Given its expressed desire to reduce tobacco use and addiction in the United States, it may be surprising to learn that the Food and Drug Administration (FDA) receives funding for tobacco enforcement from the tobacco industry itself. This funding comes in the form of industry fees, better known as user fees, which the FDA collects from companies that produce a wide range of unique products. The agency uses these fees as a reliable source of revenue to carry out its regular duties and responsibilities, such as conducting timely product reviews.

Unlike other FDA divisions, the FDA’s Center for Tobacco Products (CTP) is fully funded by user fees. This fact should be deeply troubling to anyone who cares about the direction of the FDA and its ability to practice objective tobacco enforcement. It raises concerns about how this money is spent — particularly, whether it funds enforcement efforts taken against less harmful tobacco products.

Most divisions of the FDA rely on a combination of congressionally appropriated funding and user fees to fund operations. For instance, a little over 40 percent of the FDA’s Biologics budget comes from user fees, with the rest coming from federal appropriations. It’s a similar story for the FDA’s Animal Drugs and Feed budget, where only about 20 percent comes from user fees and 80 percent comes from federal appropriations. Other agency divisions fall somewhere in between.

100 percent of the FDA’s tobacco budget comes from user fees, setting it apart from these other divisions. This over-reliance on user fees to fund enforcement efforts is problematic for several reasons.

First, it demonstrates a lack of consistency across agency divisions that makes little practical sense. It’s in everyone’s best interest that each division receives funding from a variety of sources so that year-to-year operations are smooth, consistent and not subject to the ups and downs of the economy or changes in consumer behavior.

Second, an over-reliance on user fees may create a public perception problem where observers conclude that the agency is biased against certain types of products. The agency may be viewed as imposing more fees on products it dislikes, while exempting others from similar treatment. After all, it would make sense for the agency to be tempted to use user fees to generate extra revenue. Unlike the set amount of money the agency receives each year from federal appropriations, the amount of money it can generate from user fees is potentially limitless.

Perhaps this incentive structure is partly why, over the last few years, the amount of money the agency raises from user fees has continued to rise, both in absolute terms and as a percentage of the FDA’s budget. According to the Congressional Research Service, between 2017 and 2022 alone, user fee revenue grew by 47 percent, far outpacing the 21 percent increase in congressionally appropriated funding. User fees are now responsible for nearly half of the agency’s total budget and will likely continue to grow. None of this proves with certainty that perverse incentives are responsible for this increase, but the temptation that exists for the agency cannot be ignored.

The FDA’s user fee classification system has its own set of problems that makes relying on it to generate all enforcement revenue particularly troublesome. Section 919 of the Food, Drug, and Cosmetic Act (FD&C) grants the FDA the authority to assess and collect user fees from domestic manufacturers and importers of six different classes of tobacco products. These classes, which include cigarettes, roll-your own tobacco, snuff, chewing tobacco, cigars and pipe tobacco, are responsible for generating approximately $710 million annually for the agency, which it then uses for all regulatory activities.

These regulatory activities may include enforcement actions against Electronic Nicotine Delivery Systems (ENDS) products, which aren’t included among the list of user fee classes. Researchers have routinely found ENDs products — offerings like e-cigarettes, e-cigars and vape pens — to be less harmful than traditional tobacco products. Most ENDS products utilize e-liquid heating to function, as opposed to combustion like traditional tobacco products. As a result, users of ENDS products typically inhale fewer dangerous chemicals and carcinogens, associated with negative health outcomes than users of traditional tobacco products. This harm reduction factor is one reason why e-cigarette products are frequently used for cessation treatments in countries like the United Kingdom. While not completely risk-free, ENDs products are significantly safer than traditional tobacco products and have a track record of success for helping smokers quit.

Yet, the FDA doesn’t distinguish between these types of products and their more harmful counterparts when enforcing the law. Instead, the agency routinely chooses to paint all tobacco products with a broad stroke, regardless of where they fall along the continuum of risk. The FDA has a moral obligation to protect public health to the best of its ability and meet people where they’re at. It also has an obligation to use public funds wisely. Using user fees collected from traditional tobacco products to enforce regulations on safer alternatives is deeply problematic.

In the future, it’s possible that Congress will decide to establish a new user fee classification category for ENDS products. Some legislators have already attempted to do just that. However, until that happens, the FDA has no business using money collected from existing tobacco user fees to regulate less harmful ENDS products.

Congress should take time to reexamine the current tobacco user fee system and decide whether it really makes sense for the CTP to be entirely funded by user fees. This conversation should include a serious discussion about making tobacco user fees subject to congressional reauthorization and revisiting how fees are collected to ensure that the correct incentives are in place to encourage harm reduction. Actions such as these will go a long way toward ensuring that the money the FDA raises from user fees is collected fairly and spent wisely.