This week’s column will start with a few more words on FDA, sequester, and the House “sequester alternative” passed last week and discussed in last week’s Analysis and Commentary. We will then take a quick look at the situation in the Senate.

The sequester alternative passed by the House last week is better for non-defense discretionary spending but the difference may be viewed as marginal. It is definitely not a solution. Under the sequester, FDA faces potential across-the-board cuts in the 8% range (about $200 million). Under the House alternative, the cut might be more in the range of $150 to $170 million and there is a chance that the Appropriations committee might choose to find savings in programs other than FDA.

These are just negotiating positions for the House relative to budget discussions that will need to be held with the Senate in the post-election session. Although there may well be a few dollars difference between sequester and the House alternative, the only thing to feel hopeful about is that mandatory program spending is finally on the table. If some type of tax reform were also part of the package, then it is possible that the burden of deficit reduction imposed on FDA and similar agencies might actually lessen when talks finally get underway.

Meantime, the FY 13, pre-sequester funding situation for FDA is starting to become clearer. Below is a chart that compares FY 12 with a “pieced together” look at the Senate position. It is based on the actions of the Appropriations Committee, the CBO score of the Senate PDUFA reauthorization bill, and indications of the likely fate in the Senate of various revenue elements requested by the President.

The chart should not be taken literally — rather it is a status check based on a couple of different Senate sources. Its assessment of the relative relationships between appropriations and user fees is also probably fairly accurate. On the other hand, the exact amount that the reauthorized PDUFA program will raise in FY 13 is a slightly different amount in three different sources. The number used here is the one in the Senate CBO score.

FY 12 vs. Senate FY 13 — Combining Senate Appropriations-passed Bill Plus CBO Scoring of S.2516, Senate PDUFA Reauthorization Legislation

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

As we have been saying here for a couple of years: sooner or later Congress is going to need to look at entitlements, mandatory programs, and tax revenues … because the annual federal budget deficit is too large to be fixed by just cutting discretionary spending. Last summer, the Congress tried to force itself to do this hard work by passing the Budget Control Act of 2011. The Act created appropriations spending ceilings for the next 10 years … accruing “savings” of about $917 billion over that period. No matter what happens with the sequester, this is the minimum contribution of discretionary spending to ongoing deficit reduction.

The Act also calls for a sequester (across-the-board) cut in federal discretionary spending (and some mandatory spending) on January 2, 2013, split 50-50 between defense and non-defense spending. This would be in the range of 8% to 9% and would have the long-term effect of generating an additional $1.2 trillion in savings over 10 years. FDA’s share of the cuts in FY 13 would be in the range of $200 million.

The Congress still has until next January to come up with an alternative to the sequester. The House reconciliation bill that passed on Thursday was the House budget committee’s first effort to use entitlements, mandatory programs, and tax policy to pay for (offset) part of the savings (cuts) that would otherwise have come from the sequester. This is strictly House “positioning” in preparation for negotiations with the Senate after the election, although it is possible that Senate Republicans will offer it as an amendment to other legislation in the near future. The Senate did not adopt a budget resolution this year or issue “reconciliation instructions” to Senate tax and authorizing committees and, thus, has no similar bill.

We have mixed feelings about the House reconciliation effort. It is definitely good for us that the House is starting early to review deficit reduction strategies that are not focused on the appropriations process. However, given that the House’s primary motivation is protecting defense, the bottom-line result may not be any better for non-defense discretionary programs, including FDA.

As the week went on, there continued to be tweaking of the House reconciliation package. Our understanding is that the final version results in cuts in non-defense discretionary spending that are substantial, but still less than would be required under the sequester. Further, we have been told that the appropriations committee will be able to allocate the cuts according to priorities, rather than having an automatic across the board cut. Next week’s Analysis and Commentary will contain final details and further discuss the implications for FDA.

In any case, our focus needs to remain on the FDA’s central, indispensible role in keeping Americans safe and healthy … and how that role continues to grow independent of any Congressional efforts to shrink government. FDA needs to be an exception to any deficit reduction efforts (whether by appropriations, sequester or some sequester-alternative).

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

This week’s “Pink Sheet” carried the following item:  ”Speaking with FDA’s Science Board, FDA Commissioner Dr. Margaret Hamburg reported that FDA is preparing a FY 2014 budget that may include both cuts as well as new initiatives.  According to Dr. Hamburg, although FY 2014 budget planning is still in its early phases, the budget process offers the opportunity to sort through FDA’s critical priorities.” … READ MORE …