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FDA Budget Sequestration

By Jonathan W. Emord

Under the Budget Control Act of 2011, Congress must either agree to spending cuts or a 7.8% across-the-board cut will be imposed on all federal agencies.  With the White House and Congressional Republicans at an impasse, those automatic cuts appear likely.  For the FDA, that means a reduction in about $68 million in user fee revenues from prescription drug and medical device companies along with $26 million from generic and biosimilar user fees, and about $200 million from direct congressional appropriations.  FDA’s overall budget is about $2.7 billion.

The immediate impact of $300 million in cuts will make it difficult for FDA to maintain the pace of new drug approvals, implement the Food Safety Modernization Act mandates, fulfill mandated levels of inspections of food and dietary supplement companies, inspect imported food items at levels planned, and hire the number of inspectors the agency slated for this coming year.  The Center for Food Safety and Applied Nutrition essentially operates with a permanent staff equal to the one it had in 1992 despite the addition of dozens of new responsibilities mandated by legislation passed since 1992.

For many in the food and supplement industry, the automatic cuts may mean a welcomed reprieve from the burdens associated with ramped up federal inspections.  Although we are unlikely to see cessation of inspections, congressionally mandated increases in inspections and regulatory compliance activities (particularly those coming from the Food Safety and Modernization Act) are unlikely to occur in 2013.

For those in the drug industry, the automatic cuts pose a very real prospect of significant new delays in the drug approval process.  User fees given to the U.S. Treasury are likely to be withheld by the treasury to comply with the requirements of the Budget Control Act.

Given current budget realities, even if a budget deal is reached sometime in the New Year, FDA will not receive the kind of increases in funding it enjoyed last year (an added $50 million to its appropriations from Congress ostensibly to enforce the Food Safety and Modernization Act).

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