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Alliance Issues Economic Impact RFP

May 1, 2010

ADVOCACY

FDA Economic Impact Study: Request for Proposal.  This week the Alliance issued a RFP for a project to develop a white paper about the economic impact of FDA and FDA-regulated industries and the economic benefit to the US economy that derives from an effective (well-resourced) FDA.  We envision that the study will provide the Alliance with important information to further bolster advocacy efforts for an adequately funded FDA.  

ANALYSIS AND COMMENTARY

Last week we examined the President’s budget request for FDA for FY 11. We showed how it really isn’t the claimed increase of 23% (+ $754M). When you subtract tobacco user fees and proposed user fees, the total proposed increase is 8% (+$249M), about a third of what’s claimed. Within this, appropriated funding would grow by about 6% and user fees (non-tobacco) by about 15%. We concluded that: even combining appropriations and user fees, the Administration’s request leaves the FDA far short of what is needed to cover existing costs and new initiatives.  

It is important to provide this perspective in the face of the claim that FDA will grow 23% in FY 11.

But we need to go further … to be clear that the appropriated and user fee dollars are not the same. Both are needed to strengthen the agency, but they are not equally useful for the agency. As a coalition, we are committed to strengthening FDA through appropriations, without reference to user fees.

In a prior column (March 19), I supplied two reasons why appropriated dollars should be FDA’s primary source of funding.  

  • FDA is a public health agency. The Agency’s mission is to serve the American public. The bulk of FDA funding should come from appropriated funding (general revenue).
  • Balance is needed. The growth in user fee revenue is substantially greater than growth from appropriated sources. This is true even if you exclude the large and distorting impact of tobacco user fees. The growth in each source of agency funding should be brought into balance.

 
We often talk about a third reason: user fees buy specific services and outcomes; appropriated funds support all of the agency’s needs, especially its core mission and programs. A recent conversation with a former commissioner underscored that this is: a difference that makes a big difference.  FDA’s leadership is constrained in its programming, priority-setting, planning and personnel management by this division between funding for specific services…and funding the agency’s mission and needs.

An analogy may help. If you send your alma mater a check for $100 for the scholarship fund, the amount available for scholarships does not go up by $100. Rather a $100 of the  money allocated to scholarships is re-routed to serve some other priority. Thus, the college’s leadership can weigh and set priorities, allocate funds appropriately and not have the “specific services and outcomes” money alter their vision of the college’s priorities.

Not so for FDA and user fees. They do not free up monies. They do not provide flexibility. And, sometimes, they drive institutional priorities rather than meld with them.  This is not to say user fees are bad. The work they pay for is vitally important and serves the American public.

The constraint user fees impose on FDA leadership is considerably less when the agency appropriation is growing strongly, as it has for the past two fiscal years. That will not be true in FY 11 unless Congress puts at least $100 million more into FDA’s appropriated budget above the President’s request. The Alliance for a Stronger FDA recommends even more, urging Congress to provide an FY 11 appropriation that is $495 million above the current year.

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

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