Order Code RL33914
The Prescription Drug User Fee Act (PDUFA):
Background and Issues for
PDUFA IV Reauthorization
March 13, 2007
Susan Thaul
Specialist in the Regulation of Prescription Drugs and Biologics
Domestic Social Policy Division

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The Prescription Drug User Fee Act (PDUFA):
Background and Issues for PDUFA IV Reauthorization
Summary
The Prescription Drug User Fee Act (PDUFA), first enacted in 1992 and
reauthorized twice (referred to as PDUFA II and PDUFA III), gives the Food and
Drug Administration (FDA) a revenue source — fees paid by the pharmaceutical
manufacturers — to supplement, not replace, direct appropriations.
The impetus behind the 1992 law was the length of time from a manufacturer’s
submission of a New Drug Application (NDA) or a Biologics License Application
(BLA) to FDA and the agency’s issuing its decision on approval or licensure, which
FDA attributed to constrained review-staff time. This delay affected patients and the
drug manufacturers.
PDUFA I goals were to diminish the backlog of applications at FDA and to
increasingly shorten the time from submission to decision. PDUFA II expanded the
goals to include activities related to the investigational phases of a new drug’s
development; it also added the goal of increasing FDA communications with industry
and consumer groups. PDUFA III authorized activities both at earlier (preclinical
development) and at later (up to three years after drug approval) stages of drug
research and development. FDA set these performance goals in conjunction with the
drug manufacturers, and the Secretary of Health and Human Services (HHS)
submitted them in letters to the chairs of the relevant congressional authorizing
committees. The Secretary also submits annual PDUFA performance and financial
reports.
Based on its stated goals, PDUFA has generally been viewed as a success. FDA
has added review staff and reduced its review times. It has also standardized the
information required for applications and developed computer tools to use
electronically submitted data.
Criticism of PDUFA fits into three categories. First, the fees have not fully
covered FDA’s increased costs, despite the provisions that Congress implemented.
Second, because PDUFA has directed a majority of the collected fees toward
premarket review of applications, some people see PDUFA as responsible for what
they view as the agency’s increasing focus on premarket activities in contrast to the
relatively slower increase in postmarket surveillance and safety studies and
enforcement. They point to the fees’ funding 20% of the salaries and expenses in
FDA overall and 30% within the human drug program (with a yet higher proportion
among the premarket drug review staff). Finally, some critics think that, through its
provision of fees, the industry has too much influence over FDA actions.
In January 2007, FDA released its proposal for PDUFA IV. The goals,
developed through consultation with Congress, industry, and healthcare consumers
and professionals, focus on securing FDA’s sound financial footing, and enhancing
both premarket review and the postmarket safety system.

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Contents
Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Prescription Drug User Fees: Law and Practice
of User Fee Collection and Use at FDA . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
PDUFA I . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
PDUFA II . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
PDUFA III . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Performance Goals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Current Status . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Impact of PDUFA I, II, and III . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
PDUFA: Support and Criticism . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Support . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Criticism . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
PDUFA IV Issues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
FDA PDUFA IV Proposal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Proposed Recommendations to Ensure
Sound Financial Footing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Enhancing the Process for Premarket Review . . . . . . . . . . . . . . . . . . . 14
Modernizing and Transforming
the Postmarket Drug Safety System . . . . . . . . . . . . . . . . . . . . . . . 14
Possible Congressional Approaches . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
List of Figures
Figure 1. Drug Research and Development Timeline,
Industry-FDA Interaction, and PDUFA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Figure 2. Median Approval Times for NDAs and BLAs . . . . . . . . . . . . . . . . . . . . 8
Figure 3. History of PDUFA Total Process and
User Fee-Funded FTEs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Figure 4. History of Funding for Review of Human Drugs . . . . . . . . . . . . . . . . 10
List of Tables
Table 1. PDUFA Performance Goals for FDA’s Review
and Action, FYs 1994-2007 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Table 2A. Budget Authority, User Fees, and Total Program Level
for FDA Salaries and Expenses, Selected Years FY1996-FY2006 . . . . . . . 12
Table 2B. Budget Authority, User Fees, and Total Program Level
for FDA’s Human Drug Program Salaries and Expenses,
FY2002-FY2006 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12

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The Prescription Drug User Fee Act
(PDUFA): Background and Issues
for PDUFA IV Reauthorization
Introduction
The 1992 passage of the Prescription Drug User Fee Act (PDUFA) gave the
Food and Drug Administration (FDA) a revenue source it had sought for over 20
years. Originally opposed by the drug manufacturing industry, PDUFA passed after
industry groups were persuaded that the user fees assessed by the new law,
accompanied by performance goals that the agency would negotiate with the industry,
would bring new resources aimed at decreasing the time FDA took to approve new
drugs and license new biological products (e.g., vaccines).
The law had its origin in the dissatisfaction, which peaked in the late 1980s, of
industry, consumers, and FDA itself with the long time between a manufacturer’s
drug or biologics marketing application submission to FDA and the agency’s
decision. Finding out whether FDA would approve the new drug or license the new
biologic for sale in the United States then took a median time of 29 months.1 Patients
had to wait for access to the products. For some patients, a drug in review — and
therefore not available for sale — could be the difference between life and death.
Manufacturers, in turn, had to wait to begin to recoup the costs of research and
development. At that time, FDA estimated that each one-month delay in a review’s
completion cost a manufacturer $10 million.2
FDA argued that it needed more scientists to review the drug applications that
were coming in and the ones already backlogged in its files. It had not received
sufficient appropriations to hire them. But while for years FDA had asked Congress
for permission to implement user fees, the pharmaceutical industry was generally
opposed to them, believing that the funds might go into the Treasury to reduce
federal debt rather than help fund drug review.
The 1992 compromise became possible with the addition of performance goals,
under which target completion times for various review processes would be set. The
agreement also held that the fees would supplement — rather than replace —
resources Congress routinely gave FDA.
1 Food and Drug Administration (FDA), Third Annual Performance Report: Prescription
Drug User Fee Act of 1992, Fiscal Year 1995 Report to Congress, Dec. 1, 1995, at
[http://www.fda.gov/ope/pdufa/report95.html].
2 Philip J. Hilts, “Plan to Speed Approval of Drugs: Makers Would Pay Fees to U.S.,” New
York Times, Aug. 11, 1992, p. A1.

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This report begins with a brief history of FDA’s prescription drug user fee
program. The program was originally authorized for five years, and Congress
extended it in two subsequent five-year reauthorizations.3 The current authority
expires October 1, 2007, and Congress will likely debate the form and substance of
any reauthorization. FDA released its proposal for a reauthorized program in January
2007. In anticipation of those debates, this report summarizes the pros and cons that
academics, government and industry policy analysts, and consumer and other
interested groups raise over what many are calling “must-pass” legislation to ensure
that there is no interruption in FDA’s collection and use of the fees to expedite
market approval and postmarket monitoring of drugs and biologics.
Prescription Drug User Fees: Law and Practice
of User Fee Collection and Use at FDA
PDUFA I
Congress first authorized FDA to collect fees from pharmaceutical companies
in 1992 with the Prescription Drug User Fee Act (PDUFA, P.L. 102-571), which
amended the Federal Food, Drug, and Cosmetic Act (FFDCA). Its goals were to
speed up FDA’s review of new drug applications for approval and to diminish its
backlog of applications. PDUFA specified the activities on which FDA could spend
the fees; most of the collections were to be used to hire additional reviewers.
To keep funding predictable and stable, Congress required three kinds of
prescription drug user fees, and specified that they each make up one-third of the
total fees collected:
! application review fees: a drug’s sponsor (usually the
manufacturer) would pay a fee for the review of each new or
supplemental drug-approval or biologic-license application it
submitted;
! establishment fees: a manufacturer would pay an annual fee for
each of its manufacturing establishments; and
! product fees: a manufacturer would pay an annual fee for each of
its products that fit within PDUFA’s definition.
For FY1993, the standard application fee was approximately $100,000. The law
provided exceptions — either exemptions or waivers — for applications from small
businesses, or for drugs aimed at orphan diseases or unmet public health needs.
While PDUFA included estimated annual fees, it specified that FDA’s annual
appropriations legislation would set the total fees allowed each year. It also set two
statutory triggers:
3 PDUFA is codified at 21 U.S.C. 379g and 379h.

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! FDA would assess user fees only if the agency’s total annual
appropriations — excluding user fees — for salaries and expenses
for a given year were at least equal to its total appropriations for
FY1992, multiplied by an inflation adjustment factor; and
! FDA would spend on defined activities supporting new drug and
biologics applications from its annual allocation of appropriated
funds an amount at least equal to what it had spent in FY1992,
adjusted for inflation.
PDUFA’s basic goal was, each year, to reduce the time from the sponsor’s
submission of an application to FDA’s decision regarding approval. Rather than
listing specific performance goals in statutory language, Congress stated in the bill’s
“Findings” (Section 101) that:
(3) the fees authorized by this title will be dedicated toward expediting the
review of human drug applications as set forth in the goals identified in the
letters of September 14, 1992, and September 21, 1992, from the Commissioner
of Food and Drugs to the Chairman of the Energy and Commerce Committee of
the House of Representatives and the Chairman of the Labor and Human
Resources Committee of the Senate, as set forth at 138 Cong. Rec. H9099-H9100
(daily ed. September 22, 1992).
This direction is not codified in the Federal Food, Drug, and Cosmetic Act; instead,
Congress, with that “finding,” incorporated the performance goals listed in FDA
Commissioner David Kessler’s September 1992 letters to the committee chairs.4 The
predominant goal was that, by 1997, FDA would review 90% of standard
applications within 12 months and 90% of priority applications within six months of
application submission.5
PDUFA II
Congress reauthorized PDUFA in 1997 as Title I of the Food and Drug
Administration Modernization Act (FDAMA, P.L. 105-115). In what is called
PDUFA II, FDAMA:
! stated that the fees were to be used to expedite the drug development
and application review process as laid out in performance goals
identified in letters sent by the Secretary of the Department of Health
and Human Services (HHS) to the two authorizing committees;
4 James L. Zelenay, Jr., “The Prescription Drug User Fee Act: Is a Faster Food and Drug
Administration Always a Better Food and Drug Administration?” Food and Drug Law
Journal, vol. 60, no. 2, 2005, pp. 261-338.
5 FDA policy states: “A ‘priority’ designation is intended to direct overall attention and
resources to the evaluation of applications for products that have the potential for providing
significant preventative or diagnostic therapeutic advance as compared to ‘standard’
applications” (FDA, “Review Management: Priority Review Policy,” Manual of Policies
and Procedures, MAPP 6020.3, Center for Drug Evaluation and Research, April 22, 1996,
at [http://www.fda.gov/cder/mapp/6020-3.pdf], hereinafter “CDER MAPP 6020.3").

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! ordered the goals to be published in the Congressional Record; and
! required HHS to send two annual reports — performance and fiscal
— to Congress.
In the 1997 reauthorization, Congress mandated tighter performance goals, more
transparency in the drug review process, and better communication with drug makers
and patient advocacy groups. Congress expanded performance goals for PDUFA II
to include activities related to the investigational phases of a new drug’s
development, in addition to the later phases of a completed application.
PDUFA III
PDUFA III, the most recent five-year reauthorization, passed as Title V of the
Public Health Security and Bioterrorism Preparedness and Response Act of 2002
(P.L. 107-188). In it, Congress allowed FDA to adjust annual revenue targets based
on changes in workload. Again, rather than spelling out specific performance goals,
Congress referred in the legislation’s “Findings” (Section 502(4)) to the goals
specified in the HHS Secretary’s letters to the relevant congressional committee
chairs and also made public in the Congressional Record. The Conference Report
for PDUFA III “... for the first time require[d] the agency to meet with interested
public and private stakeholders when considering the reauthorization of this program
before its expiration.”6
The 2002 law continued to restrict FDA’s use of collected fees to activities
related to the “process for the review of human drug applications.” In its FY2004
report to Congress, FDA listed such activities. They include investigational new
drug (IND), new drug application (NDA), biologics license application (BLA),
product license application (PLA), and establishment license application (ELA)
reviews; regulation and policy development activities related to the review of human
drug applications; development of product standards; meetings between FDA and
application sponsor; pre-approval review of labeling and pre-launch review of
advertising; review-related facility inspections; assay development and validation;
monitoring review-related research; and collecting, developing, and reviewing safety
information for up to three years on drugs approved after October 1, 2002 (PDUFA
III).7 FDA review, therefore, covers a drug’s preclinical development, clinical
development, marketing applications, and post-approval safety surveillance and risk
management.8
6 H.Rept. 107-481, Public Health Security and Bioterrorism Preparedness and Response Act
of 2002, conference report to accompany H.R. 3448, May 21, 2002.
7 FDA, “Allowable and Excluded Costs for the Process for the Review of Human Drug
Applications,” Appendix C to FY 2004 PDUFA Financial Report, March 2005, at
[http://www.fda.gov/oc/pdufa/finreport2004/appendixC.html].
8 FDA, “Prescription Drug User Fee Act (PDUFA): Adding Resources and Improving
Performance in FDA Review of New Drug Applications,” white paper, Nov. 10, 2005, at
[http://www.fda.gov/cder/pdufa], hereinafter “FDA, PDUFA White Paper.”

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In the 2002 reauthorization, Congress added some new provisions to PDUFA.
It:
! allowed biotechnology companies to request that FDA select an
independent consultant (for which the sponsor would pay) to
participate in FDA’s review of protocols;
! authorized two pilot programs for the continuous (“rolling”) review
of new drug applications for fast track products;
! allowed FDA to use fees to support postmarketing surveillance
activities, thereby allowing the agency to double the number of staff
monitoring side effects of drugs already on the market;
! encouraged companies to include risk management plans in their
pre-NDA/BLA meetings;
! allowed the use of fees to develop databases documenting drugs’
use;
! allowed the use of fees for risk management oversight in the “peri-
approval” period (i.e., two to three years post-approval);
! provided for “first cycle,” preliminary reviews;
! required the HHS Secretary to note on FDA’s website if a sponsor
did not meet an agreed-upon deadline to complete a study, and to
note if the Secretary considers the reasons given for study
incompleteness to be unsatisfactory; and
! required any sponsor who failed to complete timely studies to notify
health practitioners both of this failure and of unanswered questions
related to the clinical benefit and safety of the product.
The top and middle sections of Figure 1 illustrate the five stages of drug
development, beginning with basic research and continuing through preclinical
development (which could be research in the laboratory or with animals), clinical
research (the Phase 1, Phase 2, and Phase 3 trials that involve people), and FDA
review; and the related industry-FDA interactions.9 The bottom third displays the
span of industry R&D activities over which the laws allowed PDUFA fees to cover
FDA activities. The law authorized FDA to use PDUFA I fees to fund only those
activities from NDA submission through the review decision; PDUFA II allowed
FDA to use the funds for meetings with manufacturers during the clinical
development stages, going, therefore, from the investigational new drug (IND)
submission through review; and PDUFA III extended the time range at both ends, to
include the pre-clinical development period and up to three years after marketing
begins. FDA’s proposal for the next reauthorization addresses extending the
postapproval period.
9 FDA, PDUFA White Paper, 2005, Figure 3.1.

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Figure 1. Drug Research and Development Timeline,
Industry-FDA Interaction, and PDUFA
FDA Filing
Prototype
Clinical Development
Basic
Preclinical
Approval &
Design or
Research
Development
Launch
Discovery
Phase 1 Phase 2 Phase 3
Preparation
Industry - FDA
Pre-IND Meeting
End of
Safety Update
Interactions
Phase 2a
During
Meeting
Development
Initial
Market
IND
End of Phase 2
Application
Submissions
Meeting
Submissions
Ongoing
Pre-BLA or NOA
Submission
Meeting
IND Review Phase
Application
Review
Phase
PDUFA I
PDUFA II
PDUFA III
PDUFA IV (proposed)
Source: Adapted by CRS from FDA, PDUFA White Paper, 2005, Figure 3.1.
Performance Goals
In preparation for each PDUFA reauthorization, FDA and manufacturers meet
to discuss workload and revenue needed. FDA then submits a letter to the
authorizing committees that presents performance goals to review and take action on
a specified percentage of complete applications within a specified number of
months. Table 1 shows the goals since PDUFA began in 1993. Beginning in 1997,
the goals distinguish between standard and priority applications, assessed by a
medical group team leader when FDA receives an application.10
10 FDA, CDER MAPP 6020.3, April 22, 1996.

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Table 1. PDUFA Performance Goals
for FDA’s Review and Action, FYs 1994-2007
PDUFA
Fiscal
Completion
Goal, in
Type of application
version
year
goal (%)
months
1994
unspecified
55
12
I
1995
unspecified
70
12
1996
unspecified
80
12
NDA
PLA/ELA
standard
90
12
1997
priority
90
6
standard
90
12
1998
priority
90
6
12
standarda
90
1999
30
10
priority
90
6
II
12
standarda
90
NDA
2000
50
10
PLA/BLA
priority
90
6
12
standarda
90
2001
70
10
priority
90
6
standard
90
10
2002
priority
90
6
III
2003-
standard
90
10
2007
NDA BLA
priority
90
6
Sources: FDA, “Appendix A. PDUFA Performance Goals, FY1993-FY1997,” Third Annual
Performance Report: Prescription Drug User Fee Act of 1992, Fiscal Year 1995 Report to Congress,
Dec. 1, 1995; FDA, “PDUFA Reauthorization Performance Goals and Procedures,” enclosure to letter,
created Nov. 16, 1997, last updated July 7, 2005; and FDA, “PDUFA Reauthorization Performance
Goals and Procedures,” enclosure to June 4, 2002 letter transmitting the PDUFA III goals and
procedures; all at [http://www.fda.gov/cder/pdufa/default.htm].
Note: NDA — New Drug Applications; BLA — Biologics License Applications; PLA — Product
License Applications; ELA — Establishment License Applications.
a. For FY1999-FY2001, there are two goals for standard applications (e.g., for applications completed
in FY1999, the FDA goal is to review and act on 30% within 10 months and on 90% within 12
months).
Current Status
To prepare its annual appropriations request, FDA calculates the total fee
revenues, adjusting for inflation. The per-review fee in the upcoming year is based
on FDA’s estimate of the number and type of applications to be submitted that year.

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CRS-8
User-fee revenue contributes significantly to FDA’s budget. The FY2006
program level for FDA’s human drugs program was $517,557,000, of which
$219,841,000 (42.5%) was from user fees (the remainder was from direct
appropriations).11 Fee rates for FY2007 are:12
per application requiring clinical data
$896,000
per application not requiring clinical data
$448,100
per application supplements requiring clinical data
$448,100
per establishment
$313,100
per product
$49,750
Impact of PDUFA I, II, and III
Based on its stated goals, PDUFA has been generally viewed as a success. FDA
has added review staff and reduced its review times. Median time from an NDA or
BLA submission to FDA’s approval decision was 29 months in 1987; for the first
two years of PDUFA I, it fell to 17 months.13 In later years, FDA presented separate
calculations for standard applications and priority applications. Figure 2 shows
median approval times for FY1993 through FY2003.14
Figure 2. Median Approval Times for NDAs and BLAs
Source: FDA, PDUFA White Paper, 2005, Figure 1.3.
11 FDA, “Consolidated Budget in Brief,” Office of Management Budget Formulation and
Presentation, FY2007, at
[http://www.fda.gov/oc/oms/ofm/budget/2007/PDF/2ConsolidatedBIB.pdf].
12 FDA, “Prescription Drug User Fee Rates for Fiscal Year 2007,” Federal Register, vol. 71,
no. 148, Aug. 2, 2006.
13 FDA, Third Annual Performance Report: Prescription Drug User Fee Act of 1992, Fiscal
Year 1995, Report to Congress, Dec. 1, 1995,
at [http://www.fda.gov/ope/pdufa/report95.html].
14 FDA, PDUFA White Paper, 2005, Figure 1.3.

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FDA attributes the shorter approval times to both increased FDA staff time
available for application review and increasingly more complete applications, also
a reflection of FDA staff activities with the sponsor before it submits the NDA or
BLA. In its FY2002 performance report to Congress, FDA commented on the spike
in approval times, as seen in the FY2001 data, citing an “imbalance between
resources and workload [that] resulted in significant stress to the program.”15
Figure 3 shows the changes in FDA staffing (expressed as full-time equivalents
[FTEs]) over the years since PDUFA began. While the number of PDUFA-supported
staff has increased steadily, the number of positions funded by direct appropriations
has stayed about the same. This reflects the triggers written into PDUFA that require
FDA to maintain the budget and level of pre-approval review activities that existed
in the year before PDUFA’s enactment.16
Figure 3. History of PDUFA Total Process and
User Fee-Funded FTEs
Source: FDA, PDUFA White Paper, 2005, Figure 1.2.
15 FDA, FY 2002 Performance Report to Congress for the Prescription Drug User Fee Act
of 1992 as reauthorized and amended by the Food and Drug Administration Modernization
Act of 1997, at [http://www.fda.gov/oc/pdufa/report2002/pdf/report.pdf].
16 FDA, PDUFA White Paper, 2005, Figure 1.2.

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Figure 4 — showing user fee and direct-appropriations funding for the review
of human drugs — illustrates a similar point.17
Figure 4. History of Funding for Review of Human Drugs
Source: FDA, PDUFA White Paper, 2005, Figure 1.1.
PDUFA: Support and Criticism
PDUFA has attracted both criticism and praise from industry, FDA staff,
consumers, and Members of Congress. These stakeholders and other FDA observers
will likely continue to air their mixed reactions — about PDUFA goals, performance,
administrative procedure, and budget — during discussions of reauthorization. Some
of the major reactions are discussed below.
Support
Support for PDUFA focuses on the following administrative changes at FDA
that are attributable to the added revenues provided through user fees: FDA now
completes it reviews of NDA/BLA applications more quickly and runs less of a
backlog; it has standardized the medical and statistical information that needs to be
included with NDAs; and it has developed computer tools to help standardize,
manage, and track electronically submitted data for application review.
17 FDA, PDUFA White Paper, 2005, Figure 1.1.

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As a result of PDUFA, industry faces shorter and more predictable review times.
It has treated the per-application fee — about $100,000 FY1993 and almost $900,000
FY200718 — as an acceptable cost relative to the estimated $10 million monthly cost
of delay in the years immediately before PDUFA was enacted.
Finally, PDUFA has enabled consumers to have access to new drugs sooner.
That is a benefit when those drugs are safe and effective. But if it turns out that the
PDUFA process somehow allows products to be approved with less attention paid
to their safety and effectiveness, then that would obviously diminish the program’s
benefits. However, many overlapping factors influence whether a drug can be used
safely, most unrelated to the source of funding. Congress may opt to consider
whether certain safety problems could have been identified before public marketing,
whether FDA has the authority and resources to identify problems during both the
premarket and postmarket periods, whether FDA has the authority and resources to
act on its findings, and, finally, whether industry’s funding of a significant part of
those activities presents what some see as an unresolvable conflict of interest.
Criticism
Critics of PDUFA, and some supporters, have expressed three types of concerns.
First, the annual adjustments in fees have not fully covered FDA’s increased costs,
despite provisions that Congress intended to account for cost changes over time.
Examples of incompletely funded expenses are cost-of-living increases, retirement
and health benefits, and bonuses to retain the highly skilled scientists whom PDUFA
collections allow FDA to hire. Nor do the annual PDUFA increases adequately cover
the costs of increased security and the rents for FDA’s new facilities.19
Second, because PDUFA initially allowed FDA to use the fees on only pre-
approval activities (the review of manufacturer applications to market drugs and
biologics) and still directs a majority of fees to those tasks, it is widely asserted that
PDUFA is responsible for what some observers view as an inappropriate budget
imbalance between FDA’s premarket drug review and its postmarket safety activities.
They point out that triggers squeeze non-PDUFA related programs, giving as an
example long review times for generic drugs.
FDA relies on fee revenue for maintaining its expert science base via staff
retention. Critics say that FDA is becoming too dependent on industry fees to carry
out its normal review activities. A related concern is that the large percentage of
FDA’s budget being covered by user fees may undercut congressional support for
increases in direct appropriations to the agency.
User fees are an increasing part of FDA’s budget. Table 2A covers all of
FDA’s programs, not just human drug activities. In FY2006, user fees contributed
19.9% of FDA’s salaries and expenses. Looking only at the agency’s Human Drug
Program (basically that is the Center for Drug Evaluation and Research and related
18 Application fee for FY2007 is $896,200 (FDA, “Prescription Drug User Fee Rates for
Fiscal Year 2007,” Federal Register, vol. 71, no. 148, Aug. 2, 2006, pp. 43780-43784).
19 The FDA Alliance, “Improve Consumer Health & Safety: Increase FDA Funding,” at
[http://www.StrengthenFDA.org], visited March 7, 2007.

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activities of the Office of Regulatory Affairs) in Table 2B, for FY2006, user fees
contributed 29.8% of the drug program’s budget. Not shown on this table: FY2006
user fees were, for the human drug program, 34.3% of the pre-market activities total
and about 10% of the postmarket activities total.
Table 2A. Budget Authority, User Fees, and Total Program Level
for FDA Salaries and Expenses, Selected Years FY1996-FY2006
(dollars in millions)
Budget
Fiscal year
authoritya
User feesb
Totalc
1996
820
85
9.4%
905
1998
858
91
9.6%
949
2000
1,038
145
12.3%
1,183
2002
1,184
162
12.0%
1,345d
2004
1,379
287
17.2%
1,665
2006
1,469
357
19.6%
1,826
Table 2B. Budget Authority, User Fees, and Total Program Level
for FDA’s Human Drug Program Salaries and Expenses,
FY2002-FY2006
(dollars in millions)
Fiscal
Budget
year
authoritya
User feesb
Totalc
2002
364
110
23.1%
474
2003
404
130
24.3%
534
2004
373
163
30.3%
536
2005
482
191
28.3%
673
2006
518
220
29.8%
737
Source: FDA, Office of Management Budget Formulation and Presentation, FDA Budget Summary
FY 2007, Consolidated Exhibits: Table of Estimates and Appropriations, S&E, p. 49 of 84, at
[http://www.fda.gov/oc/oms/ofm/budget/2007/PDF/5ConsolidatedExhibits.pdf].
a. Includes only direct appropriations; does not include the user fee amount that the appropriations
bills also set.
b. Does not include Mammography Quality Standards Act (MQSA), export, or color certification fees.
All years include Prescription Drug User Fee Act (PDUFA) fees; Medical Device User Fee and
Modernization Act (MDUFMA) fees included beginning in FY2003; Animal Drug User Fee Act
(ADUFA) fees included beginning in FY2004.
c. Does not include Facilities & Buildings funding.
d. In Table 2A: FY2002 total does not include $151.1 million from the counter-terrorism
supplemental.

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CRS-13
Finally, some critics think that, through its provision of fees, the industry has too
much influence over FDA actions. Some critics believe that, by structuring industry
participation into the setting of performance goals, the law creates conflicts of
interest. This is compounded because, they say, the process of setting performance
goals is not transparent. While some speculate that industry funding via user fees
contributes to quick and suboptimal reviews, others believe that those speculations
alone might threaten confidence in FDA reviews. FDA staff reports of pressure to
meet performance goal deadlines suggest to some that safety and effectiveness data
are being inadequately evaluated.20
Leaving aside some critics’ distrust of the pharmaceutical industry’s motives,
other political and health analysts believe that drug application review is a regulatory
responsibility that the federal government should shoulder completely. They believe
that rather than rely on user fees, Congress should appropriate the full amount
necessary to support FDA is its mission to protect the public’s health.21
PDUFA IV Issues
FDA PDUFA IV Proposal
In January 2007, FDA released its proposal for PDUFA IV, the third
reauthorization of the Prescription Drug User Fee Act. The agency press release title
emphasizes FDA’s intention to use PDUFA as a tool to enhance drug safety
activities. That release, an accompanying fact sheet, and the more detailed Federal
Register announcement describe the plan that FDA developed in consultation “with
all of FDA’s stakeholders including Congress, industry, patient advocates and
20 See, for example: Union of Concerned Scientists, “FDA Scientists Pressured to Exclude,
Alter Findings; Scientists Fear Retaliation for Voicing Safety Concerns: Public Health and
Safety Will Suffer without Leadership from FDA and Congress,” press release, July 20,
2006, at [http://www.ucsusa.org/news/press_release/fda-scientists-pressured.html]; “Text:
Andrew C. Von Eschenbach. M.D. Confirmation Questions [from Senator Grassley] for the
Record,” FDA Week, vol. 12, no. 48, Dec. 1, 2006; and “House Energy and Commerce
Subcommittee on Oversight and Investigations Holds Hearing on Drug Safety,”
Congressional Transcripts, Feb. 13, 2007, at [http://www.cq.com].
21 Note: FDA is not the only federal agency with program elements funded in part by fees
that their regulated industries pay. Examples of others include Meat and Poultry Inspection
(USDA); Commodity Grading and Certification Services (USDA); the Farm Credit
Administration (USDA); Pesticide Registration Improvement Act of 2003 (EPA); Federal
Communications Commission Regulatory Fees; and Securities and Exchange Commission
Transaction Fees. Other user fee programs within FDA are the Medical Device Use Fee and
Modernization Act (MDUFMA); the Animal Drug User Fee Act (ADUFA); the
Mammography Quality Standards Act (MQSA); and export and color certification fees.
FDA has proposed new user fee programs to help fund reinspections, generic drug reviews,
and direct-to-consumer television advertising of prescription drugs.

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CRS-14
organizations representing health care professionals and consumers.”22 FDA’s
proposal for PDUFA reauthorization includes three sets of recommendations.
Proposed Recommendations to Ensure Sound Financial Footing.
FDA proposes adjusting the baseline budget for inflation, rent, and workload
increases, which earlier adjustment formulae did not include.
Enhancing the Process for Premarket Review. Premarket review items
include FDA’s providing timelines for review and target dates for discussions with
applicants; developing new guidance documents to “clarify regulatory pathways” to
expedite drug development; and completing the full automation of drug review.
Modernizing and Transforming the Postmarket Drug Safety System.
Proposals addressing postmarket safety include increasing the staff to work with
adverse event reports; collecting and analyzing data over a drug’s entire life;
developing ways to use large datasets to support surveillance and studies; managing
“both risk and the communication of risk”; improving communication and
coordination between the FDA offices of premarket review and postmarket
surveillance; reducing medication errors caused by drugs with similar names; and
establishing a separate user fee to fund FDA review of direct-to-consumer television
advertisements.
Possible Congressional Approaches
Reviewing FDA’s authority to collect prescription drug user fees is likely to be
a significant legislative priority for the 110th Congress. By some accounts, PDUFA
collections cover more than half of FDA’s scientists; losing those fees is widely seen
as a step that would affect the agency’s ability to review new drugs and to carry out
postmarket surveillance, studies, and enforcement of safety requirements. Many
stakeholder groups see PDUFA reauthorization as a vehicle for other drug- and FDA-
related legislation.
By engaging in the reauthorization discussion with FDA, Congress already may
be signaling its next step: to opt for continuing user fee funding of a portion of
FDA’s activities rather than choose to fully fund the agency through direct
appropriations. If so, the remaining decisions would focus on the scope of issues to
include in any prescription drug user fee legislation.23
Members of Congress have already proposed the inclusion of provisions
surrounding:
22 FDA, “FDA Proposes New Measures to Strengthen Drug Safety Under PDUFA
Reauthorized User Fee Program,” FDA News, Jan. 11, 2007, at
[http://www.fda.gov/bbs/topics/NEWS/2007/NEW01544.html]; FDA, “PDUFA Fact Sheet,”
Jan. 11, 2007, at [http://www.fda.gov/oc/pdufa4/factsheet011107.html]; and FDA, Federal
Register, vol. 72, no. 9, Jan. 16, 2007, pp. 1743-1753.
23 FDA’s authority to collect medical device user fees also ends on October 1, 2007, as the
program begun with the Medical Device User Fee and Modernization Act of 2002
(MDUFMA, P.L. 107-250) expires.

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CRS-15
! direct-to-consumer prescription drug advertising (e.g., requiring or
allowing FDA pre-air review or approval of ads; enforcing current
regulations more strongly; and banning advertising wholly or in
part);
! drug safety and effectiveness (e.g., strengthening FDA’s authority
and resources; allowing FDA to require label changes; requiring
drug distribution restrictions; and improving clinical trial design and
analysis);
! clinical trial registration and results databases (e.g., requiring
specific information and reports within specified timeframes);
! and others involving, for example, prescription drug importation,
drug compounding, follow-on biologics (akin to generic equivalents
to branded drugs), Internet pharmacy regulation, and FDA
organization and budget.24
24 “PDUFA May Become FDA Reform Bill As Lawmakers Swarm To ‘Must Pass’ Act,”
InsideHealthPolicy.com, March 4, 2007.

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