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User Fee Reauthorization: FDA Is In Trouble If 2007 Repeats Itself

Starting this week, the House will hold hearings on reauthorizing the drug and medical device user fee programs that fund one-fourth of the agency. While user fees have become largely non-controversial, this “must-pass” legislation is Congress’ opportunity to consider dozens of other FDA issues, some controversial and many time-consuming.

During the last user fee reauthorization in 2007, multiple non-user fee issues delayed enactment of a new law until September 27, just a few days before the start of the new fiscal year. In FDA Matters’ view, FDA is in serious trouble in 2012 if it once again takes until September to complete the user fee reauthorization legislation.  

There are two user fee programs up for reauthorization this year: the Prescription Drug User Fee Act (PDUFA) and the Medical Device User Fee Act (MDUFA). In addition, two new user fee programs have been proposed by FDA. One covers generic drugs and the other biosimilars and interchangeable biologics.

If only these four user fees were at stake (two renewals, two new), Congress could conceivably be finished by July 1, 2012. This would be optimum for giving FDA enough time to invoice and collect the user fees for the coming fiscal year (FY 13). It would also give FDA time to start making new hires and to work on any additional requirements in the new law. A lot of things could be in place by the start of the fiscal year on October 1, 2012.

However, almost no FDA legislation has passed since the last reauthorization five years ago. Pent-up demand for FDA amendments is enormous and delays are to be expected. July 1 does not look like a realistic target to complete legislation.

What happened in 2007 is beyond instructive, it is frightening. As a general precaution, FDA left many staff positions vacant during 2007, just in case the user fee monies were not renewed. As required by law, FDA compiled lists of employees it could not pay if user fee monies were not available on October 1, 2007. The agency narrowly avoided actually having to send out RIF (lay-off) notices to individual employees. While the RIF process was a formality, this created a great deal of distraction within the agency. 

Simultaneously, the timing for invoicing companies and collecting fees was disrupted and fee revenue was not collected, as it usually is, by October 1. While FDA was dealing with this (which required delays in hiring), it faced the harsh reality that many provisions of the new law became effective immediately and had to be addressed with existing staff.

Memories seem to vary about the impact in 2007. I remember significant problems; others have told me the disruption was not consequential. In fact, there is direct evidence of the impact.

Below is a slide from a December 2011 presentation given by Dr. John Jenkins, head of the Office of New Drugs (OND) in the Center for Drug Evaluation and Research (CDER). His intent was not to focus on 2007 or to draw comparisons, but the point seems quite clear.

The chart shows the number of pending drug applications on which FDA was behind schedule (as judged by the timeframes established in the user fee law). The green bars represent the most important applications, those involving new molecular entities (NMEs). The light blue bars represent other drug and biologics applications, while the violet bars represent applications for additional efficacy indications.

A backlog started to form in the second half of 2007. It increased significantly and lasted for more than 24 months. There may well have been other factors at work, but it seems more than a coincidence that the problems started at the same time as the disruption caused by the new law.

If 2012 becomes a repeat of 2007, then FDA will find itself under withering criticism later this year for not reviewing innovative drug applications in a timely fashion. Medical device are likely to be similarly impacted. FDA will be unhappy, companies with pending applications will be outraged, and patients will be short-changed as potential new therapies are delayed.

Congress needs to commit to speed up the process, minimize amendments, and make new provisions effective six months or a year after enactment. What is possible by July 1 is a House-Senate agreement on a very limited piece of non-controversial legislation that addresses user fees and perhaps one or two other items.

It is a disservice to FDA and the public health for Congress to do otherwise.


3 Responses to “User Fee Reauthorization: FDA Is In Trouble If 2007 Repeats Itself”

  1. Mark McCarty says:

    There may be a problem before Congress gets involved, at least where device user fees are concerned. FDA had proposed a five-year user fee schedule of at least $730 million and as much as $800 million, while industry has proposed a sum of as low as $447 million and as much as $485. This is according to the agency’s minutes from the Nov. 29 device user fee meeting. That’s a big gap.

    Managers at the Center for Devices are concerned about congressional appropriations for each of the five years, and part of that issue is that when appropriated monies have fallen off in previous agreements, so did user fees. Part of the underlying problem here is obviously the [lack of confidence in the] federal budget.

    In my view, the bigger question here is: How did Congress come up with an extra $10 billion for NIH in the American Recovery and Reinvestment Act – a sum NIH has already blown through entirely – but still can’t get FDA’s appropriated sums to $3 billion even as NIH’s annual budget exceeds $30 billion each and every year?

    So much for the claim that FDA is “the most important public health agency in the world.” That’s a real popular thing for the folks on Capitol Hill to say, but they obviously don’t mean it, do they?

  2. Mark—Thank you for pointing out that the medical device user fee proposal is not finalized. While it is still too early to know for sure (the agency deadline was January 15, which was missed), it is possible that further delays to MDUFA reauthorization could jeopardize (and/or significantly slow) the reauthorization process. My best guess is that the medical device impasse will break soon. If not, at some point Congress will go ahead and do PDUFA reauthorization–it won’t kill PDUFA because of medical device problems. In any of these scenarios, the Congress still comes back to the issue that was the topic of this column–that non-user fee issues delay reauthorization and could contribute to serious problems for the agency. Steven

  3. As many readers may already know, the logjam on MDUFA reauthorization seems to have been resolved last week. There are still some potential for significant delays (e.g. agreement on exact bill text, 30 day FDA comment period), but it seems like that MDUFA can catch up with the PDUFA package in time. By itself, it should not delay the legislation….although it is unknown how many other medical device amendments (user fee and non-user fee related) might still be offered.

    For those wondering how many different and far-ranging topics could be offered as amendments (and thus dramatically slow the process), consider the just-introduced HR 3848 at http://thomas.loc.gov/cgi-bin/query/z?c112:H.R.3848: dealing with use of federal funds to support campaigns to ban any lawfully marketed food or beverage. The back-story is at: http://www.foxnews.com/politics/2012/02/01/rep-wants-ban-on-taxpayer-funded-ad-campaigns-against-sodas-junk-food/. It would give true meaning to the fear that user fee reauthorization could turn into a food fight.

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