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A Tough Environment for FY 13 in 2012

December 10, 2011

As discussed in last week’s column, the Alliance is already hard at work on supporting the highest possible appropriations level for FDA in FY 13. The environment will be tough: the budgets of all government agencies will be under severe downward pressure … almost certainly greater than in the past two appropriations cycles.

This will play out against the backdrop of a Presidential election year, the next phase of deficit reduction politics, and continued policy clashes over a broad array of issues from Social Security to national security. For the FDA community, there will be the additional time, energy and focus that will center around reauthorizing drug and medical device user fees, adding at least two new fee programs and  program and legislative efforts to deal with safety, counterfeiting, inspections and approval standards as part of the user fee legislation.

Here is a preview of how the FY 13 appropriations process as it is likely to play out in 2012:

President Obama delivers the State of the Union Address (SOTU) to Congress (most likely date is Tuesday, January 24, 2012). This will include the President’s assessment of the country’s accomplishments and issues and sets forth his priorities for 2012 and for the FY 13 budget. Typically,  the address covers very broad themes — war and peace, the economy and jobs, major program initiatives, etc. We would not expect an FDA or a food and drug reference in the speech, but it is always a possibility. Note that the Iowa caucuses and the New Hampshire and South Carolina primaries will occur before January 24, so Presidential election politics will already be in full swing.

Office of Management and Budget (OMB) releases the President’s Budget Request for FY 13 (about 1 to 2 weeks after the SOTU — usually early February). This will be the first opportunity to view the President’s full request for FDA — both the aggregate amount requested, the break-out by centers, and any new initiatives.

Appropriations committees will hold hearings (between March and May). Following the patterns of the last few years, there may only be one hearing in the House and one in the Senate … and FDA will be the only witness.  The Alliance will submit testimony to each. The main force of the Alliance’s efforts, this fall and continuing in 2012, will be meetings with Members of Congress and their staff, staff briefings and grassroots meetings.

Given that it is an election year, the plan will be to try to mark-up bills in committee by May/June, get floor action in June/July and have bills sent to the President starting in late July and finishing off by early September. Because the Budget Control Act of 2011 sets aggregate spending ceilings for domestic programs for FY 13, one of the big delays in 2011 will not recur next year. Also, if Congress can finish off FY 12 with an omnibus bill this month, that would tend to suggest that agreements would be easier to achieve next Spring. However, these opportunities for early resolution of appropriations are rarely achieved in Presidential election years. While, we proceed on the assumption of the fast schedule, it would not be surprising if some or all of the government needs to be funded on a continuing resolution on October 1, 2012, with final decisions deferred to a post-election session.

Finally, on January 1, 2013, deficit reduction cuts are mandated in the amount of $1.2 trillion in 10-year program savings. These will be accomplished by across-the-board cuts (“sequestration”) and will mostly hit discretionary domestic and defense spending … unless Congress passes legislation that would raise these monies by entitlement cuts or additional tax revenue or other changes the law. The impact on FDA is likely to be a cut be between $150 and $250 million.

In sum, 2012 will be a busy year for the Alliance, with a large number of challenges to FDA’s appropriation.

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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