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Proposed FDA FY 18 Budget Swap a Non-Starter

May 12, 2017

The Alliance focuses on increasing FDA’s budget authority (BA) appropriation, which is taxpayer-funded. When asked about industry user fees, we stress that they are intended to be supplementary, not primary, and that it is important that BA be the predominate source of agency funding.

Since the first medical product user fee was adopted 25 years ago, there has been a common understanding among the Executive Branch, legislators, industry and consumer stakeholders that:

  • BA appropriations pay for fulfilling FDA’s mission and responsibilities. This includes safe and effective medical products and safe foods, and also a myriad of other Congressionally-mandated public health and consumer protection programs, such as overseeing radiological products, cosmetics and personal care products, and pet food. Those responsibilities should be supported in large measure by the public, which is the primary beneficiary, and overseen by a Congress that is appropriating these funds annually.
  • User fees supplement the agency’s BA appropriation and pay for improvements; they were never intended to replace the agency’s BA appropriation. They result from carefully balanced negotiations in which FDA commits to undertake certain programs and meet certain metrics in exchange for the user fees that medical product industries have agreed to pay. Every 5 years, Congress has the final say on renewing user fee agreements and each year appropriates the monies and oversees the programs.

For the current year, FY 17, FDA is receiving $2.75 billion in BA appropriations, of which about 50% is devoted to programs that the agency classifies as related to food and about 50% is devoted to programs the agency classifies as related to medical products. There are also a number of cross-cutting ways to regroup the BA budget, for example to show funds spent on field operations (inspections) and rent.

In FY 17, FDA is also receiving about $1.35 billion in medical products user fees, covering prescription drugs (PDUFA), generic drugs (GDUFA), medical devices (MDUFA), and biosimilars (BsUFA). This total excludes tobacco user fees, animal drug and animal generic drug user fees, and a number of very small fee programs that are structured differently. If the new set of medical product user fee agreements, covering FY 18-22, become law this summer, they will increase the user fee total in FY 18 to $1.6 billion. More than two-thirds of the year-over-year increase reflects changes in GDUFA funding. For all four programs, subsequent years in the 5-year cycle are adjusted to reflect inflation and increases in workload.

The FDA needs both sources of income; neither one can replace the other. The Administration’s proposed FY 18 swap (dramatically increasing user fees and dramatically cutting BA appropriations) is a non-starter. Foremost among the reasons: it threatens to upset a careful and historically-proven balance between BA appropriations and user fees that has helped the agency to grow and succeed in the face of an increasingly large and scientifically complex mission.

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

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