FY 2002 PDUFA Financial Report: Carryover Balances
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Under PDUFA and PDUFA II any fees collected and appropriated but not obligated by the end of a fiscal year continue to remain available to FDA in future fiscal years. These revenues are referred to as carryover balances. The net result of operations in FY 2002 decreased the carryover balances by $12,733,161.
The table below captures the changes in carryover balances from FY 1993.
|Fiscal Year||Beginning Carryover||Net Collections||Obligations||Year-End Carryover|
The balances above reflect cumulative cash at the beginning/end of each fiscal year, and net cash collected during each fiscal year for all cohort years. The figures do not include accounts receivable. The collections balance shown above for FY 2002 of $149,078,939 is substantially more than the FY 2002 collections balance on page 3 of $143,331,211. Most of this difference is the result of collections during FY 2002 of amounts applicable to earlier cohort years.
There are also a number of claims on these carryover funds. Those claims are explained below.
COLLECTION CEILINGS, POTENTIAL REFUNDS AND OFFSETS
PDUFA prohibited FDA from keeping fees in excess of the amount specified in appropriations (collection ceiling) each fiscal year through FY 1997. Amounts collected that exceed collection ceilings through FY 1997 must be refunded. A total of $6.3 million surplus collections from this period were refunded in FY 2000 and FY 2001.
Under PDUFA II, collections in excess of amounts stated in appropriations after FY 1997 may be kept, and used to reduce fees that would otherwise be assessed in a later fiscal year. The following table depicts net collections since FY 1993, collection ceilings specified in appropriations, and amounts that may be either refunded or used to offset future collections.
|Fiscal Year||Collections Realized||Collection Ceiling||Potential Refund||Potential Offset to Future Collections|
RESERVE FOR REFUNDS AND OFFSET FOR FUTURE COLLECTIONS
As of September 30, 2002, collections have exceeded appropriations in FY’s 1994 ($277), 1996 ($3,488) and 1997 ($126,312). Further refunds of remaining pre-1998 balances will not be made until all pending appeals from this period are resolved, but $130,077 must be kept in reserve for potential refunds until these appeals are resolved or refunds are made.
FDA’s FY 1998 collections currently exceed the appropriations limit by $634,061. Some FY 1998 requests for refunds or waivers are still pending, however. If the net collections still exceed the appropriation limit after these waiver requests are settled, then FDA will set fees at a lower level in the future to offset these surplus collections. Therefore, this $634,061 must be kept in reserve as an offset for future collections until these requests are settled.
RESERVE FOR FUTURE OPERATIONS
The table below provides a summary of carryover balances as of September 30, 2002. Due to a change in PDUFA III law requiring establishment and product fees to be paid for FY 2003 and future years by the first of the fiscal year, FDA no longer needs to have at least a 3-month reserve for future operations at the end of each fiscal year—at least until FY 2007. The carryover amount shown as available for allocation in the table below is enough to fund estimated FY 2003 operations for approximately 1.2 months.
AMOUNTS ALLOCATED IN FY 2002
Virtually all of the $35 million from carryover balances will be allocated to FDA components in FY 2002, in order for FDA to be able to sustain its current level of operations and meet the PDUFA II goals, several of which are increasingly challenging in the final year. Goals with higher standards for FDA in 2002 include review times for all standard original submissions, review times for manufacturing supplements requiring prior approval, review times for resubmitted applications.
|Status of Carryover Funds||Amount|
|Reserve for Refunds of Excess Collections||$130,077|
|Reserve for Future Collection Offset||$634,061|
|Available for Allocation||$21,919,087|
|TOTAL Carryover Balance||$22,683,225|
SUMMARY OF RECEIVABLES AND PAYMENTS DEFERRED AND
REFUNDS OF FEES PAID BUT PENDING WAIVER RESOLUTION
At the end of FY 2002, in addition to the cash collected, FDA had receivables totaling $2,863,469. An allowance for loss on accounts receivable has been recorded at $557,159, which consists of $120,366 of accounts receivable greater than one year in arrears, and $436,793 that is deferred and will not be payable until a final decision is made on pending waiver requests.
Waivers or exemptions that will be granted will have to be met from cash realized as accounts receivable materialize or from available carryover balances. Given past experience, amounts received from accounts receivable balances and available carryover balances should adequately cover the cost of such waivers and exemptions.