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Better Off Than Some … But Not Better Off

February 17, 2012

As a practical matter, the President’s FY 13 budget request for FDA is the same as the FY 12 enacted level. This puts FDA in the same position as NIH, but better off than many federal agencies slated for cuts.

Technically, the President requested a very slight increase in BA appropriations of $11.5 million (less than half of a 1% increase). This makes a little bit of money available for new initiatives, but at a cost of fewer dollars for the Centers.  There are three different ways to look at this.

(1) Changes in funding of operational divisions and functions

The “Office of the Commissioner” increases by $9.3 million, which covers most of the cost of the “China Import Safety Initiative,” designed to increase the agency’s presence and expertise in China. “White Oak consolidation” increases by $17.7 million to equip the new biological sciences building on the White Oak campus. Finally, two budget lines covering rental costs increase by $12.5 million.

In contrast, the six Centers would be funded at $24.5 million less than FY 12.  In addition, $3.5 million less would be spent on “buildings and facilities.”

Thus, looking at budget lines, spending would increase by $39.5 million. This is offset by program cuts of $28 million, netting to the $11.5 million increase.

(2) New FDA initiatives and how are they to be funded

FDA is requesting additional appropriations to fund three areas of need:

  • China Import Safety Initiative — $10 million
  • Advancing Medical Countermeasures –$3.5 million
  • FDA Regulatory Science and Facilities $17.7 million (to equip the new building)

The budget also requests new BA funding to provide pay increases ($1.5 million) and to offset increases in rent and Infrastructure ($2 million).

Those new costs would be offset by IT savings of $19.7 million (described as “Data Consolidation and Administrative Savings/Rent Absorption”).  In addition, spending on building and facilities would be reduced by $3.5 million.

Thus, new program initiatives would cost $34.7 million, offset by $23.2 million in savings. The differential is the $11.5 million increase in BA appropriations.

(3) How much will Center directors actually have available to spend in FY 13

Each year, FDA submits a proposal for “administrative and contract savings.” The concept is: if a Center is asked to perform the same tasks in FY 13 as they did in FY 12, then they should be able to accomplish this for less money because of efficiencies and non-repeating costs. FDA, for example, has worked hard since the FDA Science Board’s 2007 report to create IT efficiencies and lower costs.

Page 66 of the Congressional Justification shows how the IT savings represent “dollars that don’t need to be spent” by each Center. So, CFSAN’s $10.8 million reduction from FY 12 levels includes $7.6 million of FY 12 information technology costs that it won’t need to spend in FY 13. Similarly, CDER’s $5.1 million cut includes $4.2 million in FY 12 IT costs that it won’t have to be spent in FY 13.

When all of the cost savings and efficiencies (IT and other) are allocated to each Center, FDA believes Center directors will actually have about the same spending power in FY 13 as they did in FY 12 (“flat funding”), despite the apparent cuts.

Conclusion. While not agreeing or disagreeing with this last analysis, the Alliance notes that the FDA’s mission, responsibilities and tasks are growing each year. All of the Centers will be doing considerably more in FY 13 than they did in FY 12. Notwithstanding any savings or efficiencies, this will cost more money to accomplish.

FDA needs increased appropriated funding and the Alliance will be working hard to get it for the agency.

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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