[House Report 108-287]
[From the U.S. Government Publishing Office]
108th Congress Report
HOUSE OF REPRESENTATIVES
1st Session 108-287
======================================================================
ANIMAL DRUG USER FEE ACT OF 2003
_______
September 30, 2003.--Committed to the Committee of the Whole House on
the State of the Union and ordered to be printed
_______
Mr. Tauzin, from the Committee on Energy and Commerce, submitted the
following
R E P O R T
[To accompany H.R. 1260]
[Including cost estimate of the Congressional Budget Office]
The Committee on Energy and Commerce, to whom was referred
the bill (H.R. 1260) to amend the Federal Food, Drug, and
Cosmetic Act to establish a program of fees relating to animal
drugs, having considered the same, report favorably thereon
without amendment and recommend that the bill do pass.
CONTENTS
Page
Purpose and Summary.............................................. 1
Background and Need for Legislation.............................. 2
Hearings......................................................... 2
Committee Consideration.......................................... 2
Committee Votes.................................................. 2
Committee Oversight Findings..................................... 3
Statement of General Performance Goals and Objectives............ 3
New Budget Authority, Entitlement Authority, and Tax Expenditures 3
Committee Cost Estimate.......................................... 3
Congressional Budget Office Estimate............................. 3
Federal Mandates Statement....................................... 6
Advisory Committee Statement..................................... 6
Constitutional Authority Statement............................... 6
Applicability to Legislative Branch.............................. 6
Section-by-Section Analysis of the Legislation................... 7
Changes in Existing Law Made by the Bill, as Reported............ 11
Purpose and Summary
H.R. 1260 authorizes a program of fees by the Food and Drug
Administration (FDA) relating to the review of new animal
drugs.
Background and Need for Legislation
Congress, in enacting the Prescription Drug User Fee Act of
1992, Public Law 102-571 (PDUFA I) for human pharmaceuticals,
required FDA in section 108(a) to conduct a study to evaluate
whether, and under what conditions, to impose user fees to
supplement appropriated funds in order to improve the process
of reviewing applications for new animal drugs under section
512 of the Federal Food, Drug, and Cosmetic Act.
FDA submitted a report to Congress in 1994. That report
revealed several problems: inadequate review resources, a
growing workload, and low quality applications submitted by
industry. The combination of problems had slowed the approval
process to a rate unacceptable to the industry. The report
noted that if Congress were to consider legislation authorizing
the FDA to impose and collect user fees, approximately $11
million would need to be collected annually.
The situation has not improved. A prolonged decrease in
resources in the 1990's resulted in a slower, less predictable
animal drug review program. In recent years, while funding for
FDA's Center for Veterinary Medicine (CVM) programs, in
general, has increased significantly, most of these increases
were earmarked for CVM activities other than its animal drug
review process. Recent modest increases in drug review
resources, combined with intense effort on the part of review
personnel, have resulted in some improvement in review times.
However, the intense level of effort needed to accomplish this
improvement cannot be maintained over the long term without
increased funds.
Under H.R. 1260, the additional revenues generated from
fees paid by the animal health industry would be dedicated for
use in expeditingthe new animal drug review process, in
accordance with performance goals that would be developed by FDA in
consultation with the industry. This legislation will provide resources
to improve the animal drug review process through the new hiring of
personnel, purchase and maintenance of technological management and
information systems thereby increasing the program's performance
capacity and efficiency.
Hearings
The Committee on Energy and Commerce has not held hearings
on the legislation.
Committee Consideration
On Wednesday, September 10, 2003, the Full Committee on
Energy and Commerce met in open markup session and favorably
ordered H.R. 1260 reported to the House, without amendment, by
a voice vote, a quorum being present.
Committee Votes
Clause 3(b) of rule XIII of the Rules of the House of
Representatives requires the Committee to list the record votes
on the motion to report legislation and amendments thereto.
There were no record votes taken in connection with ordering
H.R. 1260 reported. A motion by Mr. Tauzin to order H.R. 1260
reported to the House, without amendment, was agreed to by a
voice vote.
Committee Oversight Findings
Pursuant to clause 3(c)(1) of rule XIII of the Rules of the
House of Representatives, the Committee has not held oversight
or legislative hearings on this legislation.
Statement of General Performance Goals and Objectives
The goal of H.R. 1260 is to provide resources to improve
the animal drug review process through the new hiring of
personnel, purchase and maintenance of technological management
and information systems thereby increasing the program's
performance capacity and efficiency.
New Budget Authority, Entitlement Authority, and Tax Expenditures
In compliance with clause 3(c)(2) of rule XIII of the Rules
of the House of Representatives, the Committee finds that H.R.
1260, the Animal Drug User Fee Act of 2003 (ADUFA), would
result in no new or increased budget authority, entitlement
authority, or tax expenditures or revenues.
Committee Cost Estimate
The Committee adopts as its own the cost estimate prepared
by the Director of the Congressional Budget Office pursuant to
section 402 of the Congressional Budget Act of 1974.
Congressional Budget Office Estimate
Pursuant to clause 3(c)(3) of rule XIII of the Rules of the
House of Representatives, the following is the cost estimate
provided by the Congressional Budget Office pursuant to section
402 of the Congressional Budget Act of 1974:
U.S. Congress,
Congressional Budget Office,
Washington, DC, September 16, 2003.
Hon. W.J. ``Billy'' Tauzin,
Chairman, Committee on Energy and Commerce,
House of Representatives, Washington, DC.
Dear Mr. Chairman: The Congressional Budget Office has
prepared the enclosed cost estimate for H.R. 1260, the Animal
Drug User Fee Act of 2003.
If you wish further details on this estimate, we will be
pleased to provide them. The CBO staff contact is Margaret
Nowak.
Sincerely,
Douglas Holtz-Eakin.
Director.
Enclosure.
H.R. 1260--Animal Drug User Fee Act of 2003
Summary: H.R. 1260 would amend the Federal Food, Drug, and
Cosmetic Act to authorize the Food and Drug Administration
(FDA) to collect fees to cover the cost of expediting the
review of new and supplemental animal drug applications and
investigational animal drug submissions. Such fees could be
collected and made available for obligation only to the extent,
and in the amount, provided in advance in appropriation acts.
H.R. 1260 also would require the Secretary of Health and
Human Services to submit annual performance and fiscal reports
related to the animal drug user fee program to the
Congressional committees of jurisdiction.
Because the spending of new fees would lag behind their
collection, CBO estimates that implementing H.R. 1260 would
reduce net outlays by $4 million over the 2004-2008 period,
assuming the necessary authorities are provided in
appropriation acts.
H.R. 1260 contains no intergovernmental mandates as defined
in the Unfunded Mandates Reform Act (UMRA) and would not affect
the budgets of state, local, or tribal governments.
The bill would impose private-sector mandates as defined in
UMRA on manufacturers of new animal drugs, by requiring them to
pay fees to the Food and Drug Administration. CBO estimates
that the direct cost of the mandates would not exceed the
annual threshold specified in UMRA ($117 million in 2003,
adjusted annually for inflation) in any of the first five years
that the mandates would be effective.
Estimated cost to the Federal Government: The estimated
budgetary impact of H.R. 1260 is shown in the following table.
The costs of this legislation fall within budget function 550
(health).
----------------------------------------------------------------------------------------------------------------
By fiscal year, in millions of dollars--
--------------------------------------------
2004 2005 2006 2007 2008
----------------------------------------------------------------------------------------------------------------
CHANGES IN SPENDING SUBJECT TO APPROPRIATION
Collection of FDA user fees:
Estimated authorization level.................................. -5 -8 -11 -11 -14
Estimated outlays.............................................. -5 -8 -11 -11 -14
Spending of FDA user fees:
Estimated authorization level.................................. 5 8 11 11 11
Estimated outlays.............................................. 3 7 10 10 11
FDA administrative expenses:
Estimated authorization level.................................. 1 * * * 1
Estimated outlays.............................................. 1 * * * 1
Net effect on spending by the Food and Drug Administration:
Estimated authorization level.................................. 1 * * * -2
Estimated outlays.............................................. -1 * * * -2
----------------------------------------------------------------------------------------------------------------
Note.--* = less than $500,000.
Basis of Estimate: For this estimate, CBO assumes the bill
will be enacted early in fiscal year 2004 and that
appropriation acts will provide the necessary authority for fee
collection and spending.
Estimated authorizations
H.R. 1260 would establish a new user fee program to help
defray FDA's costs of expediting the review process for animal
drugs. CBO estimates that implementing the bill would save $1
million in 2004 and $4 million over the 2004-2008 period.
User Fees. H.R. 1260 would require FDA to assess and
collect application and other user fees from manufacturers of
drugs for animals to expedite the development of such drugs and
the review of new and supplemental animal drug applications and
investigational animal drug submissions. H.R. 1260 would create
four types of user fees: (1) Animal drug application and
supplement fees, (2) animal drug product fees, (3) animal drug
establishment fees, and (4) animal drug sponsor fees. The fees
could be refunded, waived, or reduced in certain situations.
The aggregate amounts of such fees are specified for each of
fiscal years 2004 through 2008. Each year the amounts to be
collected would be adjusted further for inflation, workload
estimates, and other factors, when applicable. CBO assumes FDA
would collect the amounts specified in the bill increased by
the inflation index for wages and salaries for Federal workers.
In total, we estimate receipts from those fees would amount to
$48 million over the 2004-2008 period. Such fees could be
collected and made available for obligation only to the extent,
and in the amount, provided in advance in appropriation acts.
Under the bill, those user fees could not be assessed in a
given year unless appropriations for salaries and expenses of
FDA (excluding the amount of user fees appropriated for such
fiscal year) in that year satisfy a maintenance-of-effort
requirement: The amount appropriated would have to exceed the
amount appropriated for 2003 by the percentage increase since
2003 in the consumer price index for all urban consumers (CPI-
U). In addition, fees could be collected and made available to
defray increases in the cost of resources allocated to
reviewing animal drug applications only to the extent that the
percentage increase in those costs (excluding fees) exceeds the
costs for fiscal year 2003 adjusted by CPI-U. (The bill defines
special circumstances under which the Secretary would be
considered to have met the maintenance-of-effort requirement.)
This estimate assumes that these conditions would be met.
Before accounting for costs associated with additional
administrative activities not covered by the user fees, CBO
estimates that establishing the user fee program would reduce
net outlays by $2 million in 2004 and $7 million over the 2004-
2008 period, assuming appropriation of the necessary amounts.
The estimated budget authority for collections and spending
offset each other exactly from 2004 through 2007, while outlays
would lag slightly, resulting in small savings each year. For
fiscal year 2008, the bill would authorize the assessment and
collection of up to three months of operating reserves for the
review of animal drug applications for the first three months
of fiscal year 2009. However, the user fee program is
authorized only through fiscal year 2008. CBO assumes that the
amounts available for obligation and spending in fiscal year
2008 would not include those special reserve funds collected in
that year. The difference between the estimated collections and
spending of the user fees in fiscal year 2008 would result in
savings of $3 million for that year, CBO estimates.
Other Administrative Expenses. Based on the experience with
similar activities of FDA, CBO assumes that funding for certain
administrative activities associated with the new user fee
program would not be fully covered by the new fees. The bill
would require that FDA report annually to the Congress on its
performance under the user fee program and on the fiscal status
of the program. H.R. 1260 also would require that FDA consult
with the Congressional committees of jurisdiction and outside
experts, including industry and consumer groups, and publish
its recommendations concerning reauthorization of the user fee
program. CBO estimates that the administrative activities
associated with implementing the user fee program that are not
covered by the user fees would cost about $2 million over the
2004-2008 period.
Estimated impact on state, local, and tribal governments:
H.R. 1260 contains no intergovernmental mandates as defined in
UMRA and would not affect the budgets of state, local, or
tribal governments.
Estimated impact on the private sector: Subject to approval
in appropriation acts, H.R. 1260 would require manufacturers of
new drugs for animals to pay application fees, product fees,
establishment fees, and drug sponsor fees to the FDA. The
application fees would apply to new or supplemental animal drug
applications that are submitted after September 1, 2003. The
product, establishment, and drug sponsor fees would apply to
manufacturers of new animal drug products that have an
application pending with the FDA after September 1, 2003. The
duty to pay those fees would be a private-sector mandate under
UMRA. CBO estimates that the fees collected over the 2004-2008
period would total $48 million. Those amounts would not exceed
the annual threshold specified in UMRA ($117 million in 2003,
adjusted annually for inflation) in any of the first five years
that the mandates would be effective.
Previous CBO estimate: On May 15, 2003, CBO transmitted a
cost estimate for S. 313, the Animal Drug User Fee Act of 2003,
as ordered reported by the Senate Committee on Health,
Education, Labor, and Pensions on February 12, 2003. The two
bills are nearly identical and the estimated budgetary effects
are the same.
Estimate prepared by: Federal Estimate: Margaret Nowak.
Impact on State, Local, and Tribal Governments: Leo Lex. Impact
on the Private Sector: Daniel Wilmoth.
Estimate approved by: Peter H. Fontaine, Deputy Assistant
Director for Budget Analysis.
Federal Mandates Statement
The Committee adopts as its own the estimate of Federal
mandates prepared by the Director of the Congressional Budget
Office pursuant to section 423 of the Unfunded Mandates Reform
Act.
Advisory Committee Statement
No advisory committees within the meaning of section 5(b)
of the Federal Advisory Committee Act were created by this
legislation.
Constitutional Authority Statement
Pursuant to clause 3(d)(1) of rule XIII of the Rules of the
House of Representatives, the Committee finds that the
Constitutional authority for this legislation is provided in
Article I, section 8, clause 3, which grants Congress the power
to regulate commerce with foreign nations, among the several
States, and with the Indian tribes.
Applicability to Legislative Branch
The Committee finds that the legislation does not relate to
the terms and conditions of employment or access to public
services or accommodations within the meaning of section
102(b)(3) of the Congressional Accountability Act.
Section-by-Section Analysis of the Legislation
Section 1. Short title
Section 1 designates the short title of the bill as the
``Animal Drug User Fee Act of 2003.''
Section 2. Findings
Section 2 designates the findings of Congress relating to
the authorization of animal drug user fees.
Section 3. Fees relating to animal drugs
Section 3 adds a new part 4 to subchapter C of chapter VII
of the Federal Food, Drug, and Cosmetic Act.
Section 739. Definitions
New section 739 adds definitions for the following 11 terms
when used related to animal drug user fees: ``animal drug
application,'' ``supplemental animal drug application,''
``animal drug product,'' ``animal drug establishment,''
``investigational animal drug submission,'' ``animal drug
sponsor,'' ``final dosage form,'' ``process for the review of
animal drug applications,'' ``costs of resources allocated for
the process for the review of animal drug applications,''
``adjustment factor,'' and ``affiliate.'' These definitions are
necessary to give effect to the procedures instituted by the
authorization of the Animal Drug User Fee Act (ADUFA). The term
``process for the review of animal drug applications'' is a
term of art that describes all of the functions related to the
pre-market review of submissions and applications pertaining to
animal drugs. The term is used throughout the document to
provide simplicity and consistency in the language referring to
the process funded by this legislation. ``Affiliates'' is also
a term of art and is intended to include affiliates, partners,
and parent firms.
Section 740. Authority to assess and use animal drug fees
New section 740(a) allows fees authorized by the Act to be
assessed beginning on October 1, 2004. The fees authorized are
animal drug application and supplemental animal drug
application fees, animal drug product fees, animal drug
establishment fees, and animal drug sponsor fees. Application
fees, in general, are due upon submission of the application.
Fees paid and not refunded for filed applications that were not
approved or were withdrawn do not have to be paid a second
time. If an application is refused for filing, the Secretary
shall refund 75 percent of the fee. If the application is
withdrawn, the Secretary has sole discretion to refund the fee
or any portion of the fee.
Product, establishment, and sponsor fees are assessed in
any fiscal year when certain specified criteria are met. Only
one such fee shall be paid each year. Transition rules for
product, establishment, and sponsor fees related to products
under review at the time of implementation of this law are
specified.
New section 740(b) lists the total fee revenues for fiscal
years 2004 through 2008 for application and supplement fees and
for product, establishment, and sponsor fees.
New section 740(c) sets forth adjustments to take into
account changes in workload and the cost of performing the
work. The subsection contains inflation, workload, and final
year adjustments as well as annual fee adjustment timing
requirements. The subsection also sets forth a limit on the
total amount of fees charged for any year to not exceed total
costs for that fiscal year.
New section 740(d) sets the rules for the waivers or
reduction of fees. The waivers and reductions are for those
situations in which:
Assessing the fees would be a significant
barrier to innovation;
The fees exceed the anticipated costs;
The animal drug application or supplemental
application is solely to provide for use of the drug in
a Type B medicated feed intended for use in the
manufacture of Type C free-choice medicated feeds or a
Type C free-choice medicated feed;
The waiver or reduction is necessary to
promote the availability of animal drugs for minor uses
or minor species; or
The sponsor is a small business submitting
its first animal drug application. Periodically, the
Secretary shall publish a list of companies that
qualify for a waiver.
New section 740(e) states that, due to a failure to pay
required fees, the Secretary may consider an application or
submission incomplete or discontinue review of an application
or submission.
New section 740(f) limits assessment of fees for any fiscal
year after fiscal year 2003 unless appropriations are at least
equal to the adjusted salaries and expenses for FDA for fiscal
year 2003, excluding fees appropriated. If the trigger
conditions for collecting fees are not met until later in the
year, the full year's fees will still be required.
New section 740(g) authorizes appropriations (as adjusted)
of $5 million in fiscal year 2004, $8 million in fiscal year
2005, $10 million in fiscal year 2006, $10 million in fiscal
year 2007, and $10 million for fiscal year 2008, in amounts
consistent with the total fee revenue amounts set forth in
subsection (b). Such collected fees remain available until
expended without fiscal year limitation. Fees may be collected
only to the extent and in the amount provided in advance
through the appropriations process.
New section 740(h) states that fees overdue by 30 days
shall be treated as a claim of the U.S. Government subject to
subchapter II of Chapter 37 of 31 U.S.C.
New section 740(i) requires written requests for waivers,
reductions, and refunds be submitted within 180 days after the
fee is due.
New section 740(j) states that this law may not be
construed to require the number of FTEs in the Department of
HHS to be reduced to offset FTEs under this user fee act.
New section 740(k) requires the Agency, to the extent
practicable, to take appropriate action to segregate the review
of generic animal drug applications, which are not under the
user fee program, from the user fee funded program. It also
requires the agency to adopt other administrative procedures to
ensure that the review times for generic animal drugs do not
increase from their current level due to activities under the
user fee program.
The language contained in new section 740 uses a revenue
model that is based on the latest Prescription Drug User Fee
Act (PDUFA) reauthorization, enacted on June 12, 2002--referred
to as PDUFA III. The major features of this revenue model are
described below:
Statutory Revenue Amounts--Like PDUFA III, the total
revenue amounts FDA is expected to collect each year are stated
in section 740(g)(3), not the amounts of the various fees
individual firms will pay are not specified. The fees will be
established to generate $5 million in fiscal year 2004, $8
million in fiscal year 2005 and reaching $10 million in fiscal
year 2006 and subsequent years, plus adjustments. Adjustments
are to be made to these statutory amounts for years after
fiscal year 2004. The adjustment provisions are in section
740(c), and are discussed below.
Inflation Adjustment--An inflation adjustment provision,
section 740(c)(1), similar to provisions in PDUFA III, adjusts
statutory revenue levels each year after fiscal year 2004. Fee
revenues are adjusted each year by the greater of either the
increase in the CPI index for all urban consumers for the most
recent year (this means the 12-month period ending June 30
preceding the fiscal year for which the fees are being
established), or for the most recent change in pay for Federal
employees stationed in the Washington, D.C. metropolitan area.
These adjustments assure that the personnel resources acquired
with additional fee revenue are not diminished over time by
inflation.
Workload Adjustment--A workload adjustment provision,
section 740(c)(2), increases fee revenue if, over time, there
is an increase in the aggregate in the major components of
FDA's animal drug review work. This parallels the workload
adjustment provision included in PDUFA III. The components of
the animal drug review workload that will be considered in
making this measurement are: (1) Animal drug applications; (2)
supplements for which data with respect to safety or
effectiveness are required; (3) manufacturing supplemental
animal drug applications; (4) investigational animal drug study
submissions; and, (5) investigational animal drug protocol
submissions.
The Secretary shall publish in the Federal Register the
fees resulting from this adjustment and the supporting
methodologies. Because a revenue target for each year is set in
the statute rather than specific fee levels, this adjustment is
essential to assure that revenues remain in balance with
workload. If, over time, the number of applications or
submissions submitted to FDA for review increases, this will
generate additional revenue in proportion to such a workload
increase. If there is no workload increase, there is no
increase in fee revenues as a result of this provision.
Final Year Adjustment--Section 740(c)(3) allows FDA to make
a one-time increase in fees in fiscal year 2008, if necessary,
to assure that the agency will have up to three months of
operating reserves on hand at the end of fiscal year 2008, when
this legislation will sunset. This will allow the agency to use
fees for the review of animal drug applications for up to 3
months in fiscal year 2009. Further, delaying this payment
until fiscal year 2008 minimizes the need for FDA to carry
large balances over from year to year, thereby reducing
industry outlays until they are necessary to support
operations.
Annual Fee Setting--Section 740(c)(4) requires FDA to
publish the actual fees for each year in a notice in the
Federal Register 60 days before the beginning of the fiscal
year. This is the same process used for PDUFA fees. The fee
levels will be established to generate the revenue levels set
in the statute, plus adjustments in years after fiscal year
2004 as provided in the statute. This annual fee setting may
also take into account the most current information available
about the volume of each type of application forecast for the
coming year.
Small Business Provisions--Section 740(d)(3), for purposes
of this legislation, defines a small business as an entity that
has fewer than 500 employees, including employees of
affiliates. The term ``affiliates'' is defined in section
739(11). A fee waiver is granted to a qualifying small business
submitting its first animal drug application for review.
Limitations--Section 740(f)(1) specifies that FDA must
receive appropriated budget authority, exclusive of user fees,
each year for the next five years that is equal to or greater
than the budget authority level provided in fiscal year 2003
adjusted for inflation based on the CPI index for all urban
consumers. Further, consequences are established if FDA's
appropriated budget authority falls short of this level.
Crediting and Availability of Fees--Section 740(g)(1)
provides standard language that assures that the fees
subsequently appropriatedunder this act are treated as revenue
generated and appropriated at the same time, so that they are neutral
in their budget impact. FDA is also given the authority to transfer
these fees to appropriation accounts for specific fiscal years, in
order to pay for operations each year. This language parallels
provisions in PDUFA III.
Spending From Appropriations on Animal Drug Review--Section
740(g)(2)(A) provides two further limitations, both parallel to
limitations in PDUFA III.
The first limitation, section 740(g)(2)(A)(i), is that fees
may be retained in each fiscal year only up to the amount
specified in each year for appropriation acts. FDA may begin
collecting fees in any year in which an appropriation for fees
for the year, or any portion of it, has been enacted. However,
the appropriation act itself sets the upper limit each year on
the amount of fees that may be kept and spent each year.
Section 740(g)(4) specifies that if, in any year, FDA collects
more fees than specified in appropriations, the excess fees
collected shall be used to reduce fees that would otherwise be
collected in a subsequent fiscal year. Those excess fee
revenues would then be used in such subsequent fiscal year.
The second limitation, in section 740(g)(2)(A)(ii),
dissolves FDA's authority to collect and spend fees in any year
that FDA fails to spend on the process for the review of animal
drug applications from appropriations as much as it spent on
that process from appropriations in fiscal year 2003, adjusted
for inflation.
Like a similar provision in PDUFA III, section 740(g)(2)(B)
provides FDA some leeway in its effort to meet this
requirement. If FDA's spending is within 3 percent of the
amount required by this provision of law, the requirement of
this section is considered satisfied. If FDA under-spends by 3
percent or less, there is no penalty. If FDA under-spends by
more than 3 percent, but not more than 5 percent, FDA will be
required to reduce collections in a subsequent year by the
amount in excess of 3 percent by which FDA under-spent from
appropriations. Spending from appropriations on the animal drug
review process each year is expected to be at or very close to
the amount specified by this trigger, and may never be more
than 5 percent less than the trigger amount.
Section 4. Accountability and reports
Section 4 requires the Secretary to consult with the
authorizing committees, scientific and academic experts,
veterinary professionals, consumer advocacy groups and the
regulated industry in developing recommendations to Congress
for goals and plans for reauthorization of this law. The
recommendations are to be published in the Federal Register,
and a public meeting is to be held and a 30-day comment period
is to be provided for written comments on the recommendations.
This section requires an annual Performance Report and an
annual Financial Report to be submitted to the authorizing
committees by the Secretary.
Section 5. Sunset clause
Section 5 provides that the amendments made by section 3
(relating to definitions and to the authority to assess and use
drug fees) shall cease to be effective on October 1, 2008. The
section further provides that section 4, relating to annual
reports, shall cease to be effective 120 days after October 1,
2008. The additional 120 days will allow the animal drug user
fee reports for fiscal year 2008 to be prepared and submitted.
Changes in Existing Law Made by the Bill, as Reported
In compliance with clause 3(e) of rule XIII of the Rules of
the House of Representatives, changes in existing law made by
the bill, as reported, are shown as follows (and existing law
in which no change is proposed is shown in roman):
FEDERAL FOOD, DRUG AND COSMETIC ACT
* * * * * * *
CHAPTER VII--GENERAL AUTHORITY
* * * * * * *
Subchapter C--Fees
* * * * * * *
Part 4--FEES RELATING TO ANIMAL DRUGS
SEC. 739. DEFINITIONS.
For purposes of this subchapter:
(1) The term ``animal drug application'' means an
application for approval of any new animal drug
submitted under section 512(b)(1). Such term does not
include either a new animal drug application submitted
under section 512(b)(2) or a supplemental animal drug
application.
(2) The term ``supplemental animal drug application''
means--
(A) a request to the Secretary to approve a
change in an animal drug application which has
been approved; or
(B) a request to the Secretary to approve a
change to an application approved under section
512(c)(2) for which data with respect to safety
or effectiveness are required.
(3) The term ``animal drug product'' means each
specific strength or potency of a particular active
ingredient or ingredients in final dosage form marketed
by a particular manufacturer or distributor, which is
uniquely identified by the labeler code and product
code portions of the national drug code, and for which
an animal drug application or a supplemental animal
drug application has been approved.
(4) The term ``animal drug establishment'' means a
foreign or domestic place of business which is at one
general physical location consisting of one or more
buildings all of which are within 5 miles of each
other, at which one or more animal drug products are
manufactured in final dosage form.
(5) The term ``investigational animal drug
submission'' means--
(A) the filing of a claim for an
investigational exemption under section 512(j)
for a new animal drug intended to be the
subject of an animal drug application or a
supplemental animal drug application, or
(B) the submission of information for the
purpose of enabling the Secretary to evaluate
the safety or effectiveness of an animal drug
application or supplemental animal drug
application in the event of their filing.
(6) The term ``animal drug sponsor'' means either an
applicant named in an animal drug application, except
for an approved application for which all subject
products have been removed from listing under section
510, or a person who has submitted an investigational
animal drug submission that has not been terminated or
otherwise rendered inactive by the Secretary.
(7) The term ``final dosage form'' means, with
respect to an animal drug product, a finished dosage
form which is approved for administration to an animal
without substantial further manufacturing. Such term
includes animal drug products intended for mixing in
animal feeds.
(8) The term ``process for the review of animal drug
applications'' means the following activities of the
Secretary with respect to the review of animal drug
applications, supplemental animal drug applications,
and investigational animal drug submissions:
(A) The activities necessary for the review
of animal drug applications, supplemental
animal drug applications, and investigational
animal drug submissions.
(B) The issuance of action letters which
approve animal drug applications or
supplemental animal drug applications or which
set forth in detail the specific deficiencies
in animal drug applications, supplemental
animal drug applications, or investigational
animal drug submissions and, where appropriate,
the actions necessary to place such
applications, supplements or submissions in
condition for approval.
(C) The inspection of animal drug
establishments and other facilities undertaken
as part of the Secretary's review of pending
animal drug applications, supplemental animal
drug applications, and investigational animal
drug submissions.
(D) Monitoring of research conducted in
connection with the review of animal drug
applications, supplemental animal drug
applications, and investigational animal drug
submissions.
(E) The development of regulations and policy
related to the review of animal drug
applications, supplemental animal drug
applications, and investigational animal drug
submissions.
(F) Development of standards for products
subject to review.
(G) Meetings between the agency and the
animal drug sponsor.
(H) Review of advertising and labeling prior
to approval of an animal drug application or
supplemental animal drug application, but not
such activities after an animal drug has been
approved.
(9) The term ``costs of resources allocated for the
process for the review of animal drug applications''
means the expenses incurred in connection with the
process for the review of animal drug applications
for--
(A) officers and employees of the Food and
Drug Administration, contractors of the Food
and Drug Administration, advisory committees
consulted with respect to the review of
specific animal drug applications, supplemental
animal drug applications, or investigational
animal drug submissions, and costs related to
such officers, employees, committees, and
contractors, including costs for travel,
education, and recruitment and other personnel
activities,
(B) management of information, and the
acquisition, maintenance, and repair of
computer resources,
(C) leasing, maintenance, renovation, and
repair of facilities and acquisition,
maintenance, and repair of fixtures, furniture,
scientific equipment, and other necessary
materials and supplies, and
(D) collecting fees under section 740 and
accounting for resources allocated for the
review of animal drug applications,
supplemental animal drug applications, and
investigational animal drug submissions.
(10) The term ``adjustment factor'' applicable to a
fiscal year refers to the formula set forth in section
735(8) with the base or comparator year being 2003.
(11) The term ``affiliate'' refers to the definition
set forth in section 735(9).
SEC. 740. AUTHORITY TO ASSESS AND USE ANIMAL DRUG FEES.
(a) Types of Fees.--Beginning in fiscal year 2004, the
Secretary shall assess and collect fees in accordance with this
section as follows:
(1) Animal drug application and supplement fee.--
(A) In general.--Each person that submits, on
or after September 1, 2003, an animal drug
application or a supplemental animal drug
application shall be subject to a fee as
follows:
(i) A fee established in subsection
(b) for an animal drug application; and
(ii) A fee established in subsection
(b) for a supplemental animal drug
application for which safety or
effectiveness data are required, in an
amount that is equal to 50 percent of
the amount of the fee under clause (i).
(B) Payment.--The fee required by
subparagraph (A) shall be due upon submission
of the animal drug application or supplemental
animal drug application.
(C) Exception for previously filed
application or supplement.--If an animal drug
application or a supplemental animal drug
application was submitted by a person that paid
the fee for such application or supplement, was
accepted for filing, and was not approved or
was withdrawn (without a waiver or refund), the
submission of an animal drug application or a
supplemental animal drug application for the
same product by the same person (or the
person's licensee, assignee, or successor)
shall not be subject to a fee under
subparagraph (A).
(D) Refund of fee if application refused for
filing.--The Secretary shall refund 75 percent
of the fee paid under subparagraph (B) for any
animal drug application or supplemental animal
drug application which is refused for filing.
(E) Refund of fee if application withdrawn.--
If an animal drug application or a supplemental
animal drug application is withdrawn after the
application or supplement was filed, the
Secretary may refund the fee or portion of the
fee paid under subparagraph B if no substantial
work was performed on the application or
supplement after the application or supplement
was filed. The Secretary shall have the sole
discretion to refund the fee under this
paragraph. A determination by the Secretary
concerning a refund under this paragraph shall
not be reviewable.
(2) Animal drug product fee.--Each person--
(A) who is named as the applicant in an
animal drug application or supplemental animal
drug application for an animal drug product
which has been submitted for listing under
section 510, and
(B) who, after September 1, 2003, had pending
before the Secretary an animal drug application
or supplemental animal drug application;
shall pay for each such animal drug product the annual
fee established in subsection (b). Such fee shall be
payable for the fiscal year in which the animal drug
product is first submitted for listing under section
510, or is submitted for relisting under section 510 if
the animal drug product has been withdrawn from listing
and relisted. After such fee is paid for that fiscal
year, such fee shall be payable on or before January 31
of each year. Such fee shall be paid only once for each
animal drug product for a fiscal year in which the fee
is payable.
(3) Animal drug establishment fee.--Each person--
(A) who owns or operates, directly or through
an affiliate, an animal drug establishment, and
(B) who is named as the applicant in an
animal drug application or supplemental animal
drug application for an animal drug product
which has been submitted for listing under
section 510, and
(C) who, after September 1, 2003, had pending
before the Secretary an animal drug application
or supplemental animal drug application,
shall be assessed an annual fee established in
subsection (b) for each animal drug establishment
listed in its approved animal drug application as an
establishment that manufactures the animal drug product
named in the application. The annual establishment fee
shall be assessed in each fiscal year in which the
animal drug product named in the application is
assessed a fee under paragraph (2) unless the animal
drug establishment listed in the application does not
engage in the manufacture of the animal drug product
during the fiscal year. The fee shall be paid on or
before January 31 of each year. The establishment shall
be assessed only one fee per fiscal year under this
section, provided, however, that where a single
establishment manufactures both animal drug products
and prescription drug products, as defined in section
735(3), such establishment shall be assessed both the
animal drug establishment fee and the prescription drug
establishment fee, as set forth in section 736(a)(2),
within a single fiscal year.
(4) Animal drug sponsor fee.--Each person--
(A) who meets the definition of an animal
drug sponsor within a fiscal year; and
(B) who, after September 1, 2003, had pending
before the Secretary an animal drug
application, a supplemental animal drug
application, or an investigational animal drug
submission,
shall be assessed an annual fee established under
subsection (b). The fee shall be paid on or before
January 31 of each year. Each animal drug sponsor shall
pay only one such fee each fiscal year.
(b) Fee Amounts.--Except as provided in subsection (a)(1) and
subsections (c), (d), (f), and (g), the fees required under
subsection (a) shall be established to generate fee revenue
amounts as follows:
(1) Total fee revenues for application and supplement
fees.--The total fee revenues to be collected in animal
drug application fees under subsection (a)(1)(A)(i) and
supplemental animal drug application fees under
subsection (a)(1)(A)(ii) shall be $1,250,000 in fiscal
year 2004, $2,000,000 in fiscal year 2005, and
$2,500,000 in fiscal years 2006, 2007, and 2008.
(2) Total fee revenues for product fees.--The total
fee revenues to be collected in product fees under
subsection (a)(2) shall be $1,250,000 in fiscal year
2004, $2,000,000 in fiscal year 2005, and $2,500,000 in
fiscal years 2006, 2007, and 2008.
(3) Total fee revenues for establishment fees.--The
total fee revenues to be collected in establishment
fees under subsection (a)(3) shall be $1,250,000 in
fiscal year 2004, $2,000,000 in fiscal year 2005, and
$2,500,000 in fiscal years 2006, 2007, and 2008.
(4) Total fee revenues for sponsor fees.--The total
fee revenues to be collected in sponsor fees under
subsection (a)(4) shall be $1,250,000 in fiscal year
2004, $2,000,000 in fiscal year 2005, and $2,500,000 in
fiscal years 2006, 2007, and 2008.
(c) Adjustments.--
(1) Inflation adjustment.--The revenues established
in subsection (b) shall be adjusted by the Secretary by
notice, published in the Federal Register, for a fiscal
year to reflect the greater of--
(A) the total percentage change that occurred
in the Consumer Price Index for all urban
consumers (all items; United States city
average) for the 12-month period ending June 30
preceding the fiscal year for which fees are
being established; or
(B) the total percentage change for the
previous fiscal year in basic pay under the
General Schedule in accordance with section
5332 of title 5, United States Code, as
adjusted by any locality-based comparability
payment pursuant to section 5304 of such title
for Federal employees stationed in the District
Columbia.
The adjustment made each fiscal year by this subsection
will be added on a compounded basis to the sum of all
adjustments made each fiscal year after fiscal year
2004 under this subsection.
(2) Workload adjustment.--After the fee revenues are
adjusted for inflation in accordance with subparagraph
(1), the fee revenues shall be further adjusted each
fiscal year after fiscal year 2004 to reflect changes
in review workload. With respect to such adjustment:
(A) This adjustment shall be determined by
the Secretary based on a weighted average of
the change in the total number of animal drug
applications, supplemental animal drug
applications for which data with respect to
safety or effectiveness are required,
manufacturing supplemental animal drug
applications, investigational animal drug study
submissions, and investigational animal drug
protocol submissions submitted to the
Secretary. The Secretary shall publish in the
Federal Register the fees resulting from this
adjustment and the supporting methodologies.
(B) Under no circumstances shall this
workload adjustment result in fee revenues for
a fiscal year that are less than the fee
revenues for that fiscal year established in
subsection (b), as adjusted for inflation under
subparagraph (c)(1).
(3) Final year adjustment.--For fiscal year 2008, the
Secretary may further increase the fees to provide for
up to 3 months of operating reserves of carryover user
fees for the process for the review of animal drug
applications for the first 3 months of fiscal year
2009. If the Food and Drug Administration has carryover
balances for the process for the review of animal drug
applications in excess of 3 months of such operating
reserves, then this adjustment will not be made. If
this adjustment is necessary, then the rationale for
the amount of the increase shall be contained in the
annual notice setting fees for fiscal year 2008.
(4) Annual fee setting.--The Secretary shall
establish, 60 days before the start of each fiscal year
beginning after September 30, 2003, for that fiscal
year, animal drug application fees, supplemental animal
drug application fees, animal drug sponsor fees, animal
drug establishment fees, and animal drug product fees
based on the revenue amounts established under
subsection (b) and the adjustments provided under this
subsection.
(5) Limit.--The total amount of fees charged, as
adjusted under this subsection, for a fiscal year may
not exceed the total costs for such fiscal year for the
resources allocated for the process for the review of
animal drug applications.
(d) Fee Waiver or Reduction.--
(1) In general.--The Secretary shall grant a waiver
from or a reduction of 1 or more fees assessed under
subsection (a) where the Secretary finds that--
(A) the assessment of the fee would present a
significant barrier to innovation because of
limited resources available to such person or
other circumstances,
(B) the fees to be paid by such person will
exceed the anticipated present and future costs
incurred by the Secretary in conducting the
process for the review of animal drug
applications for such person,
(C) the animal drug application or
supplemental animal drug application is
intended solely to provide for use of the
animal drug in--
(i) a Type B medicated feed (as
defined in section 558.3(b)(3) of title
21, Code of Federal Regulations (or any
successor regulation)) intended for use
in the manufacture of Type C free-
choice medicated feeds, or
(ii) a Type C free-choice medicated
feed (as defined in section 558.3(b)(4)
of title 21, Code of Federal
Regulations (or any successor
regulation)),
(D) the animal drug application or
supplemental animal drug application is
intended solely to provide for a minor use or
minor species indication, or
(E) the sponsor involved is a small business
submitting its first animal drug application to
the Secretary for review.
(2) Use of standard costs.--In making the finding in
paragraph (1)(B), the Secretary may use standard costs.
(3) Rules for small businesses.--
(A) Definition.--In paragraph (1)(E), the
term ``small business'' means an entity that
has fewer than 500 employees, including
employees of affiliates.
(B) Waiver of application fee.--The Secretary
shall waive under paragraph (1)(E) the
application fee for the first animal drug
application that a small business or its
affiliate submits to the Secretary for review.
After a small business or its affiliate is
granted such a waiver, the small business or
its affiliate shall pay application fees for
all subsequent animal drug applications and
supplemental animal drug applications for which
safety or effectiveness data are required in
the same manner as an entity that does not
qualify as a small business.
(C) Certification.--The Secretary shall
require any person who applies for a waiver
under paragraph (1)(E) to certify their
qualification for the waiver. The Secretary
shall periodically publish in the Federal
Register a list of persons making such
certifications.
(e) Effect of Failure To Pay Fees.--An animal drug
application or supplemental animal drug application submitted
by a person subject to fees under subsection (a) shall be
considered incomplete and shall not be accepted for filing by
the Secretary until all fees owed by suchperson have been paid.
An investigational animal drug submission under section 739(5)(B) that
is submitted by a person subject to fees under subsection (a) shall be
considered incomplete and shall not be accepted for review by the
Secretary until all fees owed by such person have been paid. The
Secretary may discontinue review of any animal drug application,
supplemental animal drug application or investigational animal drug
submission from a person if such person has not submitted for payment
all fees owed under this section by 30 days after the date upon which
they are due.
(f) Assessment of Fees.--
(1) Limitation.--Fees may not be assessed under
subsection (a) for a fiscal year beginning after fiscal
year 2003 unless appropriations for salaries and
expenses of the Food and Drug Administration for such
fiscal year (excluding the amount of fees appropriated
for such fiscal year) are equal to or greater than the
amount of appropriations for the salaries and expenses
of the Food and Drug Administration for the fiscal year
2003 (excluding the amount of fees appropriated for
such fiscal year) multiplied by the adjustment factor
applicable to the fiscal year involved.
(2) Authority.--If the Secretary does not assess fees
under subsection (a) during any portion of a fiscal
year because of paragraph (1) and if at a later date in
such fiscal year the Secretary may assess such fees,
the Secretary may assess and collect such fees, without
any modification in the rate, for animal drug
applications, supplemental animal drug applications,
investigational animal drug submissions, sponsors,
animal drug establishments and animal drug products at
any time in such fiscal year notwithstanding the
provisions of subsection (a) relating to the date fees
are to be paid.
(g) Crediting and Availability of Fees.--
(1) In general.--Fees authorized under subsection (a)
shall be collected and available for obligation only to
the extent and in the amount provided in advance in
appropriations Acts. Such fees are authorized to be
appropriated to remain available until expended. Such
sums as may be necessary may be transferred from the
Food and Drug Administration salaries and expenses
appropriation account without fiscal year limitation to
such appropriation account for salary and expenses with
such fiscal year limitation. The sums transferred shall
be available solely for the process for the review of
animal drug applications.
(2) Collections and appropriation acts.--
(A) In general.--The fees authorized by this
section--
(i) shall be retained in each fiscal
year in an amount not to exceed the
amount specified in appropriation Acts,
or otherwise made available for
obligation for such fiscal year, and
(ii) shall only be collected and
available to defray increases in the
costs of the resources allocated for
the process for the review of animal
drug applications (including increases
in such costs for an additional number
of full-time equivalent positions in
the Department of Health and Human
Services to be engaged in such process)
over such costs, excluding costs paid
from fees collected under this section,
for fiscal year 2003 multiplied by the
adjustment factor.
(B) Compliance.--The Secretary shall be
considered to have met the requirements of
subparagraph (A)(ii) in any fiscal year if the
costs funded by appropriations and allocated
for the process for the review of animal drug
applications--
(i) are not more than 3 percent below
the level specified in subparagraph
(A)(ii); or
(ii)(I) are more than 3 percent below
the level specified in subparagraph
(A)(ii), and fees assessed for the
fiscal year following the subsequent
fiscal year are decreased by the amount
in excess of 3 percent by which such
costs fell below the level specified in
subparagraph (A)(ii); and
(II) such costs are not more than 5
percent below the level specified in
subparagraph (A)(ii).
(3) Authorization of appropriations.--There are
authorized to be appropriated for fees under this
section--
(A) $5,000,000 for fiscal year 2004;
(B) $8,000,000 for fiscal year 2005;
(C) $10,000,000 for fiscal year 2006;
(D) $10,000,000 for fiscal year 2007; and
(E) $10,000,000 for fiscal year 2008;
as adjusted to reflect adjustments in the total fee
revenues made under this section and changes in the
total amounts collected by animal drug application
fees, supplemental animal drug application fees, animal
drug sponsor fees, animal drug establishment fees, and
animal drug product fees.
(4) Offset.--Any amount of fees collected for a
fiscal year under this section that exceeds the amount
of fees specified in appropriations Acts for such
fiscal year shall be credited to the appropriation
account of the Food and Drug Administration as provided
in paragraph (1), and shall be subtracted from the
amount of fees that would otherwise be authorized to be
collected under this section pursuant to appropriation
Acts for a subsequent fiscal year.
(h) Collection of Unpaid Fees.--In any case where the
Secretary does not receive payment of a fee assessed under
subsection (a) within 30 days after it is due, such fee shall
be treated as a claim of the United States Government subject
to subchapter II of chapter 37 of title 31, United States Code.
(i) Written Requests for Waivers, Reductions, and Refunds.--
To qualify for consideration for a waiver or reduction under
subsection (d), or for a refund of any fee collected in
accordance with subsection (a), a person shall submit to the
Secretary a written request forsuch waiver, reduction, or
refund not later than 180 days after such fee is due.
(j) Construction.--This section may not be construed to
require that the number of full-time equivalent positions in
the Department of Health and Human Services, for officers,
employees, and advisory committees not engaged in the process
of the review of animal drug applications, be reduced to offset
the number of officers, employees, and advisory committees so
engaged.
(k) Abbreviated New Animal Drug Applications.--The Secretary
shall--
(1) to the extent practicable, segregate the review
of abbreviated new animal drug applications from the
process for the review of animal drug applications, and
(2) adopt other administrative procedures to ensure
that review times of abbreviated new animal drug
applications do not increase from their current level
due to activities under the user fee program.
* * * * * * *