FY 2001 PDUFA Financial Report: Carryover Balances
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Under PDUFA and FDAMA, 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 2001 decreased the carryover balances by $21,951,706.
The table below captures the changes in carryover balances over the course of PDUFA.
|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 2001 of $138,761,294 is substantially more than the FY 2001 collections balance on page 3 of $133,238,324. Most of this difference is the result of FY 2001 collections of amounts applicable to earlier cohort years.
There are also a number of claims on these carryover funds. Those claims (refunds and 2002 operating needs) are explained below. As a result of these claims, the carryover balances are expected to be virtually depleted at the end of FY 2002.
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 will be refunded. Under FDAMA, balances collected in excess of amounts specified in appropriations after FY 1997 may be kept, and used to reduce fee charges that would otherwise be made in a later fiscal year. The following table depicts net collections since FY 1993, collection ceilings specified in appropriations, and amounts to be either refunded or used to offset future collections.
|Fiscal Year||Collections Realized||Collection Ceiling||Potential Refund||Potential Offset to Future Collections|
As of September 30, 2001, collections have exceeded appropriations in FY's 1994 ($277), 1996 ($3,488) and 1997 ($126,312). A total of $1,656,596 of pre-1998 surplus collections was refunded in FY 2001, substantially decreasing the carryover balance from last year. Further refunds of remaining pre-1998 balances will not be made until all pending appeals from this period are resolved.
FDA's FY 1998 collections currently exceed the appropriations limit by $615,470. 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.
RESERVE FOR FUTURE OPERATIONS
In the past, FDA has kept some funds set aside as a reserve for future operations and for refunds for pending and future waiver requests. Due to both a revenue decrease in FY 2001 (application fees were about $17 million below forecasts) and the fact that fee-setting mechanisms in PDUFA will cause revenues in FY 2002 to fall by about $22 million below earlier forecasts, there will be virtually no reserves left at the end of FY 2002.
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.
|Nature of Claim||Amount|
|Reserve for Refunds of Excess Collections||$130,077|
|Future Collection Offset||$615,470|
|Amount to be Allocated in FY 2002||$34,000,000|
The chart above summarizes all the claims on the carryover balance.
SUMMARY OF RECEIVABLES AND PAYMENTS DEFERRED AND
REFUNDS OF FEES PAID BUT PENDING WAIVER RESOLUTION
At the end of FY 2001, in addition to the cash collected, FDA had receivables totaling $6,871,950. An allowance for loss on accounts receivable has been recorded at $1,086,402, which consists of $120,500 of accounts receivable greater than one year in arrears, and $965,902 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. Given past experience, amounts received from accounts receivable balances should adequately cover the cost of such waivers and exemptions.