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It’s Time to Change CDER Funding

I did some crunching of FDA budget numbers for my column earlier this week on the Office of Regulatory Affairs (ORA). A by-product of my efforts was an analysis of how the Center for Drug Evaluation and Research (CDER) is funded.

As most readers know, bio-pharma companies pay user fees, based on activities (such as submitting a New Drug Application) and on the number of their manufacturing facilities. The amounts are set by law. As part of the arrangement, FDA agrees to certain performance goals, which are also specified in law.

We often hear how dependent CDER is on user fees. The actual numbers are startling and deserve to be well-aired.

In FY 09, CDER received $413 million dollars, of which $111 million goes to ORA for inspections and enforcement. The remaining $302 million is the appropriated amount available for CDER to fulfill its responsibilities. User fees add another $357 million.

Of CDER’s $660 million, 45% comes from appropriations and 55% comes from user fees. The split is similar for employees. Nearly 1300 employees are paid from appropriated monies; 1500 employees are paid from user fee funds.

I do not believe that user fees are corrupting, as some have alleged. The oft-heard insinuation that user fees put FDA “in the pocket of industry” is nonsense.

Nonetheless, the appearance is terrible. Everyone in the FDA stakeholder community agrees—patient groups, companies, consumer groups and associations. No one favors more drug user fees…and most would like to roll back or eliminate them in favor of all-public funding. Is this possible?

The current drug user fee program (PDUFA IV) was signed into law on September 27, 2007 and covers five fiscal years. Although Congress won’t act to renew the program before 2012, the FDA will be starting its public hearing process in the first quarter of 2010. This is the first step in creating FDA’s legislative proposal for PDUFA V.

This seems like a perfect opportunity to build momentum for a rollback of user fees, leading to a much smaller PDUFA V. Except that it will never happen that way.

FDA won’t recommend, and industry won’t agree to, a smaller user fee program….unless they are assured that the same amount of funds will be replaced by appropriations. Additional appropriated funds above that level would be even better, since CDER has a lot of needs.

That brings the potential for a smaller user fee program back to Congress. It won’t be simple. The user fee programs are authorized by the House Energy and Commerce Committee and the Senate HELP Committee. They will determine the size and scope of PDUFA V.

However, the House and Senate Appropriations committees control the amounts of user fees to be collected and made available to the FDA. If there is to be a larger, offsetting appropriation to replace some user fees, these committees will have the find the money.

A smaller PDUFA V could only happen if House E&C Chair Henry Waxman and House Appropriations subcommittee Chair Rosa DeLauro agree. Likewise, Senate HELP Chair Tom Harkin would have to reach agreement with Senate Appropriations subcommittee chair Herb Kohl to implement a smaller user fee program. The Senate may be easier, since Senator Harkin is the #2 Democrat on Senator Kohl’s subcommittee.

One person can cut through all of this and lead the way to a smaller user fee program. When President Obama submits his FY 2011 budget to Congress next February, he could include additional appropriated funds to reduce CDER’s reliance on user fees. A good start would be to get the proportion of user fees below 50% of CDER funding.

I wouldn’t bet on this happening…..but I can dream, can’t I?


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