stantially increased resources in both funds and personnel for the Food and Drug Administration.

The committee favors appropriations from general revenues, rather than user fees, to support the full spectrum of new drug safety responsibilities proposed in this report. This preference is based on the expectation that CDER will continue to review and approve drugs in a timely manner and that increasing attention to drug safety will not occur at the expense of efficacy reviews but rather it will complement efficacy review for a lifecycle approach to drugs. Congressional appropriations from general tax revenues are a mechanism by which the public can directly, fairly, and effectively invest in the FDA’s postmarket drug safety activities. However, if appropriations are not sufficient to fund these activities and user fees are required, Congress should greatly reduce current restrictions on how CDER uses PDUFA funds. Should the sources described above be insufficient, alternatives that could be considered and evaluated by Congress include but are likely not limited to a user fee associated with the consumption of prescription medications and a sales tax on purchase of marketing services by pharmaceutical companies.

By some estimates, more than a billion prescriptions are written each year in the United States. A small tax on prescriptions could generate significant funding to implement the recommendations made in this report. A tax of ten cents on every prescription, for example, would generate more than $100 million for the FDA budget. The administrative costs of collecting such a tax would need to be considered as well as the ultimate incidence of the tax. For example, collecting the tax from retailers or consumers at the point of sale might have higher administrative costs than collecting it from manufacturers. On the other hand, manufacturers might not know how many prescriptions were filled out of a given amount of product sold to a wholesales or retailer. An alternative approach might be to tax manufacturers based on the value of sales (perhaps net of rebates). This would have the advantage of more heavily taxing more expensive drugs, which would tend to be the newest ones and the ones around which there is greatest uncertainty about safety. Regardless of the taxation method used, it must be considered that the ultimate incidence of the tax will be on consumers and will be regressive. This tax would likely also have an effect on the costs of and access to pharmaceuticals.

Another tax-based proposal would seek to accomplish two goals—revenue enhancement and deterrence of excessive DTC advertising. A direct tax on DTC advertising for newer drugs would have the advantage of linking the decision to impose a tax with the finding that newer drugs necessarily suffer from greater uncertainty with respect to safety and efficacy in the general population, which is more heterogeneous than that studied in the



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