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Sep 27, 2011

FDA’s Appeal for Budget Hike Will Have to Succumb to Budget Reality

The Senate was kinder than the House, but both went well below what the agency appealed for.

FDA’s Appeal for Budget Hike Will Have to Succumb to Budget Reality

If money is restricted, proponents say priorities like biosimilars and biodefense will likely suffer. [© Valerii Zan - Fotolia.com]

  • Testifying before the House of Representatives Appropriations Committee on March 11 and the Senate Appropriations Committee six days later, FDA commissioner Margaret A. Hamburg, M.D., tried her best to justify the 11.6% spending increase proposed for her agency weeks earlier by President Barack Obama. In today’s budget climate, however, the president and Dr. Hamburg may have to swallow a budget that’s at best flat with the 2011 fiscal year and that more likely will be lower.

    In separate spending plans, the House and Senate appropriations committees all but ruled out a significant, if any, increase in FDA spending. Earlier this month, Senate Appropriations approved $2.497 billion, a $50 million, or 2%, increase from current fiscal year for FDA. It was given the go-ahead as part of the Agriculture, Rural Development, Food and Drug Administration and Related Agencies portion of the federal budget, which was set at $19.78 billion. FDA was the only nonsecurity agency to see any increase in funding in the Agriculture-Rural-FDA bill.

    The senate panel was kinder to FDA than its House counterpart. In approving a $17.25 billion Agriculture-Rural-FDA budget, House Appropriations voted to spend $283.57 million, or 11.6%, below the current agency budget, leaving it with $2.163 billion for FY ’12. The president had proposed an appropriation of $2.7 billion.

    Agriculture-Rural-FDA is one of 12 appropriations bills that comprise the federal budget. Neither that bill nor any other appropriation bill is likely to be voted on as passed. House and Senate leaders are expected ultimately to approve a budget through an “omnibus” bill combining all 12 appropriations bills that comprise the federal budget, despite vocal opposition from some House conservatives.

    That bill is expected to set spending for agencies at levels generally higher than what House appropriations approved, since the Budget Control Act called for a total discretionary spending level of $1.043 trillion, higher than the House’s initial proposal of $1.019 trillion; the House has signaled it is moving toward the higher limit.

    That doesn’t mean House bills will be identical with Senate bills but does mean the two chambers will be closer in their numbers. “We should see additional dollars to each of the different subcommittees in the House, from what they were told to mark up with, assuming the House Republicans don’t stymie that number,” Jon Retzlaff, managing director of science policy and government affairs for the American Association for Cancer Research, told GEN.

  • Increases for User Fees

    FDA figures do not include the additional billion or so dollars expected to be collected from drug developers and others through user fees. The House panel approved a total $1.49 billion in user fees, the biggest share of which would be $856 million in prescription drug user fees. The Senate panel agreed that FDA should collect $1.393 billion in user fees, of which $702 million would come from prescription drug companies. Prescription drug fees accounted for a total $573 million of the roughly $922 million in total user fees collected in FY ’10.

    The Senate panel’s prescription drug target matches the $702 million revenue target set by FDA in August; no surprise since Democrats lead both the Senate and White House. FDA has projected it will spend $652.7 million of that total in FY 2012. The following year it expects to spend $693.1 million in prescription drug fees, under a proposed reauthorization of the Prescription Drug User Fee Act covering FY 2013 through FY 2017.

    According to a draft of the reauthorization, agreed upon by the agency and drug companies, most of the increase—$36.12 million of the total almost $40 million—would be spent on hiring 129 additional full-time equivalent staffers. The agreement will be the topic of a public meeting set for October 24.

  • Proposed Cuts

    House Appropriations set the stage for a budget below what FDA sought back in the Spring when the panel’s Republican leadership made clear the Democratic president’s budget was a nonstarter. “If the president’s Budget Request for 2012 were adopted, the result would be a 156 percent increase for FDA since 2004. This level of spending is unsustainable,” House Appropriations wrote in its committee report.

    Two Democrats on the House Appropriations panel, Reps. Sam Farr (D-CA) and Norman D. Dicks (D-WA), criticized the proposed FDA cut. They said it would result in work being stopped or slowed down on several agency priorities. In addition to starting to implement the Food Safety Modernization Act, funded by the Senate panel with $40 million, Democrats said those priorities included continuing work on biosimilars, increasing the number of inspections of overseas medical facilities, and continuing work on medical countermeasures against bioterrorism.

    “After years of underinvestment, there was recent widespread recognition by Congress and both industry and consumer groups that FDA did not have enough resources to keep up with the new responsibilities given to it by Congress and the explosion of imports of food and medical products into the U.S.,” Farr and Dicks asserted. “Congress began to give the agency the resources to meet this need. The deep cut in the committee bill sets back this bicameral work of the past several years.”

    While Senate Appropriations did approve a 2% overall increase in the FDA budget, it followed the House in terms of beating back numerous spending increases proposed in President Obama’s budget. Among examples affecting the life sciences:

    • The Center for Drug Evaluation and Research (CDER) was approved for $347.317 million in FY 2012, about $1.4, or 0.4%, more than the current fiscal year. Obama proposed a 5.9% hike for a total of $366.439 million. Those figures do not include CDER’s field activities, funding for which would dip 0.8% from $131.089 million in FY ’11 to $129.993 million.
    • The Center for Biologics Evaluation and Research (CBER) would receive $171.461 million in FY ’12, up $304,000 from $171.157 million for FY ’11. The figure falls short of the $183.775 million proposed by Obama, who sought a nearly 7.4% hike. Field activity funding would dip from $40.857 million to $40.513 million.
    • The Center for Veterinary Medicine (CVM) would see $84.669 million, down nearly 1% from $85.403 million in FY ’11. Obama proposed $92.247 million. Field activities funds would be just about flat at $53.322 million versus $53.775 million.
    • The National Center for Toxicological Research (NCTR) would be funded at $60.039 million, down almost $500,000 from $60.543 million but only slightly below Obama’s proposed $60.294 million.

    House Appropriations offered no similar center-by-center guidance, but instead asked Hamburg to submit a report within 30 days of enactment of the Agriculture-Rural Development-FDA portion of the budget, detailing how funds will be spent by program, project, and activity.

  • Priorities Set by House and Senate

    House Appropriations did give FDA direction on several topics. Among those with a drug development focus is the independent postmarket surveillance of drugs approved for market. FDA was directed to submit a report to the panel by March 31, 2012, outlining the process needed for creating an independent office within the agency focused on post-market evaluation, with the controls and separation of duties necessary for making unbiased decisions.

    “This process should also ensure that the postmarket surveillance and premarket functions can work collaboratively so that science-based, postmarket assessments can formally feed back to officials involved with making premarket drug approvals,” the committee added.

    Other drug development topics where House offered guidance:

    • Pediatric cancer: Noting that cancer remained the leading cause of disease-related death in children, the panel urged FDA to “collaborate with industry and the pediatric cancer community” to promote development of new therapies.
    • Influenza vaccines: The panel urged FDA to use the Accelerated Approval of Biological Products regulation to approve licenses for seasonal flu vaccines with proven records of safety.

    The flu language is similar to Senate appropriations, which attributed similar authority to FDA, yet also called for the agency to work with industry and other federal agencies to design and conduct needed studies.

    Additionally, the Senate panel stipulated that no less than $97.218 million should be spent on FDA’s generic drugs program, of which at least $52.947 must go to the Office of Generic Drugs. The panel directed FDA to report back on how it will help develop new treatments for obesity, calling the lack of medicines for the condition “a significant unmet medical need.”

    The guidance by both chambers of Congress offers some clues as to where FDA is going in the coming year: more work on generic drugs and flu vaccines, more use of user fees to pay for prescription drug reviews, and possibly work on obesity medicines and pediatric cancer. How much FDA will be able to address these and other priorities will depend on how much funding it ends up with when a budget finally emerges. With a presidential election year looming and Congress as divided as ever along partisan lines, it’s fair to say that a budget is unlikely to emerge anytime soon.


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