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OMB Report Suggests $318 Million Loss to FDA From Sequestration

September 14, 2012

As indicated in the regular “Analysis and Commentary” earlier today, OMB has released its report on the impact of sequestration on Federal agencies. Despite being over 300 pages, the report is surprisingly short on detail. For reference, FDA is featured on pages 79 and 80 of the actual report (pages 91 and 92 of the PDF).

$3.873 billion of FDA’s budget is subject to an 8.2% reduction (merely $67 million of the agency’s budget is exempt from the sequester). That cut means that sequestration will erase $318 million from the FDA’s budget. As predicted in our September 4 note on this web site, it does appear that the major user fee programs are included in the sequester. The application of the sequester to user fees further compounds a very bad situation.

A cut of $318 million will have a devastating impact on the FDA. If all the savings were achieved through lay-offs, it would mean more than 1,000 fewer people would be standing on the front line to protect the public health. It is important to note that the timing couldn’t be worse. While the sequester is cutting the agency’s budget, the need for FDA’s public health protection is growing exponentially. Whether from globalization to emergent infectious disease, the demands on the agency continue to grow.

The sequester does not go into effect until January 2, 2013. That gives the Alliance a bit more than 3 months to make our case to legislators that the sequester is bad public policy. The sequester merely treats each Federal program the same. In times of fiscal stress, priorities need to be made. FDA is a core function of government. The public expects their food to be safe and their medical products to be safe and effective.

On Monday, the Alliance will be hosting congressional staff for a briefing on the challenges FDA faces in a globalized world. Part of our goal is to explain how the sequester would have a negative impact on FDA’s ability to properly deal with the pressures of globalization. 

Note: This special communication is written by Ladd Wiley and Steven Grossman, the Executive Director and Deputy Executive Director of the Alliance for a Stronger FDA.

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