Debate: America’s FDA Funding

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On October 11, 1988, roughly 1,500 activists from ACT UP chapters around the country descended on the Food and Drug Administration’s headquarters in Rockville, Maryland. It was the group’s first national action, and the demand was blunt: speed up the research, development and approval of drugs for AIDS. People were dying in the queue.

Four years later Congress bought the speed, and it did not use your money to do it. The Prescription Drug User Fee Act of 1992 found that prompt approval of safe and effective new drugs is critical to public health, and that public health would be served by making additional funds available to the agency’s review process. Those funds came from the companies whose drugs were waiting.

So, who pays for the FDA today? Drug companies now cover about three quarters of what it costs to review their own drugs, you cover nearly all of the food work, and what the companies’ money buys is a deadline, not a decision.

From seven percent to seventy-seven

In fiscal year 1993, the first year fees were collected, prescription drug user fees provided 7 percent of the total cost of the drug review program. In fiscal 2025 they covered 77 percent.

That flip did not happen because Congress cut the FDA. It happened because Congress stopped growing it. Between fiscal 2021 and fiscal 2026 the agency’s enacted total program level rose from $6.050 billion to $7.069 billion, but appropriated funding grew about 2 percent over that period while user fee revenue grew more than 30 percent.

One thing is easy to miss. Both streams run through Congress: FDA’s annual appropriation sets both the budget authority and the user fees the agency may collect and obligate that year. The companies write the checks. Congress decides whether they can be cashed.

What lands on a drug company’s desk

The bill is public and precise. For fiscal 2027, an application requiring covered clinical data costs $4,600,753, an application without it costs $2,300,376, and a company with an approved product pays an annual program fee of $416,857.

Miss the payment and the science never gets read. An application from a company that owes fees is considered incomplete and cannot be accepted for filing until every fee owed is paid.

The fee buys a clock

What industry gets for the money is written in a letter, not a statute. The current commitment letter promises that FDA will review and act on 90 percent of standard applications for new molecular entities within 10 months of the 60-day filing date, and on 90 percent of priority ones within 6 months.

In plain terms: the clock does not start when the application arrives. It starts two months later, once FDA agrees the submission is complete enough to file, so a ten-month review runs closer to a year on your calendar.

The agency has been hitting it. In its fiscal 2024 performance report FDA told Congress it was meeting or exceeding the 90-percent level for all 10 review performance goals. Of the 50 novel drugs approved in 2024, 34, or 68 percent, were approved in the United States before any other country.

None of it is a promise to say yes.

One Kansas family went public while their young son was receiving an enzyme treatment for Hunter syndrome inside a clinical trial and they waited on the FDA. His mother measured the risk in calendar time: even a six-month delay, if the agency wanted more information, would cost children like him the ability to speak, to walk, to feed themselves.

The approval came. The family says it is saving his life. That is the case for the clock, and it is not a small one.

The letter is not only about speed. It also commits FDA to modernizing its drug safety system and to hiring and keeping reviewers.

The rule that stops Congress swapping your money for theirs

The obvious risk with industry money is that lawmakers pocket the savings and quietly withdraw the taxpayer’s share. The 1992 bargain built a floor under that.

Fees must be refunded for any year in which FDA’s salaries and expenses appropriation, excluding fees, falls below the fiscal 1997 appropriation multiplied by a statutory adjustment factor. The Congressional Research Service (CRS) notes a further condition: the agency must spend at least as much appropriated money on human drug review as it did in fiscal 1997, adjusted for inflation.

Read that again, because it is the strangest feature of the system. If the taxpayer’s contribution falls too far, the FDA does not get to keep the industry money. It has to give it back.

Commissioner Marty Makary’s written testimony on the fiscal 2026 request told appropriators the budget was built to meet those triggers, including an $8.2 million increase for the device program’s non-user-fee trigger. After the 2025 layoffs, former staff told the trade publication AgencyIQ that the agency was “dangerously close” to triggering the conditions that would bar collection and force refunds of fees already paid.

Nobody sends the food side an invoice

Now the part of the question with a one-word answer. Food.

In the fiscal 2026 enacted budget, FDA’s human foods program ran on $1,171 million of taxpayer budget authority against $13 million in fees. The food fees that exist are narrow: color certification, export certification, reinspection after a failure, recalls, the voluntary qualified importer program, third-party auditors. Nobody is billed for a routine inspection.

Congress has ordered more inspections than the agency can do. Through the Food Safety Modernization Act, lawmakers set a rising schedule of foreign inspections culminating in 19,200 a year from 2016, a target FDA considers unrealistic and unachievable given its resources.

Frank Yiannas ran the food side, and he left. On January 25, 2023 the Deputy Commissioner for Food Policy and Response told Commissioner Robert Califf he would go the following month, writing that he had first considered resigning in February 2022 because the decentralized structure of the foods program significantly impaired FDA’s ability to operate as an integrated food team and protect the public.

He had stayed to work the infant formula crisis. An expert panel convened by the Reagan-Udall Foundation had reached the same diagnosis weeks earlier, blaming flat staffing and neglected information technology.

A food fee is on the table. The administration’s fiscal 2027 request counts $71 million from a proposed foreign food facility registration fee, which CRS classes as unauthorized because Congress has not enacted it.

The gap shows when the government closes. During a lapse FDA may spend carryover fee balances on review work, so drug review continues for a while; food inspection does not. In the 2018 to 2019 shutdown Commissioner Scott Gottlieb suspended routine inspections of seafood, fruits, vegetables and other high-risk foods, then reversed course and recalled inspectors for the highest-risk plants.

Every five years, all of it expires

The drug fee authorities cease to be effective on October 1, 2027. That is not a paperwork deadline. It is the day the money stops.

The last renewal cleared with nothing to spare, riding H.R. 6833, the Continuing Appropriations and Ukraine Supplemental Appropriations Act, 2023, signed September 30, 2022. Senators Patty Murray and Richard Burr, then chair and ranking member of the Senate health committee, announced the deal in the language of the agency’s payroll, saying FDA “will not need to send out pink slips.” Officials had warned that employees whose salaries come from fees could face reductions in force or furloughs.

Who is in the room

Industry sits across the table, but it is not the only party the law puts in the process. Before negotiations begin the Secretary must publish a Federal Register notice seeking public input, hold a public meeting and take 30 days of comment. During negotiations FDA must meet patient and consumer advocacy groups at least monthly, and minutes of the industry sessions are posted.

Those minutes are worth reading. The November 20, 2025 pre-market subgroup seated FDA’s Mary Thanh Hai, Janet Maynard and Mark Levenson across from Mark Taisey of Amgen, for BIO, the Biotechnology Innovation Organization.

Then came February 24, 2026. At the finance subgroup that day, negotiators for the trade groups BIO and PhRMA restated that their support for FDA’s operating reserve model had been premised on fee dollars being set aside to rehire staff. They said they had learned five days earlier that prescription drug fee funds had paid part of the severance for staff who had been cut. By their account, money collected to hire reviewers had helped pay to let them go.

The statute is not neutral about that. Fees are made available to defray increases in the cost of the review process, including additional full-time equivalent positions, measured against 1997 costs. The design is capacity on top of appropriations, not a replacement.

Industry says it wants restraint this round: slower growth in the fees themselves, and more accountability, transparency and stability. Patient groups want something else. The National Health Council has asked for a mechanism to bring outside experts into the review of patient experience data.

The case that the money bought deference

David Graham worked in FDA’s Office of Drug Safety. Testifying to the Senate Finance Committee after Vioxx was withdrawn, he said the agency as then configured “is incapable of protecting America against another Vioxx. We are virtually defenseless.” He also testified that the Office of Drug Safety and the Office of New Drugs had pressured him to soften the conclusions of his Kaiser study.

Critics keep returning to one approval: Aduhelm. It came through accelerated approval, the pathway that lets FDA clear a drug on a measure only reasonably likely to predict clinical benefit. The Department of Health and Human Services Office of Inspector General reviewed three such approvals and found FDA granted all three despite concerns from its own reviewers or advisory committees, evaluated analyses missing from the sponsor’s original plan in two, and for one could not find some sponsor meetings in the administrative file.

A joint congressional staff report concluded FDA’s handling of Aduhelm used atypical procedures and deviated from the agency’s own guidance.

Three members of the advisory committee quit. Mayo Clinic neurologist David S. Knopman and Washington University’s Joel S. Perlmutter went first, then Harvard’s Aaron Kesselheim, whose resignation letter called it “probably the worst drug approval decision in recent U.S. history.”

FDA’s answer is that advisory committees make nonbinding recommendations, which it generally follows but is not legally bound to follow. True, and beside the point critics are making.

Reviewers get overruled too. Ellis Unger, director of the Office of Drug Evaluation-I, disagreed in writing with Center for Drug Evaluation and Research (CDER) director Janet Woodcock’s decision to grant accelerated approval to eteplirsen and appealed; the dispute resolution group noted he had never had an independent scientific review, because Woodcock had resolved the conflict herself.

Public Citizen’s Health Research Group makes the structural argument: if performance goals continue, all stakeholders and not just industry must be at the table when they are negotiated. It also wants the appropriations condition abolished, because committing a set amount of appropriated money to drug approval forces FDA to move money out of everything else.

2025, and the bargain nobody reopened

In April 2025 more than 3,500 FDA employees were laid off under Health and Human Services Secretary Robert F. Kennedy Jr., a roughly 15 percent reduction in force. The agency said inspectors would not be affected. ProPublica reported the cuts stripped out inspection support staff anyway, nearly 70 people who arranged travel, budgets, translators and contingency plans.

The layoffs reached the fee machinery itself, taking out the head and deputy head negotiators for one of the user fee agreements. Peter Marks, who directed the biologics center, resigned that spring, writing to acting Commissioner Sara Brenner that “truth and transparency are not desired by the Secretary, but rather he wishes subservient confirmation of his misinformation and lies.”

Nobody reopened the deal. The invoices went out on the old schedule while the staffing they were supposed to buy was decided somewhere else.

What the reformers would do instead

Put the FDA back on the taxpayer’s books, say critics of fee dependence. Howard Sklamberg, a former FDA deputy commissioner, calls that a hard sell, since taxpayers would be underwriting review of applications that earn companies billions, and warns that ending fees with no replacement money would leave patients in FDA-supervised trials without their treatment. Mark McClellan, a former FDA commissioner now at Duke-Margolis, says losing the money would mean slower approvals and less clear decisions.

A third camp says the funding fight is the wrong fight. The Goldwater Institute’s example is Matt Bellina, a Navy pilot out of options, whose name is on the federal Right to Try Act of 2018; afterward he obtained an investigational treatment, and the Institute reports improved speech and his regaining the ability to pull himself to standing. If patients can bypass the gate, who pays for it matters less.

The dates now running

FDA has published its proposed recommendations for the eighth round of drug fees in the Federal Register. The rule is the same each round: the agency holds a public meeting on those recommendations and takes written comments for a month afterward. For the eighth round that meeting and comment period ran through the autumn of 2026, at White Oak and online.

The Secretary must transmit revised recommendations to Congress no later than January 15, 2027, with a summary of the views received and any changes made in response. The authorities lapse on October 1, 2027.

Congress has renewed them seven times. Once, with a single day to spare.