Congressional hearings began this week on the Food and Drug Administration Globalization Act discussion draft. An important thrust are measures for creating parity between inspections of domestic and foreign drug-manufacturing facilities and to use registration fees of these facilities to help fund FDA’s inspection process.

Are registration fees for drug-manufacturing facilities a sound approach to support FDA funding? It seems that it depends on what side of the political and industry fence you sit.

John D. Dingell (D-MI), Chairman of the House Committee on Energy and Commerce, who introduced the discussion draft, underscored comments by FDA calling for more funding for inspections. “An important step toward addressing this crisis occurred at the hearing on Tuesday [April 29, 2008]. During that hearing, Dr. Janet Woodcock, Director of the Center for Drug Evaluation and Research at FDA, candidly acknowledged the need for substantial new funding for inspections and stated that at least $225 million would be needed to put foreign facilities inspections on par with inspections of domestic drug firms,” said Dingell in a prepared statement.

But in later comments at the hearings on Thursday May 1, Woodcock offered a more general view of registration fees. “While the Administration is supportive of user fee programs in which regulated industry provides funding for additional performance and efforts or programs designed to recoup the costs of regulatory actions resulting from findings of violations (such as reinspections), the Administration will carefully review any proposed user fee program to ensure that it is being assessed against identifiable recipients of special benefits derived from Federal activities beyond those received by the general public,” she said in prepared testimony.

Lori Reilly, vice-president for policy and research at the Pharmaceutical Research and Manufacturers of America (PhRMA), also weighed in on the debate. “PhRMA agrees with the Committee that the rate of FDA foreign inspections should be increased and recommends that FDA utilize a risk-based approach to prioritize such inspections,” she said. At the hearing, PhRMA also stressed the importance of Congress increasing appropriated funds to help the FDA fulfill its mission of protecting patient health and safety.

Congressional appropriations or registration fees? What is the best mechanism to help fund FDA’s inspection process?

The Prescription Drug User Fee Act (PDUFA) is a good model as it balances user fees, Congressional appropriations, and accountability. Under PDUFA, pharmaceutical companies pay user fees to support FDA’s drug-review process. The law includes a set of triggers that require Congressional appropriations reach certain levels before user fees may be assessed, and that FDA devotes a certain amount of appropriated funds annually to drug-review activities. In exchange for these fees, the FDA agrees, via correspondence with Congress, to a set of performance standards intended to reduce the approval time for new drug applications and biologics license applications.

Such a model would seem to work for funding inspections. The combination of registration fees, Congressional appropriations, and a mechanism of accountability for the agency itself would balance the needs of the industry, the public, and government.