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FY 1998 PDUFA Financial Report: Obligation of User Fee Revenues

Table of Contents

Previous Section: User Fee Revenues

User fee revenues are expended only for costs necessary to support the process for the review of human drug applications, as defined in FDAMA. Allowable and excludable costs for the process for the review of human drug applications are defined in Appendix C. In FY 1998, FDA continued to improve and expedite the activities involved with the process for review of human drug applications, obligating $101,615,000 of the user fees collected.

FOOD AND DRUG ADMINISTRATION
STATEMENT OF USER FEE OBLIGATIONS BY EXPENSE CATEGORY 

as of September 30, 1998

Expense Category
FY 1997
FY 1998
Personnel Compensation and Benefits $62,039,000 $71,186,000
Travel and Transportation $2,270,000 $2,813,000
Communications $1,183,000 $1,196,000
Contract Services $13,637,000 $18,084,000
Equipment and Supplies $5,094,000 $8,215,000
Other $66,046 $121,000
TOTAL OBLIGATIONS:
$84,289,046 $101,615,000

FDA dedicated 1,277 FTE (Full Time Equivalents or staff-years) to the review of human drug applications in FY 1992, before PDUFA was enacted. These 1,277 FTE are sometimes referred to as baseline FTE. A time reporting study was undertaken in 1993 to determine the percentage of time each division devotes to user fee related activities. This allowed calculation of FTE related costs. The percentages are updated quarterly through additional time surveys. The development of these user fee related costs associated with the review of human drug applications is described in Appendix D.

The Agency utilized and financed with user fees 708 more FTE in FY 1998 for PDUFA activities than were utilized in FY 1992. This is an increase of 12 over the 696 additional FTE fees supported in FY 1997. FDA's payroll costs paid from user fee funds in FY 1998 totaled $71,186,000-over 70% of the funds expended. This includes all pay and benefits for the additional 708 FTE and costs of the FY 1998 payroll increases for the baseline FTE.

A substantial amount of the remaining funds were spent on information technology. FDA has begun an Agency-wide information technology (IT) program to support the transition from a largely paper-based regulatory submission and review environment to an electronic environment. This effort is called the Electronic Regulatory Submission and Review (ERSR) program. ERSR is comprised of a variety of projects, each of which is designed to satisfy a different part of PDUFA. The major ERSR project areas are described below.

  • Standards and Guidance. These projects promote consistent exchange of electronic information between the Agency and external constituents. At the completion of FY 1998, several technical standards have been established and supporting guidance documents were provided to external constituents.
  • Capability to Receive Electronic Submissions. These projects implement procedures and technology to support electronic submissions in lieu of paper. Progress in this area includes the establishment of Electronic Document Rooms that permit the receipt of electronic submissions in physical media format (CD-ROM, magnetic tape, etc.) from industry.
  • Electronic Review. These projects enable Agency reviewers and field inspectors to conduct review activities in an electronic environment. Progress in this area includes the implementation of electronic document management systems that facilitate electronic collaboration between review staff and the expansion of existing management information systems that track the status of each review.
  • Updated Infrastructure - These projects include the implementation of underlying technologies required to support the transition to a paperless review environment. Progress in this area included installing new computer hardware and software, increasing network capacity, updating the skills of technical support staff, and training for reviewers.

The total expenditure of $101,615,000, while larger than FY 1997 amounts, represents a 10 percent reduction below the planned expenditure level. This was a result of deliberate actions taken in the last few months of the fiscal year. In FY 1998 FDA realized that the number of fee-paying applications would be substantially less than the 152 originally projected-closer to 120. This was the first time in six years that receipts fell below the forecast. The shortfall was the compound result of both (1) fewer drug and biologic applications submitted by industry than in the previous year and (2) a larger than expected increase in the number of submissions exempt from fees under new FDAMA provisions.

The real significance of this shortfall would be felt in FY 1999 revenues, because under FDAMA amendments the number of fee-paying applications became a pivotal factor in total fee revenue for the next year. Early estimates of FY 1999 revenues ran 30 percent below plans, and sharply below FY 1998 levels, while PDUFA workload (including investigational new drug submissions and manufacturing supplements that are not counted in fee-paying submissions) increased.

Due to the anticipated shortfall in revenue, FDA felt it prudent to curtail the hiring of personnel and defer expenditures in the last few months of the fiscal year. The result of these savings in FY 1998 enables FDA to carry forward funds for use in FY 1999.

Next Section: Carryover Balances