The Food and Drug Administration (FDA) Budget: Fact Sheet

Contents

• FDA Overview
• Funding Sources
• FDA Funding History and FY2019 Appropriations

Summary

The Food and Drug Administration (FDA) regulates the safety of foods (including dietary supplements), cosmetics, and radiation-emitting products; the safety and effectiveness of drugs, biologics (e.g., vaccines), and medical devices; and public health aspects of tobacco products. FDA is organized into various offices and centers that carry out the agency's regulatory responsibilities. The Office of the Commissioner and four other program area offices oversee the core functions of the agency: the Office of Medical Products and Tobacco, the Office of Foods and Veterinary Medicine, the Office of Global Regulatory Operations and Policy, and the Office of Operations. The Office of Medical Products and Tobacco includes the Center for Biologics Evaluation and Research (CBER), the Center for Devices and Radiological Health (CDRH), the Center for Drug Evaluation and Research (CDER), and the Center for Tobacco Products (CTP), while the Office of Foods and Veterinary Medicine includes the Center for Food Safety and Applied Nutrition (CFSAN) and the Center for Veterinary Medicine (CVM). The National Center for Toxicological Research (NCTR) is housed within the Office of the Commissioner.

FDA's total program level, the amount that FDA can spend, is composed of discretionary appropriations from two different sources: annual appropriations (i.e., discretionary budget authority, or BA) and user fees paid by the regulated industry (e.g., drug manufacturers). In FDA's annual appropriation, Congress sets both the total amount of appropriated funds and the amount of user fees that the agency is authorized to collect and obligate for that fiscal year.

Between FY2015 and FY2019, FDA's enacted total program level increased from $4.507 billion to $5.725 billion. Over this time period, congressionally appropriated funding increased by 21%, and user fee revenue increased by 35%. The Administration's FY2020 budget request was for a total program level of $5.981 billion, an increase of $256 million (+4%) over the FY2019-enacted amount ($5.725 billion). This report will be updated with information on FDA funding for FY2020 once legislative action on appropriations for the new fiscal year is completed.

---

FDA Overview

The Food and Drug Administration (FDA) regulates the safety of foods (including dietary supplements), cosmetics, and radiation-emitting products; the safety and effectiveness of drugs, biologics (e.g., vaccines), and medical devices; and public health aspects of tobacco products.¹ Although FDA has been a part of the Department of Health and Human Services (HHS) since 1940, the Committees on Appropriations do not consider FDA with most of the rest of HHS under their Subcommittees on Labor, Health and Human Services, and Education, and Related Agencies. Jurisdiction over FDA's budget remains with the Subcommittees on Agriculture, Rural Development, Food and Drug Administration, and Related Agencies, reflecting FDA's beginnings as part of the Department of Agriculture.

FDA's organization consists of various offices and centers that carry out the agency's regulatory responsibilities. The Office of the Commissioner and four other program area offices oversee the core functions of the agency: the Office of Medical Products and Tobacco, the Office of Foods and Veterinary Medicine, the Office of Global Regulatory Operations and Policy, and the Office of Operations. The Office of Medical Products and Tobacco includes the Center for Biologics Evaluation and Research (CBER), the Center for Devices and Radiological Health (CDRH), the Center for Drug Evaluation and Research (CDER), and the Center for Tobacco Products (CTP), while the Office of Foods and Veterinary Medicine includes the Center for Food Safety and Applied Nutrition (CFSAN) and the Center for Veterinary Medicine (CVM). The National Center for Toxicological Research (NCTR) is housed within the Office of the Commissioner.²

The agency's budget—as presented in the Justifications of Estimates for Appropriations Committees (referred to as "Congressional Justifications," or CJs) and the materials of the Committees on Appropriations—is organized by program area. Consistent with these budget documents, Table 1 displays funding for FY2015 through FY2019, as well as the FDA's FY2020 request, by program area (e.g., Foods, Human Drugs), which includes funding for the responsible FDA center (e.g., CFSAN, CDER) and the portion of funding for the FDA-wide Office of Regulatory Affairs (ORA) that is committed to that program area.³

Funding Sources

FDA's total program level, the amount that FDA can spend, is composed of discretionary appropriations from two different sources. First, FDA is appropriated funding out of the Treasury's General Fund. (This is the usual source of funding for discretionary appropriations, and, in keeping with the conventions used in FDA budget documents, is referred to in this report as budget authority.)⁴ Second, FDA also is allowed to collect and obligate user fees.⁵ FDA's annual appropriation sets both the amount of budget authority and the amount of user fees that the agency is authorized to collect and obligate for that fiscal year. The budget authority appropriations are largely for the Salaries and Expenses account, with a smaller amount for the Buildings and Facilities account, which is used for any changes to or purchase of fixed equipment and facilities used by FDA.⁶ The appropriations of the several different user fees contribute only to the Salaries and Expenses account.

For each of the FDA user fee programs, the authorizing legislation establishes the legal framework that governs the fees, while the annual appropriations acts provide FDA the authority to collect and expend them. The largest and oldest FDA user fee that is linked to a specific program was first authorized by the Prescription Drug User Fee Act (PDUFA, P.L. 102-571) in 1992. PDUFA sets the total amount of user fee revenue for the first year, provides a formula for annual adjustments, and includes limiting conditions to ensure that user fees supplement congressional appropriations (i.e., General Fund appropriations) than replace them. After PDUFA, Congress added user fee authorities regarding medical devices, animal drugs, animal generic drugs, tobacco products, priority review, food reinspection, food recall, voluntary qualified food importer, generic drugs, biosimilars, outsourcing facilities (related to drug compounding), and some wholesale distributors and third-party logistics providers (related to pharmaceutical supply chain security). Each of the medical product fee authorities requires reauthorization every five years, while the indefinite or permanent authorities do not require reauthorization. Table A-1 presents the list of user fees that contribute to FDA's budget, sorted by the dollar amount they contribute to the agency's FY2019 budget. The table also includes the authorizing legislation for each current user fee, specifies whether the user fee program is indefinite or requires reauthorization, and provides the most recent reauthorization, if applicable.

The 21^st Century Cures Act (P.L. 114-255), signed into law in December 2016, made several changes to the drug and device approval pathways at FDA to support innovation and accelerate development and review of certain medical products (e.g., combination products, antimicrobials, drugs for rare disease, and regenerative therapies). To fund these activities, the Cures Act established an FDA Innovation Account to which a total of $500 million is authorized to be transferred over a nine-year period (FY2017-FY2025).⁷ The law specified that amounts in the account are not available until appropriated in subsequent appropriations acts and that once made available, these amounts are available until expended. The amounts subsequently appropriated (i.e., the budget authority and the resulting outlays) for FY2017 through FY2025, up to the amounts transferred, are to be subtracted from any cost estimates provided for purposes of budget controls. Effectively, the appropriations from the account will not be counted against any spending limits, such as the statutory discretionary spending limits; that is, the amounts appropriated from the account will be considered outside those limits for FY2017 through FY2025.

FDA Funding History and FY2019 Appropriations

Since the enactment of PDUFA in 1992, FDA's spending from user fees has generally increased, both in absolute terms and as a share of FDA's total budget, accounting for almost 50% of the agency's FY2019 total program level (see Figure 1).

Figure 1. FDA Budget, by Source, FY1992-FY2019 (in millions of dollars)

Source: Figure created by CRS using the FY1992 through FY2020 FDA CJs and the Consolidated Appropriations Act, 2019 (P.L. 116-6; H.Rept. 116-9). Notes: These amounts have not been adjusted for inflation. The purpose of this figure is to show how FDA's spending has changed over time to include a greater proportion from user fees compared to budget authority. With the exception of FY2019, which reflects the enacted appropriation, the amounts used in this figure are from the "Actuals" columns in the FDA CJs, which, according to the FY2005 CJ, reflect FDA's actual spending rather than what was provided in the enacted appropriation. PDUFA= Prescription Drug User Fee Act; MDUFMA= Medical Device User Fee and Modernization Act; ADUFA= Animal Drug User Fee Act; AGDUFA= Animal Generic Drug User Fee Act; TCA= The Family Smoking Prevention and Tobacco Control Act; FSMA= Food Safety Modernization Act; BsUFA= Biosimilar User Fee Act; GDUFA= Generic Drug User Fee Amendments.

Due to a lapse in appropriations, most FDA operations were halted from December 22, 2018, through January 29, 2019. Certain agency operations continued to the extent permitted by law, including activities necessary to address imminent threats to the safety of human life and activities funded by carryover funds.⁸ Agency operations were restored following enactment of the Consolidated Appropriations Act, 2019 (H.J.Res. 31; P.L. 116-6). Title VI of the act provided funding to FDA.

Between FY2015 and FY2019, FDA's enacted total program level increased from $4.507 billion to $5.725 billion (see Table 1). Over that time period, congressionally appropriated funding increased by 21% while user fee revenue increased more than 35%. The FY2019-enacted appropriation provides $3.150 billion in budget authority, which includes $70 million for the FDA Innovation Account, as well as $2.575 billion in user fees. Not included in this $2.575 billion in user fees is the $22 million provided for the review of over-the-counter drugs, as this is contingent upon enactment of the Over-the-Counter Monograph User Fee Act of 2019.⁹ More specifically, legislation authorizing FDA to assess user fees for over-the-counter (OTC) drugs has not yet been enacted. However, legislation has been introduced that would establish a new regulatory framework for OTC drugs and that would allow FDA to assess user fees to support such regulatory activities.¹⁰

The Administration's FY2020 request includes a total program level of $5.981 billion, an increase of $256 million (+4%) over the FY2019-enacted amount. The FY2020 request proposes $3.326 billion in budget authority—an increase of $176 million (+6%) over the FY2019-enacted amount. Included in the $3.326 billion is $75 million for the FDA Innovation Account, as specified in the 21^st Century Cures Act. Table 1 includes the FDA Innovation Account money in the total budget authority and program level amounts, consistent with the budget display conventions used in the FDA CJs.

The FY2020 request proposes $2.655 billion in user fees—an increase of $80 million (+3%) over the FY2019-enacted amount—to be collected through authorized programs to support specified agency activities regarding prescription drugs, medical devices, animal drugs, animal generic drugs, tobacco products, generic human drugs, biosimilars, mammography quality, color certification, export certification, food reinspection, food recall, the voluntary qualified importer program, outsourcing facilities, priority review vouchers, and third-party auditors. In addition to the $2.655 billion in user fees from currently authorized programs, the FY2020 request includes an additional $160.68 million in as yet unauthorized user fees: OTC monograph fees ($28.4 million) to support implementation of reforms to OTC drug monograph products; innovative food product fees ($28 million) to support activities such as "enhancing the scientific review of human and animal food ingredients to foster innovative products getting to the market and to improve nutrition;"¹¹ expanded tobacco product fees ($100 million) to include all deemed tobacco products in the tobacco user fee assessments (e.g., electronic nicotine delivery systems [ENDS]);¹² and additional export certification fees ($4.28 million), as current export certification fees are capped at $175 per certification, which, according to FDA, is less than the current cost to run the program.¹³ It is estimated that including the proposed fees would bring the FDA's total requested user fee amount to $2.816 billion.

Consistent with the Administration and congressional budget display conventions, Table 1 displays, by program area, the budget authority (direct appropriations), user fees (excluding proposed, unauthorized fees), and total program levels for FDA from FY2015 through FY2019 and the FY2020 request. The human drugs program comprises the largest portion of FDA's budget (33% in FY2019), followed by the foods program (19% in FY2019), and the tobacco program (12% in FY2019), which is funded solely by tobacco product user fees.

Appendix A. FDA User Fee Authorizations and Anticipated Collections

Author Contact Information

Acknowledgments

Susan Thaul, CRS Specialist in Drug Safety and Effectiveness, was a co-author of previous versions of this fact sheet.

Footnotes

1.	Several CRS reports have information on FDA authority and activities: CRS Report R41983, How FDA Approves Drugs and Regulates Their Safety and Effectiveness, and CRS Report R42130, FDA Regulation of Medical Devices.
2.	FDA Organization, https://www.fda.gov/AboutFDA/CentersOffices/default.htm.
3.	ORA is the lead office for FDA field activities, conducting inspections of firms producing FDA-regulated products, investigating consumer complaints, and enforcing FDA regulations, among other things. For additional information about ORA, see https://www.fda.gov/AboutFDA/CentersOffices/OfficeofGlobalRegulatoryOperationsandPolicy/ORA/ucm409371.htm.
4.	In its technical sense, the term "budget authority" refers to the authority to enter into obligations, and "appropriations" are a form of budget authority. However, in keeping with the convention used by the FDA budget justifications, this section of the report uses this term only to refer to the General Fund appropriations, and not the funding that comes from the user fees collected by the agency. For further information, see CRS Report R44582, Overview of Funding Mechanisms in the Federal Budget Process, and Selected Examples.
5.	Beginning with the Prescription Drug User Fee Act (PDUFA, P.L. 102-571) in 1992, FDA has been authorized to collect fees from industry sponsors of certain FDA-regulated products and to use the proceeds to support statutorily defined activities, such as the review of product marketing applications. Several CRS reports describe FDA user fee programs. See, for example, CRS Report R44961, FDA Reauthorization Act of 2017 (FDARA, P.L. 115-52); CRS Report R44750, FDA Human Medical Product User Fee Programs: In Brief; CRS Report R44864, Prescription Drug User Fee Act (PDUFA): 2017 Reauthorization as PDUFA VI; CRS Report R44517, The FDA Medical Device User Fee Program: MDUFA IV Reauthorization; CRS Report R40443, The FDA Food Safety Modernization Act (P.L. 111-353).
6.	FY2019 FDA Justification of Estimates for Appropriations Committees.
7.	For each of FY2017 through FY2025, the following amounts are authorized to be transferred to the FDA Innovation Account: $20 million in FY2017, $60 million in FY2018, $70 million in FY2019, $75 million in FY2020, $70 million in FY2021, $50 million in FY2022, $50 million in FY2023, $50 million in FY2024, and $55 million in FY2025.
8.	HHS, "Fiscal Year 2019 Contingency Staffing Plan For Operations in the Absence of Enacted Annual Agriculture and Interior Appropriations (December 21, 2018)," https://www.hhs.gov/sites/default/files/fy-2019-hhs-lapse-contingency-plan-narrative-december-ag-interior.pdf.
9.	P.L. 116-6; H.Rept. 116-9, Title VI. On June 7, 2017, the HHS Secretary transmitted to Congress the user fee goals document and FDA's technical assistance on the OTC drug monograph legislation. Legislation has been introduced in the 116th Congress that would establish a new regulatory framework for over-the-counter (OTC) monograph drugs and would create a new user fee program to support these new activities; see Division B of H.R. 269 titled "Over-the-counter monograph safety, innovation, and reform." H.R. 269 passed the House on January 8, 2019.
10.	The OTC Drug Review began in the 1970s, and many OTC monographs have not yet been finalized. The process has been described as slow and lacking flexibility, and FDA's ability to address safety labeling issues is limited. For additional information about OTC drug regulation, see CRS In Focus IF10463, Regulation of Over-the-Counter (OTC) Drugs.
11.	FY2020 FDA Justification of Estimates for Appropriations Committees, p. 10.
12.	Currently, FDA has the authority to assess and collect user fees from cigarette, roll-your-town tobacco, snuff, chewing tobacco, cigars, and pipe tobacco manufacturers. While FDA has deemed certain tobacco products to be under its authority (e.g., ENDS), the agency has determined that it currently does not have the authority to collect user fees from manufacturers of certain deemed products, such as ENDS. For more information see FDA, "Requirements for the Submission of Data Needed To Calculate User Fees for Domestic Manufacturers and Importers of Cigars and Pipe Tobacco," 81 Federal Register 28709, May 10, 2016.
13.	Under current law, export certification fees paid to FDA are capped at $175 per certification. The FY2020 request proposes an increase in the cap of export certification fees from $175 to $600 per certification (i.e., an additional $4.28 million in proceeds from export certification fees).