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Ag/FDA Appropriations Subcommittees Need to Hear From Entire Stakeholder Community

March 24, 2017

Multiple sources — on and off the Hill — have declared that the entirety of the President’s initial budget blueprint is “dead on arrival.” Further, according to media accounts, the Administration received a very cool reception at a Congressional hearing this week when it repeated the blueprint’s call for increasing medical product user fees by an additional $1 billion per year (starting in FY 18, which begins October 1, 2017).

This Congressional reaction is not surprising. Past user fee agreements have always been accepted by Congress on the basis that they represent a widely-acceptable quid pro quo based on lengthy and highly nuanced negotiations. This year’s reauthorization was destined to have the same treatment and probably will. Barring some quite unforeseen twist or turn, Congress seems likely to adopt the user fee agreements covering FY 18-22 at the agreed-upon funding levels and not include the substantial increment requested by the Trump Administration.

Nonetheless, the President’s proposal could result in FDA losing hundreds of millions of dollars in the FY 18 appropriation process — cuts that would dramatically reduce FDA’s ability to carry out its responsibilities for safe and effective medical products and safe foods. Even programs that receive substantial user fee funding could wind up with significantly less resources. Food safety could be particularly hard hit.

To understand this scenario requires a brief discussion of the appropriations process and the critical differences between FDA funding derived from budget authority (BA) appropriations and FDA funding derived from user fee agreements. Each funding stream serves a different purpose and is treated differently by the appropriations committees. Notably, BA appropriations count against the spending caps that Congress adopted in 2011; user fees do not.

BA appropriations pay for fulfilling FDA’s mission and responsibilities — safe and effective medical products, safe foods, and myriad other public health and consumer protection programs that have been mandated by Congress. Those responsibilities need to be supported in large measure by the public, who is the primary beneficiary, and overseen by a Congress that is providing the funds. User fees have always been intended to supplement the agency’s BA appropriation and pay for improvements; never to replace the agency’s BA appropriation. Currently, FDA’s funding is $2.7 billion in BA appropriations (food safety and medical products) plus about $1.35 billion in medical products user fees (excluding tobacco user fees).

The Administration has proposed that $1 billion more be collected annually in medical product user fees, which the Alliance has described as neither wise nor realistic. The only reason for such an extremely large and totally unplanned increase in medical product user fees is to shift monies from on-budget BA appropriations to off-budget user fees. This could generate upwards of $1 billion in “savings,” to be applied to the President’s goal of shifting $54 billion from non-defense to defense programs. This will, presumably, be detailed when the full budget request is submitted in May. If, as we fear, that proves to be the case, then the Administration request is likely to be something like: $1.8 billion in BA appropriations (a 33% cut) and about $2.35 billion in medical product user fees (a 100% increase). Thus, the President would be proposing the same total as current funding, but radically altered from the FY 17 base and also from Congress’ likely pathway in enacting the next set of user fees.

None of this might matter if the President’s budget request was really and truly dead, but it’s not. Even while Congress will make major changes to his request, it will be used as a baseline in the Congressional appropriations process. This will leave the Ag/FDA appropriations subcommittees with a serious dilemma. On the one hand, the President will (we believe) propose that total FDA funding remain level (or grow) and the subcommittees will be inclined to give him what he asked for. On the other hand, to achieve this result, the subcommittees with have to come up with an additional $1 billion in budget authority appropriations to off-set the “savings” in the President’s request.

That is not impossible for the subcommittees, but it will be far from easy. They need to be hearing from the entire FDA stakeholder community that cuts to FDA’s BA appropriation will put the American people at risk and undercut the goal of promoting innovation in medical products and food.

The best case for FDA actually starts with the Administration: we would be delighted if this ill-conceived and impractical idea — to cut BA appropriations and replace it with user fees — turned out to be a trial balloon and precipitates so much opposition that OMB reconsiders by the time the full budget emerges in May.

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