About FDA
FY 2006 PDUFA Financial Report
required by the
Prescription Drug User Fee Act of 1992
as amended by the
Food and Drug Administration
Modernization Act of 1997
and by the
Prescription Drug User Fee Amendments of 2002
Food and Drug Administration
Department of Health and Human Services
August 2007
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Contents
Letter from the Secretary of Health and Human Services
Main Report
Meeting the Legal Conditions for User Fees in FY 2006
Obligation of User Fee Revenues
Total Costs of the Process for the Review of Human Drug Applications
Management Challenges for FY 2007
Appendices
Appendix A: Conditions for Assessment and Use of Fees
Appendix B: Exemptions and Waivers
Appendix C: Allowable and Excluded Costs for the Process for the Review of Human Drug Applications
Appendix D: Development of Costs for the Process for the Review of Human Drug Applications
Appendix E: Risk Management Component of Costs for the Review of Human Drug Applications
Letter to the Secretary Department of Health and Human Services
August 8, 2007
Honorable Richard Cheney
President of the Senate
United States Senate
Washington, D.C. 20510
Dear Mr. President:
The Prescription Drug User Fee Act of 1992 (PDUFA), as amended, requires an annual financial report to Congress. Please find enclosed the Fiscal Year 2006 report which documents how the Food and Drug Administration (FDA) met each of the necessary conditions specified in PDUFA for continued collection of prescription drug user fees. Availability of these fees makes FDA better able to strengthen its drug review process and meet the performance goals established for this program.
I look forward to working with the Congress during the reauthorization of PDUFA in the next few months.
Sincerely,
/s/
Michael O. Leavitt
Enclosure
Identical letters to:
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Executive Summary
The Prescription Drug User Fee Amendments of 2002 require the Food and Drug Administration (FDA or the agency) to report annually on the financial aspects of its implementation of the Prescription Drug User Fee Act (PDUFA), as amended. This report covers fiscal year (FY) 2006.
PDUFA specifies that the following three conditions must be satisfied each year in order for FDA to collect and spend PDUFA fees:
- FDA’s overall Salaries and Expenses Appropriation, excluding fees, must exceed FDA’s overall FY 1997 salaries and expenses appropriation, excluding fees and adjusted for inflation.
- Fee revenues collected must be specified in Appropriation Acts.
- FDA must spend at least as much from appropriated funds for the review of human drug applications as it spent in FY 1997, adjusted for inflation, within certain tolerances.
This report describes how FDA met those specific statutory conditions or "triggers" during FY 2006. The statements and tables included in this report also provide the user fee revenues and expenditures in FY 2006, the carryover balance, and comparative data for earlier periods.
For FY 2006, FDA collected $316 million in fees, including fees collected for earlier periods. This is more than the $297 million FDA projected at the beginning of the year when fees for FY 2006 were established. The higher revenue is attributable to receiving a greater than anticipated number of fee-paying applications.
In FY 2006, FDA obligated $306 million from PDUFA fee revenues. This accounted for about 58 percent of all funds obligated by FDA from all sources in support of the process for the review of human drug applications. This $306 million was about $10 million less than net collections for the year, increasing the balance of funds collected and appropriated in previous years, and still available for obligation, to $76 million at the end of FY 2006. Over 60 percent of funds spent from all sources were for employee salaries and benefits, and the balance were for costs necessary to support and maintain those employees.
Challenges facing FDA in FY 2007 include hiring, training, and maintaining the staff to meet the PDUFA III goals and maintaining application review productivity. In addition, during the current fiscal year, FDA must work closely with the relevant congressional committees to support the enactment of reauthorization legislation for PDUFA before the current authorization expires on September 30, 2007.
