BA Monies, User Fees, and Related Complications for FY 13

As described in a previously developed report, FDA will have about $74 million in new budget authority (BA, taxpayer) monies to spend in FY 13. However, the agency will lose ground in most areas because of the 2.513% rescission and the $126 million sequester of BA funds. Net/net, BA appropriations will decrease by about $117 million (4.7%), reflecting that Congress gave FDA extra funds sufficient to offset the rescission and slightly lessen the impact of the sequester.We have received a number of inquiries about how this larger picture translates into funding of specific areas of FDA.Here is our analysis -- which should be viewed as preliminary:

• Food and Veterinary Medicine. In FY 12, CFSAN and CVM received a total of $1.004 billion dollars in BA appropriations. For FY 13, these centers will have a total of $931 million to spend (after rescission and sequestration) plus $39 million in “no year” money that is designated for food safety. Assuming the “no year” money is spent in FY 13, these centers will have about $34 million (3.4%) less to spend this fiscal year.

• Drugs and Biologics. In FY 12, CDER and CBER received a total of $690 million in BA appropriations. For FY 13, these centers will have a total of $633 million to spend (after rescission and sequestration) plus nearly $10 million in “no year” money that is designated for drug safety. Assuming the “no year” money is spent in FY 13, these centers will have about $47 million (6.8%) less to spend this fiscal year.

• Devices and Radiologic Health. In FY 12, CDRH received a total of $323 million in BA appropriations. For FY 13, the center will receive $296 million to spend (after rescission and sequestration). This means the center will have $27 million (8.3% ) less to spend this fiscal year.

• National Center for Toxicological Research. In FY 12, NCTR received a total of $60 million in BA appropriations. For FY 13, the center will receive $55 million to spend (after rescission and sequestration). This means the center will have $5 million (8.3%) less to spend this fiscal year.

• Office of the Commissioner/FDA Headquarters. In FY 12, the Office of the Commissioner (which includes many program functions, not just staff activities) received $154 million in BA appropriations. For FY 13, this budget line was scheduled to receive an increase, primarily because of new monies for a China initiative. As a result, the office will receive $151 million to spend (after rescissions and sequestration). This means they will have $3 million (2%) less to spend this fiscal year, but will be expected to accomplish at least $10 million in new program activity. This puts the actual cut on par with the 6% to 8% being absorbed by the centers (other than CFSAN/CVM).

User fees complicate this impact analysis. They were not subject to the rescission but are included in the sequester (-$82 million). The bulk of the sequester falls on the three largest user fee programs: tobacco (-$24 million), PDUFA (-$36 million), and generics (-$15 million).

More in-depth analysis is complicated by the fact that user fees do not go just into center budgets. PDUFA for example is split among CDER, CBER, FDA headquarters, White Oak Consolidation, GSA rent, and other rent and rent-related costs.Further, to use CDER as an example, the center will experience a net increase in income in FY 13 because of the generic drug user fee. However, those funds must be used for a relatively narrow set of activities. Bottom-line appearances to the contrary, the addition of generic user fee revenue does not offset the BA losses (available for any CDER priority) or the PDUFA user fee losses (available for a wide variety of drug safety and efficacy programming).

Final note: Late Thursday, we were told that the Congressional Budget Office and the President’s Office of Management and Budget disagree over whether the Consolidated and Further Continued Appropriations Act of 2013 falls within the FY 13 spending ceilings. As a result, it is possible that FDA might be subject to an additional rescission of 0.2%, which could further reduce available funding by up to $10 million. If this occurs, it will be applied evenly throughout all programs.

Note: This analysis and commentary is written by Steven Grossman, the Deputy Executive Director of the Alliance for a Stronger FDA.