Taxpayer Funding through Appropriations and User Fees: Both Important but Serve Different Purposes

Taxpayer Funding through Appropriations and User Fees: Both Important but Serve Different Purposes

With user fee legislation coming next year, this will be the first of many columns on how FDA is funded. The central theme: while both are important, budget authority (BA) is intended to serve all aspects of the FDA’s mission and responsibilities, while user fees pay only for specific activities specified in law and 5-year negotiated agreements.

Q.: How many different types of funding does FDA receive?
A.: We track five main sources of FDA funding: budget authority (taxpayer-funded) appropriations (BA); medical product user fees; tobacco user fees; 21st Century Cures; and no-year supplemental funding. There is some revenue from certain inspection and standards activities, but the amounts are negligible. All these sources are important, but they are definitely not equal in size and impact.

Most of the agency’s $6+ billion budget comes from BA (taxpayer) funding and from seven medical product user fees. BA is all-purpose money--available to meet any aspect of the FDA’s mission and responsibilities (except tobacco programs that are 100% paid for by user fees). The seven medical product user fees are collected to pay for specific purposes set out in law and 5-year negotiated agreements. User fees are intended to complement and extend what can be accomplished with BA funding. User fees are not intended to replace BA.

Tobacco user fees pay for the entirety of the agency’s tobacco control activities; there is no BA appropriated for these activities. 21st Century Cures was allocated at just under $500 million, spread over 9 years, to support specified medical product development programs. These funds run out in 2025. Finally, no-year monies are usually focused around an area of high concern, such as the COVID-19 pandemic and opioid abuse prevention. These funds are not counted against any limitation on annual discretionary funds.

Q.: Which types of FDA funding are part of the Alliance’s advocacy?
A.: The Alliance is focused on the Budget Authority (taxpayer) portion of the FDA budget. In FY 21 this was about $3.2 billion. Both the House and Senate funding bills would increase that number to more than $3.4 billion in FY 22. We also keep an eye on the Cures funding (no greater than $50 million in FY 22), although their inclusion in the appropriations bill is fairly automatic.

There are a number of reasons why we do not focus on user fees. As noted, user fees are extremely important but limited in how they may be used. The primary beneficiary of the FDA is the American people, and they should share in the cost of the agency. Further, once the 5-year funding levels (with formulas for adjustments) are enacted into law, there is nothing to advocate for during the annual appropriations process. This is consistent with the priorities of appropriations staffers whose focus is almost exclusively on BA funding.

Editorial Note: The Analysis and Commentary section is written by Steven Grossman, Executive Director of the Alliance for a Stronger FDA.