FDA: User Fees Explained
What are user fees?
The FDA collects fees from companies that produce certain products, such as drugs and medical devices, and from some other entities, such as certain accreditation and certification bodies. These fees are called “user fees.” Federal law authorizes the FDA to collect user fees to supplement the annual funding that Congress provides for the agency. User fees help the FDA fulfill its mission of protecting the public health and also facilitate timely availability of innovative FDA-regulated products without compromising the agency’s commitment to scientific integrity, public health, regulatory standards, patient safety, and transparency.
For most major user fee programs, the FDA and industry negotiate agreements on user fees every five years. As a part of this process, companies within the regulated industry (“industry”) agree to the collection of fees in exchange for commitments from the FDA to meet certain performance goals, for example, to make decisions on drug applications within a predictable timeline. To implement the agreements for the medical product user fees, Congress passes reauthorization legislation that enables the FDA to continue to collect user fees. Importantly, the outcomes of decisions the FDA makes (such as whether to approve a product) do not depend on the agency’s ability to collect user fees. The FDA’s decisions are made based on science and are consistent with the legal/regulatory standards that govern the agency.
Why are user fees important to funding the FDA?
To support its public health activities, the FDA relies on (1) annual funding that Congress provides for the agency, and (2) user fees paid by industries that make and market FDA-regulated products, and user fees paid by certain other entities.
User fees also help the FDA ensure predictable timelines for its review process by providing funding for needed staffing to more expeditiously review products without compromising the agency’s commitment to scientific integrity, public health, regulatory standards, patient safety, and transparency. The fees also directly fund other key activities, including helping ensure the safety of patients enrolled in clinical trials.
What are user fee programs and who provides input into them?
There are separate user fee programs for many of the product types that the FDA regulates. Most programs involve specific commitments made by the FDA and industry as part of their user fee agreement, such as timelines to evaluate a company’s application to bring a product to market or commitments for the FDA to publish guidance on topics of interest to industry. While user fee negotiations involve the FDA and regulated industry, multiple stakeholders, including Congress and patient and consumer advocacy groups, have the opportunity to provide input on proposed user fee commitments. The user fee programs are examples of what the FDA, Congress, industry, and other stakeholders can achieve when they work together.
Does the FDA retain all decision-making authority regarding the marketing approval of medical products?
Yes. For products where premarket review is required, there are standards for FDA product review that are written into law and that the agency follows regardless of the source of funding. The FDA’s work, high standards, and decisions are guided by science and focused on protecting and promoting the public health.
Importantly, there is no direct connection between a fee paid for an application and the review outcome for that application. Rather, the user fees, including application fees, are pooled, and used to help fund the payroll and related costs to deliver on program goals.
The user fees provide the FDA with supplemental resources for reviewing product applications based on the scientific and clinical evidence, and conducting related activities.
While the agency strives to meet the review timelines established as a part of the user fee agreements, the timeline does not force the FDA to decide on a product application before the agency’s work is complete. If additional work is necessary, the FDA would continue working past the applicable goal date. The user fee performance goals anticipate this may happen and do not count on meeting the timeline 100% of the time.
How have user fee programs benefitted the public?
User fees have helped make new human and animal drugs, generic human and animal drugs, medical devices, biologics, and biosimilar medications accessible to the public more quickly.
User fees have also supported programs to strengthen input from patients and enhance product safety. For example, the user-fee-supported Patient Science & Engagement Program ensures that the FDA engages with patients to understand and integrate patient perspectives regarding medical devices to help protect and promote public health. The program also leads the FDA’s Patient Engagement Advisory Committee and other patient engagement activities focused on medical device development and evaluation. In addition, prescription drug user fees support a number of patient focused drug development activities including the development of a guidance series related to patient experience data with the primary goal to ensure that patients’ experiences, perspectives, needs, and priorities are captured and meaningfully incorporated into drug development and evaluation.
In addition, user fees help fund certain FDA inspections. These inspections include those that help ensure the rights, safety, and welfare of participants in clinical trials, as well as pre-approval inspections of manufacturing establishments to assess a manufacturer’s ability to design and manufacture a product in accordance with the conditions specified in their marketing application and the requirements of FDA's Current Good Manufacturing Practice regulations.
What restrictions are there on how user fees may be spent by the FDA?
The FDA is required by law to spend user fee funds only on specified activities. For example, prescription human drug user fee funds can only be used for activities specified in the law, which include monitoring of research, review of human drug applications and post-market safety activities, to name a few. For medical device user fees, funds can only be used for the process for the review of device applications, which includes monitoring of research, review of device applications, and a defined set of post-market activities.
Learn more about specific user fee programs:
Prescription Drug User Fee Act (PDUFA)
PDUFA was created in 1992 and authorizes the FDA to collect fees from companies that produce certain human drug and biological products. Since the passage of PDUFA, user fees have played an important role in expediting the drug and biological product approval process. PDUFA, which must be reauthorized by Congress every five years, was renewed in 1997 (PDUFA II), 2002 (PDUFA III), 2007 (PDUFA IV), 2012 (PDUFA V), 2017 (PDUFA VI), and 2022 (PDUFA VII).
Medical Device User Fee Amendments (MDUFA)
Medical device user fees were first established in 2002 in the Medical Device User Fee and Modernization Act (MDUFMA) and must be reauthorized by Congress every five years. These fees help the FDA increase the efficiency of regulatory processes, with the goals of increasing patient access to safe and effective medical devices in the U.S. and encouraging innovation. The medical device user fees were renewed in 2007 with the Medical Device User Fee Amendments (MDUFA II), 2012 (MDUFA III), and 2017 (MDUFA IV).
Generic Drug User Fee Amendments (GDUFA)
GDUFA, the program authorizing collection of generic drug user fees, was signed into law in 2012. GDUFA is designed to facilitate the availability of safe and effective generic drugs to the public and enhance the predictability of the generic drug review process. GDUFA puts the FDA’s generic drug program on a firm financial footing and helps to ensure timely access to safe, high-quality, affordable generic drugs. The program was renewed in 2017 (GDUFA II) and must be reauthorized by Congress every five years.
Biosimilar User Fee Act (BsUFA)
The biosimilar user fee program was established in 2012 and authorizes FDA to assess and collect fees for biosimilar and interchangeable biological products (biosimilars). BsUFA facilitates the development of safe and effective biosimilar products for the American public. Biosimilars provide public health benefit by offering additional treatment options, potentially increasing patient access and lowering costs through competition. The program was renewed in 2017 (BsUFA II) and must be reauthorized by Congress every five years.
Over-The-Counter Monograph Drug User Fee Program (OMUFA)
In 2020, Congress passed legislation which reformed and modernized the way certain nonprescription, over the counter (OTC) drugs (known as OTC monograph drugs) are regulated in the U.S. and also authorized a user fee program, known as OMUFA, which enables the FDA to assess and collect user fees dedicated to supporting the agency’s OTC monograph drug activities. By supporting such FDA work, OMUFA helps provide the public with access to innovative OTC monograph drugs. The program must be reauthorized by Congress every five years.
Animal Drug User Fee Act (ADUFA)
ADUFA, which was originally signed into law in 2003, provides resources to support the FDA’s responsibilities to ensure that new animal drugs are safe and effective for animals, as well as to ensure that food from treated animals is safe for people to eat. The program was renewed in 2008 (ADUFA II), 2013 (ADUFA III), and 2018 (ADUFA IV), and reauthorizing legislation must be passed by Congress every five years.
Animal Generic Drug User Fee Act (AGDUFA)
AGDUFA, which was originally signed into law in 2008, authorizes FDA to assess and collect user fees to support the FDA’s responsibilities to ensure that generic new animal drugs are safe and effective for animals, as well as to ensure that food from treated animals is safe for people to eat. The program was renewed in 2013 (AGDUFA II) and 2018 (AGDUFA III), and reauthorizing legislation must be passed by Congress every five years.
In 2009, the Tobacco Control Act amended the Food, Drug, and Cosmetic Act to direct the FDA to assess and collect user fees on tobacco products that fall within six classes: cigars, pipe tobacco, cigarettes, snuff, chewing tobacco, and roll-your-own tobacco. Tobacco user fees are calculated based, in part, on market share and are not assessed on product applications like the medical product user fees. Domestic manufacturers and importers are assessed user fees based on the amount of tobacco products they have in interstate commerce that are subject to excise taxes. The agency’s tobacco program is entirely funded through these industry-paid user fees and tobacco regulation activities are the sole allowable use of these fees. Importantly, the annual amount of tobacco user fees is set in the statute and the tobacco user fee program does not have a sunset date, meaning it does not require reauthorization and does not expire. Although the FDA’s tobacco regulation activities include the regulation of Electronic Nicotine Delivery Systems (ENDS), the FD&C Act does not currently allow the agency to assess and collect user fees for ENDS. Tobacco user fees also fund FDA inspections of tobacco product manufacturing establishments and tobacco retailers to ensure compliance with laws and regulations.