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Initial Alliance Comment on President’s Request for FDA for FY 14

April 10, 2013

The President’s Request for FDA for FY 14, preserves the agency’s pre-sequester, pre-rescission funding level by using FY 12 as the base-year and building on that. As a starting point, that is very favorable to the agency.

The Administration claims an increase in total FDA funding of $821 million over FY 12 funding. Most of this increase ($770 million) is in user fees and is a combination of:

  • Taking credit for user fee programs that were created or increased in FDASIA (+$440 million)
  • Built-in increases in other user fee programs (+$60 million)
  • A number of new proposed food and cosmetics user fees that may or may not become law (+$270 million)

Budget authority (BA) appropriations (taxpayer funding) would increase by $51 million over FY 12 if the President’s request is adopted.

  • Of this, about $24 million was already added into FY 13 funding and the new money requested is actually about $27 million. Because of offsets (administrative savings) and possible delays in implementing FY 13 initiatives, it is difficult to precisely break out the increases between the 2 years.
  • The bulk of the new monies over the 2 years would be going to food safety programs in CFSAN and CVM (+$43 million), a new China import initiative run out of the Commissioner’s Office ($10 million), additional support for development of medical countermeasures (bio-defense) (+$3.5 million), and outfitting the new biosciences laboratory building at White Oak (+$17 million).  Also, there is about $10 million in additional rent payments.  Altogether, these total nearly $84 million in increases.
  • To bring the net total to a $51 million increase over 2 years, presumably there are administrative savings and other program adjustments. For example, the actual net increase for CFSAN and CVM is only $29 million over the 2 years (not $43 million). Further, CDER/CBER show a net decrease of about $14 million from their prior BA levels.

If you wish to review the proposal in detail, you can see it if you click here.  As part of your review, note that the charts provided by FDA include FY 13 numbers. These are the continuing resolution numbers from the first half of FY 13. They do not represent restoration of either the rescission or sequester of FY 13 funds, but rather predate that. Lessening confusion on this point is why OMB has set the base year as FY 12 and not FY 13.

The Alliance for a Stronger FDA will be reviewing the budget in more detail and will circulate an expanded analysis on April 12.

The President’s total budget request for all discretionary spending is substantially more than will be allowed under the Budget Control Act of 2011. If a larger budget deal is adopted (and the President is proposing one) that sets up a scenario where discretionary spending cuts are replaced (in whole or part) with tax changes and entitlement reforms. That would be supportive of the FDA funding level proposed by the President.

If such a deal is not adopted, then the  appropriations committees will need to cut billions of dollars from the President’s overall request — either by direct cuts or by across-the-board rescissions or sequester.  The goal for FDA funding advocates will be to preserve and increase funding levels to reflect the growing responsibilities and expanding mission of the agency. We will encourage appropriators to look at preserving funding for the highest national priorities, such as FDA. Thus, we want appropriators to set budgets, not be again placed in a position where deficit reduction is enforced by across-the-board cuts.

This interplay between budget/spending ceilings and individual program funding is likely to be protracted, with agency funding levels not determined until this summer or later.

Nonetheless, a key aspect of the President’s request is that the base is the pre-rescission, pre-sequester levels. However, by using FY 12 as the base, the proposed increases look much larger than if the FY 13 numbers had been used. For example, FDA collected most of the new generic drug user fees (GDUFA) monies in FY 13, so that it would be incorrect to say that agency revenue will be growing by $300 million this year; in fact, the increase in GDUFA is likely to be only 10% larger in FY 14, even after accounting for the FY 13 sequester.

In evaluating FDA’s funding needs for FY 14 and beyond, the Alliance will continue to stress that  the agency’s mission and responsibilities are not static. In FY 14, the agency will continue to implement three new laws (food safety, biosimilars and FDASIA, including a dramatically increased generic drug program) and must continue to deal with globalization, scientific complexity and industry growth. So, the question is not whether FDA can do more with less, but whether it is even possible to deal with such a substantial increase in responsibilities without substantial additional monies.

Despite the purported large increase for FDA, all sources of FDA revenue are not equally useful to meeting the agency’s broad responsibilities. Most of the additional revenue (real and proposed) is for very specific functions. In contrast, the greatest threat to FDA funding is for dollars that can be applied to a broad range of activities. As an example, bottom-line appearances to the contrary, the addition of $300 million in generic user fee revenue does not offset any cuts that might occur in BA funding (available for any priority) or, even within CDER/CBER, the PDUFA user fee funding (available for a wide variety of drug safety and efficacy programming).

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