FDA Budget Request Shows Optimism For Broad Food Safety User Fees

FDA's fiscal 2011 budget request is the latest nudge to Congress that the agency prefers food safety legislation with both expansive and targeted user fees over targeted fees alone.

Overall user fees would provide FDA's food programs with $193.6 million in new funding and would be directly responsible for 474 additional full-time employees, according to the agency's budget request released Feb. 1 along with the Obama administration's proposals for all federal agencies.

The user fees would allow for the biggest increase in years in spending on food programs at FDA.

The administration proposes an overall FDA ¹ budget of $4.03 billion for fiscal 2011, a 22.8 percent increase over the 2010 appropriation.

FDA seeks $1.04 billion for food programs, a 32.9 percent increase that includes $182.8 million in broadly applied food registration and inspection fees and $6.5 million in more targeted re-inspection fees.

Food safety initiatives, which cross-cut several centers and offices, would see a 30.3 percent bump to $1.37 billion in fiscal 2011. The enhancement would allow FDA to integrate federal and state food safety activities, strengthen surveillance and enforcement and set new standards for food safety, the agency says.

Snapshot Of An Ideal Budget

FDA leaders have not kept secret their preference for the House's food safety legislation, H.R. 2749, which would authorize FDA to collect general inspection and facility registration fees, as well as targeted levies on firms. The Food Safety Enhancement Act passed the House in July 2009 (² (Also see "FDA Requests More Funding, Authority As Senate Preps To Move Food Safety" - Pink Sheet, 26 Oct, 2009.)).

However, the Senate bill, S. 510, allows for only targeted fees to cover re-inspection and recall activity costs. Illinois Democrat Sen. Dick Durbin, the primary author of the FDA Food Safety Modernization Act, has said that imposing general user fees to pay for food safety enforcement will not have bipartisan support in the chamber.

S. 510 passed out of committee and was placed on the Senate's legislative calendar in December (³ (Also see "Senate Exempts Supplements From Redundant Regs, Suppliers Left Hanging" - Pink Sheet, 23 Nov, 2009.)).

Patrick McGarey, director of FDA's Office of Budget, acknowledged the user fees are dependent on legislative action but maintained they are essential to achieving the agency's food safety goals.

"If you want to get a full snapshot of what we would achieve with the resources we're requesting, you would look at both the [budget authority] and the user fees," he said during a same-day media call.

McGarey's remark echoed Principal Deputy Commissioner Josh Sharfstein's May 2009 testimony on Capitol Hill concerning FDA's need for user fee funding.

Sharfstein told House and Senate appropriations subcommittees that while the percentage of FDA's budget requests comprising user fees has increased over the years, "one of the things the user fees have been allowed to pay for is change" (⁴ (Also see "Sharfstein Defends FDA User Fees As Key To A New Food Safety System" - Pink Sheet, 25 May, 2009.)).

Scrambling Under The Cap

President Obama announced a cap on budget increases across most non-entitlement programs and on spending not related to defense or security programs. Budgetary gains at some departments and agencies in fiscal 2011 would be balanced by lower spending for others, under the president's proposal.

Despite the cap, FDA's requested funding includes some dramatic increases that some find overly optimistic. Others maintain that the agency's proposed budget still falls short of what is truly needed for the food programs.

While one perspective on FDA's budget might note the continued under-funding of food safety, another might say it could have been worse, given the freeze on increases hitting many agencies, according to food and drug attorney Stuart Pape.

"These things tend to be an ebb and flow, and at the moment the flow is towards food safety," said Pape, a partner with Patton Boggs in Washington. "And that's beginning the process of recovery from a long time in the wilderness."

Stephen Mahinka, a partner in the Washington office of Morgan, Lewis & Bockius, said the FDA budget is overly optimistic in the food area, but really has no choice given the food safety mandate it expects to receive from Congress.

"You can't go into it pessimistically. You go into it hoping you'll get the funding for the responsibilities. It's the right thing to do," he said.

Not considering a jump in user fees, FDA's added budget authority across all programs in fiscal 2011 is insufficient, according to the Alliance for a Stronger FDA. Appropriated funding is slated to increase 6.2 percent to $2.51 billion.

"The FDA needs a real increase if it is to establish needed new programs and hire new people to carry them out," said Wayne Pines, president of the alliance, in a Feb. 2 release.

All Eyes On Congress

FDA's ambitious food safety goals rest on the pending legislation. The Senate bill is ready for floor consideration but no debate has yet been scheduled, a staffer said.

Pape said he expects the enacted reform to look more like the House bill than the Senate version. However, Mahinka pointed out the Senate could pose the same type of hurdle for food safety as it posed for health care reform.

"If you want a food safety bill, you're going to have to compromise on some of it," Mahinka said. "I think there's legitimate concern by the agency that the best case scenario, if you say that's the House bill, might not be what you get."

Even with the House bill's broad user fees, FDA's food facility inspection program could still prove too expensive, the Congressional Budget Office has said. A July 2009 report found that under H.R. 2749, FDA would still need another $2.2 billion over a five-year period to support its enhanced food safety responsibilities (⁵ (Also see "House Passes Food Safety Bill That May Not Be Appetizing To Senate" - Pink Sheet, 3 Aug, 2009.)).

- Dan Schiff ( ⁶ [email protected] )