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U.S. Department of Health and Human Services

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FY 2002 PDUFA Financial Report: Background

Table of Contents

Previous Section: Executive Summary

PDUFA authorized FDA to collect fees from the pharmaceutical industry to augment appropriations spent on drug review. These additional resources were to be used to hire and support additional staff for the review of human drug applications so that safe and effective drug products reach the American public more quickly. PDUFA was very successful and, with support from the pharmaceutical industry and the Administration, Congress amended and extended it through FY 2002 (PDUFA II).

Under PDUFA II an application fee must be submitted when certain new drug applications (NDA’s) or biologic license applications (BLA’s) are submitted. The application fee amount is set in statute, but is adjusted each year for cumulative inflation since FY 1997. In addition, FDA collects annual establishment and product fees. PDUFA II authorizes FDA to set those fees each fiscal year so that the total revenue FDA receives from each category equals the amount FDA expects to collect from application fees. Thus, a third of the fee revenue each year comes from application fees, a third from establishment fees, and a third from product fees.

PDUFA II also requires FDA to submit two reports to Congress each fiscal year. A performance report is to be sent within 60 days of the end of the fiscal year, and a financial report is to be sent within 120 days. The FY 2002 PDUFA Performance Report, which discusses FDA’s progress in meeting the goals referred to in PDUFA II, is being separately transmitted to Congress. This is FDA’s FY 2002 PDUFA Financial Report, covering the period October 1, 2001 through September 30, 2002.

As required by statute, this report presents the legal conditions or “triggers” that must be satisfied before FDA can collect and spend the fees, and FDA’s calculations showing how those conditions were met for FY 2002. This report also presents FY 2002 revenues and obligations from user fees and a summary statement of user fees by source (application, establishment, or product fees). The total costs of the process for the review of human drug applications, as defined in PDUFA II, are also presented—both the costs paid from fee revenues and the costs paid from appropriations.

In keeping with the requirements of the Chief Financial Officers Act of 1990, the Office of the Inspector General (OIG), Department of Health and Human Services, audits FDA’s annual financial statements. The audit covers FDA’s financial systems and funds, including PDUFA revenues and expenses. The OIG issued unqualified audit opinions on FDA’s financial statements for fiscal years 1998 through 2002. This is the most favorable category of audit opinion.

Next Section: Meeting the Legal Conditions for User Fees in FY 2002