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From “Hibernation” to Avoidance of Confusion

March 11, 2017

An American novelist once described “hibernation” as a covert preparation for a more overt action. In this sense, the House and Senate appropriations committees have been hibernating. From a public perspective, they have been very quiet during the early days of the new Congress, while their colleagues have focused on repeal/replacement of Obamacare, regulatory rollback, tax, trade, and immigration. But it is clear that the Appropriations Committees (especially their staffs) have not ceased working, preparing for when the spotlight will be turned on them. This will happen soon, triggered by the release of the President’s FY 18 Budget Request outline. This is expected to occur on or about March 15.

For the last several years, just prior to the release of the President’s Budget Request, I have alerted Alliance members (and media, too) to the difference between the “headline number” and the actual increase that the President is requesting for FDA. An extensive discussion of this concept is here. In most previous years, we have been faced with an Administration claim that they have given FDA a large increase (e.g. 8%)…without the Administration mentioning that almost all of the increase would be in additional user fees pre-specified in five-year agreements; very little (maybe 1%) would be in budget authority (BA) appropriations. This distinction is critically important: BA appropriations support all of the agencies functions, while user fees (which are immensely valuable to FDA) are provided only for very specific tasks that FDA and industry have agreed upon. The agency needs robust funding from both sources to fulfill its mission and carry out its responsibilities.

Next week may bring a particular twist on this pattern because there are going to be more ways to misunderstand what the Administration is recommending … and there is significantly greater potential for mis-reporting in the media. Here is what to look at before deciding on the accuracy of the broad headline you may see: “FDA Proposed for Cuts/Increases of $x or x%.”

First, we don’t know how the Administration is going to handle the bulk of user fees that expire on September 30, but which are on track for renewal. Will the budget request ignore them because they are not yet reauthorized? Will the budget include them by continuing the FY 17 level or set them at the proposed FY 18 levels under the new user fee agreements being considered by Congress? The President’s request for FDA could, therefore, be significantly different than what the agency is likely to get — perhaps by as much as $1.5 billion if user fees are not in the reported FDA number. If that is the case … the headlines might be “FDA to lose billions in Trump budget” or “Trump budget cuts FDA by 30%,” but that won’t be the actual case. To be clear, the request will be the request, but depending on the treatment of user fees, the reported number may be very different from the reality that is likely to be in place by the time FY 18 starts and user fees are in place.

Second, assuming user fees are included at their proposed FY 18 level, we will still face our usual misunderstanding with the press and public. If FDA’s BA appropriations, along with the rest of HHS, is cut by 10%, we may see the headline: “FDA cut by only 7%, given more favorable treatment than other HHS agencies.” This would technically be true if — as we believe will be the case — user fee revenue is not subject to the cuts being used to pay for the $54 billion increase in defense spending. However, the headline will be misleading if FDA’s BA number is cut by the same 10% as other HHS agencies, meaning we did not receive favorable treatment.

If this is confusing, please call or e-mail me before you put an assessment of “how FDA fared in the Trump budget proposal” into your organization’s newsletter or into a published news story. As soon as possible after the release of the President’s budget request outline, we will get our analysis out to Alliance members, other, Friday Update readers, and web site visitors and clarify these several areas of potential misunderstanding.

Also, as we have urged previously, don’t assume that the President’s request is the number the agency will receive. Congress will probably enact some very deep cuts this year across a large swath of non-defense programs … but as appropriations staff repeatedly stress to us: “the President proposes, the Congress disposes.”

Editorial note: The Analysis and Commentary section is written by Steven Grossman, Deputy Executive Director of the Alliance for a Stronger FDA.

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