Looming budget cuts could undermine user-fee deals, cost jobs
Budget cuts could stymie user-fee deals, cost jobs
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Drug and device makers fear the White House’s budget-cutting plans will undermine legislation intended to improve the reviews of new products.
The Office of Management and Budget released a report Sept. 14 detailing the implementation of sequester cuts to federal agencies necessary to carry out the Budget Control Act.
User-fee programs, required to be reauthorized every five years, are part of the sequester cuts. The Food and Drug Administration collects user fees in exchange for agreeing to meet performance goals.
The Obama administration expects to cut 8.2%, or $318 million, from the agency’s $3.87 billion budget in salaries and expenses, “which will have a devastating impact on the FDA,” according to statements released by the Alliance for a Stronger FDA, which advocates for FDA resources.
The cuts will likely come in the form of layoffs of FDA staff members and reductions in grants, contracts and services, said Steven Grossman, deputy executive director of the alliance. If the FDA chooses to make the $318 million in cuts in layoffs, the FDA would lose about 1,000 jobs, he added. “It’s a big loss,” Grossman said. A spokeswoman for the FDA declined to comment.
Earlier this year, lawmakers reauthorized user-fee agreements with the drug and device
industries and authorized new user-fee programs for the generic drug and biosimilars industries. President Barack Obama signed the legislation into law in July.
In comments made last week at the National Press Club, John Castellani, president and CEO of the Pharmaceutical Research and Manufacturers of America, questioned what will happen to the user fees paid by the drug industry and counted in the FDA budget that the White House considers subject to the spending reduction.
“Does it go into an account that goes to deficit reduction? Does it go into a holding account that goes back to FDA when, hopefully, Congress can come to an agreement with the president that puts us on a sound fiscal path and meets the requirements of the Budget Control Act? We just don’t know,” he said. “Our fear is the FDA will lose the resources in the short term and not gain them back in the long term.”
In a statement released in advance of the OMB report, the Advanced Medical Technology Association had urged lawmakers to ensure that user-fee funding was used for the device review process.
“The use of the sequester authority to reduce user-fee funds intended for FDA would be devastating to patients, the FDA and medical technology companies,” AdvaMed said.
Castellani said PhRMA fears the FDA will lose the user fees paid by the drug industry.