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Unpublished Paper
Drug User Fees, Health Priorities, Politics, The Deficit and Reform Directions
ExpressO (2011)
  • Margaret Gilhooley
Abstract

The Food and Drug Administration now depends on user fees paid by drug companies to support more than half the salaries of the medical reviewers who advise the agency on the appropriateness of approving a drug. The funding creates a substantial risk of "capture" of the agency by the industry. Under the program, which began in 1992, drug companies pay a fee that permits the agency to hire additional reviewers to make more timely reviews on whether a drug can be approved. Under the law, the agency seeks to meet performance goals for the timing of reviews, giving the program the appearance of having a fee-for-service basis. The legislative authorization for the fees expires every five years, and the agency and the industry negotiate behind closed doors on the renewal and the performance goals for the reviews. The need for a renewal creates the opportunity for the passage of laws that might not have passed separately. Some believe the Administration may accept measures of debatable merit to avoid having to layoff needed reviewers. Limiting the user fees to half the Governement appropriation for the program, and making the program permanent, would help alleviate the capture and linkage problems.

This paper maintains that reforms and changes in the policy rationle for the program are needed before locking-in a permanent funding commitment at a time of debate about growing budget shortfalls. Instead of a fee-for-service rationale, the program should be based on a health review rationale. A study is needed to identify better the priority rankings and goals for drug reviews, instead of the simple categories and negotiations that now exist. To avoid the capture problem, the revenue from the fees should not exceed the Governmen funding for the program. Making the fees permanent would address the linkage problem but providing permanent funding can undercut Congress' responsibility to determine important budget allocations in a time of concern about deficits. The user fee program should be subject to general cuts in discretionary federal spending unless Congress specifically exempts the program. The resources to ensure effective compliace with the law need to be maintained. The significance of the user fee program, and the reforms needed before it is made permanent, warrant wide attention.

Keywords
  • pharmaceuticals,
  • drug approvals,
  • agency capture,
  • user fees,
  • deficits
Disciplines
Publication Date
January 30, 2011
Citation Information
Margaret Gilhooley. "Drug User Fees, Health Priorities, Politics, The Deficit and Reform Directions" ExpressO (2011)
Available at: http://works.bepress.com/margaret_gilhooley/8/