User Fee Programs are in Jeopardy: FDA Watchers
FDA’s user fee programs — long recognized as the financial backbone of the agency’s medical product reviews and authorizations — could be in jeopardy, according to regulatory experts, as sweeping layoffs and political indifference from the Trump administration threaten their reauthorization. AgencyIQ regulatory intelligence director Alec Gaffney warned last week that the future of these programs is “in extreme jeopardy,” a view shared by veteran FDA policy advocate Steven Grossman. In a 4/7 FDA Matters blog post, Grossman wrote that a collapse of the user fee system is not only possible, but increasingly likely unless there’s urgent, out-of-the-box thinking from Congress and stakeholders.
Grossman, who has tracked the agency’s funding battles for decades as co-founder and former executive director of the Alliance for a Stronger FDA, points to the current administration’s hostility toward the agency and a failure by lawmakers to fully engage on the issue as key warning signs. “We may see a disaster coming,” he wrote. “But they do not.”
User fees paid by pharmaceutical, biologic, and medical device industries fund more than 40% of FDA’s overall budget and a majority of the agency’s medical product reviews. Altogether, FDA spends about $4.6 billion on reviewing and regulating medical products in its budget with $2.6 billion from user fees and $2 billion from appropriated (taxpayer) funding, according to Grossman. Any reduction in the FDA workforce and funding requires consideration of the status of medical product user fees, especially of the underlying “letter of agreement” workplans, he said.
Gaffney points out that the user fee programs are mandated to supplement congressional appropriations, not replace them. So if “appropriated funding for salaries and expenses at the FDA fall below the levels set in 1997, multiplied by the ‘adjustment factor,’ then the FDA must refund the fees,” he said. “By dramatically slashing the FDA’s appropriated budget, the Trump administration risks falling below that statutory trigger, when the FDA would then be required to refund all user fees for all of its user fee programs.”
Over the past several months, FDA has undergone an unprecedented reduction in force. More than 3,500 staff have been laid off, with another 900 to 1,000 departing voluntarily. According to Grossman, the concern isn’t just operational dysfunction. The user fee agreements are built around hiring targets and maintenance-of-effort provisions that require a baseline level of taxpayer funding, he said, adding that President Trump is reportedly preparing to propose rescinding FY 2025 appropriations for FDA and both provisions could be in jeopardy. This could prevent the agency from meeting review deadlines and other obligations under the user fee commitments — a scenario that would trigger serious disruptions across the medical product ecosystem.
Meanwhile, Trump and HHS secretary Robert F. Kennedy Jr. have been skeptical of FDA’s mission and priorities. They’ve questioned the legitimacy of user fees, criticized the agency’s focus on treatments over cures, and portrayed the agency as overly influenced by the industries it regulates. So far, there’s little indication that the administration sees a well-staffed FDA as a protected asset — or that it would shield the agency from across-the-board cuts. “We’re going to be trying to change the minds of people who are indifferent to what most of us value,” Grossman warned.
User fees are Congressionally reauthorized every five years, which is typically a non-controversial and bipartisan affair, but this cycle is anything but typical. For now, the silence from Congress on user fees is deafening, Grossman said, adding that reauthorization discussions are expected to formally begin this summer. “If the user fee structure starts to crumble,” Grossman wrote, “the consequences won’t be abstract. The FDA won’t just move slower — it could fail to function.”
And some FDA watchers have also proposed a legislative “kick the can down the road” approach as an alternative to reauthorizing the programs. Former FDA commissioner Scott Gottlieb recently told a generic drug industry conference that industries should look to Congress to legislatively extend their current user fee agreements “past the current political environment” before they start negotiating reauthorization agreements.