Sequestration Has Less Impact on FDA? Just Not True

“The Hill” newspaper recently reported that: “a survey of federal budgets devoted to developing and enforcing regulations found that many agencies will spend more in 2013 and 2014 than in previous years, indicating that the writing and enforcing of new regulations is largely unimpeded by the massive cuts, known as sequestration.”

That certainly sounds authoritative…until you look at the analysis. In fact, the report’s authors appear to know nothing about the federal budget and have used inherently unreliable data in calculating FY 13 and FY 14 spending levels.  One can only hope that the authors—allegedly academic experts--know more about regulatory policy than they do about federal budgets.

When I first saw the “regulatory spending analysis” from George Washington University in DC and Washington University in St. Louis, I expected to write about how FDA’s budget is mostly not regulatory spending. After all, what fractional part of the FDA’s budget is actually devoted to “writing and enforcing regulations?” And the claim that FDA is growing is highly suspect, as addressed below.

Equally troubling to the “innovation economy” is that funding for the Patent and Trademark Office is counted as regulatory, placing PTO on par with the Securities and Exchange Commission (see page 6 of the report).  It is not a subtle nuance to say they are fundamentally different.

FDA and PTO are the “federal regulatory agencies” projected to have the largest growth and are the linchpins of the GW/Washington University study. If most of their budgets are not regulatory spending, then it is impossible to draw conclusions about how regulatory agencies are faring under sequester.  

But I can’t leave it there because the analysis is riddled with serious methodological issues.

The first of many errors is the use of the proposed spending levels in the FY 14 President’s Budget Request as the measure of what agencies will have to spend in fiscal year 2014. One example of the variation this creates: FDA’s “regulatory growth” is calculated by including the President’s request for more than $200 million in food user fees, a proposal that has drawn no Congressional interest.

More broadly, no one really knows what the actual FY 14 spending levels will be. They are dependent on the resolution of the difference between the House and Senate budget bills (about $90 billion in FY 14 discretionary spending), the actual spending levels adopted by Congress in appropriations bills, the vagaries of funding under (likely) continuing resolutions, and the very real threat of yet another sequester in FY 14. Most federal agency heads would be exceedingly grateful to wind up with as much money as the President requested for them.

The study’s assertions about the FY 13 spending levels are equally unfounded. The GW/Washington University report uses estimated “outlay” numbers contained in the appendix to the President’s FY 14 budget. Since these tables were compiled before the passage of the FY 13 Ag/FDA appropriations or the final FY 13 continuing resolution, the GW study is using estimates based on the President’s FY 13 request (as ungrounded in reality as the FY 14 request), perhaps modified by part-year CR’s passed in late 2012.

In short, the actual FY 13 spending levels were not used in the analysis (indeed, weren’t even determined at the time of the President’s FY 14 budget request). So, the already-unreliable numbers in the report are unadjusted for the subsequent rescission and sequester. How can the authors conclude that “agency spending levels for regulation have increased modestly despite sequester,” without having reliable numbers that reflect the sequester?

Mark Twain once observed: “There is something fascinating about science. One gets such wholesale returns of conjecture out of such a trifling investment of fact.” Thinking of the GW/Washington University study, I can only say “amen.

Funding Cutbacks at FDA: A Sequester Primer

At a time when FDA’s responsibilities continue to grow rapidly, the agency has been caught in an across-the-board reduction (sequester) in federal discretionary spending, effective March 2, 2013. Although Congress may yet reverse course and restore money to affected federal agencies, this is not considered a high probability.

Altogether, FDA will lose about $209 million between now and September 30, 2013. This will reduce inspections, slow drug and device approvals, and restrict implementation of the Food Safety Modernization Act and other recent legislation. Because of the many questions about the process and outcome, this is FDA Matters’ primer on the sequester of FDA funds.

How much of FDA’s FY 13 (current year) money is involved and which funds are cut? 

Sequestration	FY 13 CR (to 3/27/13)	Less sequester	Net amount
Budget appropriations	$2.521 billion	$ 126 million	$2.395 billion
User fees (inc. tobacco & generics UF)	$1.647 billion	$   82  million	$1.565 billion
Totals	$4.168 billion	$ 209 million (rounded)	$3.960 billion (rounded)

Will all programs within FDA be cut by precisely the same amount? Generally, yes.  Unless Congress or OMB change the sequester rules (and they might), each Center and the Commissioner’s office will be cut by about 5.0% to achieve the $209 million reduction. However, fixed items (rent, utilities, etc.) will still cost the agency the same amount, creating an internal deficit. This will require additional cuts (above the 5.0%) from the agency’s program activities.

Beyond the specific dollars, why will the impact be greater on FDA than on most federal agencies?  FDA is a staff-intensive organization. More than 80% of its funding is spent on personnel-related costs. Much of the remainder is fixed costs, rather than grants or contracts that could be cancelled or cut back. Many federal agencies are hoping to meet their sequester obligations without personnel cutbacks. FDA will do its best to follow this model.

FDA has said that no employees will be furloughed as a result of the sequester. How is that consistent with the agency’s staff-intensive nature and the depth of the cuts? To absorb the $209 million without furloughs, most of the savings will have to come from unfilled and/or delayed filling of vacancies—a process that probably started months ago. Many offices are probably already short-staffed and most will become so as we get deeper into the sequester. Hence, the predicted impact of the sequester is slowdowns in food (and other) inspections, drug and device reviews, and implementation of new FDA legislation and its global responsibilities.

In offices where staff reductions are needed as part of the sequester but no vacancies exist, some appropriately qualified employees may be saved through internal transfers into slots that can be paid for by the Generic Drug User Fee program (FDA’s one big growth area this year and for which it will definitely need to be hiring).

How would you characterize FDA’s “story” about the impact of the sequestration?  While $209M is a large cut with severe consequences, it may well be achieved by a thousand little bits and pieces, a vacancy here, a training contract there, a bunch of cancelled plane flights, some underspending early in the year, etc. It doesn’t make for a very dramatic story, which may account for why FDA has been relatively quiet while other departments and agencies have been talking about the severe impact of the sequester cuts.

Conclusion

If food is less safe…if drug and devices reviews go more slowly….if problems with imports increase....and if regulatory science and agency modernization stall….then there is a huge loss to the American people.

This loss is made larger by the knowledge that the agency’s mission is not static.  Congress has passed 6 new laws since 2009 giving FDA substantially more responsibility. Globalization and complex science makes the agency’s job larger and more difficult each year.

FDA staff wasn’t large enough to get the whole job done last year. Problems will  multiply quickly over the coming months as existing employees represent an every smaller proportion of the numbers needed to carry out this year’s and next year’s responsibilities.

Steven

*  For purposes of disclosure: I am one of the founders and serve as Deputy Executive Director of the Alliance for a Stronger FDA, www.strengthenfda.org, a multi-stakeholder group that advocates for increased FDA funding.  For more information on joining, contact me at sgrossman@strengthenfda.org.

Note that my duties with the Alliance are in addition to, and apart from, the work of my policy and regulatory consulting firm, HPS Group, LLC, which is the publisher of FDA Matters.  The views expressed in FDA Matters are my own, and those of HPS Group, and are not necessarily the views or positions of the Alliance.

FDA Funding: Agency Mission "At Risk", Says Alliance President

FDA’s mission is “at risk” because of inadequate funding. So says Alliance for a Stronger FDA President Diane Dorman, testifying before the FDA Science Board. Her remarks come 5 years after the Science Board made a similar declaration, concluding that decades of underfunding had left FDA without the resources to fulfill its mandate and make science-based decisions.

Congress responded with more monies for the agency, but since then the FDA’s workload has increased even faster. The current threat to FDA comes from two sources: four major new laws to implement since 2009; and changes in the environment in which FDA operates, notably acceleration of globalization and increasing scientific complexity.

Ms. Dorman’s remarks are reprinted below. If you care about FDA, FDA Matters urges you to read her testimony, go to the Alliance’s site (www.StrengthenFDA.org) and join.

Testimony of Diane E. Dorman

President, Alliance for a Stronger FDA

Before the

Science Board of the U.S. Food and Drug Administration

February 27, 2013

Good afternoon and thank you for the opportunity to address the FDA Science Board.

My name is Diane Dorman and I am President of the Alliance for a Stronger FDA, as well as Vice President for Policy at the National Organization for Rare Disorders. The Alliance is a 200-member coalition of all FDA’s stakeholders—consumers, patients, health professionals, trade groups and industry. Our sole purpose is to advocate for increased appropriated resources for the FDA.

When we started in 2006, FDA appropriations stood at slightly less than $1.5 billion for an agency tasked with overseeing 100% of drugs, vaccines, medical devices, and personal care products and 80% of our nation’s food supply. Altogether, the products and industries regulated by FDA account for nearly 25% of all consumer spending in the United States.

In short, FDA was the victim of decades of underfunding. It was quite small, despite its vital, complex world-wide responsibilities. Presidents weren’t asking for nearly enough money for FDA and Members of Congress were responding by giving the bare appropriations that had been asked for.

The Alliance’s goal was to change this situation by galvanizing the FDA’s broad stakeholder community to focus attention on the consequences of underfunding. We never doubted the accuracy of our analysis or the importance of our cause.

Nonetheless, it was immensely helpful when--18 months after our founding--the FDA Science Board released its own report in November 2007. As the media described it---the FDA’s own Science Board evaluated the agency’s capacities and responsibilities and declared that the agency’s mission was “at risk.”  The word “crisis” was often used and was an appropriate description of the situation.

Subsequently—and with the Alliance’s broad stakeholder advocacy—the prospects for FDA improved. Policymakers acknowledged the underfunding and acted aggressively to reverse it.

Today, in FY 13, the FDA receives slightly more than $2.5 billion in appropriated funding. This amount, might have met the FDA’s funding needs in late 2007 when the Science Board report was issued…BUT NOT NOW.

Today, $2.5 billion is dramatically less than the amount the FDA needs. For reasons I will describe in my testimony, the agency’s mission is again “at risk.” Even without the possibility of funding cutbacks, the American people will lose if FDA does not receive increased funding.

FDA Responsibilities Grow Each Year Because Congress Enacts New Laws

Two months before the Science Board declared FDA to be “an agency at risk,” the FDA Amendments Act of 2007 was signed into law, renewing the prescription drug and medical device user fee programs. It added a slew of new responsibilities, notably in food and drug safety, regulatory science, clinical trial registries, and establishment of a program for risk evaluation and mitigation strategies for new drugs.

The new responsibilities--combined with delays in funding of existing and new programming--had severe consequences. For example, FDA’s efforts in the critical area of drug reviews and approvals were slowed substantially for nearly two years, as demonstrated by this CDER chart.

The message from this experience is clear, albeit not surprising: new laws take enormous resources to implement. Once implemented, they permanently increase agency responsibilities.

Since 2007, Congress has identified a number of new needs that fall within FDA’s jurisdiction. At least six new laws have been passed in the intervening five years:

• Family Smoking Prevention and Tobacco Control Act (2009)
• Biologics Price Competition and Innovation Act (2010)
• Secure and Responsible Drug Disposal Act (2010)
• Combat Methamphetamine Enhancement Act (2010)
• Food Safety Modernization Act (2011), and
• FDA Safety and Innovation Act (2012), including re-authorization of the Best Pharmaceuticals for Children Act and the Pediatric Research Equity Act

This is hardly the end of it. Congress is already looking at a number of legislative initiatives for 2013, covering topics such as:

• Bio-security
• Track and trace/counterfeit products,
• Drug compounding, and
• Drug shortages.

 In addition, this year’s legislative requirement--renewal of two Animal Drug User Fees--is widely seen as a vehicle for other legislative mandates that FDA will need to implement.

The problem is not solely Congress’ urge to legislate. While some of our Alliance members may quibble with some of the new programs and requirements, overall I believe there is strong public and stakeholder support for Congress addressing unmet needs and emerging challenges. We all want safe foods and safe and effective medical products.

Ultimately, the real problem is Congress’ failure to acknowledge FDA as a funding priority despite the austere budget environment. Transforming FDA’s mission and responsibilities needs to be met by the necessary resources to do the job well. The current appropriations level is totally inadequate to make up for decades of underfunding AND all of the new laws enacted since 2007.

FDA Responsibilities Grow Each Year Because of Globalization and Scientific Complexity

Even were Congress not active in legislating new mandates for FDA, the agency’s mission and responsibilities would grow enormously each year for reasons unrelated to new laws. While the list is long, my remarks will concentrate on two: globalization and increasing scientific complexity.

One of FDA’s highest priorities since the Science Board report has been to re-align to adjust for the accelerating globalization in all product categories overseen by the agency. While there is no one way to fully convey the enormity of this shift and the resources required, I offer the following sample of key facts:

•      Food Imports are growing 10% annually. Altogether, 10-15% of all food consumed in the U.S. is imported. This includes nearly 2/3 of fruits and vegetables and 80% of seafood.

•      Device Imports are also growing about 10% annually.  Currently, about 50% of all medical devices used in the US are imported.

•      Drug Imports are growing even more quickly, about 13% annually.  Approximately 80% of active pharmaceutical ingredients (API) are manufactured abroad, as are 40% of finished drugs.

Inspections at U.S. ports-of-entry are critical, but ultimately less than 2% of shipments can be inspected. The better alternative--the one encouraged by Congress and chosen by FDA--is to increase foreign inspections and to establish foreign offices to work globally to improve the standards and quality of products entering the U.S.

The value of this approach cannot really be quantified. We know that the cost of illness, death and lost markets--from just a single bad actor in a single food category--can cost as much or more than the entire investment we put into FDA’s food safety activities. Drugs and devices are harder to track for a variety of reasons, but there is no reason to doubt a similar effect.

In contrast to globalization, greater scientific complexity is diffused into every part of the agency and its mission. That makes dealing with it less visible, but doesn’t make it any less costly.

FDA has adopted several approaches, many from the FDA Science Board Report. These include creation of a commissioner-level science office, investment in regulatory science, expanded and more intensive training, changes in time and manpower allotments for complex assignments, and significant reworking of the drug and medical device approval pathways.

Specifically, we have identified five areas that FDA is working on to improve the review process and respond to more complex science. Each comes at a cost in additional dollars and manpower:

•      Sponsors Need More Meeting Time and Other Feedback from FDA

•      Product Applications Require More Patients, Study Sites and Analysis

•      Enhanced Timeliness and Consistency of Product Review is Paramount

•      Expansion of Pre-and Post-Market Safety is Essential

•      Sustain and Increase Core Programs That Enhance Innovation, Speed Approvals

Further, safety inspections have also become more complex—requiring more scientific training, more preparation and, often, more time during the inspection itself.

FDA: An Agency Still Very Much “At-Risk” for Lack of Adequate Funding

It is important to recollect that FDA is a staff-intensive organization. More than 80% of its budget is devoted to staff-related costs. Of the remainder, rent and utilities are fixed costs that must be paid first. There is little grant and contracting to cut.

Sequestration is the most immediate threat to the FDA’s already-inadequate funding. Just a few days from now, the agency faces a loss of 5.1% of its FY 13 (current year) budget. This is the nominal rate. The Alliance’s analysis, confirmed by OMB testimony, is that the actual impact will be close to 9%.

Even if sequestration is avoided, FDA faces challenging funding battles in FY 14 and beyond.

If cuts occur now or in FY 14—or even if the agency budget stalls and fails to grow over the next few years:

•      food will be less safe and consumers put at risk,

•      drug and device reviews will be slower, conflicting with promises made to consumers and companies,

•      problems with imports and globalization will become more numerous, and  

•      critical efforts to modernize the agency and improve its support for innovation will stall.

Is FDA’s mission again at risk? Absolutely, yes.

And those who have the most to lose are the American people.

FOR MORE INFORMATION: www.StrengthenFDA.org or contact Steven Grossman of the Alliance staff at (301) 539-9660, sgrossman@strengthenfda.org.

FDA Post-Election: Continuity and Progress Likely to Mark 2013

Looking back over the last 40 years at FDA (as I have), there are three characteristics that create a more progressive environment at the agency: continuity of leadership, presidential support, and increased funding. For FDA in 2013 (as the saying goes): 2 out of 3 ain’t bad.

In particular, medical innovation seems poised to flourish in an FDA environment where there is continuity of policy and leadership, instead of a new team learning the ropes. I explore this and other themes in the latest issue of Pharmaphorum.com. You can read my thoughts at: http://www.pharmaphorum.com/2013/01/29/fda-post-election-continuity-and-progress-likely-to-mark-2013/.

Steven

FDA After the Election---Part 1: Budget

Apart from an occasional reference, FDA is not part of the campaign dialogue leading up to the November 6 nationwide U.S. election. FDA Matters believes this is probably good—any intelligent  discussion of FDA’s future requires a long-term perspective and a mastery of detail and nuance—both of which are in short supply during “sound bite”-oriented politicking.  

Yet, FDA will be strongly impacted by the election’s outcomes. Part 1 of “FDA After the Election” concentrates on the agency’s budget situation, while Part 2  focuses on leadership and change (http://www.fdamatters.com/?p=2164).

Both parts reflect that ultimately FDA is people-driven—not only by who leads, but also because over 80% of the agency’s costs are people-related. More money = more people = more capability and activity. Less money will have the opposite effect.

The Potential for 8.2% Cuts in January 2013. Most of the current focus is on the potential 8.2% across-the-board federal budget cuts slated for January 2, 2013. Sequester, as the process is known, will leave FDA with about $320 million less to spend in FY 13 than it did in FY 12.

This includes cuts to taxpayer-funded FDA appropriations (about a $2.5 billion base) and user fee revenue (nearly a $1.4 billion base). If the cuts were applied entirely to FDA personnel, the agency would have to lay-off or furlough about 1000 employees.

We know that the sequester of FDA funding has consequences:  food will be less safe; drug and device approvals will be slower; problems with imports and globalization will become more numerous; and FDA modernization will be severely slowed. Note that this is the opposite of what everyone--critics included--wants. The precise impact is hard to quantify because FDA will try to prioritize its remaining manpower to avoid immediate disasters and avoid any visible failure to approve life-saving therapies.

Congress does not want to reduce the federal deficit through a sequester. This view is supported by President Obama and his opponent, Governor Romney.  Despite this seeming unanimity, an alternative deficit reduction package would need to deal with entitlement programs and taxes. So—politically—deficit reduction is a mess and sequester may happen.

Budget Threats Will Continue, Regardless of Sequester. Even if sequester were somehow to be avoided, pressure on federal spending will continue far beyond the immediate future. Sequester is the most immediate hurdle in what is likely to be an annual challenge to all federal agencies, including (and especially) FDA.

In the face of this, the Alliance for a Stronger FDA* is asking Congress for three sane and sensible things that should help FDA:

• Recognize and properly fund the special and growing role of FDA as a protector of food and drug safety and a gateway to medical innovation and science.
• Find alternative means to reduce the budget deficit and avoid the across-the-board sequestration of 8.2% of federal agency funding on January 2, 2013.
• Return federal budget-making to a process under which national priorities (such as FDA) are adequately funded.

The Alliance’s call for a return to funding based on national priorities is a statement of faith: that FDA is a core function of national government and that we can demonstrate that funding the agency is essential.

Re-affirming FDA as a National Priority. We should not, however, assume that FDA’s core governmental role is self-evident to everyone. We need to convince policymakers, the media, and the public that we belong in the very special group of federal programs that need to grow--even as other important programs suffer cutbacks and some even wither and die. Implicitly, the responsibilities of the federal government are going to be redefined, whether consciously or as the residue of decisions that will be forced on the President and Congress after the election and over the next few years.

How well will FDA compete for scarce dollars, assuming that the situation is not pre-determined by across-the-board cuts? The elite tier of federal programs has some heavy-hitters, such as air-traffic controllers and the nation’s judiciary. The absence of funding in their areas often has more concrete and immediate consequences than a lack of funding for FDA.

With FDA funds being used to oversee products and services that mount in the trillions and encompass 25% of consumer spending….our case is equally compelling. Everyone involved with FDA has an obligation to make themselves advocates for increased funding.

Steven

*  For purposes of disclosure: I am one of the founders and serve as Deputy Executive Director of the Alliance for a Stronger FDA, www.strengthenfda.org. It is the only multi-stakeholder (consumers, patients, health professionals, industry) that advocates for increased FDA funding. Our strength is in the breadth and number of our members, so I urge you to contact me for more information about belonging. Contact me at sgrossman@strengthenfda.org.

Note that my duties with the Alliance are in addition to, and apart from, the work of my policy and regulatory consulting firm, HPS Group, LLC, which is the publisher of FDA Matters.  The views expressed in FDA Matters are my own, and those of HPS Group, and are not the views or positions of the Alliance.

2012 Mid-Year Report on FDA: Opportunities, Threats and Accomplishments

So much is going on at FDA right now, that it is difficult to pick just one topic for this week’s FDA Matters. Instead, we are going to take a quick tour of some “hot spots” at FDA and how they might affect the agency over the remainder of the year and beyond.

Please read on…there is something for everyone in the topics covered.

The “Lost” FSMA Regulations. At the very end of 2010, Congress passed the Food Safety Modernization Act (FSMA). The law was intended to fundamentally re-set the term under which FDA acts to assure a safe food supply. It focuses on preventing problems, rather than fixing or limiting them afterward. FSMA provides the agency with new authorities and additional resources consistent with FDA’s role of overseeing a global food supply.

The first provisions of FSMA went into effect in January 2012 and additional requirements become effective this month. To guide implementation of these requirements, FDA has produced four draft regulations. None have been published; all are stuck in the review process at OMB.

The mystery of the “lost” FSMA regulations prompted two reporters to call me this past week and ask: is OMB holding back these (and other) regulations until after the election, presumably for political reasons. I couldn’t see an electoral connection, plus the first of the proposed regulations was submitted to OMB in December 2011, a very long time before the election.

The “lost” FSMA draft regulations are worrisome by themselves, but especially with so much else going on at FDA that may require OMB review.  

FDA’s Drug Safety Monitoring Program Hits Target, Will Expand. We don’t read often enough about the successes that come from cooperation and hard-work at FDA. In the 2007 user fee reauthorization legislation, Congress directed FDA to construct a nationwide electronic post-market safety monitoring system that would allow FDA to examine tens of millions of patient records to discover or refute possible safety concerns about FDA-approved products.

In a recent edition of FDA Voice, the FDA’s own blog site, the agency reported that the monitoring system, called “Sentinel,” now has access to the de-identified medical and/or insurance records of about 126 million Americans, collected through 17 data sources (e.g. VA, Kaiser). Sentinel is definitely still a “work in progress” on a number of levels, but it will be of increasing value as medical products become even more complex and even more integral to medical care.  

Funding Ups and Downs. Despite Congressional reauthorization of the prescription drug and medical device user fee programs, the budget authority (BA) (taxpayer-funded) portion of FDA’s budget is still the bulk of the dollars. The Senate has included a small increase in BA funding for FDA for FY 13; the House has proposed a small decrease.

Of compelling concern is the strong potential that FDA (along with all federal discretionary funding programs) will be hit with a 7% to 10% “sequestration”—an across-the-board cut--on January 2, 2013. This would reduce the agency’s budget  by between $175 million and $250 million in FY 13. This is FDA’s "contribution" to saving the federal budget more than $1 trillion over the next 10 years. 

If sequestration occurs, FDA will try to avoid lay-offs by shifting more employees from taxpayer funding to user fees. In that case, increases in user fee income will be backfilling the BA cuts, rather than contributing to real agency growth. Yet, FDA will be obligated to undertake the user fee-driven activities and meet the law’s performance measures as if the new user fee money was paying for additional staff.

User Fee Reauthorization Will Drive, Not Disrupt, the Agency Agenda. Five years ago, the user fee reauthorization (PDUFA 4) didn’t become law until late September, a few days before fiscal year 2008. The combination of immediate deadlines, delays in collecting user fees, and insufficient trained personnel set off a series of problems that took three years to fully overcome.

This time, Congress finished the reauthorization in late June and FDA has been planning the law’s smooth implementation for months. Instead of panic, CDER in particular, seems to be feeling good about the path forward and the many changes called for in PDUFA 5. 

Dr. Janet Woodcock, head of CDER, has listed her priorities as, among other things: timely transition to new user fee requirements (including start-up of new generic drug and biosimilars user fees); dealing with drug shortages, moving forward on data standards and new IT support systems, and advancing regulatory science.

Results are still what matters and there are always critics….but a sense of optimism at CDER is always welcome.

 Steven

FDA Progress “At Risk:” An Update on Funding and a Call to Action

FDA Matters’ State of the FDA—January 2012 identified agency funding as the greatest threat to the FDA’s future. The agency received a very small increase in FY 12 appropriated funding, reflecting the severe budgetary pressure on all U.S. federal agencies. That pressure continues and FDA faces potential cuts in FY 13 (starting October 1, 2012).

Advocacy by the Alliance for a Stronger FDA and other stakeholder groups is critical to sustaining the agency’s appropriated funding and pressing Congress for increases to meet the growing demands on FDA. This column explains the budget situation and calls upon all stakeholders to support increased FDA funding. 

FDA was massively underfunded for two decades. Since 2007, Congress has reversed course and increased the agency from $1.5 billion to $2.5 billion in annual appropriated (non-user fee) funding. The agency is also viewed much more favorably than it was then.

However, the agency received a miniscule $50 million increase in FY 12 appropriated funding. Although this was more than many federal agencies, it is inadequate for FDA’s growing responsibilities. Even still, the agency made good progress on its key objectives in FY 12, mostly by stretching the dollars as best it could.

FY 13 funding could be much worse, while the agency’s responsibilities continue to grow. New Congressional mandates include the Food Safety Modernization Act (FSMA), the Biologics Price Competition and Innovation Act (biosimilars), and bio-defense. In addition, amendments to the user fee reauthorization legislation will impose new requirements (unfunded mandates) on the agency beyond what will be paid for by user fees.

The other sources of growth in FDA’s responsibilities are unrelated to Congress. These include: continuing growth and increased demands of globalization; science’s growing complexity; agency initiatives to promote innovation and regulatory science; and “the unexpected,” whether new foodborne pathogens, drug shortages, or new scientific discoveries that add to the agency’s responsibilities.

FDA must overcome two barriers to obtain more funding. The first relates to how Congress views FDA. Does Congress recognize FDA as providing essential governmental services that must be supported, regardless of budget cuts? Does Congress view FDA as doing a good job with the money it receives? In particular, has it used the increased funding over the last 6 years to improve its effectiveness? Does Congress feel any urgency about funding those FDA activities (e.g. implementation of FSMA) that can only occur if funding is increased in FY 13? 

The second barrier is the overall environment in which budget decisions are being made, especially the aggregate amounts Congress is willing to spend on domestic discretionary programs. The FY 12 appropriations process was driven by pressures to reduce spending. Largely because of lower House spending ceilings, FDA faced the possibility of a $275 million cut under the House-passed bill. FY 13 now looks like it may become a repeat of last year, with the House again choosing lower aggregate spending levels than the Senate. This sets up the possibility (maybe even likelihood) that the House will again vote for a large cut in FDA funding, while the Senate may be barely able to maintain current funding levels.

This is not an acceptable situation. FDA oversees nearly 25% of all consumer spending and touches the lives of every American every day. It’s not just the food, drugs and devices that we commonly think about, but also vaccines, diagnostics, cosmetics, pet food, dietary supplements and so on.

Further, as this blog’s growing global readership  attests….FDA’s decisions affects the lives of hundreds of millions of people outside the U.S. Many countries rely on FDA’s standards of quality and its regulatory decisions. Further, every country in the world is part of the global market in the import and export of FDA-regulated products.

Belonging to the Alliance for a Stronger FDA helps demonstrate support for the FDA. The Alliance’s membership includes all stakeholders —consumer, patient and research advocacy groups, professional societies, companies and trade groups, consulting firms and individuals. A stronger FDA is the only thing they all agree upon…and this carries great weight with Congress. The Alliance’s views on FY 13 FDA funding can be found here. 

For more information about the Alliance, go to www.StrengthenFDA.org or write to me at sgrossman@StrengthenFDA.org.

Steven 

For purposes of disclosure: I am one of the founders and serve as Deputy Executive Director of the Alliance for a Stronger FDA.

My duties with the Alliance are in addition to, and apart from, the work of my policy and regulatory consulting firm, HPS Group, LLC., which is the publisher of FDA Matters.  The views expressed in FDA Matters are my own, and those of HPS Group, and are not the views or positions of the Alliance.

The State of the FDA—January 2012

FDA is the only federal agency that touches the lives of every American several times every day. Its remarkably broad mandate includes all medical products and 80% of the nation’s food supply, plus countless other products. Despite this, when the President delivers his State of the Union (SOTU) address to Congress this week, it is unlikely that FDA will rate a mention.

FDA Matters will instead provide its second annual “State of the FDA.” As reflected in last week’s column, FDA did well in 2011, but one year’s progress does not change the continued precarious state of the FDA. Here is our analysis:

Strengths: FDA’s most important strength is the dedication of the agency’s staff  and the leadership of Commissioner Hamburg’s team. In the current environment, their efforts are invisible to the public they serve and largely unappreciated. If safe foods and safe and effective medications are important to you, say “thank you” to the FDA staff that make it possible.

The agency’s independence is another key strength of the FDA. At the moment, many FDA observers don’t see it that way, viewing the HHS Secretary’s decision to overrule FDA on Plan B as evidence that the agency is weak and dependent. However, Plan B is a ‘one-of-a –kind” controversy, presenting uniquely difficult and combustible issues that aren't present in 99.9 percent of FDA's decisions. If you look at the totality of FDA actions, the agency is remarkably independent from HHS and the White House. Rather than a weakness, this is one of the agency’s strengths.

Weaknesses: Despite a number of recent, laudable efforts at improvement, the FDA is still disorganized and largely ineffective in communicating its messages to the public, media, stakeholders and Congress. Notably, an analysis published in the journal, Medical Care, last week concluded that: although some [FDA] communication efforts had a strong and immediate effect, many had little or no impact on drug use or health behaviors and several had unintended consequences.

FDA’s information technology (IT) systems continue to be grossly inadequate for an agency with such large, far-flung and complex responsibilities. Some progress has been made with analytic data bases, such as the Sentinel program to track post-market safety, and with data bases that improve the flow of information within the agency and between field and headquarters. The October 2011 appointment of a new chief information officer with industry experience is a hopeful sign.

Opportunities: The promise of science has never been brighter. And Dr. Hamburg, to her credit, has made it a priority to improve the agency’s scientific bench strength—better credentials, better training and better tools.

This provides FDA and the medical products industries with the opportunity to forge a new “social contract” with regard to scientific standards and product approvals. FDA must commit to becoming less formalistic and bureaucratic in its dealings with companies. It must demonstrate (not just accept) that advancing medical innovation is an integral part of the FDA’s role in promoting public health. In turn, industry needs to accept that “science, fairly evaluated within predictable guidelines,” is an appropriate expectation as opposed to a system based on short-cuts to market and ill-defined, “leap of faith” assumptions about safety and efficacy. In addition, industry bashing of FDA needs to end. It is counterproductive to everyone’s interests.

Equally promising is the opportunity to significantly upgrade the safety of the American food supply. Even with the devotion of FDA staff to this cause, we are lucky that the reported levels of foodborne disease and product adulteration are not higher. The year-old Food Safety Modernization Act (FSMA) is, by general agreement, a blueprint for moving to a new level, one where a safer food supply reflects smart decisions.

Threats: The largest threat to FDA is inadequate funding. As science has become more complex, industry more global and information more integral to every human interaction, FDA oversees a rapidly expanding portfolio of products and responsibilities. Even without the threat of budget cuts facing all federal agencies, it would be hard to grow the FDA budget enough to stay ahead.

A related threat is the potential for massive expansion of FDA’s unfunded mandates during Congressional reauthorization of the drug and medical device user fee programs. FDA is almost certain to be given new (and needed) authority for drug import inspections and drug shortages. In addition, Congress will consider and most likely pass a dozen or more other new programs or significant changes in FDA regulation. FDA will almost certainly have to implement these new requirements without additional appropriations. 

Steven

For those who may be interested, here is a link to “The State of the FDA—January 2011” http://www.fdamatters.com/?p=1240.

FDA and Congress: Prospects for 2012

Barely more than a year ago, the US experienced a “wave” election—sweeping a Republic majority into the House of Representatives and reducing the Democratic majority in the Senate. As a result, FDA faced a Congress in 2011 that contained fewer friends and less support than previously.

The consequences, thus far, have been small. Congress became so absorbed with deficit reduction that it accomplished little else this year and spent almost no time on FDA issues. Circumstances will change this in 2012 and, fortunately, we have strong clues about Congressional attitudes and priorities.

At the end of 2010, FDA Matters devoted six blog columns to examining the impact of the election on FDA and its regulated industries. As predicted, Congress was more interested in deficit reduction in 2011 than any other topic. This shows no sign of abating.

For FDA, this means constant pressure from Congress on funding, particularly from sequestration and other threats of across-the-board cuts in federal spending. FDA’s best position is always to have its needs evaluated on an individual agency basis—rather than being part of a larger funding action.

Congress chose not to address FDA’s FY 11 appropriation in the post-election session. Instead, it addressed this in April of 2011 on fairly favorable terms to the agency.

Similarly, FY 12 appropriations demonstrated that Congress was still receptive to partially meeting FDA’s growing resource needs, but it became clearer that future funding increases will be even harder to get. Arguments for FDA being an exception to deficit reduction will be made often next year by agency supporters within Congress and by outside advocates.

In general, very little legislation passed Congress in 2011 and virtually none without bi-partisan support. FDA Matters pointed out that achieving such consensus was possible on FDA issues when Democrats from technology-oriented regions joined with Republicans on positions that could enjoy industry/patient or industry/consumer support. This approach did not produce any legislation in 2011.

However, technology-oriented Democrats are likely to join Republicans in shaping the user fee reauthorization legislation, which Congress “must-pass” in 2012. It seems certain that the bi-partisan pathways will produce most of the legislation, including new authority for drug import inspections, incentives for development of antibiotics and provisions to address drug shortages.

I expected a substantial ramp-up of Congressional oversight and investigations of FDA and regulated industries, which never materialized. There were a few hearings, but never the vehemence or persistence that would have represented a major change from the previous Congress.  I still believe there will be an uptick in these activities, but most likely it will be deferred until late 2012 or 2013, after Congress adopts the user fee reauthorization legislation.

A final column last year asked the provocative question: will the new Congress be good for FDA-regulated industries? Republicans generally want federal regulations and regulatory agencies trimmed back significantly. In contrast, FDA-regulated industries generally want more flexible regulatory requirements and greater certainty in their implementation, but are not interested in eliminating FDA’s regulatory responsibilities or limiting its ability to assure public health and safety.

So far, this Congress has not come to a firm conclusion about FDA. It has not embraced FDA as an essential government service—like national defense and air-traffic controllers—but neither has it marked FDA as a particular target to starve, roll-back, harass or marginalize.

The deciding factor may be how FDA responds to Congress’ insistence that FDA be a positive force in the advancement of American innovation and a contributor to US competitiveness. This is precipitating an identity crisis at FDA, which the agency is working hard to resolve.

If FDA succeeds in integrating innovation into its mission, priorities and processes, then Congress will be able to see FDA (and the support it enjoys) as being essentially different than other regulatory agencies that do not have widespread public support.  This is the optimum position for FDA in its relationship with Congress.

Steven

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

A Salmon on Every Plate

President Herbert Hoover supposedly promised Americans “a chicken in every pot” during his 1928 campaign. Chicken was an expensive delicacy then, so his message was about raising living standards, not ending hunger. Today, chicken is a low-cost source of protein and a mainstay of the American diet.

FDA Matters hopes that salmon (and other fish) will also become sources of low-cost protein over the next two decades. FDA is nearing the end of a long regulatory process, the outcome of which could be approval of a faster growing genetically-engineered Atlantic salmon. FDA must overcome opposition from environmental groups…and politicians and companies trying to protect the market for Pacific salmon.

The health benefits of fish are well-known. They are also a valuable source of dietary protein. However, our oceans are over-fished and aquaculture is now the source of almost 50% of the fish consumed worldwide. Expanding the availability of fish products meets a growing demand and is an important component of improved nutrition for Americans.

The proposal before FDA is for a genetically-engineered (GE) salmon that is biologically and chemically identical to the Atlantic salmon that is served in restaurants and at our own tables. The only difference is the inclusion of a Chinook salmon gene that provides the potential to grow Atlantic salmon to market size in about half the time.

Opponents have labeled the product as “Franken-fish.” It’s a catchy slogan that tries to vilify over a decade of scientific research and discredit several years of FDA review. Ultimately, the appeal is to emotion—that something dramatically new and different must automatically be dangerous. Decisions about new and different products are hard for FDA, as I wrote a few week weeks ago in a column entitled: “FDA and Things that Might Go Bump in the Night.”  

Approval of genetically-engineered animals will always require serious consideration of safety, environmental and ethical issues.  In this case—FDA’s first application for approval of a GE food product--the agency has been fortunate to have what might be considered a favorable factual context. No one questions the legitimate demands for more plentiful, high quality supplies of salmon. Further, the sponsor has agreed upon multiple redundant safeguards. For example, the GE salmon will be only sterile females and will be grown in inland fisheries with no access to either wild or farmed salmon stocks.

FDA has done its homework—digging deep into the relevant science and taking the time to consider all aspects of the issue. An agency decision is considered imminent and likely to be favorable….unless Congress tells it otherwise. A showdown may occur this week when the Senate considers the FY 12 appropriations bill for the Agriculture Department and FDA.

The House version already contains restrictive language forbidding the agency from spending any of its FY 12 monies to approve the application. However, according to some reports, only about a dozen Representatives were present when the amendment was adopted by voice vote during floor consideration.

In contrast, when the issue comes before the Senate this week, there will be debate and almost certainly a vote. Currently, about a dozen Senators are known to support the ban, with most of them from Alaska, California, Oregon and Washington, states that are the primary sources of Pacific salmon sold in the United States. 

Healthy, affordable high-protein food is always a desirable dietary option. At some time in the future, salmon could be as affordable as chicken if we allow the development of salmon that can be grown faster.  

The current fight is not just about “a salmon on every plate.” It is also about whether Congress will substitute its political judgments for FDA’s scientific decisionmaking. FDA Matters hopes that enough Senators will vote for FDA and against regional economic interests that want to protect existing sources of salmon production.

Steven

More information about salmon, aquaculture regulation of genetically-engineered foods and the current controversy can be found at: http://www.fda.gov/AdvisoryCommittees/CommitteesMeetingMaterials/VeterinaryMedicineAdvisoryCommittee/ucm222635.htm and http://www.aquabounty.com/PressRoom/#l7

FDA and Things that Might Go Bump in the Night      September 18th, 2011

FDA’s everyday business requires balancing risk and benefit as these might apply to a particular medical product or a new food. Occasionally, FDA is faced with a much larger responsibility: judging a breakthrough technology that could bring great benefit or great sorrow to humankind. Who can confidently know in advance which it will be?

Still, FDA must decide. If they say “yes,” whole new industries and benefit may be created for patients and consumers. Or, the world and humankind may be subject to devastation. Today, the agency is faced with just such challenges in dealing with nanotechnology, genetically-engineered (GE) animals, and synthetic biology. Read the rest of this entry

Can FDA Survive the Next Round of User Fee Legislation?

If FDA is to have sufficient money to operate in fiscal year 2013 (and thereafter), drug and device user fee legislation must pass Congress next Spring. That is the immovable object of the agency’s future. To pass legislation, Congress will need to plow through dozens of amendments touching every aspect of FDA and the industries it regulates. This is the irresistible force of Congress.

What happens when this irresistible force meets this immovable object? Something will need to give. FDA Matters hopes it will not be FDA’s ability to carry out its mission.   

The threat to FDA is created by two constraints imposed on the legislative process to reauthorize drug and medical device user fees.

First, the legislation needs to pass at least 90 days before the existing user fee programs expire on September 30, 2012 (i.e. by June 2012). During the last renewal cycle five years ago, the legislation wasn’t signed into law until September 21. As a result, FDA had to delay hiring new staff and the agency was compromised in its ability to implement the new law during the first year of the cycle.  

This time, there may be greater awareness by Congress of the problems created by delayed passage of the user fee legislation. However, this Congress has (thus far) a poor track record of reaching compromises on even simple matters and has demonstrated serious problems meeting deadlines.

Second, the user fee legislation is likely to be the only FDA-related legislation that “must pass” during this Congress (2011-2012). It provides Members of Congress a “one-time only” opportunity to advance their favorite issue or concern about FDA.

A partial list might include: drug re-importation; the exclusivity provisions of the new biosimilars law; approval of genetically-engineered salmon; regulation of dietary supplements; changes in the way that medical devices are regulated; and the use of Bisphenol A (BPA) in consumer products.  In addition, Congress now has some Members who might offer more fundamental amendments, such as revising FDA’s authority to review the efficacy of drug products.

The user fee reauthorization legislation will essentially have two parts. The core bill (“the inner bill”) will include renewals of drug and device user fees and adoption of new fees for generic drugs and other programs. In the best case, disagreements on these programs will be negotiable and compromises found.

Any additional amendments (“the outer bill”) are problematic. There may be some areas of agreement, such as new authority for drug import inspections, incentives for development of antibiotics, and provisions for addressing drug shortages.

However, as mentioned above, the outer bill will face a pent-up demand for resolution of controversial FDA-related issues. The House and Senate committees and leadership are going to have to deal with the onslaught—by allowing votes, negotiating compromises or adopting procedural barriers to prevent consideration of their colleagues’ amendments.

The risk for FDA is twofold. Even if “the inner bill” can be moved without problems, a lot of time will be required to deal with “the outer bill.” The clock will be ticking and June 2012 will arrive quickly. If Congress misses, FDA will be hurt. The longer it takes, the greater the damage.

Second, no one can predict which of the items proposed for “the outer bill” might be adopted. Some may make important and possibly undesirable changes in the agency’s mission and activities.   

Reauthorization of FDA’s user fee programs is essential, but difficulties are unavoidable and extend well beyond the fees themselves. FDA needs to be talking now with its many Congressional friends—not just about the details of the inevitable clash, but how to control the battle so it doesn’t get out of hand.

Steven

“Must-Pass Legislation” Key to FDA’s Future     December 12th, 2010

FDA Matters believes that the 2010 election will profoundly affect the FDA’s mission, priorities, funding, standards and work flow. Eighteen months from now, FDA’s leadership team will probably be the same, but the agency won’t be.

Identifying and understanding the likely changes to FDA requires examining the meaning of “must-pass legislation” and its escalating importance as a quarrelsome Congress turns into a divided Congress. At the moment, there is only one “must-pass” item on Congress’ FDA agenda: the next round of user fee renewals that will come before Congress in the Spring of 2012.  Read the rest of this entry

It’s Time to Change CDER Funding   September 17th, 2009

I did some crunching of FDA budget numbers for my column earlier this week on the Office of Regulatory Affairs (ORA). A by-product of my efforts was an analysis of how the Center for Drug Evaluation and Research (CDER) is funded. We often hear how dependent CDER is on user fees. The actual numbers are startling and deserve to be well-aired. Read the rest of this entry

FDA’s Busy Summer of 2011

Once upon a time, Washington slowed a little over the summer. Those days are long gone…and this was a particularly busy summer. Congress went down to the deadline on the debt limit/deficit reduction legislation, then left town for August. There was a continuous stream of FDA headlines in June, July and August.

FDA Matters focused on a number of the most pressing issues: post-market safety and surveillance; barriers and opportunities for increased drug discovery and approvals; the rising tide of imports; prospects for biosimilars and medical devices; FDA funding; and various crises facing the agency.

Here is a recap of the summer’s stories:

FAQ: How Biosimilars Will Transform the Marketplace      August 21st, 2011

Biosimilars will be a huge success--used by most prescribers at least some of the time. Much of the current negativity about the market for biosimilars is fed by a mismatch of expectations: the Biologics Price Competition and Innovation Act (BPCIA) is barely 18 months old, while the transformation of the marketplace will take a decade or longer. FDA Matters explores the likely evolution of the marketplace in a set of FAQs.  Read the rest of this entry

FDA Funding Prospects Altered by the Budget Control Act     August 14th, 2011

The Budget Control Act of 2011 (BCA) will have a heavy impact on FDA’s future. Under this new law, most discretionary spending programs will shrink—not merely cease to grow. Yet, FDA’s growing responsibilities and resource needs are not diminished because federal spending is being reduced. Our nation is less safe and less healthy if FDA cannot excel at its mission. Read the rest of this entry

People, Not Science, Make Decisions  August 8th, 2011

To FDA Matters, the people making the decisions at FDA are its strength. They are smart, conscientious and committed. Yet, when asked about bottlenecks at FDA, I have to admit that people slow the process down. There are good reasons why this is so. Read the rest of this entry

Medical Device Melodrama: A Great Story With a New Plot Twist  August 1st, 2011

Two years ago, FDA Matters urged FDA and Congress to review the 510(k) approval process for moderate-risk medical devices and predicted meaningful changes that would work for FDA, industry and consumers. FDA and industry have been proceeding along these lines (albeit with some tough negotiating and lots of rhetoric)…until the Institute of Medicine (IOM) declared that the current system is so flawed that a new regulatory framework is needed.  Read the rest of this entry

FDA, Reorganization and the Four Crises    July 24th, 2011

Dr. Hamburg’s reorganization plan addresses four crises that beset the agency: industry discontent with the medical product review process; public concern about import safety; implementation of the Food Safety Modernization Act; and Congressional concerns that the agency is inefficient in its use of resources. The new structure should drive better decisonmaking and greater productivity…. at a time when the agency is struggling to fulfill its growing mission and faces the potential for budget cuts.  Read the rest of this entry

Complexity, Uncertainty, Unpredictability: Not Necessarily Bars to FDA Approvals      July 17th, 2011

In most discussions of science and medicine, there is an implicit assumption that the human body is a complex biological machine. “The human body as a machine” is a metaphor, not a fact. Once we accept this, FDA Matters believes we can become liberated from unrealistic expectations about medical discovery and FDA’s role as a gatekeeper for new products that benefit patients. Read the rest of this entry

Should FDA Have an Independence Day?     July 4th, 2011

FDA Matters thinks that making FDA an independent agency will not make FDA more effective or more efficient. Although the idea is not truly harmful, proposing independent agency status is a seductive distraction from the tough job of improving FDA. Read the rest of this entry

Imports: FDA Issues a Cry for Help   June 26th, 2011

 No challenge to FDA’s mission looms larger than the rapid globalization of the world markets for food, drugs, medical devices and other FDA-regulated products. By way of making this point, the FDA released a special report, entitled “Pathway to Global Product Safety and Quality.”  FDA Matters read the report carefully and heard a cry for help, if not an actual primal scream. Read the rest of this entry

Post-Market Safety: Getting the Most Out of Inferences That Aren’t Proofs   June 21st, 2011

FDA has expanded its post-market efforts, including development of a monitoring system (called Sentinel) that will be able to track drug usage and medical history information on tens of millions of patients. Although such information will be useful, it can only provide post-hoc inferences, not proof of causation. Even with this limitation, FDA Matters thinks developing the system is worthwhile and may provide multiple benefits.  Read the rest of this entry
Steven

FDA Funding Prospects Altered by the Budget Control Act

The just-passed Budget Control Act of 2011 (BCA) will have a heavy impact on FDA’s future.  Under this new law, most discretionary spending programs will shrink—not merely cease to grow.  Yet, FDA’s growing responsibilities and resource needs are not diminished because federal spending is being reduced. Our nation is less safe and less healthy if FDA cannot excel at its mission

FDA Matters urges Congress and the President to see that increased funding of FDA is the only option.  Ultimately, the pressures created by the BCA will test the government’s commitment to FDA’s essential role in our society.  

Appropriations Caps and the Impact on FY 12.  The BCA limits discretionary federal spending for every fiscal year from 2012 through 2021. By capping annual appropriations growth, federal spending will be reduced by more than $900 million over 10 years.

For FY 12, the House and Senate appropriations committees cannot spend more than $1.043 trillion. Within this total, the ceiling for non-security programs (e.g. FDA, NIH, education, etc.) is slightly below the FY 11 appropriations level.

The ceiling is also substantially above the level the House has been using to mark up FY 12 bills. This is particularly encouraging because the House-passed Ag/FDA appropriations bill would cut FDA by $285 million below FY 11 (-11.5%) and $572 million below the President’s FY 12 budget request (-21%).

Senate staffs are currently preparing FY 12 appropriations bills using the aggregate spending levels in the BCA. Subcommittee and then full committee mark-ups are expected to start in early to mid-September.  Advocates, notably the Alliance for a Stronger FDA and its members, have been encouraging the Senate to put more money into FDA. The goal is to provide the agency with an increase in its FY 12 appropriation, not merely undo the cuts proposed in the House bill.

FY 13 Appropriations and Beyond.  A second part of the BCA requires a further reduction of the federal deficit by $1.2 trillion over the next 10 years. This can be achieved by any combination of changes in entitlements, revenues and appropriations.  

To pull together this deficit reduction plan, a so-called “super committee” has been appointed. It is composed of 12 members—3 each from the majority and minority parties in the House and the Senate. The group’s work must be completed by November 23, 2011. Any resulting bill will not be amendable and must pass Congress by December 23, 2011. If no legislation passes or the President fails to sign it, then across-the-board cuts (“a sequester”) will occur during  fiscal year 2013, which starts on October 1, 2012.

The general consensus in Washington is that the super committee appointees are too divided ideologically to pull together the needed deficit package. Democrats will only accept entitlement changes if there are new tax revenues. Republicans are pledged to oppose any tax increase.

Predictions of failure may be premature because the super committee will be under intense public and political pressure to find a compromise. In addition, sequester cuts would fall heavily on defense programs that most of Congress supports.

FDA is vulnerable in the “super committee/sequestration” process in two ways.

• If the super committee produces a plan, it may include further cuts in discretionary spending. There is no guarantee that Congress would allocate those cuts in a way that would protect FDA and other essential programs.
• If the super committee does not produce a plan, then the sequester would go into effect in FY 13.  If the entire 10-year $1.2 trillion in savings must be found through sequestration, then FDA is likely to sustain an across-the-board reduction in FY 13 of at least 8% to 10%.

Conclusion. Over the last five years, FDA has been one of few discretionary programs to receive substantial funding increases. This reflected both Congressional and Executive Branch recognition that the agency was dramatically underfunded for its growing responsibilities in an increasingly complex world. FDA still needs more resources, even though the downward budgetary pressures have become significantly greater.

Steven

Imports: FDA Issues a Cry for Help          June 26th, 2011

No challenge to FDA’s mission looms larger than the rapid globalization of the world markets for food, drugs, medical devices and other FDA-regulated products. By way of making this point, on June 20, the FDA released a special report, entitled “Pathway to Global Product Safety and Quality.” FDA Matters read the report carefully and heard a cry for help, if not an actual primal scream. Read the rest of this entry

FDA “Exceptionalism” at the Funding Crossroads       May 2nd, 2011

Congress returns at the beginning of May to start the FY 12 appropriations process. Downward pressure on federal spending will intensify. If, despite this, the FDA receives another increase, then it will move closer to establishing itself as an exception to the budget cutting process. Thus, FDA Matters sees the coming funding battle as a crossroads for FDA.  Read the rest of this entry

FDA Appropriations: Good News for FY 11...A Struggle in FY 12

FDA survived the FY 11 (current year) appropriations process with an increase of about $107 million. The agency was the only account in the agriculture appropriations bill that received more money in FY 11 than it did in FY 10. Very few domestic discretionary programs received increases.

FY 12 will be harder. All the “easy” cuts have been made. In the House, the appropriations subcommittees were given very small allocations for programs under their jurisdiction. As a result, the initial House position for FY 12 has included cuts to FDA.

On May 24, 2011, the House Agriculture Appropriations Subcommittee marked up the FY 2012 appropriations bill. The chairman’s mark—adopted by the subcommittee--proposed cutting the FDA’s budget authority (BA) appropriations by $285 million for Fiscal Year 2012 (starts October 1, 2011). This represents an 11.5% cut from the recently passed FY11 Continuing Resolution, which funds the government until September 30, 2011.

This cut represents a significant decrease and would put FDA’s appropriation below its FY10 number and more than $500 million below what the President requested for the agency in FY12.

FDA	FY 10  Final	FY11  Final  CR	FY 12 House Appropr. S/C  May 24, 2011	FY 12 President’s Request—Feb.14, 2011
Budget Authority appropriations  (no user fees)	$ 2.361 billion	$2.457 billion    includes -0.2% across the board cut of $5 million	$ 2.172 billion $285M below FY 11	$2.744 billion

The House appropriation committee’s press release states that the overall cut in the agriculture appropriations bill is 13.4%. FDA’s 11.5% cut is slightly better, on average, than other agencies within the agriculture appropriations jurisdiction. Every area of FDA activity would sustain cutbacks under the House subcommittee bill. (For exact breakdown by Centers, go to: http://fdaalliance.files.wordpress.com/2009/11/fy-12-fda-approps-house-sc-by-center-5-24-11.pdf)

FDA will have about $288 million more in user fee income in FY 12, about the same amount by which budget authority appropriations have been cut. However, user fees are limited in scope and only pay for specific activities. The Alliance for a Stronger FDA does not consider an increase in user fees as justification--or an offset--for decreases in BA appropriations. I agree.

The Alliance for a Stronger FDA’s press release on the House subcommittee mark-up is at: http://strengthenfda.org/media/media-release-may-24-2011/. The Alliance is the only multi-stakeholder group working to increase FDA’s appropriations. Its 180 members represent consumer, patient and health professions’ groups, as well as companies, associations and individuals.

The Alliance will be working hard to restore funding to FDA when the full House Appropriations Committee marks up the subcommittee bill on May 31 or June 1, 2011. While the FDA’s case is strong, the pool of available monies is so small that there probably won’t be any progress at the full committee mark-up.

It is generally assumed the Senate will be more favorable to domestic discretionary programs. However, the situation is unclear.  The Senate is at an impasse with regard to a FY 12 Budget Resolution…and the appropriations subcommittees have not yet been given allocations on how much they can spend.

The Senate may start to move on appropriations bills in June or early July. More likely there will be no action until the House and Senate reach a deal on raising the debt ceiling, which must be done by August 2.

Advocates for more funding for FDA must continue to stress that the agency provides essential services. There is no fallback—no other agency to do FDA’s work--if there are insufficient monies.

Steven

For purposes of disclosure: I am one of the founders and serve as Deputy Executive Director of the Alliance for a Stronger FDA. For more information about the Alliance, go to www.StrengthenFDA.org or write to me at sgrossman@StrengthenFDA.org.

FDA “Exceptionalism” at the Funding Crossroads

The 15-month long battle over the nation’s fiscal year (FY) 2011 budget was finally resolved on April 16, just before Congress recessed. Despite broad pressures for program cuts and deficit reduction, the FDA received a $107 million increase, one of the few winners among domestic federal agencies.

Congress returns at the beginning of May to start the FY 12 appropriations process. Downward pressure on federal spending will intensify. If, despite this, the FDA receives another increase, then it will move closer to establishing itself as an exception to the budget cutting process. Thus, FDA Matters sees the coming funding battle as a crossroads for FDA.

There are two primary considerations that drive FDA’s fate in the FY 12 funding battles:

• The US government is in a fiscal situation that can’t be resolved without unpopular actions. There is no avoiding the “iron triangle” of deficit reduction: discretionary spending cuts, entitlement changes and net increases in tax revenues. While there is hope that a comprehensive, multi-year resolution can pass Congress this year, it will still take at least a decade before the deficit crisis is fully behind us.

• FDA has been chronically underfunded for more than 25 years. Congress has chosen to give FDA new responsibilities without commensurate increases in appropriations. Even without these mandates, the FDA has needed to grow because of globalization, increasingly complex science, and significant growth in the industries it oversees. After several years of substantial increases, the agency is in better financial shape, but still resource-restricted in fulfilling its mission.

Advocacy by the Alliance for a Stronger FDA and others (especially Commissioner Hamburg) undoubtedly helped in achieving an increase for FDA this year. Also of significant help to FDA was the half-billion dollars in “saving” that the agriculture appropriations subcommittees derived from lower FY 11 cost estimates for the nearly $7 billion Women’s, Infant and Children (WIC) nutrition program. Behind the scenes, we know that Members of Congress spoke on behalf of FDA’s funding needs.  

The FDA budget, along with the rest of federal spending, is going to be under significant pressure for at least the next 10 years. Surviving the first year is an accomplishment, but not a trend. Nor can it be treated as a sign that FDA will have it easier in the FY 12 funding battles.

Yet, FDA has a strong case for why it should be an exception to budget-cutting. Here are a few of the points that should resonate this year:

Congress is interested in creating more jobs and stimulating the US economy. FDA is part of the solution.  FDA-regulated products represent nearly 25 cents out of every consumer dollar spent in the US.  There are millions of jobs in the food, drug, device and cosmetics industries that FDA oversees. These are also industries that are growing and are major exporters of US products.

Congress is concerned that regulatory agencies, in particular, are an impediment to innovation and the growth of US companies. Yet, all the major trade associations favor increased FDA funding. Every company whose products are regulated by FDA probably wishes for at least a few changes in agency rules and regulations. However, they recognize that no federal regulatory agency is more willing to engage in dialogue and consider changes. Further, industry understands that their problems are likely to get worse, not better, if FDA is underfunded.

Congress wants to protect the health and well-being of the American people. FDA has a unique role in achieving this. If FDA cannot do its job, there is no organization or persons to pick up the slack. No one else can assure that our food is safe. No one else can evaluate the safety and efficacy of drugs, devices, biopharmaceuticals, and vaccines prior to market. The agency also has a unique role in preventing agro-terrorism and developing medical countermeasures that will lessen the casualties from a terrorist attack.

There are many more reasons why FDA should be an exception to Congressional budget-cutting. The main advocate for this cause is the Alliance for a Stronger FDA, the only multi-stakeholder group devoted to increasing the appropriated resources available to FDA. I urge you to contact me and consider joining.  

Steven

For purposes of disclosure: I am one of the founders and serve as Deputy Executive Director of the Alliance for a Stronger FDA. Members include patient and consumer groups, professional societies, research advocacy groups, associations, companies, consultants and individuals. For more information about the Alliance, go to www.StrengthenFDA.org or write to me at sgrossman@StrengthenFDA.org.

FDA and Its Regulated Industries: A Cornerstone of America’s Economic Future       March 7th, 2011

On March 7, the Alliance for a Stronger FDA released a white paper on the far-reaching and positive economic impact of a strong FDA and the industries it oversees. The report is intended to provide interested parties, including Congress and Executive Branch policymakers, with information on FDA’s role in economic growth. A number of groups–consumers, patient advocates and industry–provided comments to the Alliance on the impact of FDA on the American economy.

FDA and Its Regulated Industries: A Cornerstone of America's Economic Future

On March 7, the Alliance for a Stronger FDA released a white paper on the far-reaching and positive economic impact of a strong FDA and the industries it oversees.  The report is intended to provide interested parties, including Congress and Executive Branch policymakers, with information on FDA’s role in economic growth. A number of groups--consumers, patient advocates and industry--provided comments to the Alliance on the impact of FDA on the American economy.

“Most policymakers have heard that FDA-regulated industries account for nearly 25% of U.S consumer spending,” said Nancy Bradish Myers, President of the Alliance for a Stronger FDA and President of Catalyst Healthcare Consulting. “However, many have not thought about the major negative economic impact if FDA, the primary regulator of those industries–which employ millions and are net exporters of U.S. products—is not adequately funded by federal dollars.” 

She added: “FDA is a regulatory agency that can help the economy expand. It is one of the reasons that industry, patients and consumers support a strong, appropriately funded FDA that has the resources to assure that our foods are safe and our biopharmaceutical, medical devices and vaccines are safe and effective.”

The Alliance for a Stronger FDA white paper, entitled “The U.S. Food and Drug Administration: A Cornerstone of America’s Economic Future” provides useful information about medical products, the American food supply, and FDA’s role in fighting bio- and agro-terrorism. It also describes some of the advantages of maintaining U.S. leadership role in the global economy and the potential costs to the domestic economy and U.S. exports if FDA falls behind.  

“Food contributes nearly $1.2 trillion to our economy, or 8% of the U.S. gross domestic product. Ensuring the safety of our food supply is as essential as providing for our national defense,” said Caroline Smith DeWaal, an Alliance Board Member and Director of Food Safety at the Center for Science in the Public Interest. “Protecting our food supply is a major part of FDA’s mission, and both the food industry and consumers benefit from a strong FDA and a growing economy.”

“No agency with a critical role like FDA’s should be asked to do more, with less,” said Margaret Anderson, Vice President of the Alliance and Executive Director of FasterCures.  “If we are to advance medical progress and improve patients’ lives--which will significantly bolster the US economy--we need to start making the FDA a national priority.”  

The Alliance’s 180 members--comprised of consumer, patient, professional and research groups, companies, trade associations, and individuals--represent millions of Americans who support increased appropriated funding for FDA.  More information about the Alliance can be found at www.StrengthenFDA.org.

The full report – The U.S. Food and Drug Administration: A Cornerstone of America’s Economic Future -- can be downloaded from the Alliance’s web site.

###

WHAT OTHERS ARE SAYING ABOUT THE IMPACT

OF FDA ON THE AMERICAN ECONOMY

AdvaMed (Advanced Medical Technology Association)

“Everyday, America’s medical technology companies are developing life-saving, life-enhancing advancements in patient care. This progress doesn’t occur in a vacuum. It’s critical to patients, continued innovation and future economic growth that our regulatory processes support the next great leap forward in medical progress. That’s why we support a well-resourced FDA with well-trained reviewers who have appropriate scientific expertise.” Stephen J. Ubl, President and CEO

Alliance for Aging Research

“Over the next 30 years, there will be no greater challenge to the U.S. than dealing with the human and economic consequences of the graying of America.  To improve lives and bend the cost curve of billions of health care dollars, we will need investment and innovation from the medical products industries.  An effective working partnership with the FDA is essential.” Dan Perry, President & CEO

AstraZeneca

“AstraZeneca favors a well-funded and scientifically world-class FDA that has the resources it needs to bring safe, effective and innovative medicines to patients in the United States. Developing and making new medicines available not only helps improve peoples’ health, it helps grow the American economy.” Rich Fante, President, U.S. & CEO North America

Biotechnology Industry Organization (BIO)

“The promise of the life sciences – economic expansion, jobs, and new therapies for unmet medical needs – requires an adequately funded FDA and a strong, reliable regulatory environment.” James C. Greenwood, President & CEO

Center for Science in the Public Interest

“Food contributes nearly $1.2 trillion to our economy, or 8% of the U.S. gross domestic product. Ensuring the safety of our food supply is as essential as providing for our national defense. It is a major part of FDA’s mission. Both the food industry and consumers benefit from a strong FDA and a growing economy.” Caroline Smith DeWaal, Director of Food Safety

FasterCures/The Center for Accelerating Medical Solutions

“No agency with a critical role like FDA’s should be asked to do more, with less. If we are to advance medical progress and improve patients’ lives--which will significantly bolster the US economy--we need to start making the FDA a national priority.” Margaret Anderson, Executive Director

Friends of Cancer Research

“Innovation – in the form of new drugs, vaccines, and medical devices – has vastly improved the health of people around the world and has thus far been a pillar supporting the US economy.  Without further financial investment in the science at FDA, future innovation is put at severe risk.”   Dr. Ellen Sigal, Chair and Founder

Medtronic

"The growth of Medtronic and the medical device industry is truly an American success story. To write the next chapter, we need a business environment that fosters innovation, drives job creation and supports principled collaboration between industry, government and medical professionals.  A strong, fully-funded FDA is vital to creating a more predictable and consistent regulatory system, making it possible for patients to get faster access to novel medical technology." Bill Hawkins, Chairman and CEO

National Research Center for Women and Families

“As public health experts and advocates, we know that Americans depend on a strong FDA to ensure the safety and effectiveness of medical products made by companies that also produce jobs and grow our economy.” Diana Zuckerman, PhD,  President

National Organization for Rare Disorders

"There are innumerable diseases and conditions for which patients are awaiting new therapies. These can only come from viable and vibrant biopharmaceutical and medical devices industries whose investments grow America and move us closer to helping patients with unmet medical needs.” Peter Saltonstall, President

Pharmaceutical Research and Manufacturing Association (PhRMA)

"America’s biopharmaceutical research companies are among the most innovative, research-driven enterprises in the world. Combined, they employ around 650,000 high-skill, high-wage men and women; and, every direct job supports nearly 3.7 additional American jobs. Our industry invests tens of billions annually in research and development. But, without a strong, science-driven, appropriately funded FDA, patients wouldn’t realize any of the benefits of the life-saving and life-enhancing therapies that our companies produce." John J. Castellani, President and CEO.  

FDA Is Fighting on Two Fronts

FDA is still a 20th century agency. It lacks the databases, technologies and tools to do its work. It does not have the depth of manpower to be experts in all the increasingly complex sciences associated with medical products and foods. It lacks the confidence to consistently make decisions based on risk-benefit analysis, rather than leaning toward the highly restrictive Precautionary Principle.

FDA Matters can’t see any downside to the FDA gaining the technology, the manpower and the confidence to transform itself into the 21st century FDA that our nation needs. Yet, Commissioner Hamburg has to fight on two fronts to preserve her ability to make the necessary changes.

The new Congress has a different set of priorities than the previous two. Deficit cutting and government accountability are on everyone’s mind.

Under a House-passed bill that would fund the federal government in Fiscal Year (FY) 11, the FDA would be allotted $241 million below the level at which it was funded in FY 10. Were this to become law, the agency would need to cut new programs, abandon initiatives and probably lay off staff. To reach agreement with the House, the Senate will also have to cut the federal budget, although perhaps not the funds for FDA.

A 21st century FDA requires capacity to meet new challenges. This won’t occur if the FDA’s budget is being cut.

At the same time, Congress is increasing its oversight/investigative activities. Oversight of FDA needs to occur, but it comes at a price. Investigative hearings are a potent reminder to FDA that cautious, risk-adverse decisions are the ones Congress won’t question. Thus, FDA is reinforced in being a 20th Century agency, rather than encouraged to modernize and think more broadly about problem-solving in the 21st century.

Also, there is an ongoing shift from public funding of FDA to industry funding. User fees pay for very specific tasks. Over-reliance on them reduces the flexibility that FDA leadership needs to handle public health challenges, especially modernizing and strengthening the agency.

Prevailing with Congress won’t be easy and must be considered Commissioner Hamburg’s top priority. At the same time, she must deal with growing unhappiness among FDA-regulated medical product companies.

Based on some recent FDA decisions (e.g. on three weight-loss therapies), many in industry believe FDA is erecting an insurmountable wall of trial design and safety requirements, all intended to slow or deny approval for large-population drugs. Yet, the blockbuster drug (rather than personalized medicine) will remain the industry’s primary business model for at least the next 10 years. Further, Americans still need safe and effective drugs that can treat hundreds of thousands of patients.

Similarly, there have been a number of skirmishes about review standards for medical devices. FDA has moved slowly, listened hard and made compromises. However, with some justification, industry still fears that proposed new standards and procedures will be expensive and delay approval of safe and effective medical devices in the US. FDA also finds itself being compared to the European system, where medical devices are approved far more quickly.

Current industry unhappiness might not be such a challenge for the Commissioner, except for its likely impact on user fee negotiations, agency funding, Congressional oversight and the national debate over how to stem the flow of American jobs and capital to Europe and Asia.  

Ultimately, the FDA’s “fight” with Congress and “fight” with industry come down to one issue: the creation of a 21st century FDA.

It won’t happen if Congress doesn’t fund modernization, tears FDA apart with investigations or relies too heavily on user fees. It also won’t happen if industry—which is the natural advocate for a more modern FDA—can’t work with the FDA to synchronize public health and safety concerns…with efficient and effective ways to review and approve new therapies.

 Steven

FDA and Congress: FY 11 Deficit Reduction Could Cut Deep   February 13th, 2011

Based on budget-cutting actions in the House of Representatives, the FDA is now vulnerable to substantial cuts in its current-year programs. This column analyzes the House situation for FY 11, based on analysis I have done for the Alliance for a Stronger FDA, which is the leading voice for increased appropriations for FDA. Read the rest of this entry

Will the New Congress Be Good for FDA-Regulated Industries?     December 19th, 2010

FDA Matters is hearing that FDA-regulated industries will benefit from the 2010 election. It is assumed that a Republican-led House and more Republicans in the Senate will benefit drug, device and food companies. After all, aren’t Republicans more business-friendly and more concerned about perceived regulatory excess?

Those saying and thinking these things may be in for a rude awakening. Everybody—FDA, industry, patients and consumers—is going to have a rough time over the next two years. Industry will be heard more often, but not always have the winning position. Read the rest of this entry

FDA and Election 2010: Oversight and Investigations     November 13th, 2010

The return of a Republican majority in the House of Representatives means an increase in Congressional oversight and investigations. This mirrors 2006, when the Democrats took back Congress and immediately started investigating the Bush administration. Once again, the agency will find itself buffeted by political forces that are as concerned about “scoring points” as they are about improving government. FDA Matters thinks this will have a large impact on FDA, as well as the agency’s stakeholders.  Read the rest of this entry

FDA and Congress: FY 11 Deficit Reduction Could Cut Deep

Two upcoming events this week will set the tone for FDA appropriations for the next two years. On Monday, the President will release his request for FY 12 funding. On Tuesday, the House will begin consideration of HR 1, which provides continuing appropriations for the remainder of FY 11 (through September 30, 2011).

This column analyzes the House situation for FY 11; a separate column will preview the President’s FY 12 request. These are based on analysis I have done for the Alliance for a Stronger FDA, which is the leading voice for increased appropriations for FDA. I urge you to e-mail me at sgrossman@strengthenfda.org for more information about joining.

The current FY 11 Continuing Resolution (CR) expires on March 4. Until then, almost the entire federal government (including FDA) will be funded at the FY 10 enacted level. For FDA that has meant a budget of $2.35 billion.

The new House Republican majority feels committed to immediate passage of sweeping budgetary cutbacks. Compromises were proposed in the House this past week that would have made a substantial cut in FY 11, but not the $100 billion in deficit reduction that many new Representatives felt was promised.  This approach was rejected.

On Thursday and Friday, the House appropriations committees had to find an additional $20+ billion in cuts to reach the target of $100 billion below the President’s FY 11 budget request. In the first (compromise) round, FDA was slated to receive $2.284 billion. This is $220 million below the President FY 11 request and $62 million below the FY 10 enacted level.

The agency was hit harder in the second round of much deeper cuts. The bill that will be debated on the House floor next week would fund FDA at $2.104 billion. This is $400 million below the President’s request level and $242 million below the FY 10 enacted level.

This represents about a 10% decrease in available agency funding in the current fiscal year. Since the cuts would all have to be absorbed in the second half of the fiscal year, the actual cut (in percentage terms) is likely to be larger. The exact magnitude depends on how much money FDA held back (from spending in the first half of the year) as a hedge against cuts later in the year.

Here is the timeframe and process for consideration of HR 1:

·        Next Tuesday (2/15) – floor debate under an open rule (an open rule allows many amendments to be offered). Expect the House to be confronted with proposals that would impose even greater cuts compared to the version of HR 1 that will come to the floor.

·        By next Friday (2/19) – House expects to have passed HR 1

·        House and Senate both recess on 2/19 and return on 2/28

·        When it returns, the Senate has less than five days to act on the CR and reach a compromise by March 4 with the House   

Most commentators expect several short-term CR extensions before the House/Senate finally agree in late March on serious cuts that are, nonetheless, much less than the House levels. This assumes that 53 Senate Democrats will agree upon lesser cuts and outvote the 47 Senate Republicans.

FDA Matters points out that the Senate is rarely that simple. Senate Majority Leader Reid has said he will fight the House cuts. However, he may not have 53 votes to do so, given the views of several fiscally-conservative Democrats up for re-election in 2012.

In contrast, Senate Minority Leader McConnell has said he has 47 Republican votes for whatever FY 11 CR passes the House. While that may not be true, it leaves open the possibility that he would need only a few Democrats to control the Senate with regard to the FY 11 CR.

Steven

For purposes of disclosure: I am one of the founders and Deputy Executive Director of the Alliance for a Stronger FDA. It is the only multi-stakeholder group devoted to education and advocacy to increase the appropriated resources available to FDA. Members include patient and consumer groups, professional societies, research advocacy groups, associations, companies, consultants and individuals. For more information about the Alliance, go to www.StrengthenFDA.org or write to me at sgrossman@StrengthenFDA.org.

FDA and the President’s FY 12 Budget Request: What to Watch For

Two upcoming events this week will set the tone for FDA appropriations for the next two years. On Monday, the President will release his request for FY 12 funding. On Tuesday, the House will begin consideration of HR 1, which provides for continuing appropriations for the remainder of FY 11 (through September 30, 2011).

This column previews the President’s FY 12 request; a separate column will analyze the House situation for FY 11. These are based on analysis I have done for the Alliance for a Stronger FDA, which is the leading advocacy voice for increased appropriations for FDA. I urge you to e-mail me at sgrossman@strengthenfda.org for more information about joining.

The President’s FY 12 budget request is the opening salvo in what is likely to be a long, hard fight over next year’s appropriation. While Congress is unlikely to accept the President’s recommendations, it is critically important to FDA whether the President suggests increases, flat funding or cuts for the agency.

If past years’ patterns repeat, there will be confusion on Monday after the release of the President’s budget request. Many of the numbers being discussed by media and commentators will be inaccurate or out of context.

Here are the most common sources of misunderstanding:

·        What base is being used in the President’s request? A proposed $100 million increase (or decrease) for FY 12 means something different if it is based on the FY 10 funding level (which is also the current FY 11 CR level) or on the President’s FY 11 request.

If the President follows past practice, the FY 12 budget request will be based on his FY 11 budget request. Because Congress never adopted it and never will, it would mean that every number in the President’s request has to be adjusted before determining its impact.   

·        For FDA specifically, are user fees included in any given budget number? If comparisons are made between budget numbers, are they both calculated the same way?

As recently as this past week, the media was confused because the House appropriations committee’s initial FDA numbers for the FY 11 CR referred to the President’s FY 11 funding request. The intended reference was to the budget authority (BA) appropriations request (monies to be drawn from general revenue). However, some analysts attempted to interpret the House position by referencing the President’s FY 11 request that included both BA appropriations and user fees.

·        The President’s budget request for FDA usually appears larger because it includes revenue from user fees that are proposed, but not authorized. In many cases, the proposed user fees have been submitted to Congress year after year, although they will never be adopted.

·        The President’s budget request is distorted by the inclusion of tobacco user fees, which represent $450 million in agency income in FY 11. While BA comparisons are not affected by these monies, they make any increase in total funding for the agency look much greater that it really is. The tobacco program is distinct and self-funded. Its growth in no way helps FDA meet its traditional public health mission.  

In terms of timing, the House and Senate want to resolve FY 11 before devoting much time to FY 12. A fast schedule (probably unrealistic) for FY 12 funding would be: 

·        Hearings in March/April, 2011

·        Subcommittee and full committee mark-ups in April/May

·        Final floor action and House/Senate conference agreements in June and July

·        Under this schedule, no bills (or only conference reports) would require action in September.

More likely, there will continue to be sharp disagreements between the House and the Senate on funding levels, delaying the passage of FY 12 funding bills until summer or September. FDA Matters will continue to keep you posted.

Steven

For purposes of disclosure: I am one of the founders and Deputy Executive Director of the Alliance for a Stronger FDA. It is the only multi-stakeholder group devoted to education and advocacy to increase the appropriated resources available to FDA. Members include patient and consumer groups, professional societies, research advocacy groups, associations, companies, consultants and individuals. For more information about the Alliance, go to www.StrengthenFDA.org or write to me at sgrossman@StrengthenFDA.org.