of “regulatory capture”4 has been employed to describe the state of affairs created or, more likely, exacerbated by the user-fee system,5 namely, that powerful industry interests control or strongly influence the regulatory agency’s decision making.

Some have argued that eliminating industry funding for regulatory review is in the best interest of the credibility of the drug safety system. Others have argued that industry receives a valuable service (timely approval of their products) and should be expected to pay for this,6 as long as agency independence and the credibility of its scientific review remain intact. Others argue that without extra funding from user-fee revenue, the delays in new drug review observed prior to user fees will return since FDA budgets will then be subject to fluctuations in the policitical climate and increased pressures to reduce government spending. This too may compromise the effectiveness of our drug approval system.

As described elsewhere in the report, PDUFA has included an extensive number of performance goals (see Appendix C for a complete listing). CDER reports yearly to Congress on how well it has met those goals (in the performance goals letter7 submitted by the Secretary of the Department of Health and Human Services (DHHS), see, for example, http://www.fda.gov/cder/pdufa/default.htm). Along with performance goals, PDUFA includes restrictions on how CDER can use its funds. Each round of PDUFA negotiations has led to more demands on CDER and continued restrictions on CDER’s flexibility. The committee is not concerned about the existence of performance goals in principle,8 but finds the limitations or “strings” that direct how CDER can use PDUFA funds the most troubling aspect of the arrangement.9

7.1: To support improvements in drug safety and efficacy activities over a product’s lifecycle, the committee recommends that the Administration should request and Congress should approve sub-

4

Adapted from the capture theory of regulation advanced by Stigler (1971) and critiqued by Laffont and Tirole (1991) and by Carpenter and Ting (2004).

5

The industry has a powerful influence on the political process and on the regulatory environment whether or not it funds the agency.

6

Similar arguments have been made regarding user-fee programs for other regulatory agencies.

7

http://energycommerce.house.gov/107/hearings/03062002Hearing502/print.htm.

8

See Chapter 3 for a recommendation regarding institution of safety goals.

9

The committee is aware that other regulatory agencies, for example the Environmental Protection Agency and the Federal Communications Commission, are supported in part by specific user-fee programs. Some user fees go directly into the Treasury; other user fees go to the agency and offset congressional appropriations. The committee has not done an exhaustive analysis of other user-fee programs but is of the understanding that they are not associated with significant requirements on how the agency uses the fees to achieve programmatic goals.



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