Targeting FDA user fees would leave agency gutted, experts say

WASHINGTON — Health and Human Services Secretary Robert F. Kennedy Jr. and his allies rallied around removing industry influence from the Food and Drug Administration as part of their quest to Make America Healthy Again, which Kennedy has used in his early days in office to sound the alarm over food industry lobbying and pharma’s influence in D.C.

But they’ve also, less explicitly, suggested plans to target a more unassuming but long-standing program that funds nearly half of the FDA’s budget: the user fees that industry pays to the FDA in exchange for reviewing their product applications.

A 1992 law called the Prescription Drug User Fee Act was primarily intended to fast-track the time between applying for approval and receiving a decision. Before that law was passed, researchers at Tufts University had documented a delay between the time new pharmaceuticals were getting approved in the United Kingdom compared with the United States.

Under the law, the FDA is required to set a date by which it must make a determination on whether to approve products. In the following years, Congress authorized additional user fee programs for medical devices, generic drugs, biosimilar medicines, certain over-the-counter drugs, animal drugs and tobacco products.

The reauthorization of FDA’s prescription drug, generics, biosimilar and medical device programs was included in the fiscal 2023 appropriations act, and they are set to expire on Sept. 30, 2027. The laws are typically renewed on a five-year time frame. The user fee program has historically drawn criticism, including from FDA officials themselves.

Kennedy and his allies have a long history of being critical of the user fee program. Writing in his 2021 book, “The Real Anthony Fauci,” Kennedy uses the user fee program as an example of the agency’s closeness to industry, noting that the agency receives 45% of its budget “from the pharmaceutical industry, through what are euphemistically called ‘user fees.'”

In a Wall Street Journal op-ed this past September, Kennedy wrote that he wanted to reform the prescription drug user fee program at the FDA.

“Pharmaceutical companies pay a fee every time they apply for a new drug approval, and this money makes up about 75% of the budget of the Food and Drug Administration’s drug division,” he wrote. “That creates a barrier to entry to smaller firms and puts bureaucrats’ purse strings in the hands of the pharmaceutical industry.”

Kennedy is not the only critic of user fees. Former FDA Commissioner Robert Califf, who served under both Barack Obama’s and Joe Biden’s administrations, has previously said he would have preferred that the agency be fully funded by taxpayer dollars.

“Philosophically, I wish the taxpayer paid for all the F.D.A. and there weren’t user fees,” he said at a news conference in 2022, per The New York Times.

On the campaign trail as a presidential candidate last year, Kennedy rallied support around draining industry influence from the health agencies. That notion is one his supporters are likely to keep the pressure on.

Speaking at a Politico event in late February, Del Bigtree, Kennedy’s former communications director during his independent presidential run who is the president of MAHA Action, a group that stemmed from Kennedy’s health movement, suggested that Kennedy is looking at reforms to the user fee program.

“Finally we have someone at the head of HHS not owned by these corporations,” Bigtree said at the event. “I think he’s looking for the right type of people.”

HHS did not return a request for comment.

The funding conundrum

Experts and former leaders at FDA said that the user fee programs allow industry to pay its own way for approvals that will yield them profits, and that removing them would likely be an uphill battle.

Mark McClellan, the director of the Duke-Margolis Institute for Health Policy and former FDA commissioner in the George W. Bush administration, differentiated the issue of user fees from the push to remove conflicts of interest from advisory committees like FDA’s Vaccines and Related Biological Products Advisory Committee and the Centers for Disease Control and Prevention’s Advisory Committee on Immunization Practices.

He said if user fees were eliminated, there would need to be additional appropriated funds for the FDA to fully operate, which he said would be challenging for Congress to agree to. He underscored that losing that funding would result in slower approval times and less clear approval decisions that would ultimately result in poor outcomes for health.

“I don’t think any of those are viable options right now,” he said.

Scott Gottlieb, who served as FDA commissioner at the beginning of President Donald Trump’s first term, suggested late last month that the pharma industry should urge lawmakers to extend the existing user fee programs rather than renegotiate the laws in the “current political environment,” according to Citeline’s reporting.

McClellan said there are certain updates that need to be considered in this upcoming round of negotiations.

He pointed to the use of artificial intelligence in the approval process as an area that could be addressed in the next round. He also underscored that it’s still unclear how Marty Makary, Trump’s pick to lead the FDA, will approach the issue once confirmed.

“There are definitely some issues that ideally need some attention, and I understand the concerns, but I think we probably need to wait a little bit to see,” he said.

Steven Grossman, a regulatory consultant at HPS Group and author of the FDA Matters newsletter, said in an email to CQ Roll Call that his concerns about the future of the user fee program have grown since the Trump administration took over.

“The risk of dramatically different medical product user fee programs — or none at all — has gone from blue (general risk) to at least yellow (significant risk),” he wrote. “If somebody suggested orange (high risk), I would not say they are exaggerating.”

Writing in a Feb. 14 blog post, Grossman said the process for negotiating the next set of user fee programs would typically start with hearings beginning in the summer or fall, allowing time for the legislation to be drafted by January 2027.

“My hope is that it warns stakeholders not to take renewal for granted,” he said in an email.

Howard Sklamberg, a partner at the law firm Arnold & Porter who was an FDA official during the Obama administration, said the argument for funding the FDA fully by appropriations is challenging. He said many would have issues with having taxpayers fund application fees that ultimately benefit industry.

“An FDA approval of a brand drug could net a company billions of dollars,” he said.

Sklamberg said if user fees were to be eliminated altogether with no additional funds, there would be immediate effects, which could include patients in clinical trials being overseen by the FDA not receiving their treatment.

“It was something that would be visible fast, and I think there would be public reaction, and not just from the industry and stakeholders but the general public,” Sklamberg said.