95-422 STM
Updated June 9, 1998
CRS Report for Congress
Received through the CRS Web
Food and Drug Administration:
Selected Funding and Policy Issues
Donna U. Vogt
Analyst in Social Sciences
Science, Technology, and Medicine Division
Summary
Under the authority of the Federal Food, Drug, and Cosmetic Act (FFDCA), the
Food and Drug Administration (FDA) is responsible for ensuring the safety of foods,
drugs, medical devices, cosmetics, and other products.1 Those products account for 25
cents of every dollar U.S. consumers spend. FDA assesses the public health impact
from the use of these products, and tries to anticipate and prevent hazards to public
health. It evaluates and grants pre-market approval to many products, conducts
postmarket surveillance, evaluates reports of adverse reactions, and takes enforcement-
related actions when necessary. The Food and Drug Administration Modernization Act
of 1997 (FDAMA) created many regulatory changes and new tasks and deadlines for the
agency. In the President’s FY1999 budget request for FDA, the agency requested a total
of $1.264 billion, of which $970 million would be in budget authority, $281 million
would be collected in user fees, and $13 million would come from other reimbursable
activities. If funded, almost $50 million will be used for the President’s food safety
initiatives and $134 million will be used to reduce young people’s use of tobacco. This
report will be updated periodically.
Background
Presidential requests for FDA funding and the actual congressional appropriations
reflect four major trends since 1985:
! There have been substantial increases in the volume and complexity of FDA’s
traditional tasks, such as premarket application review and new product approvals.
Premarket reviews require trained personnel, particularly for drugs, medical
Federal Food, Drug
1
, and Cosmetic Act of 1938 (FFDCA), as amended, (21 U.S.C. 301 et seq.) gives FDA
its broad regulatory and enforcement authority. In 1988 the FFDCA was amended by the Food and Drug
Administration Act, Title V of the Health Omnibus Programs Act of 1988 (P.L. 100-607). That amendment
established FDA as a unit of the Public Health Service (PHS) within the Department of Health and Human
Services and required that the FDA Commissioner be appointed by the President and confirmed by the Senate.
Congressional Research Service ˜ The Library of Congress

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devices, and food additives. Increases in the number of applications for approval
of those products and new biotechnology products have also contributed to the
growing competition for agency resources.
! Special emergencies arise every year. When E. coli O157:H7, in bottled,
unpasteurized apple cider, caused an outbreak of food borne illness in November
1996, FDA food scientists and enforcement personnel worked in cooperation with
other officials of federal, state, and local governments to detect the cause and to
warn consumers nationwide.
! FDA has been given new tasks. In November 1997, Congress passed the Food and
Drug Administration Modernization Act of 1997 (FDAMA), which changed how
FDA reviews and regulates drugs, medical devices, and certain food additives.
The Act directed FDA to publish 42 regulations, 23 guidances, and 13 other
publications in the Federal Register, and to complete 25 other tasks by specific
deadlines. In December 1997, FDA implemented a new systematic preventive
approach for seafood safety called Hazard Analysis and Critical Control Point
(HACCP) because food borne microbial pathogens have emerged as a public
health concern. Under this approach, food firms must analyze and identify points
in their food production process where risks of hazards are greatest, and they
monitor each point to assure that food borne hazards do not occur. Firms must
make HACCP plans and records available to FDA’s investigators during
inspections.
! Public expectations have grown with regard to the role that FDA should play in
protecting the public from all types of drug, device, and food risks. The public
expects FDA to approve new therapies for serious and life-threatening diseases
more rapidly than in the past.
Funding
Table 1 shows FDA appropriation funding from FY1985 through FY1998, and
requested funding for FY1999. In current dollars, appropriations rose approximately
146% over that time period, while in constant (FY1992) dollars, the increase was 66%.
Most of this change occurred between 1990 and 1994, the period during which Congress
significantly augmented FDA’s responsibilities. In constant (FY1992) dollars, FDA
appropriations were flat in FY1995 and FY1996, and declined by 2% in FY1997. Both
Houses gave FDA an increase of 4% for FY1998 in current dollars but less than a 1%
increase in 1992 dollars. The President is requesting a 23% increase for FY 1999 over
last year’s appropriation. The reason for the requested increase is in part that the number
of applications that the agency must review for all types of FDA-regulated products has
been increasing 12% each year for the last 4 years.
User Fees
The President’s FY1999 budget request to Congress contained a request for $281
million to be collected in user fees to augment FDA’s resources for performing specific
services. Approximately $153 million would be used for standing programs, including
the Prescription Drug User Fee Act (PDUFA) and the Mammography Quality Standards

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Act (MQSA) of 1992, and $128 million would be used to help fund the agency’s regular
programs in new “general user fees.”
Table 1. FDA Funding in Current and Constant (1992) Dollars,
Fiscal Years (FY) 1985-1998, Request for FY1999
(in thousands of dollars)
Current Dollars
FY1992 Constant
Dollarsb
Fiscal
President’s
Congressional
Percent
Congress
Percent
Years
Request to
Appropriationa
Change
-ional
Change From
Congressa
From
Appropri
Previous Year
Previous
a-tion
Year
1985
392,554
409,694
7
523,303
3
1986
417,400
420,306c
2
521,795
-0.3
1987
453,575d
436,430
4
527,535
1
1988
488,604
476,116
9
554,720
5
1989
507,456
507,456
7
570,047
3
1990
582,183d
592,691
17
636,481
12
1991
680,420d
682,131
15
702,214
10
1992
763,216d
751,574
10
751,574
7
1993
782,650d
817,647
9
796,694
6
1994
915,914d
918,698
12
874,867
10
1995
974,582d
943,398
3
876,601
0.2
1996
1,011,756d
963,988
2
877,150
0.1
1997
1,010,472d
967,197
0.3
858,662
-2
1998E
1,034,029d
1,008,965
4
866,809
0.9
1999R
1,236,125d




Data
a
is for salaries, expenses, and GSA rent. It does not include funds for buildings and facilities,
reimbursable activities or certain collected fees.
Prepared by the Congressional Research Service us
b
ing the Composite Deflator as published in Table 10.1
in the FY1998 Historical Tables of the President’s Budget. E= Estimated. R = Requested.
After
c
1986, the numbers indicate amounts available after the Gramm-Rudman-Hollings sequesters. For
example, the amounts originally appropriated were $420,306,000 in FY1986 and $585,883,000 in
FY1990.
dThe numbers include the following amounts to be collected through user fees: 1987:$31,425,000;
1990:$100,000,000; 1991:$157,175,000; 1992:$197,500,000; 1993:$200,000,000;
1994:$254,000,000; 1995:$337,923,000; 1996:$141,667,000; 1997:$145,749,000;
1998:$244,272,000; 1999:$293,380,000.

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Source: Data from 1985 through 1995 is from the FY1995 Congressional Budget Submission, pp. 31-33.
The FY1995-FY1999 appropriation levels are from the relevant conference reports.
In FDAMA, Congress reauthorized PDUFA, which since 1992 has been FDA’s
largest and most successful user fee program. PDUFA allows FDA to charge
pharmaceutical companies user fees to expedite the drug development process through
review of human drug and biologic applications. PDUFA fees are used to supplement
existing FDA appropriations. PDUFA mandates that FDA complete certain performance
goals
2 and that Congress annually approve the total collections for the program in agency
appropriations bills. Both FDA and the pharmaceutical industry consider PDUFA a
success because 95% of the applications for new drugs and biologics were reviewed
within the time frames specified in the law. For FY1999, the President requested $132
million in fees to be authorized to be collected under PDUFA.
The Mammography Quality Standards Act (MQSA) of 1992 gave FDA authority
to collect user fees to pay for certifying mammography facilities and to set national
standards that each facility must meet. The current fees pay for annual inspections of
approximately 8,300 mammography facilities by federal or state inspectors to ensure
compliance with national quality and safety standards. Authorization for this program
expired on September 30, 1997. On November 9, 1997, the Senate passed the
Mammography Quality Standards Reauthorization Act of 1998 (S. 537). On November
12, 1997, the Senate referred the bill to the House Commerce Subcommittee on Health
and the Environment where the House version, H.R. 1289, has already been referred. In
the FY1999 budget request, the President requested $14.4 million to continue annual
inspections of mammography facilities.

The President’s FY1999 request also includes $6.6 million to be collected from
requesters for certifying color additives, exports, and for information sent to requesters
under the Freedom of Information Act (FOIA).
FDA has requested “general user fee” authority in its annual budget requests to
Congress in 1987 and from 1990 to the present. (See Table 1.) These repeated requests
are because user fee programs have been successful in supplementing the agency’s
budget. Supporters of user fee programs think that the beneficiaries of agency services
should pay for the services they receive: FDA approval increases consumer confidence,
improves the competitive position of U.S. firms worldwide, and gives firms significant
protection from product liability. Others are concerned that such dependence on fees may
lead FDA to focus on facilitating commerce of consumer products and medical therapies
at the cost of diminishing its efforts to protect the public health.
For FY1999, FDA requested “general user fee” authority to collect $128 million in
fees. The agency justified this new request for “general user fees” by stating that the
industry should share some of the regulatory cost with the taxpayer because industry
derives a direct commercial benefit from consumer’s confidence in FDA’s review process
and product surveillance activities.
2 For FY1999, the performance goals include the review and processing of 90% of new drug
applications within one year of submission and 90% of new drug applications for priority drugs
within 6 months.

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Members of both the House and Senate Appropriation Committees have not looked
favorably on the request for “general user fees.” The Chairman of the House Committee
on Appropriations, Subcommittee on Agriculture, Rural Development, Food and Drug
Administration, and Related Agencies, Representative Joe Skeen, stated at a recent
hearing that appropriations for new general user fees “were not going to happen.” 3
Previously, both the House and Senate Appropriations Subcommittees had expressed
displeasure that the Administration had not proposed a legislative package to authorize
such user fees.
Agency Staffing
FDA Total Full-Time Equivalent Positions
FY 1985-1999, with 1999 Requested.
Employee positions referred to
as full-time-equivalents (FTEs), are
Thousands
10
shown in Figure 1. From FY1988-
94, many new employees were hired
8
to implement programs established
6
by Congress, particularly the Nutri-
4
tion Education and Labeling Act,
PDUFA, and MQSA. Since 1996,
2
staffing at the agency has leveled off
0
with user fees adding resources to
85 86 87 88 89 90 91 92 93 94 95 96 97 8999Req
Source: Food and Drug Administration.
FISCAL YEARS
hire a few more employees. In FY-
1994, user fees paid for 244 FTE
Figure 1
positions; in FY1995, 453 positions;
in FY1996, 685 positions; in FY1997, 677 positions; and in FY1998, 825 positions. For
FY1999, FDA is requesting that 2,128 FTE’s be paid for by user fees.
Current Legislative Issues
The 105 Congress is facing t
th
wo related FDA issues. First, Congress is being asked
to appropriate a 23% increase in FDA’s appropriations for FY1999 over FY1998. The
President’s request is for $1.264 billion, of which $970 million is in budget authority,
$281 million in user fees, and $13 million in other reimbursable activities. The request
includes funding increases for two presidential initiatives and resources to carry out tasks
mandated by the Food and Drug Administration Modernization Act of 1997 (FDAMA,
P.L. 105-115). (See CRS Report 98-263 STM, Food and Drug Administration
Modernization Act of 1997 — The Provisions
.) Second, Congress is being urged to
monitor closely how the agency is implementing FDAMA. The new law has created
many regulatory changes and deadlines for the agency.
As part of this FY1999 budget request, the President has asked for authority to
collect “general user fees” to pay for basic agency functions. Some in Congress are
concerned that without “general user fee authorization” and with increased funding for
specific initiatives, the base resources for the agency will decline and that will affect other
program areas. If the appropriation subcommittees do not authorize the collection of user
fees, Congress may be asked to appropriate funds to cover the cost of some of those basic
3 Comment by Representative Joe Skeen at a February 25, 1998, hearing before the House
Appropriations Subcommittee on Agriculture.

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functions. Since the conference committee has not yet met to agree on a FY 1999 budget
resolution, there is concern that there may not be enough resources to cover these
functions.
One such program, for which the President has asked for an increase, is the Food
Safety Initiative (FSI). The President requested a total of $50 million for FDA’s FSI for
FY 1999, an increase of $25 million. The agency intends to use $25 million to continue
to monitor the nation’s food supply, particularly seafood plants. The other $25 million
would be spent on expanding oversight of fresh produce, particularly imports. In
FY1996, approximately 430,000 entries of fresh produce were imported. FDA inspectors
examined only 0.2% of these entries for pathogen contamination.
FDA also requested an additional $100 million for a total of $134 million to fund
tobacco-related outreach and enforcement activities. By the end of FY1998, the agency
will have contracts with all 50 states to enforce its regulation aimed at reducing underage
tobacco use. Some Members believe that state and local governments could absorb more
FDA tobacco-related responsibilities. Critics in the medical device industry are
concerned that FDA may over stretch its resources with those tobacco-related
responsibilities. The comprehensive tobacco legislation currently under consideration by
the Senate would expand the agency’s anti tobacco program.
A related concern has to do with funding activities mandated by FDAMA. FDA
must now meet many additional statutory requirements. The Act directed FDA to publish
series of regulations, and guidances, and to execute other tasks that include negotiating
international recognition agreements, harmonizing global standards, reviewing post
marketing studies, and providing reports to Congress. Some say that FDA, however, has
not yet been given resources necessary to carry out some of these responsibilities. Many
in the regulated industries, patient groups, and consumer organizations are lobbying for
increased FDA appropriations for FY 1999 to help carry out these tasks. The
Administration, however, believes its request will be adequate.
Many interest groups are urging Congress to monitor closely how the agency
implements FDAMA’s new regulatory requirements for drug and medical device
approvals. For example, FDAMA directs FDA to identify drugs that should undergo
further studies to determine their optimum use in pediatrics. On May 20, 1998, FDA
named 330 drugs that need pediatric research; industry has criticized the agency for not
issuing guidance on how the drug list should be used by manufacturers. Some in Congress
have also complained that the list did not carry out the intent of FDAMA. Other FDAMA
mandates may have long term effects. FDAMA allows the dissemination of journal
articles about uses of unapproved drugs if the manufacturer promises to do studies to
support the claim in the article. Critics point out that an article’s publication on an
unapproved use of a drug in a peer-reviewed journal is no guarantee of safety or efficacy.
Supporters claim that, with this incentive, manufacturers will now make an effort to get
off-label uses on the label more expeditiously.
Some in Congress are also concerned about what appears to be the agency’s
priorities on medical devices. FDA issued a guide on managed care promotion mandated
in FDAMA that some congressional staff believe went beyond the Act’s requirements.
The agency has issued, without complaint, several other guidance documents
implementing FDAMA’s requirements. One guidance laid out how industry should

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collaborate on applications that declare their conformity with other devices; another set
out the procedures for how the industry should file manufacturing changes in premarket
approval applications.