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Lance introduces bill to protect drug companies' fees from sequestration cuts

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U.S. Rep. Leonard Lance has introduced legislation exempting user fees paid by drug and device companies to improve product reviews from federal budget cuts.

Lance (R-Westfield) said unless a specific exemption is approved, programs paid by such fees are vulnerable to cuts under the federal sequester — a trigger of automatic spending reductions that Congress allowed in March.

The user fees account for about 35 percent of the Food and Drug Administration's budget, according to Lance. Such fees are paid drug and medical device companies, including many in New Jersey, to keep the FDA's drug review program modern. The fees are in addition to tax dollars that fund the FDA.

Under sequestration, the FDA is prohibited from collecting about $85 million in user fees in fiscal 2013, and more than $1 billion over a five-year period, according to the Congressional Budget Office.

"The FDA user fee program is critical in ensuring timely patient access to life-saving medicines and medical devices," Lance said in a statement. "Protecting this program from the congressional sequester will allow the FDA to fulfill its critical public health mission."

The legislation was lauded by the HealthCare Institute of New Jersey, which says New Jersey's biopharmaceutical and medical technology companies should not face cuts in programs that are paid by private industry apart from taxes.

"The user fees paid by life sciences companies to the FDA are different from appropriated funding, and are not generated from taxpayers," HINJ CEO Dean Paranicas said in a statement. "By exempting them from sequestration, the FDA will be able to use all of these funds for timely product reviews and approvals in order to improve patient care."

Congress has recently increased FDA user fees in order to strengthen the review process, Lance said.

Reporter Tom Zanki is @BizTZanki on Twitter.

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