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Dr. von Eschenbach Joins Alliance

April 23, 2010

ADVOCACY

The Alliance welcomes Andy von Eschenbach, who has joined the Alliance as an honorary member.  We are pleased to add him to the current list of six former FDA Commissioners supporting the Alliance’s mission.

ANALYSIS AND COMMENTARY

Why are we talking so much more about user fees this year? After all, we are a coalition built around advocacy for strengthening FDA through appropriated funding. In an ideal world, we would focus entirely on appropriations and  rightfully say: whatever other income the agency receives is a separate benefit. This worked just fine for us in previous years.

Here’s what’s different this year: the President’s budget request proposes a 23% increase for FDA, making it seem like the agency is on the fast track for substantial growth. But it just isn’t so.

The proposed increase in appropriated funding is $153 million on top of a FY 10 base of $2.36 billion, or about 6% growth. I have devoted several prior columns to why this is not enough. The proposed increase in user fee funding is $601 million on top of a FY 10 base of $922 million, or about 66% growth.

Overall agency funding would go from $3.28 billion to a little over $4 billion, which is where the 23% growth number is derived. This means the agency would grow by $754 million.

The impact on the agency is far less than this would suggest. Tobacco funding should not count in the FY 10 base ($235 million), nor in gauging agency growth (proposed $215 million increase for FY 11). This is a totally closed loop program: Congress gave the agency a large, but discrete set of responsibilities and directed that it be funded entirely from user fees. The monies do not add to the capacity of FDA to meet its traditional responsibilities. Any growth in FDA that is attributed to tobacco user fee monies is inherently distorting.

The proposed growth in the agency also includes $289 million in user fees that are currently not authorized. About one-quarter is from user fee programs that the administration has proposed before, but Congress has shown no interest. The remainder ($220 million) is attributed to food inspection and facility user fees. This might happen. However, the authority for collecting these fees is in the House-passed food safety bill, but not in the Senate committee-passed bill. And even if authorized, it is not certain that collections would start in FY 11 versus FY12.

Subtracting increases from tobacco user fees and from proposed user fees, the President’s budget request is for $249 million total growth from appropriated funding and user fees. That is a third of the claimed increase in FDA funding for FY11.

If you also subtract tobacco user fees from the FY 10 base, the President’s proposal is to grow the agency from $3.045 billion in FY 10 to $3.294 in FY 11, including only authorized non-tobacco user fees. This is 8% growth, not 23%.  Of this, appropriated funding increases by a little more than 6% and user fees increase by a little less than 15%.

Bottom line: The agency’s budget needs will grow in FY 11 because of: new responsibilities (as provided in the President’s budget justification plus biosimilars and maybe food safety), continuing increases in scientific complexity and globalization and increases in salary, benefits, and rent. Even combining appropriated funds and user fees, the President’s request leaves FDA far short of what is needed.

A further note: The administration request is structured in the way FDA budget requests have looked for at least two decades. In terms of the claims made (and critically scrutinized here), the budget is not different than one that would have been offered by any of the President’s four predecessors.

Next week, this column will look at why appropriated funding is still far preferable to user fee funding.

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

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