required by the
Prescription Drug User Fee Act of 1992
as amended by the
Food and Drug Administration
Modernization Act of 1997
and by the
Prescription Drug User Fee Amendments of 2002
Food and Drug Administration
Department of Health and Human Services
Appendix A: Conditions for Assessment and Use of Fees
Appendix B: Exemptions and Waivers
Appendix C: Allowable and Excluded Costs for the Process for the Review of Human Drug Applications
Appendix D: Development of Costs for the Process for the Review of Human Drug Applications
Letter to the Secretary Department of Health and Human Services
May 10, 2005
Honorable Richard Cheney
President of the Senate
United States Senate
Washington, D.C. 20510
Dear Mr. President:
Enclosed for your consideration is the annual financial report to Congress required by the Prescription Drug User Fee Act of 1992 (PDUFA), as amended. In FY 2002 Congress reauthorized PDUFA for five years (PDUFA III). This is the second financial report under PDUFA III. This report covers fiscal year (FY) 2004 and documents how the Food and Drug Administration (FDA) met each of the conditions specified in PDUFA, thereby allowing the Agency to continue to collect prescription drug user fees.
The report also presents the user fee revenues and related expenses for FY 2004 and comparative data for earlier periods, and details the amounts carried over at the end of each year that remain available. For FY 2004, FDA collected $246 million in user fees and spent $232 million. FDA spent almost 60 percent of the fee revenue for employee salaries and benefits. This infusion of human resources continues to be the single most critical factor enabling FDA to meet the challenging performance goals associated with PDUFA.
Michael O. Leavitt
Identical letters to:
The law requires the Food and Drug Administration (FDA or the Agency) to report annually on the financial aspects of its implementation of the Prescription Drug User Fee Act of 1992 (PDUFA), as amended. This report covers fiscal year (FY) 2004.
PDUFA specifies that the following three conditions must be satisfied each year in order for FDA to collect and spend PDUFA fees:
- FDA's overall Salaries and Expenses Appropriation, excluding fees, must exceed FDA's overall FY 1997 salaries and expenses appropriation, excluding fees and adjusted for inflation.
- Fee revenues collected must be specified in Appropriation Acts.
- FDA must spend at least as much from appropriated funds for the review of human drug applications as it spent in FY 1997, adjusted for inflation, within certain tolerances.
This report describes how FDA met those specific statutory conditions or "triggers" during FY 2004. The statements and tables included in this report also provide information on the user fee revenues and expenditures in FY 2004, on the carryover balance, and on comparative data for earlier periods.
For FY 2004, FDA collected $246 million in fees. This is slightly more than the $241 million FDA projected at the beginning of the year when fees for FY 2004 were established. The higher revenues is attributable to receiving a greater than anticipated number of fee paying applications.
In FY 2004, FDA obligated $232 million from PDUFA revenues. This accounted for about 53 percent of all funds obligated in support of the process for the review of human drug applications. FDA obligated about $16 million less than net collections for the year, increasing the balance of funds collected and appropriated in previous years, and still available for obligation, to $51 million at the end of FY 2004.
Challenges facing FDA in FY 2005 include hiring, training and maintaining the staff to meet the PDUFA III goals and maintaining application review productivity while appropriated budget authority that supports drug review requires FDA to absorb the costs of pay increases and achieve significant administrative efficiencies.