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Additional Q&As re FDA Funding and FY 13 Appropriations Law

April 5, 2013

Congress returns next week and the FY 14  budget and appropriations cycle will kick into high gear.

We have fielded a lot of questions about the just-completed FY 13 appropriations law, as well as the process and prospects for FY 14. Here are some of the top inquiries:

Does the Alliance have an FY14 request for FDA or is it still in development? Our philosophy is to ask for what FDA needs to fulfill its mission, which is usually far more than the agency is likely to get. We try to balance this aspirational approach, which stretches the discussion in Congress and pulls them toward a higher number … while not asking for such a large increase that Congress doesn’t view us as credible.

To be able to identify that “sweet spot,” we really need to see the President’s request (hopefully on April 10). Once we have seen his request, we anticipate presenting a formal position for the Alliance’s Board to approve at its next meeting on April 18. In the interim, we are sticking with the position in the Alliance’s testimony to the House appropriations committee. Essentially, we asked for FY 14 funding that would bring FDA back to the pre-sequester level and stated that more funding can be fully justified.

How do I respond when Congressional staff (or reporters) point out that FDA received a net increase in total revenue for FY 13, a feat matched by very few federal programs? We are pleased that FDA will have more resources in FY 13 than FY 12. However, this masks two important points that we need to keep making to policymakers and media:

  • The agency’s mission and responsibilities are not static. In FY 13, the agency will be implement three new laws (food safety, biosimilars, and FDASIA, including a dramatically increased generic drug program) and must continue to deal with globalization, scientific complexity, and industry growth. So, the question is not whether FDA can do more with less, but whether it is even possible to deal with such a substantial increase in responsibilities without substantial additional monies.
  • All sources of FDA revenue are not equally useful to meeting the agency’s broad responsibilities. Much of the new money is available for very specific functions, while most of the cutbacks are to dollars that can be applied to a broad range of activities. Bottom-line appearances to the contrary, the addition of $300 million in generic user fee revenue does not offset the BA losses (available for any priority) or, even within CDER/CBER, the PDUFA user fee losses (available for a wide variety of drug safety and efficacy programming).

What impacts will there be from the sequester and when are we likely to start seeing them? In particular, given that FDA’s budget is almost entirely staff costs, how can FDA absorb the 5% sequester without furloughs or lay-offs?  We have described the impact of the sequester as “death by a thousand cuts.” Despite the Administration’s dire warning of specific horrendous consequences at many agencies, it will generally be the case that there will be a real cut in responsiveness and delays in a broad range of responsibilities rather than dramatic changes that will affect and be visible to the general population. It has been predicted the sequester will result in 750,000 jobs lost in the economy … and those, too, will be spread out over time and, to an extent, over geography.

At FDA, regulations, guidances, meetings, and product reviews will not be timely because there will not be the necessary manpower to keep up with the work. In addition, inspections will be postponed, cancelled, or fall further behind in the queue. The decision that there will be no lay-offs or furloughs is not an indication that the impact will be minimal. Rather, the agency has not been filling all its vacancies for a while (because of the uncertainty of the FY 13 budget) and will continue along this path for the rest of the year.

“No furloughs” was really just a statement that the FDA’s headcount on March 2, 2013 was less than the headcount that they will be allowed post-sequester. But for internal FDA planning, it is important to understand that all of the existing headcount are not in the right place: every BA-funded office and many user fee-funded offices will wind up short-handed. Thus, to avoid lay-offs or furloughs at FDA, some people will need to be transferred to offices/activities that have funding or have too few people to function.

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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