FDA Funding Gets Boost In Cures Bill, But Is Industry Pleased?
Executive Summary
Several trade associations offer little praise for additional funding as 21st Century Cures bill moves to House floor.
Members’ joy was obvious in the statements, hugs and applause as the House Energy and Commerce Committee concluded its mark-up and passed the 21st Century Cures bill on May 21.
And industry generally shared the committee’s happiness, issuing statements offering congratulations and extolling some of the virtues of the bill. But one change in the bill largely was left out of the trade group talking points: the additional funding for FDA to handle the new responsibilities.
The amended bill passed the committee 51-0 and now moves to the House floor. Committee leaders want to get it to President Obama by the end of the year, although the Senate may have other ideas.
In the manager’s amendment added before the full committee vote, a Cures Innovation Fund was created that would give FDA $550 million in additional dollars over five years.
A number of other amendments were filed, but later withdrawn (see sidebar).
When combined with the $90 million in additional appropriations included in other parts of the bill, FDA would receive $640 million in additional dollars through the Cures package (Also see "21st Century Cures Now A Partially Funded Mandate For FDA" - Pink Sheet, 21 May, 2015.).
The Biotechnology Industry Organization and Pharmaceutical Research and Manufacturers of America did not prominently highlight the added money in their statements of praise following bill passage.
BIO President and CEO Jim Greenwood briefly mentioned FDA funding in his May 21 statement, saying the group supported enhancing FDA scientific capacity by “improving access to adequate funding,” in addition to enhancing recruitment and expanding management processes.
PhRMA ignored the additional FDA dollars in its statement.
Not The Right Non-User Fee Dollars?
The Cures Innovation Fund would be filled with non-user fee dollars, which industry would appear interested in supporting.
It would be paid for in part by selling oil from the U.S. Strategic Petroleum Reserve. From fiscal years 2018 through 2025, the SPR would be required to sell 8 million barrels of crude per year.
Given varying oil prices and the staggered sales, total proceeds could vary. But using today’s prices, the oil could generate about $3.8 billion to pay for the costs of the Cures package.
However, the money also would be a temporary boost, which may not serve industry’s interests in ensuring FDA is properly funded.
At least one Energy and Commerce Committee member liked the alternative pay-for idea. Rep. Ed Whitfield, R-Ky., said during the mark-up that he was pleased committee leaders looked beyond health care for an offset.
“Whether I support it or not, the concept I like because we should look at the entire jurisdiction of Energy and Commerce,” he said. “I just want to thank you all for looking outside of the box.”
With Congress belt-tightening when it comes to budget authority, FDA has increased its reliance on industry user fees to maintain service levels.
Industry and other stakeholders have been concerned that the agency relies too much on user fee revenue, which also breeds a perception that drug companies have too much influence over the government agency (Also see "FDA’s Budget Proposal: It’s The User Fees’ Agency Now" - Pink Sheet, 15 Apr, 2013.).
The agency’s FY 2016 budget request reduced the proportion of user fees to budget authority for the first time in several years. It also was thought to potentially help smooth the playing field for the start of user fee program reauthorization talks (Also see "User Fees Would Recede In Significance Under President’s Budget" - Pink Sheet, 2 Feb, 2015.).
Sequester Exemption The Focus
PhRMA’s statement on the Cures bill clearing committee highlighted protection of industry user fee payments from deficit reduction.
John Castellani, the group’s president and CEO, said a provision permanently exempting user fees from the budget sequester “is critical to ensuring FDA is able to fulfill its public health mission.”
Generic Pharmaceutical Association President and CEO Ralph Neas also said in a statement that he was pleased with the user fee exemption.
When the budget sequester went into effect in FY 2013, FDA lost $85 million in user fee revenue (Also see "Hamburg, Like Industry, Wants Predictability – But In FDA Funding" - Pink Sheet, 5 Nov, 2013.).
That money was restored in FDA’s FY 2014 spending bill (Also see "Budget Accord Should Increase FDA Funding, Free Up User Fees" - Medtech Insight, 12 Dec, 2013.).
BIO’s Greenwood listed a number of provisions the group supported, including those related to biomarker qualification, precision medicine and clinical trial modernization.
Other stakeholder groups like the Alliance for a Stronger FDA were thrilled with the additional FDA funds.
“This money is substantial and truly welcome and will help the agency fulfill the broad new responsibilities being placed on it, should the legislation become law,” the Alliance said in a statement. “We are especially encouraged to see an authorizing committee consider the resource implications of the new responsibilities it is giving FDA.”
The additional dollars would not cover FDA’s estimate for the entire cost of Cures, which also could dampen industry’s celebration.
The agency said the package would cost more than $900 million over five years to fully implement (Also see "Biomarker Qualification Costs As Much As Application Review, FDA Says" - Pink Sheet, 20 May, 2015.).