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Another Look into the Mailbox in Silver Spring

May 17, 2013

Yet more interesting questions from Steven Grossman’s mailbag this week:

Q: FDA seems to be weathering the sequestration better than they or the Administration first forecast. Why is that and what are the long-term consequences?

A: In general, it now appears that the Administration overstated the immediate consequences of sequestration, with FDA being merely a specific example of how this has created a credibility gap with Congress. This isn’t a surprise because we have written a number of times that sequestration would be mostly “death by a thousand cuts,” rather than dramatic, attention grabbing program failures.

Assuring a diffused impact was why the sequester law specified that the cuts were to be taken evenly from all programs. This was to make it harder for an agency to concentrate cuts in a specific area to force public attention. There is even a widely-held suspicion that the two sequester exceptions thus far — meat inspectors and air traffic controllers — were achieved by the Agriculture and Transportation departments allocating larger cuts to those workforces.

FDA has said that it has been able to marginalize the impact of the FY 13 sequester through cuts to travel and contracts, as if such cuts do not have real programmatic impact. Further, some portion of the “savings” is being achieved by not filling all vacancies, which started earlier in the fiscal year. Nonetheless, the agency has fed an impression on Capitol Hill that FDA had 5% worth of waste ($209 million) that it could trim without consequences.

We do not believe there are extra dollars in the agency budget and wonder how that could be true in the face of massive expansion of agency responsibilities over the last 5 years, plus the costs of dealing with globalization and increased scientific complexity. For example, we certainly hope that there are no major food safety incidents, but think it is obvious that the risk of such incidents is higher post-sequester than pre-sequester. For another example, we have written that the number of new drug and device approvals this year will likely stay high—that the impact of sequester is more likely to be felt in pipeline developments where meetings, response letters and other feedback will be slowed by a lack of manpower.

Q: The House has just released is 302(b) allocations for FY 14 appropriations. What are the implications for FDA funding?

A: Relative to the BCA/2011 and the FY 14 House budget resolution, we have previously written that FDA’s proportional share for FY 14 is about the same as its post-sequester funding level. By dint of the agriculture/FDA subcommittee getting approximately the post-sequester funding level to spend, the probability of either a major increase (e.g., the President’s request level) or a further substantial decrease for FDA funding in FY 14 have been reduced. We might have benefited if the House 302(b) allocation for agriculture/FDA were larger, but we also avoided a situation (faced by several other House subcommittees) of being given less to spend than the FY 13 post-sequester amount.

The Senate numbers (to be released next week) are likely to be much better, but this foreshadows the eventual difficulties in reconciling FY 14 appropriations bills from the House and Senate that will have dramatically different bottom-line totals. FDA’s best hope is still that the Congress and the President agree on a major deficit reduction package that reduces the pressures for further cuts in domestic discretionary spending.

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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