This Final Annual Report to Congress on the financial aspects of the FDA's implementation of the Prescription Drug User Fee Act of 1992 (PDUFA) covers FY 1997, from October 1, 1996 through September 30, 1997. The PDUFA established certain conditions that must be satisfied each year in order for the FDA both to collect the user fees established in the Act and to spend those revenues to enhance FDA's process for the review of human drug and biological product applications. This report documents how those statutory conditions were met in FY 1997. Since the conditions were met, FDA both collected and spent PDUFA user fees in FY 1997.
The PDUFA established FY 1992 costs as a baseline. These costs are then adjusted for the lessor of inflation since 1992 or changes in overall government domestic discretionary spending since 1992, as required by the Act, and presented in financial reports each year for comparison. The statements and tables included in this report provide information on the user fees FDA collected and spent in FY 1997, and also provide comparative data for FYs 1996, 1995, 1994, 1993, and baseline cost data for 1992. Over the past 5 years FDA has collected over $328 million in user fees of which $292 million has been obligated and spent.
In FY 1997, FDA collected $93,234,125 in user fees and had gross receiveables of $10,639,550 at year end. In addition, at year end, the Agency had a substantial number of reviews in process for applications received in FY 1997 (and a few received in 1996), for which the second half of the application fee will not be billed until FDA issues an action letter on the application. Most of these action letters will be issued, and fees collected in FY 1998; some may not be issued until FY 1999 or beyond.
In FY 1997, FDA obligated and spent $84,289,046 of fees collected this year or carried over from previous years, of which 95 percent were for direct review actions. Of the $84,289,046 that FDA spent in FY 1997, $62,039,000 was for staff and payroll costs. Throughout FY 1997, the Agency financed with user fees about 696 more FTE for included activities than were utilized in 1992. This large infusion of human resources into the process is one of the most important factors that enabled FDA to continue to meet the perfomance goals in the Act.
The balance of the fee revenue spent in FY 1997 represents investments in the Agency's infrastructure and other activities supporting the process for review of human drug applications. These include vital investments in the continued development of information technologies.
We are pleased with our progress in enhancing the review of human drug applications in FY 1997 that has been made possible by the fees we have collected under this act. We are pleased that PDUFA has been amended and extended another five years under the FDA Modernization Act of 1997(P.L. 105-115). The new provisions not only improve upon many aspects of the PDUFA, but they also provide a greater level of resources over the next five years. These new resources will enable FDA to meet an even more challenging set of new goals. We look forward to further reducing drug development times as we strive to meet these goals over the coming five years.
Michael A. Friedman, M.D.
Lead Deputy Commissioner of Food and Drugs