Leaked FY 26 FDA Budget Document Explained
There is a document widely-circulated this morning that purports to be the OMB passback to HHS of the draft proposed FY 26 HHS President’s budget request. It includes proposed numbers for FDA funding for the coming fiscal year.
It is still subject to negotiation and therefore may change between now and the release of the President’s request. Note that it is not the FY 25 recissions package—anticipated in the next week or two—that would, if enacted, reduce current-year FY 25 funding and make the proposed FY 26 cuts look smaller.
The table (below) compares the FY 26 leaked proposal with the FY23 numbers for the budget authority (BA) portion of FDA funding. This is the non-user fee portion that comes from taxpayer funding[1].
In the aggregate, FDA BA funding in FY 24 and FY 25 (current year) are slightly lower than FY 23. Individual line items varied more, so the comparison with FY 23 should be viewed as illustrative of the general magnitude of proposed changes over a three-year period. They are not definitive, relative to the FY 24 and FY 25 appropriations. In particular, Human Drugs BA spending decreased in FY 24, so that the one-year decrease (compared to FY 25) is not as great as it looks by reference to the three-year decrease.
Based on the text and the table, the following conclusions can be drawn:
I have focused only on the BA appropriations level because user fee funding levels are derived by formula rather than calling for any policy judgment by either the Administration or Congress[2].
There is a statement in the HHS text that these proposed appropriations numbers are sufficient to meet maintenance of effort funding requirements (i.e., permitting user fees to be collected). I have no way to confirm this, but OMB/HHS/FDA have accurate numbers for the necessary amounts. It is, therefore, reasonable to assume their statement is accurate.
I have called into question the long-term prospects for user fees (here). However, proposing sufficient appropriated funding to meet the maintenance of effort requirements in FY 26 suggests that the intent is to at least complete the existing five-year cycle. The real risk in the long-term is to reauthorization in 2027, as reflected by the expressed opposition of Trump/Kennedy to industry funding of some FDA activities.
The overall cut from FY 23 funding levels would be in the vicinity of 17%. I will have more to say about this in my follow-up next week.
The food budget cut is accompanied by reference to moving all routine facilities inspections to the states. The viability of this approach would turn, among other things, on 1/ whether the state contracts would include enough additional dollars to offset increased state costs; 2/ which states have the infrastructure to go it alone; 3/ how much money will be left in FDA for national coordination and enforcement plus reinspections.
There is no funding proposed for buildings and facilities and no monies appear to be allotted for pay increases based on time in grade. (Cost-of-living increases are explicitly rejected). Any such costs will need to be absorbed by FDA within the proposed budget levels.
I have referenced in earlier columns that FDA spends about $2 billion in BA funding on medical products programs. This number is derived from a “major functions analysis” that appears in budget documents in most years. It includes funds that are in every line item—not just CDER, CBER, and CDRH. As a result, the OMB passback numbers do not tell us how much overall medical product spending from BA funds will be cut.
The HHS reorganization document circulated at the same time….is interesting but does not appear to affect FDA or its proposed funding.
If subscribers to “FDA Matters: The Grossman FDA Report” (subscribe on the website at www.fdamatters.com) have additional questions, please send them to me. I will try to answer them via a column early next week.
Note that FDA took all budget documents off their website in late January, making it nearly impossible to do any comparative budget analysis. However, I have the FY 23 enacted numbers, which are accurate, and I am using as the baseline. I have seen analysis that uses the FY 24 baseline, which I believe is also accurate. Using FY 23 vs. FY 24 should not make any fundamental change in my conclusions.
Note that total medical product user fees are derived by excluding tobacco user fees, indefinite user fees, and a smattering of food user fees. The total does appear to increase in FY 26 but only modestly and presumably in line with the amounts called for in the five-year user fee agreements.