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Inside Health Policy – FDA 2013 Approps Clouded By Unclear Impact of User Fees, Sequestration

Inside Health Policy – FDA 2013 Approps Clouded By Unclear Impact of User Fees, Sequestration

By NANCI BOMPEY

This year’s appropriations process could be more difficult for FDA than it has been in recent years

¬†because of a more constrained budget environment, the unlikelihood that major initiatives — like the food safety law — will continue to enjoy funding hikes, new funding needs that could surface through the reauthorization of user fees and a looming budget sequestration put in motion by the super committee’s failure to hammer out a deficit plan, although the agency continues to have strong funding advocates, sources said.

Sources said any FDA reforms attached to must-pass legislation reauthorizing user fees will likely be unfunded mandates and funding advocates are fighting to keep the agency well-funded for current programs as the budget potentially faces deep cuts in fiscal 2013, first through spending targets set by the Budget Control Act followed by across-the-board cuts resulting from the super committee’s failure last year.

The Obama administration is crafting its budget request for next fiscal year, with the president’s budget request expected out the second week of February. A source knowledgeable on the process said “the allocations are pretty much locked in” although they are not yet public.

“It is going to be a tough year for everybody and FDA is not excluded,” said a Senate aide, adding that the budget will likely be “significantly more constrained than what they sent up last year.”

Increases for major programs, including the Food Safety Modernization Act, were included last fiscal year. “The big increases of the past several years are probably going to go away,” the aide said.

While appropriations will be used to fund existing programs, FDA is also possibly facing new responsibilities as stakeholders eye the user fee package as a vehicle to move dozens of proposed reform measures.

Alliance for a Stronger FDA — a group of funding advocates that includes industry, patient groups and other stakeholders — said in their annual report that they will “work hard to draw attention to this and call for additional appropriated funding to support these new activities.”

One source familiar with the process said that Congress needs to realize that “at a minimum, everything that goes into that outer bill has a potential to be an unfunded mandate.”

“It doesn’t mean I don’t think it’s good policy or Congress shouldn’t do it, but everything they ask FDA to do has additional costs,” the source said. “They (FDA) may get additional money, but not for these.”

The “big unknown question” is whether the budget request and sequestration will be considered separately or the president’s request will include the across-the-board cuts, said one source, adding that it seems unlikely that the budget request will account for sequestration.

Spending targets for domestic discretionary programs set by the Budget Control Act are only marginally higher than the aggregate set for fiscal 2012, while sequestration calls for $1.2 trillion in cuts over 10 years, with a likely 7.8 percent cut in fiscal 2013 to discretionary programs including FDA, which could face cuts between $150 million and $250 million.

“I did hear a rumor that OMB is going to tell agencies what their sequestration number is likely to be, which may be why most people are pretty confused about this,” the source said. “As far as I read it, it (the budget and sequestration) is two processes.” The Senate aide agreed that these will likely be two separate processes.

The source said stakeholders are hoping lawmakers can find a way to “do what the super committee couldn’t do” and find a way to achieve the $1.2 trillion in cuts without sequestration.

“I think pretty much everyone knows sequestration is the worst way to achieve $1.2 trillion of deficit reduction,” the source said.

The appropriations process is also not likely to be resolved in the same way it was last year, with FDA one of several agencies funded through a “mini-bus” appropriations bill passed in November. Funding advocates said such early resolutions are rarely achieved in presidential election years.

FDA funding advocates’ lobbying efforts paid off last year when FDA received a $50 million boost over the previous fiscal year — one of the only agencies to receive an increase. The Alliance for a Stronger FDA anticipates policymakers to be even more intensely focused on reducing government spending in 2012 than they were in 2011.

“FDA still needs more resources, even though the downward budgetary pressures have become significantly greater,” the group said in its annual report. “The FDA requires continued sustained funding increases to create a 21st century regulatory agency, implement a growing list of mandates including the Food Safety Modernization Act, assure science-based, predictable, decision-making on medical products and handle the burgeoning demands of globalization.”