Untangling FDA’s FY 23 Funding: Appropriations and User Fees Hit Peak Uncertainty

For useful background, go to How the FDA is Funded, the Alliance primer on the agency’s resource needs.

Earlier this week, the House took the FY23 Ag/FDA appropriations bill, merged it with five other spending bills, and passed it by a 220 to 207 vote. The bill contains a $341 million increase for FDA (about a 10% bump over FY 22). Overall,  an important preliminary step for for FY 23 funding and an excellent result for FDA.  

However, there is no topline agreement on total FY 23 spending and ratios for  defense and non-defense programs. Without that, the FY 23 appropriations process will, eventually, halt. As in many past years, Republicans and Democrats are looking at vastly different numbers and there are likely further differences between the House and the Senate on an acceptable compromise.

Reportedly, Senate Democrats will be releasing draft appropriations bills later this month. Those are unlikely to get Republican support, but it sets up a small window when funding bills could be finished in September.

Failing that, FDA, and most of the rest of the government would presumably operate under a Continuing Resolution (CR). CRs typically extend funding authority at the prior year’s level, meaning no monies for new or expanding initiatives. A CR also limits the agency’s abilities to initiate new programs, regardless of the availability of funds. A CR is meant to extend the budget and workplan from the prior year (in this case FY 22). 

A first CR would probably extend until after Election Day and might extend to December.  If the Republicans win back either the House or Senate, there will certainly be calls for a year-long CR. The main bulwark against that result is that the Department of Defense has the same objections to a CR as FDA (no new monies, limits on new initiatives).

Conclusion: A Continuing Resolution is an undesirable outcome and also the most likely.

The appropriations process is annual and familiar to most of us. Not so, the user fee reauthorization cycle, which occurs every 5 years.

Over several renewal cycles, the legislative vehicle containing user fees has allowed Congress to adopt many important non-user fee provisions that have strengthened FDA and improved the agency’s ability to protect the health and safety of Americans. In the past, these non-user fee provisions have slowed negotiations, but deadliness were met before there were consequences. 

However, we do face potential consequences this year that involve 60-day lay-off notices, which would eventually be a prelude to furloughs if the user fee programs are not reauthorized. In past renewal cycles,  lay-off notices would have to be issued on August 1 and furloughs might start October 1. Currently, there is uncertainty about whether left-over user fee balances can be used to delay those dates. If that is possible at all, there is still some disagreement whether the carryover balances would extend the programs through November or the end of the year. In any case, failure to renew the user fee programs would create a $2 billion hole in the agency’s budget.  

Substance and timeliness have been the norm in prior user fee cycles. However, it is too soon to know how Congress will reconcile competing bills, one with non-user fee provisions and the other without.

Conclusion: User fees will be reauthorized, almost certainly by October 1. What is unclear is whether they will pass into law accompanied by other changes to FDA’s responsibilities—either a relatively slim version or one more wide-ranging and including a number of initiatives in the  the current House and Senate bills.