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Will Congress Actually Stand Behind its Own Words?

June 1, 2012

This week’s column raises a delicate question: Can Congress be counted upon to remember and act upon its own words?

In successive weeks, the Senate and now the House have taken up the FDA user fee reauthorization legislation and passed it by large bipartisan margins. In both bodies, the importance of the FDA has been extolled. The urgency of its funding needs have been fully acknowledged. The incredible breadth of support for the agency has been counted and documented.

Perhaps most encouragingly, the FDA’s cause has become linked to J-O-B-S.  Upon passage of the user fee legislation in the House on Wednesday, the House Energy and Commerce Committee released a fact sheet on the legislation that begins:

The United States has led the global medical device and biopharmaceutical industries for decades.  This leadership has made the U.S. the medical innovation capital of the world, bringing hundreds of thousands of high-paying jobs to our country and life-saving devices and drugs to our nation’s patients.  U.S. medical device-related employment totals over 2 million jobs, and these are good, rewarding jobs as employees in the device industry earn an average of $60,000 per year.  The U.S. biopharmaceutical industry is responsible for over 4 million U.S. jobs.

The media have noted that the user fee legislation assures FDA of nearly $6.5 billion in industry monies over the next 5 years. This is indeed a lot of money. We assume FDA will need every dollar of it to meet the commitments it has made in writing to use these monies on specific activities and on achieving specific performance benchmarks.

This brings us to truth that nobody seems to be focused on right now: FDA CANNOT LIVE BY USER FEES ALONE.

To conduct the bulk of its functions — the ones that are supplemented by user fees — FDA received a budget authority (BA) appropriation of about $2.5 billion in FY 12. Assuming a very modest 6% annual increase in costs and responsibilities, FDA will need about $15 billion in BA appropriations over the same 5-year period (FY 13-17). This is in addition to the industry contribution of $6.5 billion.

Prospects for this happening do not look good. The Senate is recommending only a 0.5% increase for FY 13 (about +$25 million of the needed $150 million). Even worse, the agency faces a potential January 2013 sequester (reduction) of about 8% of BA funds ($200 million), leaving the possibility of a –$325 million gap in FY 13 compared with the modest 6% growth the agency needs. Were that to happen, FDA would need 4 straight years with increases above 12%, just to come close to the $15 billion needed.

The $15 billion, 5-year estimate for BA appropriations — whichh includes only modest annual increases — does not account for the costs of the Food Safety Modernization Act. Nor does it account for the increased non-user fee responsibilities Congress has incorporated in the user fee reauthorization legislation or the many other ways (such as globalization) in which FDA’s job becomes more complex each year.

This brings us back to the delicate question we began with: Are the Senate that supported FDA last week and the House that supported FDA this week prepared to stand behind their own words about the importance of FDA and its role in job-creation and the economy? If so, Congress needs to plan for a larger BA appropriations for FDA — for FY 13 and for each of the succeeding 4 years.

Note: This analysis and commentary is written by Steven Grossman, the Deputy Executive Director of the Alliance for a Stronger FDA.

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