FY 2001 PDUFA Financial Report: Appendix A
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CONDITIONS FOR ASSESSMENT AND USE OF FEES
The Food, Drug, and Cosmetic Act (the Act), as amended by PDUFA and FDAMA, specifies three major conditions that must be met each year before user fees can be collected and spent. A summary of these conditions and how they were met was provided earlier on page 2. A more detailed presentation of each of these conditions is provided below, along with an explanation of how the condition was met in FY 2001.
For making the comparisons to determine if statutory conditions are met, FDA's 1997 Salaries and Expenses appropriation must be adjusted each year by an adjustment factor, which is defined in section 735(8) of the Act. It states:
The term 'adjustment factor' applicable to a fiscal year is the lower of --(A) the Consumer Price Index for all urban consumers (all items; United States city average) for April of the preceding fiscal year divided by such Index for April 1997, or
(B) the total of discretionary budget authority provided for programs in the domestic category for the immediately preceding fiscal year (as reported in the Office of Management and Budget sequestration preview report, if available, required under section 254(c) of the Balanced Budget and Emergency Deficit Control Act of 1985) divided by such budget authority for fiscal year 1997 (as reported in the Office of Management and Budget final sequestration report submitted after the end of the 105th Congress, 1st Session).
The first calculated factor is the consumer price index of April 2000 (171.3), which is the fiscal year immediately preceding FY 2001, divided by the consumer price index for April 1997 (160.2). The result of this division is a factor of 1.0693.
The second calculated factor is the domestic discretionary budget authority for FY 2000 ($290.1 billion)1 , the fiscal year immediately preceding FY 2001, as reported in the final sequestration report submitted after the end of the 106th Congress, 2nd Session, divided by the domestic discretionary budget authority for FY 1997, as reported in the final sequestration report submitted after the end of the 105th Congress, 1st Session ($253.5 billion). The result of this division is a factor of 1.144.
1 The amount of domestic discretionary budget authority for the previous year is no longer included in the final sequestration report, and has not been required by law since 1999. The figure used above ($290.1 billion for FY 2000) was provided by Office of Management and Budget staff as the amount that would have been included in the final sequestration report as non-defense discretionary spending had the requirement to report it still been in effect.
The lower of these two numbers is the first factor, 1.0693. Accordingly, the adjustment factor to be used for FY 2001 is 1.0693.
The first condition comes from section 736(f)(1) of the Act. It states:
Fees may not be assessed under subsection (a) for a fiscal year beginning after FY 1997 unless appropriations for salaries and expenses of the Food and Drug Administration for such fiscal year (excluding the amount of fees appropriated for such fiscal year) are equal to or greater than the amount of appropriations for the salaries and expenses of the Food and Drug Administration for fiscal year 1997 (excluding the amount of fees appropriated for such fiscal year) multiplied by the adjustment factor applicable to the fiscal year involved.
This requires that FDA's total Salaries and Expenses appropriation (excluding user fees) each year must be greater than or equal to FDA's FY 1997 Salaries and Expenses appropriation (excluding user fees) times the adjustment factor. FDA's total FY 1997 Salaries and Expenses appropriation, excluding fees, was $819,971,000. Multiplying this amount by the adjustment factor of 1.0693 results in an adjusted Salaries and Expenses Appropriation minimum, excluding fees, of $876,794,990.
For FY 2001, FDA's total Salaries and Expenses appropriation, excluding user fees, and excluding rent to GSA, which was also not included in the FY 1997 Appropriation amount, was $978,897,000. Since the FY 2001 appropriation amount exceeds the FY 1997 adjusted amount, the first condition was met.
The second condition comes from Section 736(g)(2)(A). It states that fees "shall be collected in each fiscal year in an amount specified in appropriation acts, or otherwise made available for obligation, for such fiscal year…." Without a specific appropriation, no fees may be collected.
The Appropriation Act (Public Law 106-387) specifying amounts collectable from fees during FY 2001 was signed by the President on October 28, 2000. It provided $149,273,000 to come from fees collected. Thus, the second condition was met, and fees may be collected.
The third condition in the Act, in Section 736 (g) (2) (B), states:
fees shall only be collected and available to defray increases in the costs of the resources allocated for the process for the review of human drug applications (including increases in such costs for an additional number of full-time equivalent positions in the Department of Health and Human Services to be engaged in such process) over such costs, excluding costs paid from fees collected under this section, for fiscal year 1997 multiplied by the adjustment factor.
In FY 1997, FDA's actual obligations for the process for the review of human drug applications, excluding obligations paid from user fees, was $147,959,689, as reported in the FY 1997 Financial Report to Congress. Multiplying this amount by the adjustment factor of 1.0693 derived above, FDA's 1997 adjusted minimum spending for the process for the review of human drug applications from appropriations, exclusive of fees, is $158,213,295 in FY 2001.
The FDA costs (obligations) from appropriations for the process for the review of human drug applications for FY 2001 was $162,691,657. Since this is greater than the adjusted FY 1997 amount ($158,213,295) the third condition was met.
The table below shows amounts FDA spent on the process for the review of human drug applications in FY 2000 and 2001 and also shows the adjusted FY 1997 amount that had to be spent from appropriations. It also shows the amount of these costs that was charged to appropriations and the amount met from user fee revenues each year.
|Adjusted FY 1997||FY 2000||FY 2001|
|From User Fee Revenues||$147,276,000||$160,713,000|
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