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FY 1998 PDUFA Financial Report: Carryover Balances

Table of Contents

Previous Section: Obligation of User Fee Revenues

Under PDUFA and FDAMA, any fees collected and not spent by the end of a fiscal year continue to remain available to the Agency in future fiscal years. These revenues are referred to as carryover balances. The net result of operations in FY 1998 increased the carryover balance by $31,056,143. This large increase is the combined result of:

  • the one-time spike in FY 1998 collections, attributable to collection of both (1) the second-half of application fees for many prior fiscal year submissions, (2) full application fees for all FY 1998 submissions; and
  • actions previously mentioned to constrain FY 1998 obligations in order to conserve funds for use in FY 1999. The table below captures the changes in carryover balances over the course of PDUFA.

FOOD AND DRUG ADMINISTRATION
STATEMENT OF COLLECTIONS, OBLIGATIONS, AND CARRYOVER BALANCES BY FISCAL YEAR

as of September 30, 1998

Fiscal Year Beginning Carryover Collections Obligations Year-End Carryover
1993 - $28,531,996 $8,949,000 $19,582,996
1994 $19,582,996 $53,730,244 $39,951,020 $33,362,220
1995 $33,362,220 $70,953,500 $74,064,015 $30,251,705
1996 $30,251,705 $82,318,400 $85,053,030 $27,517,075
1997 $27,517,075 $93,234,125 $84,289,046 $36,462,154
1998 $36,462,154 $132,671,143 $101,615,000 $67,518,297
1999 $67,518,297      

The balances above do not include estimated receivables from FY 1998 and prior years, which total $13,759,458. It is important to note that while the carryover balance grew substantially in FY 1998, there are also a number of claims on these funds. Those claims (refunds, reserve for future operations, and FY 1999 operating needs) are explained below. As a result of these claims, we expect a substantial reduction in the carryover balance at the end of FY 1999.

COLLECTION CEILINGS AND POTENTIAL REFUNDS

PDUFA prohibits the agency 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 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 refunded.

FOOD AND DRUG ADMINISTRATION
STATEMENT OF FEES COLLECTED, COLLECTION CEILINGS, AND POTENTIAL REFUNDS

as of September 30, 1998

 

Fiscal Year Collections Realized Collection Ceiling Potential Refund
1993 $35,949,490 $36,000,000 -
1994 $56,556,650 $56,284,000 $272,650
1995 $77,765,800 $79,423,000 -
1996 $87,332,885 $84,723,000 $2,609,885
1997 $90,776,726 $87,528,000 $3,248,726
1998 $113,057,857 $117,122,000 -
Total: $6,131,261

As of September 30, 1998, collections have exceeded appropriations in FY's 1994 ($272,650), 1996 ($2,609,885) and 1997 ($3,248,726). A total of $6,131,261 will have to be refunded, decreasing the carryover balance. The amounts to be refunded for FY's 1996 and 1997 are likely to increase because more second-half application fees will be paid for these years. Any surplus collections will be accumulated by the Agency until (1) further collections of fees from each fiscal year are unlikely and (2) all waivers and refunds have been settled. Resolving these waivers and refunds, particularly for years in which refunds are due, is a priority in FY 1999.

When the refunds are made, it is FDA's intention to pro-rate the amount based on the total fees paid (application, establishment, and product fees combined) by each firm for the specific fiscal year.

RESERVE FOR FUTURE OPERATIONS

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 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 PDUFA II Five-Year Plan, at the end of FY 1999 the Agency needs to carry forward $39.5 million to cover essential future operating costs.

AMOUNT ALLOCATED IN FY 1999

In addition to the items discussed above, $25 million from carryover balances has been allocated to FDA components in FY 1999. Acquisitions and hiring were postponed in FY 1998 in order to have this amount available for essential operations and personnel in FY 1999. The availability of these funds assures that performance goals for FY 1999 will be met.

FOOD AND DRUG ADMINISTRATION
SUMMARY STATEMENT OF CLAIMS ON CARRYOVER BALANCE

as of September 30, 1998

 

Nature of Claim
Amount
Reserve for Refunds $6,131,261
Reserve for Future Operations $39,477,000
Amount Allocated in FY 1999 $25,000,000
TOTAL CLAIMS $70,608,261

The chart above summarizes all the claims on the carryover balance. The total exceeds the available carryover balance by $3.1 million because it takes into consideration the anticipated collection of receivables.

SUMMARY OF RECEIVABLES AND PENDING WAIVER REQUESTS

At the end of FY 1998, in addition to the cash collected, FDA had receivables totaling $13,759,458. As shown in Appendix B, there were waiver requests totaling $7,020,858 pending at the end of FY 1998. A reserve in this amount has been established within accounts receivable. The balance, exclusive of this reserve, is $6,738,600. Over half of that amount will be used to satisfy the claims on the carryover balance described above.

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 1997. The agency is actively working on resolving all pending waiver or refund requests.

Next Section: Total Costs of the Process for the Review of Human Drug Applications