February 14, 2007

MAKE IT 100%:

Bush budget plan's drug fees attacked (Julie Schmit, 2/14/07, USA TODAY)

Of the FDA's proposed $2.1 billion budget for fiscal 2008, 21.3% would come from user fees paid mostly by drug, medical device and food companies. That's about the same as in last year's proposed budget.

The FDA first required drugmakers in 1993 to pay fees to help fund reviews of new human drugs before they are approved for sale. User fees for animal-drug reviews began in 2003 and for medical-device reviews in 2002.

Now, the FDA seeks fees for generic-drug reviews, for food and animal-feed exporters seeking FDA certification, and for re-inspections of FDA-regulated facilities, including manufacturing plants, that fail a first FDA check. Drugmakers will pay the bulk of the $444 million in fees the FDA expects to raise in the fiscal year starting Oct. 1.

In addition to criticism from some members of Congress, the drug industry is questioning the growth of user fees, too. In the next fiscal year, drugmakers will fund almost 60% of the FDA's reviews of human-drug applications, estimates the Pharmaceutical Research and Manufacturers of America. That's up from about 40% 10 years ago. "There's concern about it getting this high," says Alan Goldhammer, PhRMA deputy vice president for regulatory affairs.

They should fund it all since it's their business that makes it necessary.

Posted by Orrin Judd at February 14, 2007 8:12 AM

re: "They should fund it all since it's their business that makes it necessary."

Actually, much of the FDA's regulatory activity isn't necessary, and we would be better off without it. If voters are stupid enough to impose the regulations, they should foot at least some of the bill for them.

Also, if the FDA were funded entirely by user costs, what incentive does it have to cut its own costs? It would make sense if non-FDA-approved drugs etc. could be sold, so that "FDA approved" would be a sort of quality brand name thing. In that case, the FDA would have a reason to streamline costs, because if the costs of getting FDA approval went too high, the mark-up would cause consumers to move to non-FDA-approved drugs, and their business would dry up. The FDA would in effect be spun off as a private agency providing consumer-research services to the public.

Posted by: Nathan Smith at February 14, 2007 10:30 AM

Actually, we all pay for it either way....either through taxes or through higher prices on the goods sold by the food and drug companies. The only issue is how it is apportioned among different individuals. If the cost of the FDA is funded through taxes, than those who pay more taxes will pay a higher share of the costs (on a per capita basis). If it's paid by the manufacturers and passed on through food and drug prices, then the ability of companies to stick those costs on consumers will depend on the elasticity of demand for the particular product.

Posted by: Foos at February 14, 2007 10:31 AM

Don't take drugs.

Posted by: oj at February 14, 2007 11:14 AM

oj, that's one way to keep costs down. It's a draconian one, but undeniably effective.

Posted by: erp at February 15, 2007 10:26 AM