Effects on Agencies
The effect on the FDA could be devastating, Grossman remarked. “The FDA has been chronically underfunded for decades. It could use a 15–20 percent budget increase and still be short of resources.” Demands upon the agency, meanwhile, are growing. Resources permitting, it must implement a new food safety system, budgeted at $318 million for 2011, deal with increasingly complex science, and expand overseas to respond to the globalization.
More than 80% of the FDA budget is allocated to employees and facilities, according to Grossman. Therefore, if deep cutbacks occur, he foresees program consolidation and abandonment as well as massive furloughs and layoffs.
In contrast, cutbacks at the NIH may be implemented by halting some grant competitions or by awarding fewer numbers of grants or smaller awards. The NIH is already planning to abolish the National Center for Research Resources and some of its programs. It will transfer the remaining projects to the soon-to-be-created National Center for Advancing Translational Sciences (NCATS), according to HHS secretary, Kathleen Sebelius, in a letter to legislators. “Funding is intended to come from existing resources of the programs that would move to NCATS,” she noted.
NIH programming is also growing, though. The Patient Protection and Affordable Care Act of 2010 formed the Patient-Centered Outcomes Research Institute, which will require funding from the diminishing resources of the federal budget.
“I think what you may see going forward in the next year is a more robust governing agenda coming out of the agencies,” commented Bruce Katz of the Brookings Institution in a rehash of the State of the Union address. He said this may mean marshalling the tools that have bi-partisan support as well as greater dependence upon public/private partnerships.
Such partnerships could be troublesome for the FDA, however. The Prescription Drug User Fee Act (PDUFA), due for reauthorization in 2012, is a case in point. PDUFA is expected to add $707 million to the FDA budget in 2011, Grossman said. Although that’s only about one quarter of the overall FDA budget, “those user fees are concentrated in certain areas. PDUFA fees pay about 65 percent of the drug approval process.”
The concern, Haiselmeir explained, “is that if more than 50 percent of the FDA’s budget is generated from fees from the biopharmaceutical industry, the agency is in effect a major shareholder in the industry and thus has a conflict of interest.”
At the Alliance for a Stronger FDA, Grossman added, “We look at the FDA as a public agency, performing tasks for the public good. It, therefore, should be funded by the public—not by industry.” Nonetheless, he said, “there is an acceptance that FDA needs some user fees from the biopharmaceutical industry to do its job.”
Streamlining the FDA won’t generate the savings needed, either. “When responsibilities so exceed revenue, streamlining can add more value to the agency’s activities but will not save money. For example, there are new databases that would save time but require significant money up front before they can be put together,” Grossman explained.