July 11, 2014 SIGN IN | REGISTER
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Sequester Withholding of FDA User Fees Irks Industry

Chris Maddaloni/CQ Roll Call File Photo
Hamburg said industry members were surprised their payments to the FDA were subject to sequester cuts; the companies expect the money to be used for work.

The Food and Drug Administration is able to do its work in part because of a symbiotic relationship with the industries it regulates. But recently that relationship has been knocked off balance.

For years, makers of drugs for humans and animals, tobacco products and medical devices have paid the FDA in exchange for the agency committing to certain performance goals. Those user fees wind up constituting a significant part of the agency’s annual budget and help it do review and oversight work. But now the FDA may not be able to accomplish all those goals, because some of the funds are being cut by the sequester.

Lawmakers now are working to give the FDA the flexibility to access all funds it receives from private companies.

Companies that make drugs and devices are still paying the full amount established in the latest user fee reauthorization (PL 112-144), but the money is subject to the sequester cuts at the same level as the rest of the FDA’s budget authority. That means that portion of the user fees — $83 million, according to the agency — is being sliced off and is unavailable to the FDA.

“Those monies are being collected from industry, but they’re going into a bank so to speak ... and they can’t be used to support our programs and activities,” FDA Commissioner Margaret A. Hamburg explained at an April hearing of the House appropriations subcommittee that covers agriculture programs and the FDA. “At the same time, they can’t be used to offset the debt, as I understand it.”

Appropriators have raised concerns about how the sequester is affecting the agency — particularly when it comes to the user fees. The FDA negotiates the user fee rates with industry stakeholders before each reauthorization, with the agency committing to certain performance goals in exchange for the money.

With the FDA unable to access all the user fee funds, the agency and the paying companies are worried the FDA will not be able to reach those goals.

“We will not be able to use all of those user fees to achieve the performance goals that were negotiated with industry, and I think that will be reflected in a slowing of some of our ability to build up key programs, to advance medical products, review programs in critical ways,” Hamburg told a Senate appropriations subcommittee.

She added that industry members have been surprised that their payments were subject to the sequestration cuts, and said the companies expect their money to be used to fund work toward the goals.

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