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Press Release

    Sick Americans Face $1 Billion in Higher Taxes Under Clinton Plan to Balance Budget

    02/06/1997

    Ill and hospitalized Americans will end up paying nearly $1 billion more in new taxes under President Clinton's proposed FY98 budget, according to an analysis by Citizens for a Sound Economy (CSE). The taxes are in the form of so-called "user fees" paid to the federal Food & Drug Administration (FDA) first by health care businesses but ultimately passed along to consumers.

    According to Lydia Verheggen, director of health care policy at CSE, "The new user fees proposed by the president would be paid initially by drug and medical device manufacturers who are regulated by the FDA. It doesn't take a rocket scientist, however, to understand these are fees eventually paid by patients who rely on the drugs and devices."

    Verheggen describes the president's FDA budget as a non-starter. "While at first glance the president appears to cut spending, he actually plays a shell game by increasing spending with user fees. Patients and other consumers will pay these new taxes, which will be disguised as higher prices for generic and over-the-counter drugs, heart pacemakers and hospital stays," says Verheggen.

    President Clinton's fiscal year 1998 budget proposes to reduce obligations to the Treasury for the Food and Drug Administration by $188 million, or 18 percent. However, the President's proposed user fees more than make up for that reduction, bringing the FDA's budget to a record $1.1 billion.

    Over five years, the proposed FDA user fees would cost sick Americans $1.3 billion -- nearly $1 billion more than current prescription drug user fees would cost over five years.

    "Because the evidence shows the FDA's performance has actually worsened with existing user fees," said Verheggen "their value must be studied by the General Accounting Office before any new ones are enacted."

    Data from Tufts University's Center for the Study of Drug Development show the while the FDA has cut average review time for new drug applications by one year since it was allowed to collect user fees from applicants, overall approval time has lengthened by over two years -- swallowing up any gains made in cutting average review time.

    "Additional user fees would be acceptable only if they paid for timely, FDA-accredited, independent scientific review organizations to conduct safety and efficacy reviews," said Verheggen. "Any new fees must come in the context of FDA reform and modernization. To balance the budget with new taxes on the sick is simply unfair."