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Executive Summary

The bulk of FDA's staff would be furloughed for about seven days per month if the Gramm-Rudman-Hollings federal deficit reduction law is fully implemented, according to budget documents HHS forwarded to the White House Office of Management and Budget Aug. 27. The furlough plan would affect 7,450 of the 8,309 full-time equivalent staff slots FDA projects will be filled on Oct. 1, the start of fiscal year 1991. Certain categories of employees, notably HHS Commissioned Corps members, are protected from the reduction. The belt-tightening measures are geared to meeting a full-year Gramm-Rudman spending cut of 31.9%. With projections that $629 mil. is needed to maintain the current level of FDA services through 1991, the Gramm-Rudman cut would translate into a $200 mil. reduction for FDA. HHS imposed a department-wide hiring freeze on Aug. 24. While on one hand, HHS must develop a contingency plan for the worst-case budget scenario, the documents play up the negative consequences of Gramm-Rudman to help goad congressional budget negotiators to reach an agreement on an alternative budget reduction package. For example, although the budget documents say an 85-day furlough might be needed if Gramm-Rudman continues through the entire year, federal personnel rules limit furloughs to 22 days. Beyond 22 days, the more severe "Reduction-In-Force" would be required, involving a separate procedure to actually eliminate jobs. The Pharmaceutical Manufacturers Association warned member companies' Washington reps on Sept. 5 that the scramble to find new revenue sources as well as savings could revive the Administration's proposal for FDA user fees. The Senate Appropriations/Agriculture Subcommittee has scheduled a Sept. 11 markup of FDA's budget. Congressional and Bush Administration budget negotiators retreated to Andrews Air Force Base near Washington, D.C. over the Sept. 7-9 weekend to try to hammer out an agreement. The Democratic leadership of the Congress held a Sept. 6 press conference outlining their six objectives for any budget package. These are: protecting means-tested safety net program for the poor; ensuring that any tax increases are "progressive and fair"; reducing the deficit by $50 bil. in 1991; funding a strong defense program; encouraging economic growth; and reemphasizing "energy security." At FDA, the employee furlough would save about $115.4 mil. The furlough approach was designed after a number of other savings proposals were projected to total only $73.3 mil. of the $188.7 mil. savings targeted for the "salary and expenses" category. The belt-tightening measures include eliminating overtime pay for all activities but field product emergencies (one-year savings: $2.2 mil.); freezing hiring at the Oct. 1 level, which is 90 FTEs below the permitted ceiling ($4.4 mil.); and allowing "absolutely no replacement hiring" during the freeze, despite a 5% anticipated attrition rate ($10 mil.). Additional potential actions include cutting all agency operating expenses by 40% ($39.6 mil.); reducing extramural funds by 65% ($14.6 mil.); and cutting orphan product research grants by 31.9% ($2.4 mil.). "Even one or two weeks of such drastic actions would cause irreversible damage and loss of irreplaceable highly-skilled employees," the documents warn. "Drug, biological product, and device review times would be more than doubled, because reviewing physicians have very marketable skills and would leave more rapidly than other employees...The possibility also increases that less skilled remaining review staff might fail to detect serious flaws in product applications." FDA employees were notified of the possibility of a furlough in an Aug. 27 memo from Acting Commissioner Benson. Another HHS warning is that "recently strengthened generic drug quality assurance efforts would revert to their pre-1989 levels, with no ability to maintain [the] recent initiative to public assurances about the safety and quality of generic drugs." In addition to the $188-plus mil. that would be cut from FDA's salary and expenses budget, another $11 mil. would be cut from other areas such as the building and facilities budget, yielding the $200 mil. Gramm-Rudman total.

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