Drug User Fee Reform: The Problem of Capture and a Sunset, and the Relevance of Priorities and the Deficit

New Mexico Law Review, Vol. 41, p. 327, 2011

21 Pages Posted: 26 Jan 2011 Last revised: 17 Feb 2012

Margaret Gilhooley

Seton Hall University - School of Law

Date Written: January 26, 2011

Abstract

The Food and Drug Administration now depends on user fees paid by drug companies to support more than half the salaries of the medical reviewers who advise the agency on the appropriateness of approving a drug. The funding creates a substantial risk of "capture" of the agency by the industry. Under the program, which started in 1992, drug companies pay a fee that permits the agency to hire additional reviewers to make more timely reviews on whether a drug can be approved. Under the law, the agency seeks to meet performance goals for the timing of reviews, giving the program the appearance of having a fee-for-service basis.

The legislative authorization for the fees expires every five years, and the agency and the industry negotiate behind closed doors on the renewal and the performance goals for the reviews. The need for renewal creates an opportunity for the passage of laws that might not have been enacted separately. Some believe the Administration may accept measures of debatable merit to avoid having to layoff needed reviewers. Limiting the user fee support to half the Government appropriation for the program, and making the program permanent have received support as ways to alleviate the capture and linkage problems.

This paper maintains that other reforms are needed before locking-in a permanent funding commitment. Making the drug fee program permanent can undercut Congress' responsibility to determine important budget allocations at a time when there is not enough. To provide better guidance on the benefits a drug may provide, the program should be based on a health review rationale rather than a fee-for-service rationale. A study is needed to determine better priority critria for reviews than the simple categories that now exist. The law should be clear that funding for the drug approval program is subject to the general cutbacks to deal with the deficit. The significance of the user fee program, and the reforms needed before it is made permanent warrant wide attention.

Keywords: Drug Approvals, Deficit, User Fees, Prescription drugs

Suggested Citation

Gilhooley, Margaret, Drug User Fee Reform: The Problem of Capture and a Sunset, and the Relevance of Priorities and the Deficit (January 26, 2011). New Mexico Law Review, Vol. 41, p. 327, 2011 . Available at SSRN: https://ssrn.com/abstract=1747065 or http://dx.doi.org/10.2139/ssrn.1747065

Margaret Gilhooley (Contact Author)

Seton Hall University - School of Law ( email )

One Newark Center
Newark, NJ 07102-5210
United States

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