How Pharma companies operate with the FDA—show us the money, honey

When a pharma company approaches the FDA with a new drug—hoping to win approval—they have to pay an upfront fee.

That usual fee is $3,672,848.

That’s a nice chunk of change. Very nice.

Although federal law forbids an employee of the Agency from pocketing any of that money, it does set up a situation where the drug company expects FDA to give them something in return. Like approval of the drug.

Now get this. When the FDA DOES approve a drug, the company must pay the FDA $393,933. Not just once, but for every year, going forward, during which company sells the drug in the US.

If, for example, the company sells the drug for the next 20 years, it pays the FDA $393,933 times 20.

That’s also a nice chunk of change. And the FDA likes to have that money, for buying new computers, hiring new people, improving office space, etc. Which creates an incentive for the FDA to approve drugs.

This is a business arrangement between the Agency and drug companies, no matter how you want to slice it.

Money is changing hands.

The drug companies who pay fees expect PERFORMANCE from the FDA, and the FDA knows it’s going to get paid for every drug it approves.

Here’s another interesting fact. Senior staff at the FDA can get bonuses: