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FDA’s Budget Challenge

August 22, 2007

Wayne Pines

The FDA Alliancewww.StrengthenFDA.or

g

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FDA Budget Basics• FDA’s relatively small: $1.57B appropriated in FY

2007 plus $400M in user fees

• 83% of FDA costs are staff-related: salary, benefits, rent, supplies, telecom, travel, etc.

• FDA’s appropriation must increase $80 to $100 million per year to “stay even” with increased costs

• FDA’s crunch– more responsibilities + more complex task +, small

budget increases = eroding credibility– E.g., could not complete analysis of diabetes drug data

before Avandia adcom July 30

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Two Groups Formed• FDA Alliance formed in April, 2006 at urging

of patient and research advocacy groups

– More than 100 members, including six former commissioners and a broad range of patient, consumer and industry interests

• Coalition for a Stronger FDA formed in September, 2006 by BIO, GMA and three former HHS Secretaries

– Broad membership representing consumers, patients, trade associations, and companies

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A Common Goal

• Two coalitions, two voices, one goal:

Increased Appropriations for FDA

• Both organizations have campaigned to educate and persuade Congress, Administration, media, general public

• Model: Multiple advocates contributed to doubling of the NIH budget

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Basic Messages

• FDA touches every American, every day • FDA needs more resources to: assure safety;

foster innovation; and ensure that the United States remains the “gold standard” for food, drug, device and cosmetic regulation.

• A strong FDA benefits both public health and the U.S. economy

• All FDA stakeholders – consumers, patients, professional societies, and industry – support increased funding

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Consequences of Underfunding FDA

• New therapies/devices for major diseases and conditions could be seriously slowed

• Public confidence in drug safety wavering• Europe forging ahead, investing $250M/yr. in

“critical path”

• Scientist turnover double that of NIH, CDC

• Public confidence in food safety sinking• Uninspected food imports skyrocketing

• Foodborne disease outbreaks increasing

• Food bioterrorism a realistic threat, few countermeasures

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Wavering Public Confidence in FDA

Harris Poll: How well does FDA ensure safety and efficacy of new Rx drugs?

Positive Negative

2004 56% 37%

2006 36% 58% (after Vioxx, stents)

2007 45% 49% (May 22-24)

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FDA StaffingFood and Drug Administration

Full Time Permanent (FTP) Positions / Full Time Equivalents (FTEs)

5,000

6,000

7,000

8,000

9,000

10,000

11,000

Fiscal Year

FT

E

USER FEES****

FDA S&E*,**,***

* Prior to 1980, FDA counted each federal employee as a Full Time Permanent (FTP) position.

** Listed are program level FTPs or FTEs only. User Fees, Revolving Fund for Certification and Other Services, Advances & Reimbursable, and Parklawn Computer Center FTPs or FTEs are NOT included in the FDA S&E column.

*** Source: DHHS/FDA J ustification of Estimates for Appropriations Committees

**** Source: FDA's data submission to Bio and PhRMA PDUFA IV information request; Source: MDUFMA Industry Chart; Source: ADUFA Industry Chart

Since 2003 “bump:” overall staff levels have declined;

user fees pay for an increasing proportion of staff

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Congress Keeps Adding Responsibilities—60 since 19941994 - Animal Medicinal Drug Use Clarification Act1994 - Dietary Supplement Health and Education Act1995 - Federal Reports Elimination and Sunset Act1995 - Unfunded Mandates Reform Act1995 - The Paperwork Reduction Act1996 - Freedom of Information Act (FOIA)1996 - Safe Drinking Water Act Amendments1996 - Animal Drug Availability Act1996 - Food Quality Protection Act1996 - Economic Espionage Act of 1996 1996 - Electronic Freedom of Information Improvement Act1996 - Comprehensive Methamphetamine Control Act1996 - Health Insurance Portability and Accountability Act1996 - Drug-Induced Rape Prevention Punishment Act1997 - Food & Drug Administration Modernization Act

(FDAMA)1997 - Better Pharmaceuticals for Children Act1997 - PDUFA II1998 - Antimicrobial Regulation Technical Corrections Act1998 - Sec. 615 Ag. Research, Extension and Education

Reform Act1998 - MQSA Reauthorization1998 - Sec. 654, Omnibus Approps. (Family Impact

Assessments)1999 - Government Employees Training Act1999 - Fed. Financial Assistance Management

Improvement Act2000 - Responsible for Clinical Laboratory

Improvement Amendments (CLIA)2000 - Approps Act (FDA) - FY 20012000 - Medicine Equity and Drug Safety Act2000 - Prescription Drug Import Fairness Act2000 - Approps. Act (HHS), Sec. 516, HPV-Condom

Labeling Review

2000 - Ryan White AIDS Care Act2000 - Date Rape Drug Prohibition Act2000 - Children’s Health Act 2000 - Technology Transfer Commercialization Act2001 - Animal Disease Risk Assessment 2002 - Medical Device User Fee and Modernization Act (MDUFMA)2002 - Hatch-Waxman-Amendments2002 - Drug Importation Report 2002 - Farm Security & Rural Investment Act2002 - Bioterrorism Act2002 - PDUFA III2002 - Best Pharmaceuticals for Children Act2002 - Rare Diseases – Orphan Product Development 2002 - E-Government Act2003 - Mosquito Abatement for Safety and Health Act2003 - Animal Drug User Fee Act2003 - Pediatric Research Equity Act (PREA)2003 - Medicare Prescription Drug and Modernization Act2004 - Minor Use and Minor Species Animal Health Act2004 - Food Allergen Labeling and Consumer Protection Act2004 - Medical Devices Technical Corrections Act2004 - National Defense Authorization Act2004 - AIDS (PEPFAR)2004 - Project BioShield2004 - Anabolic Steroid Control Act2004 - MQSA Reauthorization 2004 - Homeland Security Pres. Directive (HSPD) #12, ID Standard2005 - Protecting America in the War on Terror Act2005 - Patient Safety & Quality Improvement Act 2005 - Medical Device User Fee Stabilization Act (MDUFSA)2005 - Stem Cell Therapeutic and Research Act 2006 - Combat Meth Act

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0

20,000

40,000

60,000

80,000

100,000

120,000

140,000

160,000

180,000

1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004

Year

Ind

ivid

ual

Saf

ety

Rep

ort

s R

ecei

ved

MFR 15-day

Volume of Adverse Event Reports Becoming Unmanageable

11

0

4,000

8,000

12,000

16,000

20,000

24,000

1993 1995 1997 1999 2001 2003 2005 2007 est

FISCAL YEAR

IMPORT LINES (000)

19.8 MILLION import lines

Imports of FDA-regulated food products

Imported food lines subject to FDA review has quadrupled since 1999

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ORA Field Budget History - FTEs

3493 3488 3488

3633

38724003

2002 2003 2004 2005 2006 2007

Fiscal Year

FT

Es

FTE Level

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FDA Funding Has Lagged Other Public Health Agencies

$0

$5,000,000

$10,000,000

$15,000,000

$20,000,000

$25,000,000

$30,000,000

19

86

19

88

19

90

19

92

19

94

19

96

19

98

20

00

20

02

20

04

20

06

Th

ou

san

ds

of

Do

lla

rs

FDA CDC NIH

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Congressional Appropriations to FDA and Other Agencies

42.17%

72.78%

83.93%92.28%

109.69%

147.42%

0.00%

20.00%

40.00%

60.00%

80.00%

100.00%

120.00%

140.00%

160.00%

USDA FoodSafety

FDA (withoutuser fees)

HRSA NIH Alcoholand DrugInstitutes

NIH CDC

Agencies

Pe

rce

nta

ge

Gro

wth

(1

99

8 t

o 2

00

6)

Congressional Appropriations Grow Quicker in Grant-Centered Agencies Compared to FDA and Other

Salary-Intensive Agencies

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FDA Funding Compared To Local School Systems

FY 06 FY07CR FY08 Proposed

Fairfax County (VA) $1.89B $2.1B $2.2B

Montgomery County (MD) $1.72B $1.85B $1.98B

FDA (appropriated funds) $1.48B $1.57B (Pres. Request $1.64B)

Prince George's County (MD) $1.35B $1.49B $1.66B

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President’s Annual Appropriations Request for FDA

• Never includes the full cost to FDA of the increased costs of pay and benefit increases

• Never includes increases for increased non-pay costs

• Almost always include reductions in FDA’s budget under a variety of headings– –Administrative Savings– –IT Consolidation– –Strategic Redeployment, etc….

• Usually proposes new priorities without adding enough new money

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Congress is Listening to Us

• FDA Alliance has held about 80 meetings with Congressional staff and members themselves

• Alliance’s “ask” is for $2 billion in FY 2008 plus user fees (about another $500 million)– This would restore FDA to its FY 2003 operating level

• Congressional reception has been excellent but committees must deal with competing demands– Plus controversies have undermined FDA

• E.g., story about bonuses to senior officials

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The Outcome

• Senate appropriators raised FDA budget to $1.755B– increase of $186 million, 12% more than FY07 and

almost as many new dollars as in last three years combined

• House appropriators raised FDA budget to $1.697B– increase of $128 million, 7.7%, but nearly $60M below

Senate• Schedule: compromise numbers will be worked out by

House/Senate in mid-to-late September• Impacted by Bush threat to veto appropriations bills

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FY07 Appropriations vs. House, Senate FY08 Levels and Alliance Recommendations

Recommended FY 2008 Budget Authority Appropriations Increases, by Total and by Center for the FDA

PRELIMINARY ANALYSIS BY THE FDA ALLIANCE--UPDATED JULY 26, 2007

Center/Major Function

FY 2007 Appropriat

ion (budget

authority w/o user

fees)

House Committee

Recommend.FY2008

HouseFY2008 increase

overFY2007

Senate CommitteeRecommen

d.FY2008

Senate FY2008 increase

over FY 2007

FDA Alliance : Recommendations on

Budget Authority/Appropriations

FY 2008

Increase over FY 2007

Foods $457,105,000

 $475,726,000

# +28,000,000

+$47 million

$ 522,453,00

0

+$ 65 million

$597,105,000

+$140 million

Drugs $315,138,000

## $348,438,00

0

+33 million

$ 354,706,00

0

+$ 40 million

$413,138,000

+$ 98 million

Biologics $144,547,000

  $155,073,00

0

+11 million

$ 158,588,00

0

+$ 14 million

$191,547,000

+$ 47 million

Animal Drugs& Feed

$94,749,000

  $  94,809,000

none $   98,513,00

0

+$  4 million $124,749,000

+$ 30 million

Devices & Radiol. Health

$230,683,000

  $240,122,00

0

+$ 9 million

$ 243,255,00

0

+$ 13 million

$302,683,000

+$ 72 million

NCTR $42,056,000

   $36,455,000

($6 million)

$   46,104,00

0

+$   4 million

$55,056,000

+$ 13 million

Other Activities 90,541,000    $89,577,000

($1 million)

$ 102,007,00

0

+$ 11 million

$120,541,000

+$ 30 million

SUBTOTAL $1,374,819,000

$1,468,200,000

+$93 million

$1,525,626,000

+$151 million

$1,804,819,000

+$430 million

Rent & RelatedFacility Costs ###

$194,425,000

  $229,509,00

0

+$35 million

$  229,509,00

0

+$ 35 million

$219,375,000

+$ 20 million

TOTAL $1,569,244,000

$1,697,709,000

+$128 million

$1,755,135,000

+$186 million

$2,024,194,000

+$450 million

# = Funds made available by the House for July 1, 2008 to September 30, 2009, conditional on committee approval of a food safety plan from FDA

## = Of which $6.25 million is an increase for review of DTC ads, in lieu of funds that would come from a new user fee for review of DTC television advertisements

contained in authorizing legislation that is likely to pass Congress shortly.### = FDA receives $4.95 million for “buildings and facilities repair” every year. It is sometimes included in summation charts,

but is not reflected in these charts, which are the numbers being reported by the Committees as their totals and include only “salary and expenses.” Note: FDA Alliance recommendations and allocations do not include any new authorities that may result from pending

legislation and do not include user fee revenue.

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How FDA Will Use Money

• Up to FDA, OMB and Congress– Both groups advocated for overall spending, not

specific program needs

• Largest immediate needs– IT– Inspectors– Usable adverse events data bases for foods, drugs

and devices

• User fees in PDUFA will ease pressures in drug/device review divisions and drug safety initiatives; food will be most in need of new funds

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Appropriations Committees’ Report Language Priorities for FDA

• Senate:– Assuring resources for Critical Path– Drug safety– Improve MedGuides– Speeding generic drug reviews – Medical device unique identifies– Food safety and import inspections– No closure of FDA Labs

• House– Upgrade FDA field force, enforcement, no closure of labs– Funds DTC review without new user fees– Postmarketing studies– Sunscreen monograph– Microbial resistance

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For More Information

Steven GrossmanExecutive Director

FDA AlliancePO Box 4305

Silver Spring, MD 20914-4305

info@StrengthenFDA.org www.StrengthenFDA.org

301-879-9800

The FDA Alliancewww.StrengthenFDA.

org