Worst of Both Worlds: FDA’s Funding Structure, Corporate Capture, and Political Interference

The United States Food and Drug Administration (FDA) has a unique funding structure among federal scientific and health agencies. The industries it regulates fund nearly half of its budget. The agency charges companies a user fee for each application for products requiring FDA approval like prescription drugs and medical devices.

Does this non-governmental funding source insulate the FDA from political interference? No, the structure instead harms the agency by opening it up to corporate capture, while still leaving it susceptible to executive overreach and other political harms. Such political and industry pressures have led to FDA approval even when drugs lack efficacy data or fail to meet clinical trial endpoints. Ultimately, this problem is not just about how to fund an agency; it could mean the drugs you take are unsafe or ineffective despite FDA approval.  

The user fees are a relatively recent phenomenon dating back just to the ’90s. During the H.W. Bush Administration’s push for fiscal responsibility, Congress looked for ways to raise revenue and expedite the FDA review process in response to industry concerns. In 1992, Congress passed the Prescription Drug User Fee Act (PDUFA), which allowed FDA collection of fees on each application for brand-name drug approval.

PDUFA has had some positive impact. Since passage, the FDA’s drug evaluation component, the Center for Drug Evaluation and Research, doubled its number of divisions, eliminated its review backlog, and promised to act on new applications in under six months — a massive acceleration of its review pace. Reauthorizations of these fees give Congress an opportunity every five years to reassess the FDA’s funding structure and attach additional policies to a bill that typically receives broad bipartisan support. Following PDUFA’s implementation, subsequent user fees enactment laws for other regulated products followed, allowing fee collection for animal products, biosimilar drugs, generic drugs, medical devices, and over-the-counter monograph drugs. 

With current threats to scientific agencies’ funding and personnel, might the user fees allow the FDA to weather current attacks on science better than the Centers for Disease Control and Prevention or the National Institutes of Health? Having a funding source outside of congressional appropriations has often been cited as a reason for independence of agencies like the Federal Reserve or Consumer Financial Protection Bureau. But in reality, the user fee agreements fail to insulate the FDA and make it more vulnerable to corporate capture. 

Former FDA leaders have categorized user fees as allowing “industry to pay its own way for approvals that will yield them profits.” User fee agreements, critics claim, subvert the typical relationship between regulating agencies and regulated industries by shifting the relationship to one that views industry as customers and partners whose profits the FDA hopes to help maximize. 

The FDA also frequently meets with industry to hear their demands for user fee agreement reauthorizations, providing industry increased access to change the rules for approval of their own products. While regulators meeting with industry is not abnormal, academics have noted that the FDA is “unique in the degree to which industry sets the terms of the agenda.” 

This close relationship has real impacts. Many experts cite corporate capture as responsible for approvals for drugs lacking the requisite efficacy data in instances like Aduhelm, an Alzheimer’s drug approved over an FDA expert committee’s recommendation to reject the drug for lack of effectiveness evidence. The drug, which initially retailed at a list price of $56,000 annually, was later pulled from the market due to lack of sales and effectiveness concerns.

FDA’s cozy relationship with industry also broadly impacts the type and quality of data that the agency considers sufficient to evaluate a drug’s safety and effectiveness. In the 2012 PDUFA reauthorization, manufacturers negotiated with FDA to allow data beyond the typical controlled clinic trials to form part of the review. Observers have expressed concerns that the new standards are “more susceptible to manipulation,” “a departure from rigorous science,” and “that they could lead to lower standards.” Lower standards for approval mean faster access to new drugs and increased manufacturer revenue, but could have real costs for patients taking less safe or effective drugs that weren’t subject to rigorous review.

This concern of approval without scientifically robust safety and effectiveness data was realized in the FDA approval of Elevidys, a drug for Duchenne muscular dystrophy. Elevidys’s Phase 3 clinic trial failed to meet its primary endpoints, leading the FDA’s clinical and clinical pharmacology review team to state that the drug “provided no satisfactory data to support effectiveness claims for all ages and for non-ambulatory patients.” Despite this, an FDA official stepped in to grant approval to the drug, a decision former FDA chief scientist Luciana Borio called “a mockery of scientific reasoning and approval standards.” Observers cite Elevidys’s approval as evidence of industry influence over FDA decision-makers. The FDA this year had to limit its approval for Elevidys and add a warning label after two teens died from liver failure after taking the drug.

The FDA has also been harmed by political influences. As a non-independent agency in the executive branch, the FDA is subject to President Trump’s control under the administration’s broad implementation of a unitary executive theory, where the president has the authority to directly manage all executive agencies, including the FDA. As such, President Trump laid off nearly 3,500 FDA employees in July, likely resulting in less rigorous review of applications and slower approval processes. Further, industry funding doesn’t insulate the FDA from congressional dysfunction, as the agency stops collecting user fees during government shutdowns.

Some, including seven former FDA Commissioners, have called for the FDA to operate as an independent agency, though administrative law trends at the Supreme Court question the future viability of such structures.

At a time when scientific agencies’ ability to fulfill their statutory duties is under attack from public officials who decry their expertise and an administration hamstringing agencies’ ability to function, one might hope the FDA’s user fees structure could insulate its regulation of nearly 20 percent of the U.S. economy. However, the agency gets the worst of both worlds with industry influence over its approval process, while still feeling the negative effects of political dysfunction and skepticism of science.