The Animal Drug User Fee Act of 2003 (ADUFA I, P.L. 108-130 ) was signed by the President in November 2003. It established a new requirement, effective in FY2004, for FDA to collect fees from sponsors of brand-name animal drugs in order to reduce the backlog of reviews for those products, decrease the time required for future reviews, and improve the predictability of the review process. Representatives of animal drug research and development companies say that an animal drug can take 7 to 10 years to develop, at a cost of $100 million or more. Predictable and timely review is important to these companies. Companies that make generic animal drugs, which are not currently covered by a user fee program, want review of their products to be timely and predictable as well. Moreover, veterinarians, animal producers, pet owners, and consumers have an interest in the safety, availability, and affordability of animal drugs, including their safety when used in livestock production. Animal drug user fee authority sunsets October 1, 2008. If the program were not reauthorized by then, FDA would have been prohibited at that time from collecting user fees, and would have to lay off animal drug review staff. FDA began discussions with animal drug sponsors regarding ADUFA reauthorization (ADUFA II) in the spring of 2007. In 2008, FDA published its reauthorization proposal in the Federal Register in February, held a public meeting in March, and accepted public comments through mid-April. On April 24, 2008, FDA published draft legislation to reauthorize ADUFA, along with a proposal for a new user fee authority for generic animal drug reviews. On July 8, 2008, bills were introduced in the House to reauthorize ADUFA ( H.R. 6432 ) and to establish a user fee program for generic animal drugs ( H.R. 6433 ). Both bills were forwarded without amendment to the full committee by the House Energy and Commerce Subcommittee on Health the following day, and were marked up by the full committee on July 16, 2008. On July 30, 2008, the House passed H.R. 6432 , as amended, under suspension. The engrossed bill incorporated an amended version of H.R. 6432 , as it was reported by the full committee, and H.R. 6433 , the proposal for generic animal drugs, as it was reported. On August 1, 2008, the Senate took up the House-passed measure and passed it by unanimous consent. The measure has been sent to the President, who is expected to sign it. Reauthorization of the existing user fee program was supported by animal drug research and development companies, livestock producers, and the American Veterinary Medical Association. Because a sunset of program authority would have been highly disruptive to the animal drug review process, many supporters felt that ADUFA reauthorization was "must pass" legislation in the 110 th Congress. A coalition of consumer groups opposed the user fee program and its reauthorization, however, citing concerns about the safety of animal drugs approved for livestock production. This report discusses aspects of ADUFA I, including funding and program performance; FDA's proposed changes for ADUFA II; FDA's proposal for a new generic animal drug user fee program; congressional activity; and relevant issues. Appendix A provides a summary of ADUFA I. Appendix B describes the FDA process for approval of animal drugs. This report will be updated to incorporate legislative actions and other events as they unfold. References in this report to "the Secretary" refer to the Secretary of Health and Human Services (HHS). The Animal Drug User Fee Act of 2003 (ADUFA I, P.L. 108-130 ) established, for the first time, effective in FY2004, authority for FDA to collect fees from sponsors of animal drugs in order to reduce the backlog of application reviews for those products, and to decrease the time required for future reviews. The act mirrored many provisions from the existing prescription drug and medical device user fee programs. ADUFA authority is in sections 739-740 of the FFDCA [21 U.S.C. §§ 379j-11 and -12]. With the exception of one technical and one conforming amendment in 2007, the law has not been amended since its original passage. ADUFA I authority sunsets October 1, 2008, the beginning of the FY2009 fiscal year. A summary of the law is provided in Appendix A . The bills that were ultimately enacted in the 108 th Congress were H.R. 1260 and S. 313 . In its report on the House bill, the House Committee on Energy and Commerce noted that in 1992, FDA was required to report to Congress regarding the feasibility of a user fee program to improve the review process for animal drugs. In 1994, FDA reported that inadequate review resources, a growing workload, and low-quality applications submitted by industry had slowed the approval process to an unacceptable rate. The FDA report noted that if Congress were to consider legislation authorizing FDA to impose and collect user fees, approximately $11 million in fees would be needed annually. The committee reported that as of 2003, the situation had not improved, and may have worsened. In its report on the Senate bill, the Senate Committee on Health, Education, Labor, and Pensions said that animal drug user fee authority should allow FDA to (1) eliminate existing backlogs of applications within two years; (2) over a five-year period, move toward the goal of completing the review of 90% of new animal drug applications within 180 days; (3) resolve new and emerging scientific issues that affect the ability of FDA to make approval decisions; and (4) achieve an enhanced and predictable review performance. ADUFA I authorizes the collection of user fees for the review of pioneer animal drugs, the so-called "(b)(1)" animal drugs. It does not authorize the collection of fees for ANADAs, the so-called "(b)(2)" generic animal drugs. The law requires the Secretary, to the extent practicable, to segregate the review of ANADAs from that of NADAs, and adopt other administrative procedures to ensure that review times of ANADAs do not increase because of activities under the user fee program. ADUFA I defines the activities and costs that are allowable under the user fee program, including those related to personnel, management of information and facilities, and fee collection, for the review of applications. The definitions do not include any postmarket activities, and expressly prohibit the use of user fees to review advertising and labeling after an animal drug has been approved. Congress established, in ADUFA I, three funding "triggers" that prohibit FDA from collecting user fees for animal drug review unless certain conditions are met each year. This was done to ensure that user fees supplement, rather than replace, appropriated funds. Two of the triggers set FY2003 as a baseline, a minimum level of non-user fee appropriations (adjusted for inflation) that must be maintained each year. One of these triggers requires that this level be maintained across the agency. The other requires that it be maintained specifically for animal drug review activities. The third trigger prohibits FDA from collecting user fees unless an explicit amount for such fees is authorized in annual appropriations. The triggers are as follows: FDA's overall appropriation for salaries and expenses for a given fiscal year, excluding fees, must exceed the agency's overall appropriation for salaries and expenses for FY2003 (prior to the user fee program), excluding fees, and adjusted for inflation. FDA must spend, for animal drug review, from appropriated funds, an amount not more than 3% below the amount spent for animal drug review, from appropriated funds, in FY2003 (prior to the user fee program), under certain conditions. Under no condition may such amount be more than 5% below the FY2003 amount. (Amounts in either case are adjusted for inflation). Fees shall be collected and available for obligation only to the extent and in the amount provided in advance in annual appropriations acts. In its annual financial reports to Congress for fiscal years 2004 through 2006 (the most recent available), as required by ADUFA I, FDA reports that each of the fee triggers was met each year. Experience from the human drug and medical device user fee programs showed that because the number of applications varies from year to year, basing a user fee program solely on application fees did not provide predictable funding streams. From the outset, ADUFA I authorized several types of user fees. The act also authorized the total revenues for each fee type that may be collected each fiscal year, which are to be adjusted annually for inflation and workload. The act required the Secretary to set annual fees at least 60 days before the start of each fiscal year and to publish the fees and methodology in the Federal Register . The types of animal drug user fees, and the fee amounts for FY2008, are as follows: Application fees: One-time fees for new animal drug applications (NADAs), and NADA supplements for which safety or effectiveness data are required. Supplement fees are half the amount of the NADA fee. The FY2008 amounts are $172,500 per NADA and $86,250 for a NADA supplement for which safety or effectiveness data are required. Product fees: Annual fees for each of a sponsor's products to which ADUFA is applicable, including approved and pending applications. The FY2008 amount is $4,125. Establishment fees: Annual fees for each of a sponsor's manufacturing establishments, unless the product is not manufactured in the year the fee would be assessed. The FY2008 amount is $52,700. Sponsor fees: Annual fees for each sponsor of an approved or pending application. The FY2008 amount is $43,900.