Budget Cutbacks Threaten User Fee Deal

Published Online: Friday, October 5, 2012
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Budget cutbacks could compromise the 3-month old Prescription Drug User Fee Act (PDUFA), which changed the fees brand-name, generic, and medical device manufacturers pay when applying for FDA approval, according to a September 10, 2012, report from Bloomberg.

In order to accept and spend the fees paid for drug and device reviews, the FDA must receive a certain amount of federal funding. A deadline missed by the Office of Management and Budget for $109 billion in required spending reductions—the first of governmentwide cuts to total $1.2 trillion by 2021— could put the FDA funding at risk and slow drug and device reviews.

According to advocacy group Alliance for a Stronger FDA, the agency could lose 8% of the taxpayer money it typically receives, which amounts to a $200 million budget reduction for the 2013 fiscal year. The Obama administration’s initial budget for 2013 included $2.5 billion in taxpayer monies for the FDA. The taxpayer dollars would be supplemented by $2 billion in industry fees, including $299 million from generic manufacturers.

The PDUFA would have manufacturers paying 60% in drug review fees, increasing and expanding previous fees to help speed FDA review times. The act expansion includes a provision for generic manufacturers, which were exempt from the fee structure previously. Over the 5-year deal, generic manufacturers would pay $1.58 billion total on the user fees.

The concern of Alliance for a Stronger FDA, which includes several pharmaceutical companies and the Generic Pharmaceutical Association (GPhA) as members, is that the user fees could also be taken to meet spending reduction requirements. Most of the user fee money offsets personnel costs associated with drug and device approvals, so a reduction there could result in FDA layoffs, according to Alan Goldhammer, an independent consultant cited in the Bloomberg article.

Despite the potential for cutbacks that could compromise the act, GPhA remains optimistic about PDUFA, which went into effect October 1, 2012.

“We are grateful to Congress and to the House Energy and Commerce Committee Chairman Upton (R, MI) and Ranking Member Waxman (D, CA) who first introduced this needed legislation, for their work to assure this much needed funding can get to the FDA and be put to work in the approval of safe, effective, and affordable generic medicines,” Ralph G. Neas, GPhA president and chief executive officer, said in a press release. “By saving consumers, patients, and providers nearly $200 billion each year, generic prescription drugs have proven to be a vital component of the solution to controlling health care spending.”

“For consumers to fully benefit from the savings offered by generic medicines, it is critical that the FDA have the resources it needs, both through Congressional appropriations and by way of user fees, to guarantee the timely approval of new generic medicines,” Neas added. “[This action] is a real win for patients, providers, seniors, and all consumers who rely on prescription medicines to improve their lives.”

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