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Feb 14, 2012

FDA, CDC Budget Inches Up under President Obama’s Proposal for 2013

FDA would see a bigger boost from user fees, while CDC gains from 10-year prevention fund.

FDA, CDC Budget Inches Up under President Obama’s Proposal for 2013

User fees included, FDA’s budget jumps 17% to $4.5 billion, while nondiscretionary spending takes CDC’s budget up 0.4% to $11.25 billion for FY ’13. [Maxim_Kazmin - Fotolia.com]

  • In an election year where federal spending is already a major issue, President Barack Obama has proposed a budget for the 2013 fiscal year that largely keeps growth slow and steady for key agencies involved with biopharma issues. Sources beyond Congress would see funding hikes for these agencies.

    FDA’s budgetary authority—the amount of funds appropriated by Congress—would inch up 0.4% to $2.517 billion. Once industry user fees are included, FDA’s total program spending would jump 17% to $4.486 billion.

    CDC would see its discretionary budget authority shrink by 11.6% or $664 million to $5.068 billion. After nondiscretionary spending is factored in, however, total CDC funding rises by 0.4% to $11.236 billion in FY ’13.

    How helpful do you think President Obama’s proposed budget for the next fiscal year is to FDA and CDC?

  • FDA

    The current fiscal year calls for $2.506 billion in budgetary authority and $1.326 billion in user fees for FDA. The $642.664 million jump in user fees accounts for 98% of the total increase proposed by President Obama.

    In 2013, user fees would account for 44% of FDA’s budget, up from 35% this fiscal year. FDA Commissioner Margaret A. Hamburg, M.D., said the agency had no qualm about industry’s growing share of program funding. “User fees have provided a very significant benefit, and in tough times we need to leverage our resources,” Dr. Hamburg said during a budget briefing for reporters. “I think it’s not inappropriate that industry help share and support these critical services that matter so much to the health of the nation and the health of the economy.”

    FDA expects to collect $1.386 billion in FY 2013 from 12 existing user fee programs. That’s up 4.5%, or $59.295 million. Under the proposed fifth authorization of the Prescription Drug User Fee Act (PDUFA V) submitted to Congress, FDA expects to collect $712.808 million, up 1.5% from FY 2012. The agency says the extra money will allow the hiring of 12 new full-time equivalent employees (FTEs), bringing staffing up to 2,599.

    FDA is also counting on another $299 million in first-time revenue from new user fees to be imposed on developers of generic drugs, allowing for hiring 450 FTEs; and $20.242 million in first-time biosimilar user fees, to pay for 72 FTEs. Those charges would account for more than half the $563.125 million in new user fees projected by FDA. Of the remainder, the largest new fee would be the $220.2 million in “food establishment registration” fees FDA plans to collect to help pay for 273 FTEs to implement the Transforming Food Safety Initiative portion of the Food Safety Modernization Act.

    President Obama angered industry groups by proposing to cut the exclusivity period for biologic drugs to seven years from the 12 years proposed in the Affordable Care Act. The president argued that the shorter period would strike a better balance between encouraging innovation and promoting access to affordable drugs.

    FDA’s spending increases are targeted to several specific programs. The agency will set aside $10 million to advise Chinese biopharmas on manufacturing products to FDA standards as well as inspect products produced at the companies’ manufacturing plants. It expects to have 19 FTEs based in China. “There is a saying,” Patrick McGarey, FDA’s assistant commissioner for budget, recalled, “it’s much more efficient to educate people into compliance than to inspect them into compliance.”

    FDA increases also include spending $17.658 million to outfit, make operational, and certify the Center for Drug Evaluation and Research/Center for Biologics Evaluation and Research’s Life Sciences Biodefense Laboratory now under construction within its headquarters in Silver Spring, MD. “FDA must make this investment now to ensure that the laboratory is operational and ready for occupancy in FY 2014,” the agency said in its 677-page budget justification report.

    The agency would also increase spending on its Medical Countermeasures (MCMs) Initiative by 17.5%, or $3.51 million, to $23.548 million in FY ’13 from $20.038 million. The extra funding is expected to allow partnerships with industry, academia, and government to improve MCM development timelines and success rates plus expand technical assistance to developers for the highest priority MCMs.

    To accommodate the program budget hikes and avoid criticism about overspending, FDA proposes $19.706 million in savings by consolidating its data centers into two sites and switching to an internal cloud computing environment. FDA also plans to cut $3.468 million from its buildings and facilities budget.

  • CDC

    Total CDC funding would get a 0.35% boost from last year to $11.236 billion in FY ’13. One reason for the overall increase: CDC will tap into $903 million this year from the Prevention and Public Health Fund created by Obama’s healthcare overhaul to advance disease prevention. The fund authorizes $1.25 billion this year and a total of $15 billion over 10 years.

    CDC would cut $15.501 million by eliminating the Centers for Public Health Preparedness “because this program has not demonstrated a significant public health impact” and also ending CDC management of the Public Health Emergency Preparedness program. The Strategic National Stockpile would also see a $47.572 million cut, down to $486.22 million because “the current fiscal climate necessitates scaling back.” CDC will spend $146.999 million, $8.73 million above FY ’12, for the agency’s Preparedness and Response Capability program, designed to detect and respond to chemical, biological, and nuclear terrorism.

    Birth Defects and Developmental Disabilities activities would overall be reduced. It would see an $11.722 million decrease to $125.565 million. Of this, $18.476 would come from budget authority and $107.089 million from President Obama’s Affordable Care Act. Within Birth Defects and Developmental Disabilities, only one program would see increased funding: Autism would rise by less than 1%, or $75,000, to $21.34 million.

    The move is in keeping with a new policy of transitioning CDC’s disease-specific activities into broader budget lines. For example, CDC’s heart disease and stroke; nutrition, physical activity, and obesity prevention; school health (excluding HIV/AIDS prevention school health activities); diabetes; comprehensive cancer control; and arthritis and other chronic disease activities would be grouped into a single, streamlined grant program, the Coordinated Chronic Disease Prevention and Health Promotion Program.

    The proposed budget includes about $1.146 billion for domestic HIV/AIDS, viral hepatitis, sexually transmitted diseases (STD), and tuberculosis (TB), up about 3%, or $35.744 million. That reflects a $4.607 million decrease for TB prevention, but a $40.231 million increase for domestic HIV/AIDs programs in awareness and prevention.

    Additionally, CDC would see a $15.079 million hike for a program to eradicate polio in Afghanistan, India, Nigeria, and Pakistan along with Angola, Chad, and the Democratic Republic of the Congo. The polio eradication increase accounts for nearly all of the $15.295 million increase for global health programs, spending for which would rise 4.4% to $362.889 million. Also increasing would be the budget for Emerging and Zoonotic Infectious Diseases, which at $331 million would be $27 million above FY 2012.

    Programs remaining flat include CDC’s Agency for Toxic Substances and Disease Registry ($76 million) and an asbestos screening and outreach services program for residents of Libby, MT ($23 million).

    Obama’s budget increases discretionary budget authority for the National Science Foundation 4.8%, lowers overall outlays 9%, while leaving NIH spending flat at exactly the same $30.702 billion the agency received in FY ’12. The proposed FY 2013 budgets for both agencies will be discussed in an upcoming GEN Insight & Intelligence™ report.


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