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Executive Summary

BUDGET SEQUESTRATION COULD CUT FDA 1991 PROGRAM EXPENSES BY OVER $200 MIL. in budget authority, according to an analysis released by the Office of Management and Budget July 16. In its annual mid-session review of the federal budget, OMB said that if budget summit negotiations fail, the fiscal 1991 deficit will require a sequestration of over $100 bil., which translates into across-the-board reductions of 38.4% in non-defense programs, including FDA. Using a baseline budget authority figure of $618.5 mil., the sequester amount for FDA program expenses would be $237.5 mil. in fiscal 1991, which begins Oct. 1, the document states. In projected outlays, program expenses would be reduced by $199.6 mil. Fundings for buildings and facilities would be reduced by a separate $3.3 mil. in budget authority and $501,000 in outlays. The report notes that the sequester at FDA could "(1) lengthen the drug review process, (2) suspend efforts to make experimental therapies available to patients with no therapeutic alternatives, and (3) reduce inspection of foods, drugs, devices and imports." In addition, OMB said, "the expedited review proposed for AIDS drugs would be slowed and field inspections and product-related research would be reduced. The number of new orphan drug grants awarded, laboratory equipment, and automobiles necessary for field inspections would be substantially reduced." A sequester also would "eliminate" the proposed funding enhancement for generic drug and seafood inspections, the report stated. OMB also said the sequestration would result in about 400 fewer AIDS research grants being funded. Research grants supported by National Institutes of Health and the Alcohol, Drug Abuse and Mental Health Administration could be cut by over 9,000 from a total of 28,000 in fiscal 1991. All new drug abuse research, including development of medications, would be eliminated. OMB estimates that the Gramm-Rudman-Hollings federal baseline deficit for FY 1991 is $148.4 bil., or $166 bil. when adjusted for reauthorization of the Food Stamp Program. Under current law, the deficit target is set at $64 bil. By comparison, the fiscal 1990 sequestration totaled $3.5 bil. The "baseline" is what spending would be absent any program changes. Commenting in the report at a July 16 press conference, OMB Director Richard Darman stated: "If these budget negotiations fail -- if the Congress fails to enact a responsible, multi-year deficit reduction program -- these sequesters are exactly what we will face in the fall."

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