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President Trump’s FY 18 Proposed Budget: More Qs and More As

March 31, 2017

The following offers some additional responses to questions the Alliance has been receiving about the President’s proposed budget for FY 18:

Q: What are the specifics of the President’s request for FDA funding in FY 17 (the current year)?

A: OMB is seeking a $40 million cut from FDA and explains:

The reduction is derived from staffing and non-pay administrative reductions for the remaining months in FY 2017. FDA can absorb some of the reductions through administrative savings, including slower than anticipated hiring.

It is unclear whether FDA would be required to do something (e.g., accelerate retirements and delay hires) or whether this is merely a recognition that a substantial number of slots at FDA were budgeted but not filled for all or part of this fiscal year. We don’t have the internal FDA numbers needed to determine which explanation is correct.

Q: What is the purpose of the President’s FY 17 budget request and how does FDA compare to other agencies?

A: In his quest to find an aggregate of $18 billion in non-defense program savings, the President’s FY 17 request primarily targets agencies this year that are already being proposed for elimination or major cutbacks in his initial FY 18 request. FDA is different in that the proposed $40 million cut is self-contained; if the President’s request were adopted for FY 17, it would not affect what could or will happen in FY 18.

Q: What is the difference between budget authority (BA) appropriations and user fees?

A: Budget authority appropriations supports the entire public health, public safety and consumer protection mission of the FDA. These funds represent the public’s commitment to funding an agency whose mission and activities serve the needs of the American people multiple times each day. In FY 16, the agency received about $2.7 billion for these purposes. These monies are considered “on-budget” because they count against the spending cap that was enacted as part of the Budget Control Act of 2011. During the annual appropriations cycle, Congress can increase or decrease the amounts FDA receives.

In contrast, user fees pay for specified improvements relating to medical product reviews. User fees were always intended to supplement FDA’s budget, not to replace the public’s responsibilities to fund the agency. In FY 16, the agency collected approximately $1.35 billion dollars in medical product user fees (this omits tobacco user fees). User fees are considered “off-budget” because they are not paid by taxpayers and do not count against the spending caps. The amounts that can be collected annually are set in law as part of five year agreements. Appropriators cannot generate or spend user fees that are greater than what the law provides.

Q: Why is the President’s FY 18 request (increasing user fees and offsetting it with decreases in BA appropriations) such a threat to the agency?

A: Recognizing that the user fee agreements negotiated by FDA reflect nearly two years of work and embody a delicate balance of interests, Congress has traditionally adopted the agreements without alteration. With a summer deadline for completion, the new user fee agreements are moving ahead and Congress has shown no interest in changing any of the terms of the agreements. That being so, the President’s request for a $1 billion per year increase in medical product user fees is dead.

Notwithstanding this, the President may persist in proposing the “user fees for BA appropriations” swap when he delivers his final budget proposal in May. The Appropriations committees will then have a dilemma. Before them will be a request from the President for $1.7 billion in BA appropriations, a 37% cut from the current BA baseline of $2.7 billion. To restore funding will be a heavy lift given scarce dollars and competing priorities, even while the President may well be proposing that total FDA funding (appropriations plus user fees) remains at or above current levels.

The Alliance is working to have OMB reconsider this proposal, dropping it before they submit the President’s final budget request. Failing that, 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.

Q: Is funding the only threat to FDA’s resource needs?

A: No. FDA’s entire workforce (whether funded by BA or user fees) needs to be exempt from the Administration’s efforts to reduce the number of federal government employees. More than 80% of FDA’s entire budget is for personnel related costs — salary, benefits, rent, IT, training, etc. Freezing the agency’s ability to hire will quickly undercut the FDA’s capacity to fulfill its mission.

Not only are the number of employees important, but also the agency’s ability to hire the different kinds of staff it needs. The agency needs medical doctors, biologists, consumer safety officers, field inspectors, epidemiologists, analysts, clerks, etc. So far, most of these categories appear to be exempt from the short-term freeze, but there is no guarantee that all the necessary backgrounds and skill sets will be exempt under the longer-term federal employment plan that OMB will be submitting to the President at the end of April.

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