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FDA's FY 1994 BUDGET OF $ 924 MIL. CLEARS SENATE APPROPRIATIONS COMMITTEE

This article was originally published in The Tan Sheet

Executive Summary

FDA's FY 1994 BUDGET OF $ 924 MIL. CLEARS SENATE APPROPRIATIONS COMMITTEE on July 20 with the requirement that FDA generate $ 175 mil. in unspecified user fees in addition to the $ 54 mil. authorized for 1994 by the Prescription Drug User Fee Act of 1992. The FDA budget was passed by the committee essentially unchanged from the version reported out by the agriculture subcommittee on July 19. Consideration of the agriculture/FDA appropriations bill on the floor of the Senate is scheduled for July 26. The $ 924.3 mil. provided to FDA in the Senate committee- passed measure matches the sum requested by President Clinton and approved by the House on June 29 ("The Tan Sheet" July 5, In Brief). However, both the Senate and the House versions make some adjustments to the administration's allocation of the funds within FDA. Like the House measure, the Senate bill grants FDA's biologics program only $ 10 mil. of the $ 34.6 mil. in additional funding that was requested for activities related to childhood immunization. The balance of $ 24.6 mil. is distributed to other FDA programs. The Senate committee concurred with the House's decision to grant FDA's orphan drug program $ 15.2 mil., an increase of $ 3.2 mil. from its 1993 level and the level requested by the administration. The Senate measure also provides $ 2 mil. for FDA to establish an Office of Women's Health in the Office of the Commissioner. The Senate committee also joined the House in stipulating an employment floor for FDA of 9,824 full-time equivalent staff years. The committee report notes that the administration's budget request does not provide the increase in FTEs that should be funded by the collection of $ 54 mil. in Rx drug user fees. "This staffing increase is required to deliver the increased services required by" the user fee legislation, the report states, and "the committee expects FDA to receive an increase in [FTEs] commensurate with the $ 54 mil. provided in user fee collections." A report accompanying the Senate FY 1994 agriculture bill highlights the importance of generic drugs, but the Senate measure does not grant, as the House did, additional funding beyond the level requested by the President to FDA's generic drug program ("The Tan Sheet" June 28, p. 12). The Senate report states: "The Committee is concerned about escalating prescription drug prices, which has led to consideration of proposals for cost controls. The Committee recognizes that generic drug competition can play a significant role in keeping prices down, and encourages FDA to support the development and approval of generic drugs consistent with the Waxman-Hatch Act." If the full Senate approves the FDA budget reported out of the Appropriations Committee without substantial changes, the greatest task facing Senate and House conferees will be reconciling the level of actual appropriations to the agency. Unlike the House bill, which appropriates the full budget amount of $ 924.3 mil. except for $ 54 mil. in prescription drug user fees, the Senate measure follows the path taken in the President's budget request by specifying the collection of additional user fees and cutting the amount appropriated to the agency. Senate Appropriations/agriculture subcommittee Chairman Dale Bumpers (D-Ark.) emphasized to subcommittee members at the July 19 markup that "we are $ 175 mil. apart from the House for openers when we go to conference. That is a very big gap to close." The total amount of actual appropriations to FDA under the Senate measure is $ 695.3 mil., compared to $ 870.3 mil. under the House version. The President's budget request, which included $ 200 mil. in additional user fees, appropriated a total of $ 670.3 mil. Because total FDA appropriations in FY 1993 were $ 780 mil., not including $ 36 mil. in prescription drug user fees, it appears that about half of the additional user fee revenues would be used for general deficit reduction rather than an expansion of FDA's activities. Although Congress traditionally has taken a dim view of attempts to include unauthorized user fees in appropriations bills, Bumpers explained at the July 19 markup that the subcommittee was at its limit for allocating discretionary funds. Bumpers, who in the past had called inclusion of unauthorized user fees in the President's budget request for FDA "very suspect," defended the inclusion of the additional user fees in the agriculture bill: "While I don't like making this recommendation, fiscal restraints require it." The Senate bill does not specify the source of the additional user fees. The administration has indicated that FDA would target OTC drugs, medical devices and foods. The device industry recently has warmed to the idea of user fees, and the concept has been gaining popularity on Capitol Hill. However, the Nonprescription Drug Manufacturers Association has not supported user fees for over-the-counter drugs beyond Rx- to-OTC switch applications. NDMA also has been opposed to user fees that are not exclusively dedicated to enhancing FDA operations. The Senate appropriations report notes that the committee "is determined that FDA user fees not burden small companies regulated by that agency." Therefore, small businesses would be exempt from the additional user fees. The committee also instructed FDA to provide a report before "implementing user fees on FDA-regulated companies not subject to the Prescription Drug User Fee Act." The report to the committee should include FDA's "assessment of the regulatory and paperwork burden, possible disincentives for firms which bring new products to FDA for approval, potential increase of prices to consumers, the number of firms which would be subject to these fees, and the level of such fees from companies in each sector of the regulated industries." FDA facility consolidation received a boost from agriculture subcommittee member Sen. Tom Harkin (D-Iowa) at the subcommittee markup. FDA "is one of the most important agencies; it affects people's lives all over this country," Harkin contended. "I've never been able to understand why its [physical plant] is spread all over." Harkin expressed his hope that the consolidation project would go forward "sometime in the very near future." Funding for the FDA consolidation project in the amount of $ 73.9 mil. is included in a Treasury/Postal Service FY 1994 funding bill that passed the Senate Appropriations Committee July 22 following subcommittee markup July 20. The full House also included $ 73.9 mil. for the project in the appropriations bill it passed on June 22.
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