Under the act, FDA has the  authority to issue regulations controlling the manufacture, marketing, and  distribution of tobacco products. FDA executes its regulatory authority under the Tobacco Control Act  through CTP. The act  established three pathways for FDA’s review of new tobacco product  submissions: (1) the Substantial Equivalence (SE) pathway, which is for  new tobacco products that have the same characteristics as a predicate  tobacco product that is already legally marketed or has different  characteristics that do not raise different questions of public health;  (2) the Exemption from SE pathway, which is for new tobacco products  with minor modification of another product marketed by the same  manufacturer; and (3) the Premarket Tobacco Product Application  (PMTA) pathway, which is for new tobacco products that do not meet the  criteria for the other two pathways. Tobacco User Fees

The Tobacco Control Act requires FDA to assess user fees on  manufacturers and importers of tobacco products that are subject to FDA  regulation based on their market share and specifies that tobacco user  fees can only be applied toward FDA activities related to the regulation of  tobacco products.collected is specified in the act for each fiscal year, beginning in fiscal  year 2009 (see table 2), and the total amount does not vary based on the  number of tobacco products under regulation. FDA Spent 79 Percent of User Fees Collected, Mostly in Fiscal Year 2013

As of March 31, 2014, FDA spent about $1.48 billion (79 percent) of the  $1.88 billion in tobacco user fees collected (see fig. Most Spending Was for Public Education, Regulatory Science, and Compliance and Enforcement Activities

About 79 percent ($1.17 billion) of user fees spent as of March 31, 2014,  on tobacco-related activities was for activities related to public education,  regulatory science—which includes product research, product review, and  regulation and guidance support—and compliance and enforcement. FDA’s regulatory science activities also include developing the scientific  basis to support regulations and guidance for the tobacco industry,  including proposed regulations to deem additional tobacco products to be  subject to FDA’s authority and guidance on reporting and submission  review. Compliance and Enforcement Activities

FDA’s tobacco compliance and enforcement activities have been focused  on (1) tobacco retailer inspections; (2) inspections and enforcement of  domestic manufacturers and imported tobacco products, and  determinations of eligible predicate products in SE submissions;   (3) surveillance and review of tobacco promotions, advertising, and  labeling; and (4) outreach and small business assistance. FDA Encountered Challenges As It Established CTP, Including Setting Review Time Frames

FDA faced challenges related to starting up a new center, which affected  CTP’s efforts to educate the public, build the regulatory science base, and  enforce the new law and regulations. While FDA officials indicated that  the agency has taken steps to address some of the challenges it faced— such as those related to contracting and staffing—challenges related to  building the scientific basis for regulating a previously unregulated  product and setting review time frames remain. The agency has indicated that it intends to identify and implement  performance measures for these provisional SE submissions as it gains  more experience reviewing them. This will be particularly pressing as FDA  moves forward with plans to deem additional types of tobacco products to  be subject to its regulatory authority, which has the potential to generate a  substantial number of new submissions requiring review. Agency Comments

We provided a draft of this report to HHS for comment, and its comments  are reproduced in appendix IV. HHS agreed with the need for  performance measures related to its new tobacco product review  process.
Why GAO Did This Study

Tobacco use is the leading cause of preventable death and disease in the United States. In 2009, the Family Smoking Prevention and Tobacco Control Act (Tobacco Control Act) granted FDA, an agency within the Department of Health and Human Services (HHS), authority to regulate tobacco products, including marketing and distribution to youth. The act established CTP, which implements the act by educating the public on the dangers of tobacco use; developing the science needed for tobacco regulation; and developing and enforcing regulations on the manufacture, marketing, and distribution of tobacco products. The act authorized FDA to assess and collect user fees from tobacco manufacturers and importers.
The Tobacco Control Act mandated that GAO review the authority and resources provided to FDA for regulating the manufacture, marketing, and distribution of tobacco products. This report examines (1) how FDA spent tobacco user fees for key activities using its authorities granted in the act, and (2) any challenges FDA encountered in using its authorities. GAO analyzed data on tobacco user fees collected and spent on key activities by FDA as of March 31, 2014; reviewed documents related to FDA's key activities, as well as relevant laws, regulations, and guidance; and interviewed CTP, public health, and tobacco industry officials.
HHS reviewed a draft of this report and agreed with GAO's reiteration of its previous recommendation that performance measures for all tobacco product reviews are needed.

What GAO Found

As of March 31, 2014, the Food and Drug Administration (FDA) spent about $1.48 billion (79 percent) of the $1.88 billion in total tobacco user fees it collected since fiscal year 2009. FDA spent the majority of tobacco user fees on key activities led by the agency's Center for Tobacco Products (CTP), which is funded solely by tobacco user fees. These included activities related to public education (including public education campaigns and communicating CTP activities); regulatory science (including research, product review, and developing the science to support regulations and guidance); and compliance and enforcement (including tobacco retailer inspections; manufacturer and import inspections and enforcement; promotion, advertising, and labeling surveillance; and outreach and small business assistance).
While FDA has taken steps to address some of the challenges it has faced, including challenges related to starting up a new center, it continues to face challenges, including setting and monitoring review time frames. Until recently, CTP has not had performance measures for making final decisions on new tobacco product submissions by which to assess its progress, as GAO previously recommended. FDA has announced performance measures for two of its new tobacco product review processes (to take effect in October 2014), but not for the type of new tobacco product submission that comprises the bulk of FDA's review backlog. The agency has indicated that it intends to establish such performance measures, but until it does so, the agency's ability to assess its efforts will be limited. This will be particularly pressing as FDA moves forward with plans to deem additional types of tobacco products to be subject to its regulatory authority.