Latest Budget Proposal Green Lights Access to FDA’s User Fees

As part of the current budget negotiations, user fees paid my medical device companies would be freed from sequestration. About $85 million in user fees paid by life-science companies—including drug and biologics firms—again will be available to the U.S. Food and Drug Administration (FDA), should the measure pass. All early indications, seem to indicate biparisan support for passage.

Under last year’s sequester (which is a term for automatic spending cuts triggered by Congress) the FDA was prohibited by the federal Office of Management Budget from collecting the fees. The funds were diverted for general budget purposes. Restoration of that funding means the FDA can resume using the targeted fees toward advancing its review programs for medical devices and drugs. Pharmaceutical and medical device companies pay the fees directly to the FDA, which amount to about 35 percent of the agency’s budget. The rest is supported by taxes.

A full vote on the House and Senate omnibus spending bill for 2014 is expected Thursday, Jan. 16. The so-called “omnibus” package of all 12 annual spending bills is a compromise. It has more money in it than what Congressional Republicans wanted, but less than what Democrats had asked for. There is some disappointment with the measure on both sides of the aisle, but this time there’s no chatter about forcing another government shutdown.

The bill would keep the government funded through September (until a new fiscal year starts in October), ease some of the sequester’s across-the-board spending cuts.

Overall, the spending package would provide $1.012 trillion for discretionary spending for fiscal year 2014, including $491.7 billion for domestic programs.

Specifically, the spending bill would reduce funding for the departments of Labor, Health and Human Services, and Education by about $100 million from the fiscal year 2013 enacted level, with labor and education programs taking most of the reductions to offset increases in healthcare spending. For example, the Centers for Disease Control and Prevention would be funded at $6.9 billion, a $567 million increase from FY 2013, and FDA would receive nearly $2.6 billion, up $91 million from FY 2013, according to House appropriators.

The National Institutes of Health would receive the biggest increase from FY 2013, with an addition $1 billion in funding, to $29.9 billion, for FY 2014.

The medical device industry is applauding the bipartisan effort.

“AdvaMed applauds the FY 2014 appropriations omnibus legislation for restoring $85 million in industry-provided user fees that were lost to FDA in FY 2013 due to the sequester,” said Stephen Ubl, president of the Advanced Medical Technology Association (AdvaMed). “AdvaMed also supports the additional funding for FDA in the FY 2014 omnibus, which provides the agency with $91 million above FY 2013 enacted funding levels. These added funds increase FDA’s budget above pre-sequestration levels and will help the agency continue to fulfill its mission to promote and protect the public health.”

Ubl added that user fees paid by industry to FDA should not be treated the same way as taxpayer appropriated dollars.

“User fees are part of an agreement between industry, FDA and Congress under which industry agrees to supplement FDA’s appropriated budget, and the agency agrees to performance commitments designed to increase the efficiency and predictability of the review process. Restoring these user fee funds upholds that agreement,” he said. “We look forward to working with Congress to permanently remove industry-paid FDA user fees from sequestration in the future.”