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How the Federal Budget Applies to the FDA — A Refresher for FY 18

May 31, 2017

For all readers, both new and old, we are providing a refresher this week on the federal budget, with an eye on how it applies to FDA resources in the current FY 18 funding cycle.

What we call the macro-budget is the entirety of federal spending (about $4 trillion), of which just over $1 trillion is spent on discretionary programs (defense, social programs, FDA, etc.). While FDA is not part of the macro-budget discussion, decisions made about federal discretionary spending have serious implications for the monies FDA receives. For example, the President’s FY 18 request is built on the assumption that aggregate discretionary spending will stay roughly level with the prior year, but that billions of dollars will be cut from non-defense programs and re-allocated to defense programs and homeland security. Accordingly, both DHHS and USDA are faced with aggregate budget cuts of 15% to 20%.

The Administration’s FY 18 proposal for FDA is premised on cutting nearly a billion dollars from on-budget appropriations (BA funding) and replacing these funds with off-budget user fee revenue that substantially exceeds any prior negotiation between FDA and industry. The main purpose of trying to fund the agency this way is to generate a large on-budget saving that can be counted in the domestic discretionary spending cuts needed to fund increases in defense and homeland security.

As the process moves forward in Congress, FDA will be affected by additional macro-budgetary considerations, even though its mission, accomplishments, and resource needs are not part of this larger discussion. The House and Senate budget committees will be deciding how much money will be spent on non-defense discretionary programs, including whether to adhere to caps on defense and non-defense spending that were part of the Budget Control Act of 2011. Once the budget is set, the appropriations committees take the aggregate permitted spending and allocate it to each of its subcommittees (known as 302(b) allocations). The share allocated to the Ag/FDA subcommittees represents a ceiling under which all USDA and FDA programs must fit. Since USDA programs are also threatened with large cuts, it is vitally important that the subcommittees have the maximum amount of money to spend.

While macro-budgetary struggles grab headlines (and will again this year), it is Congress’ micro-budgetary judgment of FDA that ultimately decides the agency’s appropriation. Relevant considerations: How much did the President request for FDA? How much do the House and Senate subcommittees have available to spend on FDA? And particularly pertinent: Does Congress perceive that FDA monies are well spent and that there is a strong rationale for prioritizing FDA funding over other pressing demands?

The President’s FY 18 budget request provides a good start to the micro-budgetary discussion. It is unequivocal in advocating for an increase in the FDA’s overall budget, specifically the medical products activities of the agency. The food side is not as encouraging — about a 10% decrease — although it is less than the amount proposed for reductions at other agencies.

This creates a three-part agenda for the Alliance as it addresses the micro-budget:

  • Advocacy for the vital mission of FDA as a core function of government
  • Urging Congress to sustain proposed increases in medical products activities by restoring BA funding in place of the proposed new user fees, and
  • Establishing to Congress’ satisfaction that the food functions of FDA require the FY 17 level (and more) and that a 10% cut threatens the food supply on which America depends.

Editorial note: We apologize to readers for the delay in posting this information to the Alliance web site.

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