This Third Annual Report to Congress on the financial aspects of FDA's implementation of the Prescription Drug User Fee Act of 1992 (PDUFA) covers FY 1995, from October 1, 1994 through September 30, 1995. The PDUFA established certain conditions that must be satisfied each year in order for 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 1995. Since the conditions were met, FDA both collected and spent PDUFA user fees in FY 1995.
The FY 1992 financial information is established by PDUFA as a baseline year and will be adjusted for inflation, as required by the Act, and presented in financial reports each year for comparison. The statements and tables in this report provide information on the user fees FDA collected and spent in FY 1995, and also provide comparison data for FYs 1994, 1993, and baseline cost data for 1992. Over the past three years, FDA has collectde over $150 million in user fees of which $123 million has been obligated and spent.
In FY 1995, FDA collected $70,953,500 in user fees and had gross receivables of $1,608,500. In addition, at year end, the Agency had a substantial number of reviews in process for applications received in FY 1995 (and a few received in 1994 and 1993), 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 1996; some may not be issued until FY 1997 or beyond.
In FY 1995, FDA obligated and spent $74,064,015 of fees collected this year or carried over from previous years, of which over 95 percent were for direct review actions. When accounts receivable are included, there remains a total of $31,860,205 of unobligated fees that are available to the Agency for future expenses as of September 30, 1995.
Of the $74,064,015 that FDA spent in FY 1995, $33,294,000 was for increased staff and payroll costs. By the end of the year, the level of effort devoted to the process for the review of human drug applications was the equivalent of 453 staff years more than was expended in FY 1992. This large and growing infusion of human resources into the process is one of the most important factors which enabled FDA to continue to meet the performance goals in the Act. The costs for payroll and benefits are expected to increase in FY 1996 as staff increases are expected to continue.
The balance of the fee revenue spent in FY 1995 represents investments in the Agency's infrastructure and other activities supporting the process for the review of human drug applications. These include vital investments in the development of information technologies.
We are pleased with our progress in enhancing the review of human drug applications in FY 1995 that has been made possible by the the fees we have collected under this Act. We look forward to continued improvements and investments in 1996 that will further strengthen and enhance our human drug application review process.
David A. Kessler, M.D.
Commissioner of Food and Drugs