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Meeting the Needs of the American People … On a Budget

December 16, 2011

For a change, it’s nice for FDA not to be caught in the end of the year Congressional frenzy. Since mid-November, the agency has known exactly how much it will be able to spend in FY 12 AND how many full-time equivalent (FTE) employees it will be permitted. While the FDA budget and management offices and the centers have been planning for this for months, a meaningful allocation only becomes possible when the appropriations levels are set.

Certain things are set outright by the appropriations committees: how much money/how many people for each Center and the Office of the Commissioner; how much money is allocated upfront for rent; and the split between program activities in each center and the monies that will go to the Office of Regulatory Affairs (ORA) for inspections and enforcement (field programs). Here are some perspectives on the FY 12 (current year) appropriation:

  • Nearly two-thirds of the FDA’s monies come from appropriations ($2.50 billion) and a tad more than one-third comes from user fees ($1.29 billion). The user fee component is heavily skewed by the $477 million that go to the tobacco center, which is 100% industry-funded.
  • Within the appropriated funding, $1.32 billion goes to programs, $910 million to field programs (inspections and enforcement) and $266 million pays for rent. This means slightly more than half of the appropriations pays for center staff (approvals, guidance development, regulatory oversight, research, etc.), about 36% pays for inspection and enforcement and about 10% pays for rent.
  • Combining appropriations and user fees, the largest operating unit at FDA is the Office of Regulatory Affairs, with CDER second.
  • Of the $866 million allocated to foods, CFSAN receives $264 million and $602 million is for field activities in ORA.
  • The amount allocated by the appropriations committee for rent is based on cost estimates made in advance. In some years, rent is higher than the Congressional allotment and each of the Centers and programs has to contribute monies to cover the difference.

The relative distribution of dollars by function (program, field, rent) and funding source (appropriations, user fees) is consequential to the agency. They determine what activities FDA can undertake and they define the balance among competing priorities. In spending user fee dollars, FDA is limited and has to operate within carefully defined parameters as to what the money can be spent for.

It is the size of the appropriation (non-user fee funding of the agency) that permits the Commissioner some opportunities to initiate new programming and change emphasis or direction within programs. However, the discretion to accomplish new priorities is often greatly reduced by the cost of meeting unfunded mandates. Some of the unfunded mandates  originate in appropriations reports language, others in new responsibilities given to FDA by other parts of Congress or by HHS and OMB.

Also, in years when there are a large number of emergencies, the ability of FDA to set priorities can often be constrained. FDA’s appropriation does not account for extraordinary crises (e.g., Hurricane Katrina) or provide the flexibility to deal with Gulf Stream seafood or melamine in pet food, without taking its toll on other initiatives and activities that were planned by the agency.

All of this is to say: FDA planned and negotiated for months to maximize the funding level in its part of the President’s budget request for FY 12. It has then worked with Hill staff on what became the final appropriations. Now it must take what it was given — considerably less money than the President requested and near continuous expansion of its responsibilities — and make sure that the FY 12 monies are well spent in meeting the public health needs of the American people. It’s a big job with lots of competing demands on each and every dollar.

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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