Fiscal Cliff Threatens FDA Reviews

According to a Bloomberg report, a $6.4 billion accord for U.S. drug and medical-device reviews may fall apart three months after taking effect as lawmakers argue over $1.2 trillion government-wide budget cutbacks. Drug and device reviews, which rely heavily on fees paid by companies, may slow or halt in January because the FDA must receive certain funding from Congress before it can spend any of the industry money collected as user fees. For instance, pharmaceuticals such as Pfizer Inc. and Eli Lilly & Co. will pay almost $2 million for each new drug application to the FDA beginning Oct. 1, as well as a $527,000 establishment fee and $98,000 product charge. Also at risk are fees for medical-device and cigarette-safety reviews.

The Office of Management and Budget missed an early September deadline to submit a plan to Congress for the first $109 billion in mandated spending reductions, known as sequestration. The FDA, thus, may lose 8 percent of the taxpayer money appropriated, or a reduction of $200 million for fiscal 2013.

As noted, user fees play a large role in the FDA’s upcoming budgets. The fees were increased and expanded to help the FDA speed product review times, especially after U.S. drug approvals rose to a seven-year high last year.

For fiscal 2013, the Obama administration requested about $2.5 billion in taxpayer funds for the FDA. An additional $2 billion in industry user fees are to be collected as well; including $720 million for brand-name drugs, $299 million for generic medicines, and $98 million from medical-device companies.