The fate in the Senate of fees on industry to pay for new FDA food safety responsibilities underscores the tough climate on Capitol Hill for new industry assessments to improve FDA oversight of drugs.

The Senate's version of the Food Safety Modernization Act (S. 510) took a more targeted approach to fees than the House version had, dropping registration fees and adding fees for reinspection of facilities and government conduct of a recall order when a company fails to comply with an initial request.

In that sense, the Senate's fee structure makes firms pay only for activities resulting from poor corporate performance – and that philosophical approach could make broad fee structures such as the one that Mylan is proposing a harder sell in Congress.

The limited fees were adopted in order to move a bi-partisan bill out of the Health, Education, Labor and Pensions Committee in the face of Republican Senators' concerns about the industry-wide fees.

That compromise produced complications of its own, because while the bill sailed through the Senate by a 73-25 vote on Nov. 30, it encountered choppy waters in the House because the changed fee structure made it a new revenue bill, which the Constitution says can only originate in the lower chamber.

Even that storm subsided, however, and the Senate's version of the food safety bill was attached to the continuing resolution that the House passed Dec. 8.

FDA Appropriations Have Strong Support, For What It's Worth

The CR would fund the federal government in fiscal 2011 at the fiscal 2010 level of $1.089 trillion, but with some shifting of funds between agencies and programs. F'DA would be on the receiving end of the shift. The bill would provide the agency with $2.504 billion in appropriations from the Treasury, plus $1.2 billion in user fees. The appropriations are $157 million more than approved for FDA in fiscal 2010.

The Senate developed an omnibus appropriations bill that is slightly more generous to FDA, providing $2.541 billion from the Treasury. But the measure was pulled from the floor schedule Dec. 16, and FDA and other agencies might be stuck at FY 2010 levels for the time being as Congress continues to wrangle with how to fund the government.

Even as the continuing resolution shows that Congress values the work of FDA, the recent history of drug safety legislation shows that legislators are increasingly wary of using fees to get it done.

The newest iteration of the Drug Safety and Accountability Act, introduced by Sen. Michael Bennet, D-Colo., Aug. 3, also avoided registration assessments, showing that even the heparin scare may be losing its political punch (Also see "Rx Manufacturing Safety Bill Resurfaces Without Inspection Fees" - Pink Sheet, 3 August, 2010.). Previous House and Senate bills to strengthen FDA's oversight of pharmaceutical imports and overseas drug manufacturing facilities had called for user fees on registered drug facilities.

The Senate that starts Jan. 3 is likely to be even less receptive to user fees as the Democrats' margin over Republicans shrinks to 51 versus 47 with two independents, and 13 new members join the Republican caucus, including several backed by fiscally conservative tea party activists.

In the House, the incoming Republican majority has indicated that a major goal will be to limit the financial burden placed on industry by government regulation and taxation.

In this environment, crafting the sales pitch for a user fee program will be all-important, and of course, if industry can work out a deal with FDA to get the application review services it wants at a fee price it likes, it shouldn't be terribly difficult to get Congress to enact it.

Mylan's proposal to create establishment and inspection fees to fund FDA safety activities in the U.S. and abroad probably won't get legislative traction without the rest of industry also supporting it, but the company's deft positioning of it as an American jobs bill will likely give it momentum.

User Fees Could Be Tough Sell On Capitol Hill

More from Archive

More from Pink Sheet