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FY 1998 PDUFA Financial Report









Statute requires the Food and Drug Administration (FDA) to report annually on the financial aspects of its implementation of the Prescription Drug User Fee Act of 1992 (PDUFA), as amended and extended by the Food and Drug Modernization Act of 1997 (FDAMA). This report covers fiscal year (FY) 1998.

The PDUFA, as amended, specifies that the following three conditions must be satisfied each year in order for FDA to collect and spend PDUFA fees:

1. Overall FDA appropriations, excluding fees, must exceed FDA's overall FY 1997 appropriation (excluding fees and adjusted for inflation).
2. Fee revenues collected must be specified in FDA's appropriations.
3. FDA must spend on the drug review process at least as much from appropriated funds as it spent in FY 1997, adjusted for inflation.

This report describes how those specific statutory conditions or "triggers" were met in FY 1998. The statements and tables included in this report also provide information on the user fee revenues and expenditures in FY 1998, and on the carryover balance. Comparative data for earlier periods is also provided.

In FY 1998, FDA collected $132.7 million in user fees and had estimated receivables of $13.8 million. The $132.7 million collected includes $113.1 million in FY 1998 fees and $19.6 million in fees from previous years. Most of the latter are second-half application fees from submissions prior to October 1, 1997, when the second half of the application fee was not due until FDA completed action on the application. Under FDAMA amendments, the full application fee is due upon submission for all applications received on or after October 1, 1997. The result was a one-time spike in fee revenues in FY 1998. In FY 1999 FDA expects to receive a few more second-half fees, but a far smaller number.

In FY 1998, FDA spent $101.6 million from PDUFA revenues. The FY 1998 expenditures were significantly constrained because of concerns that arose about a potential shortfall in fee revenues in FY 1999. As a result, many acquisitions were delayed and many hiring actions were deferred in order to preserve funds for use in FY 1999.

Over 70 percent of the FY 1998 expenditures went for employee pay and benefits. Throughout FY 1998, user fees financed 708 more staff-years for the drug review process than were utilized in 1992 (before PDUFA was enacted). This large infusion of human resources is the most important factor enabling FDA to meet the performance goals associated with PDUFA. The balance of the fee revenues spent in FY 1998 went for operating support for these additional employees and for investments in the Agency's infrastructure supporting the process for the review of human drug applications (including vital investments in the continued development of information technology capabilities).




Meeting the Legal Conditions for User Fees in FY 1998

User Fee Revenues

Obligation of User Fee Revenues

Carryover Balances

Total Costs of the Process for the Review of Human Drug Applications

Management Challenges for FY 1999


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


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