FY 2000 PDUFA Financial Report: Carryover Balances

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Under PDUFA and FDAMA, any fees collected and 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 2000 decreased the carryover balances by $14,215,661.

The table below captures the changes in carryover balances over the course of PDUFA.

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 2000 of $133,060,339 is substantially less than the FY 2000 collections balance on page 3 of $137,698,948. Most of this difference is the result of refunds made in FY 2000 of excess collections in three previous years-1994, 1996 and 1997-when total collections exceeded the ceiling on collections established in FDA's Appropriations Act.

There are also a number of claims on these carryover funds. Those claims (refunds, reserve for future operations, and FY 2001 and 2002 operating needs) are explained below. As a result of these claims, we expect a further reduction in the carryover balance at the end of FY 2001.

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 collections since FY 1993, collection ceilings specified in appropriations, and amounts to be either refunded or used to offset future collections.

As of September 30, 2000, collections have exceeded appropriations in FY's 1994 ($42,833), 1996 ($489,514) and 1997 ($1,254,276). A total of $4,661,464 of pre-1998 surplus collections was refunded in FY 2000, substantially decreasing the carryover balance from last year. We expect to refund the remainder of the pre-1998 surplus collections in FY 2001.

FDA's FY 1998 collections currently exceed the appropriations limit by $324,776. A number of 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 FY 2002, to offset these surplus collections.

A substantial carryover balance is necessary at the end of each fiscal year to ensure adequate operating funds in the first 4 months of each new fiscal year. Each year, two-thirds of the PDUFA fees (product and establishment fees) are not paid to FDA until January 31-4 months after the fiscal year starts. The other one-third (application fees) is spread out over the year. For estimation purposes, this portion is distributed evenly over 12 months. These application fees in aggregate would cover FDA costs for 1.3 of the first 4 months of the fiscal year. FDA needs to carry forward, as a bare minimum, at least 2.7 months of operating costs into each new fiscal year to cover expenses until the product and establishment fees are received on January 31. As shown in FDA's most recent PDUFA II Five-Year Plan, at the end of FY 2001 the Agency needs to carry forward a minimum of $38.1 million to cover essential future operating costs.

As reflected in Appendix B, there are waivers pending for a total of $3,875,373. If all of these waivers are granted, FDA will have to refund this amount of fees already paid, so FDA has a contingent liability for this amount.

In addition to the items discussed above, at least $9 million from carryover balances will be allocated to FDA components in FY 2001, and over $9.6 million will be allocated in FY 2002, as reflected in the most recent update of FDA's PDUFA II Five-Year Plan.

The chart above summarizes all the claims on the carryover balance.

At the end of FY 2000, in addition to the cash collected, FDA had receivables totaling $9,520,976. Of this amount, a total of $824,478 has been deferred and will not be payable until a final decision is made on pending waiver requests.

Originally under PDUFA there was no limitation on when waivers or refunds could be requested. That has been remedied by FDAMA. No further waiver or refund requests may be made for applications submitted through FY 1998. FDA is actively working on resolving all pending waiver or refund requests.

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