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FDA’s Fuzzy Funding Future

While not all of FDA’s problems are caused by a lack of resources, few of its problems can be solved without better funding. Money matters. “Safer foods” requires funding to implement the Food Safety Modernization Act. “Faster and safer drug and device approvals” are only possible with funds to pay additional reviewers and build improved regulatory systems.

FDA has an enormous job and its responsibilities grow every year. Funding increases over the last five years have not offset decades of underfunding and under-investment in the agency. FDA Matters believes the next 12 months will determine FDA’s funding future.

The Outlook for Appropriations. FDA’s FY 12 funding is now set. The agency will have $50 million more to spend this fiscal year, for a total of $2.5 billion. While this increase is not large, FDA did quite well in the face of a possible $285 million cut. The agency was one of the few federal programs to receive more dollars than in FY 11.

 It’s too early to project next year’s appropriation. The President’s FY 13 request will be released in early February 2012. Because the Budget Control Act (BCA) of 2011 requires aggregate domestic discretionary spending to be lower than FY 12, competition for funding will become even more intense. Congress will need to be persuaded that FDA funding is a priority and needs to be an exception to funding constraints.

Also as a result of BCA, there is a very real threat to FY 13 FDA funding, as part of mandatory across-the-board cuts (“sequestration”) scheduled to take place on January 1, 2013. Unless Congress passes substantial deficit reduction legislation next year in lieu of sequestration, FDA must prepare for a possible cut in the range of $150 million to $250 million.   

Prospects for User Fees. In addition to appropriations, the Prescription Drug User Fee Act (PDUFA) provides FDA with supplemental funding from industry to support review of applications for new drugs and biologics. A similar program (MDUFMA) supports review of medical devices. There are also several smaller fee programs, as well as user fees that support the FDA’s tobacco center.  This chart shows the amount and growth of revenue derived from industry fees:  

All numbers approximate

FY 2009

FY 2010

FY 2011

PDUFA

$    512 million

$    573 million

$   667 million

MDUFMA

$      47 million

$      57 million

$     57 million

TOBACCO

——

$    235 million

$   450 million

       

All Fee Revenue (inc. smaller programs)

$    637 million

$    922 million

$ 1.224  billion

PDUFA and MDUFMA are expected to be renewed in FY 12 with higher revenue targets. With so much pressure on appropriations, Congress will be tempted to see user fees as the answer to FDA’s growing funding needs. However, user fees are only available for specific purposes and do not support FDA’s full mission.

Further, Congress has no qualms about increasing the amount of user fees, then bemoaning the agency’s increasing reliance on industry funding.  This is not a situation where “all money is green.” Increases in appropriated funding are still critical to a well-functioning FDA.

Delays in Enacting User Fee Legislation and the Possible Impact of Unfunded Mandates. FDA’s future funding is further obscured by the nature of the process of renewing the user fee programs. For example, delays in adopting legislation could result in funding shortages in early FY 13, making it harder for FDA to fulfill its obligations. In turn, this will contribute to Congressional concerns about whether FDA is spending monies efficiently and effectively.

Further, Congress “must pass” renewal of user fee programs in 2012, creating a situation where multiple FDA-related amendments are certain to be considered. Such amendments, if they become law, are likely to expand the agency’s responsibilities without adding additional funds for implementation.

Steven

Here are November 2011 columns you may have missed:

Animal Research: An Update on One of FDA’s Core Values     November 22nd, 2011

Bold Discussions: Possible New Approval Pathways for Breakthrough Drugs November 14th, 2011

By Whose Standards: FDA’s Identity Crisis and the Level Playing Field  November 7th, 2011

2 Responses to “FDA’s Fuzzy Funding Future”

  1. Mark McCarty says:

    Unless the economy picks up a lot of steam between now and the end of this fiscal year, it’s tough to see how the FDA budget will fare well in FY 2013. Getting a little additional money for the balance of FY 2012 will help the current user fee negotiations a little, but not much.

    Good point about the inconsistency about attitudes toward user fees on the Hill, but user fees are one of the things that foment distrust of FDA among the citizenry, as I blogged about earlier today. User fees may well be here to stay, but one wonders if they don’t create more problems for FDA than they solve. But as the saying goes, there are legislators and then there are appropriators. That hasn’t changed at all.

  2. jabebe says:

    FDA is an exceptional agency responsible for making our food and drugs safe and its role is expanding both in complexity and volume.The attempt to develop an inverse relationship between finance and operations will result in outcomes that are very hard to comprehend. Our Legislators do not have the courage to envison the consequences of a weakened FDA. User fees are supplemental not the core service value of the FDA. As Mark comments, the User Fees might influence decsions by the FDA, if dependency on User Fees for finance triggers in the process of approval.

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