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The Good News; the Bad News; and What’s Next?

May 26, 2017

The good news is that the new Administration proposed a significant increase in aggregate funding for the FDA.In a budget in which almost all agencies faced large cuts, the strength of FDA’s mission and responsibilities led the new Administration to request a 9% ($452 million) increase. We think that’s exactly right and we love the message (“FDA needs more resources!”) We applaud the Administration’s intent.

However, there is definitely bad news that might well overwhelm the good. The OMB proposal would cut $871 million from the agency’s budget authority (BA) appropriations, which is a 31% cut. This includes a $108 million cut in food funding (8%), a $705 million cut in medical product funding (52%) and a cut of about $50 million in activities that as far as we can tell are not characterized as food or medical product programs.

To lessen the blow on the food side, the Administration proposed a $54 million increase in animal drug and animal generic drug user fees. It is extremely unlikely that Congress will authorize these additional funds. To lessen the blow on the medical product side, the Administration is proposing a $1.2 billion dollar expansion of PDUFA, GDUFA, MDUFA, and BsUFA. That would roughly double the size of those programs. Congress has already made clear that they will not re-open the current re-authorization process to consider the proposed additional fees.

Apart from these practical reasons why expanded user fees won’t happen, there is also our concern that user fee funds should not be a substitute for budget authority funds. They serve different purposes. 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. The primary beneficiary is the public. In contrast, 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.

In sum, the pieces of the Administration proposal do not really fit together. As Ladd Wiley, our Executive Director, has been widely quoted as saying:

The real practical problem here is that [the Administration proposal] is taking appropriations away and replacing it with something that’s not going to happen, and what we’re left with, is the taking away and a significant hole in the agency’s budget.

What happens next? The House held its FDA appropriations hearing this week and we assume the Senate will do the same within the next month. In each subcommittee, staff will be discussing tentative funding levels for major agencies and programs. However, the process can’t be completed until the Budget Committees determine the size of the federal budget in FY 18 and the full appropriations committees allocate that total amount among their 12 subcommittees. Subcommittee and committee mark-ups follow. This all will take some time, but can move remarkably quickly if a consensus forms. On the other hand, if it grows too contentious, there is the possibility that the process will grind to a halt.

So, the Alliance will be proceeding with urgency, working with Congress to find ways to support the agency in the new fiscal year. Expect additional action alerts and Hill meetings as we ask you to help spread the word.

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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