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The Food and Drug Administration (FDA) had a budget of about $6.9 billion in fiscal year 2024, which is equivalent to $10.68 per American per year.[1] You may be surprised to learn that only 52% of the FDA’s budget ($3.6 billion) was provided by public funds. In fact, 48% of the budget was provided by $3.3 billion in industry user fees.
For different FDA programs, the distribution between public funds and user fees varies widely. User fees fund 69% of the budget for human drugs, 53% for...
The Food and Drug Administration (FDA) had a budget of about $6.9 billion in fiscal year 2024, which is equivalent to $10.68 per American per year.[1] You may be surprised to learn that only 52% of the FDA’s budget ($3.6 billion) was provided by public funds. In fact, 48% of the budget was provided by $3.3 billion in industry user fees.
For different FDA programs, the distribution between public funds and user fees varies widely. User fees fund 69% of the budget for human drugs, 53% for biologics, and 44% for devices and radiological health. Although public funds provide 99% of the FDA’s budget for foods, 100% of the budget for tobacco comes from user fees.
The industry fees were set by the FDA User Fee Reauthorization Act of 2022, which included the sixth reauthorization of the Prescription Drug User Fee Act (PDUFA).[2] Drug manufacturers began paying for the FDA’s review of their new drug applications in 1992; medical-device companies started paying user fees ten years later.[3]
Although the 2022 act helps to ensure that the FDA will receive stable and consistent funding through September 2027, user fees also make the agency beholden to the companies that it regulates. Without industry money, the FDA would lose thousands of its nearly 20,000 full-time-equivalent employees,[4] making it impossible to maintain its review times for medical products and to perform many other key activities.
The FDA maintains that it retains “all decision-making authority regarding the marketing authorization of medical products.”[5] Although technically true, the massive conflict of interest posed by more than $3 billion a year of industry payments is obvious. Since 1992, the FDA has been captured by the industries that it regulates.[6]
Although Congress should end user-fee-based funding of the FDA and restore full funding with public funds, it has never shown any interest in reversing course. The reelection of former President Donald Trump may offer a path forward, however. Robert F. Kennedy, Jr., the nominee for Secretary of Health and Human Services, dislikes user fees[7] and has pledged to decrease pharmaceutical industry influence over the agency. As FDA user fees are reauthorized for five years at a time and the reauthorization process is complex, planning for the 2027 reauthorization may start as soon as July 2025 with a public-input-focused meeting about PDUFA VIII. If the timeline for prior reauthorization is followed, there will then be a public kickoff meeting in September 2025, which is likely to include presentations from the FDA, industry, and non-industry stakeholder groups about the program’s fees, performance, accomplishments and challenges.
If the Trump Administration is serious about restoring the FDA’s independence, it could promptly start planning for an FDA budget that is free of industry funding.[8] Instead of asking Congress to reauthorize FDA user fees in 2027, there is an opportunity to chart a new path for the agency with taxpayer funding that fully replaces user fee dollars. The politics may be difficult, but the FDA is a public health agency, not a partner with regulated industries.
FDA user fees are inherently corrupting; they should end.
References
[1] FDA at a Glance. Distribution of FDA FY2024 budget by program and source. October 2024. https://www.fda.gov/media/182749/download. Accessed December 17, 2024.
[2] Food and Drug Administration. PDUFA VII: Fiscal Years 2023-2027. April 24, 2023. https://www.fda.gov/industry/prescription-drug-user-fee-amendments/pdufa-vii-fiscal-years-2023-2027. Accessed December 17, 2024.
[3] Prescription Drug User Fee Act. https://en.wikipedia.org/wiki/Prescription_Drug_User_Fee_Act#:~:text=FDA%20calculates%20fees%20based%20on,per%20supplement%20requiring%20clinical%20data. Accessed December 17, 2024.
[4] FDA at a Glance. Distribution of FDA FY2024 budget by program and source. October 2024. https://www.fda.gov/media/182749/download. Accessed December 17, 2024.
[5] FDA: user fees explained. May 22, 2024. https://www.fda.gov/industry/fda-user-fee-programs/fda-user-fees-explained. Accessed December 17, 2024.
[6] Carome M. Outrage of the Month: Congress reauthorizes FDA-corrupting user fees for five more years. Health Letter. December 2022. https://www.citizen.org/article/outrage-of-the-month-congress-reauthorizes-fda-corrupting-user-fees-for-five-more-years/. Accessed December 17, 2024.
[7] Karlin-Smith S. Trump’s US FDA user fee cycle: ‘an underappreciated threat.’ Pink Sheet. November 16, 2024. https://insights.citeline.com/pink-sheet/pathways-and-standards/user-fees/trumps-us-fda-user-fee-cycle-an-underappreciated-threat-GVVSHUIRXBDOHDLWQXHSLC2U4A/. Accessed December 17, 2024.
[8] Kesselheim AS, Sharfstein JM. Will the new administration’s FDA be a threat or an opportunity for the public’s health? Health Affairs Forefront. December 13, 2024. https://www.healthaffairs.org/content/forefront/new-administration-s-fda-threat-opportunity-public-s-health. Accessed December 17, 2024.
