The Possible Demise of User Fees: Existential Threats Require Outside-the-Box Thinking
Last Thursday, Alec Gaffney of AgencyIQ declared “…the future of FDA’s user fee programs is in extreme jeopardy” (here). Alec has a well-deserved reputation as one of the best FDA analysts. Alec talks; people listen.
For the most part, I agree with him and have been building up to this conclusion since January (see addendum “Rising Concerns About User Fees”).
There is an urgent need to counter the widespread assumption that user fees will be renewed because the alternatives are unthinkable. True, Congress is not going to provide the extra $2.6 billion in taxpayer funding. But we now have leaders who seem ready, perhaps eager, to let the user fee programs lapse.
The existential threat is real. Fresh, outside-the-box thinking is essential if we are to prevent a potential disaster.
Today’s column is about my reasons for coming to the same conclusion as Alec (albeit with some differences in perspective). An upcoming column will look at various scenarios for the endgame.
The case for renewing medical product user fees[1] rests on the belief that FDA needs a robust, credible, and expert staff to: 1/ assure safe and effective medical products, 2/ maintain its “gold standard” reputation as a global regulatory agency, and 3/ be an engine of medical product innovation[2].
President Trump and Secretary Kennedy see FDA in an entirely different light. Among other things, they point to user fees, the revolving door, and an emphasis on products that treat rather than cure chronic diseases….and conclude that the agency is overstaffed, corrupt, and controlled by the biopharmaceutical, medtech, and food industries[3].
So far, there is no evidence that President Trump and Secretary Kennedy:
see the benefit to the US of having an FDA that is robustly staffed with credible experts.
appreciate that FDA’s food and medical product responsibilities require complex, multidisciplinary teams whose members are not interchangeable with each other[4].
care whether cuts to FDA and NIH will hurt patients, undercut FDA’s standing as the global regulatory “gold standard,” and jeopardize the development and review of innovative biopharmaceutical and medtech products in the United States.
would make an exception to a government-wide RIF and severe budget cuts in order to preserve an agency they think is in the hands of industry and making decisions that they see as antithetical to the public interest.
In short, we are going to be trying to change the minds of people who are indifferent to what most of us value. We may see a disaster coming, but they do not. This is the challenge ahead as stakeholders and Congress work toward reauthorization of medical product user fees.
These are not just rhetorical points. Secretary Kennedy has acted (or failed to act) with disregard for FDA’s ability to do its job as it has historically been defined and funded.
With RIF’s (3500 employees) and voluntary departures (variously estimated at 900-1000 employees), FDA will have lost upwards of a quarter of its workforce 1/ suddenly, with no time for transition, 2/ with no analysis or plan to guide the RIF process, and 3/ protecting only reviewers and inspectors from the RIF without regard for the fact that it is “review teams” and “inspection teams” that are required
Medical product user fees account for slightly more than 40% of the agency’s total budget[5] and account for well more than half of monies spent on medical product programs[6]. Altogether, FDA spends approximately $4.6 billion on medical products-- $2.6 billion from user fees and $2 billion from appropriated (taxpayer) funding. 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.
User fee agreements contain 1/ targets for funding additional employees[7], so that FDA’s capacity to perform work in a specific timeframe is enhanced and 2/ maintenance of effort provisions designed to ensure that user fees supplement rather than supplant budget authority (BA) appropriation (taxpayer funding)[8]. Both provisions are problematic after the lay-offs and RIF’s, and with the President’s plan to submit a proposal to Congress to rescind FY 2025 appropriated funds.
For lack of what President Trump and Secretary Kennedy view as “extra staff,” the agency is going to start missing product review dates and fail to complete other user fee tasks in a timely manner. For lack of appropriated dollars, FDA may fail to maintain the share of their activities that must be paid by taxpayers in order to be able to collect user fees[9].
Medical product user fees should have been a major part of the conversations thus far. The deafening silence on this issue does not bode well for the user fee reauthorization cycle that starts this coming summer.
They are renewed in five-year cycles and might be likened to a cooperative agreement between FDA and the involved industry. There is another $700 million in tobacco user fees. That program is permanent, not cyclical, and is an imposition on an unwilling industry. This article concerns medical product user fees and is not applicable to the tobacco program.
All of those goals are also true for food and nutrition. However, user fees are not part of funding those programs.
Politico’s April 3, 2025 interview with Secretary Kennedy’s primary surrogate, Calley Means: https://www.politico.com/video/2025/04/03/inside-rfk-jr-s-maha-agenda-with-calley-means-playbook-deep-dive-1561174
Discussed further at: https://www.fdamatters.com/fdamatters/what-is-happening-to-federal-workers-at-fda. NB: it may be possible to have fewer teams, but in many (if not most) cases, you cannot have fewer team members.
Higher percentages are often shown that reflect mixing medical and tobacco user fees, which are in no way alike.
Roughly, FDA’s $6.8 billion budget is divided: BA for medical products programs $2 billion; BA for food programs $1.5 billion; UF for medical products programs $2.6 billion; and UF for tobacco $700 million.
Expressed as FTE’s—that is full-time equivalents to reflect the common situation in which an employee is funding partly from user fee funds and partly from BA appropriated funds. https://www.fdamatters.com/fdamatters/special-edition-fda-rifs-and-user-fees-explained
Maintenance of effort—and its consequences—are well-explained by Alec Gaffney, here.
Resolution of the MOE issue is necessary but not sufficient for the continuation of the user fee programs. I believe that there are likely to be both bookkeeping and legislative solutions for the MOE triggers issue that can be negotiated if the continuation of user fees is otherwise accepted by all necessary parties.