FDA's proposed fiscal year 2012 budget provides a modest 7% increase in federal appropriations for the human drugs program, which also will benefit from a hefty 46% increase in PDUFA user fees.

Overall, FDA is spared the proposed cutbacks levied on some other agencies in the Department of Health and Human Services and elsewhere in the federal government. But it may struggle to implement some of the fledgling initiatives and added responsibilities.

One example of an initiative for which FDA is challenged to secure funding in the current budget environment is one championed by Commissioner Margaret Hamburg: improving regulatory science (Also see "FDA FY 2012 Budget Gives Hamburg Regulatory Science Upgrade A Year Late" - Pink Sheet, 21 February, 2011.).

President Obama unveiled his budget request Feb. 14. The request represents a starting point for congressional negotiations on appropriations to fund federal programs. And as if underscoring that the budget plan was drafted in a belt-tightening environment, it was released as legislators sparred over how deep to slash funding in continuing resolutions to keep the federal government operating in FY 2011 (Also see "FDA User Fees Soften Sting Of Second Round Of House Budget Cutting For 2011" - Pink Sheet, 14 February, 2011.).

The combined allocation for FDA's human drugs program – which accounts for 27% of the agency budget – would be set at $1.2 billion, up from $883 million for fiscal 2010. (The new budget documents rely on comparisons to fiscal 2010 expenditures in light of the current continuing resolution debate.)

Excluding user fees, the share of the human drugs program funded by congressional appropriations would be $497.5 million, a 7% increase from fiscal 2010. The budget outlines projections that Prescription Drug User Fee Act assessments will rise by 46%, from $421.2 million to $614.9 million.

When fees that are proposed but not-yet-authorized are added in, user fees going toward the human drugs program would increase to $654.3 million in 2012. (For a budget overview, see Also see "Highlights In FDA's FY 2012 Ledger" - Pink Sheet, 21 February, 2011.).

Fees Top 50% Of Human Drug Budget

In either case, user fees from industry would constitute more than half of the human drug budget – 51% when only PDUFA fees are factored in, or 56% if the requested new fees are considered.

For FDA as a whole, appropriated funds would increase by 15% to $2.744 billion, under the 2012 proposal. Some of the increase reflects new responsibilities such as food safety.

Factoring in user fees, overall spending at FDA would rise to $4.44 billion, a 40% increase from the $3.117 billion spent in fiscal 2010.

The fees, which include assessments on devices and other medical products, as well as prescription drugs, would bring in $1.616 million.

The total amount that would be collected from the proposed new assessments include – $40 million from generic drug users, $14 million from medical product manufacturers requiring a re-inspection, and $5 million from an assessment to pay for greater surveillance of medical products carried into the country by international couriers.

The 2012 HHS budget is designed to freeze discretionary (that is, non-entitlement programs such as Medicare) spending in general at 2010 levels.

Some agencies, such as the Centers for Disease Control and Prevention, would see decreases; CDC is slated for a 9% cut in appropriations under the plan.

HHS "is making cuts in some areas and making investments in other areas and overall coming in with a discretionary budget that is slightly below 2010," HHS Secretary Kathleen Sebelius explained at a press conference to release the health budget. "We have additional client responsibilities and really pretty much a frozen budget."

"This budget recognizes that we can't build a lasting prosperity on a mountain of debt," she said. "We need to make some tough choices."

Commissioner Hamburg said at the same event that the agency is trying to maintain its core programs and responsibilities, even with the belt-tightening and ongoing congressional debates.

"We have been moving forward, fulfilling critical elements of our mission and waiting for greater clarity on our budget," she said.

Looking into the details of proposals for FDA, HHS budget documents say that activities related to reviews of new drugs would be funded at $444.6 million for 2012.

The Center for Drug Evaluation and Research estimates it will receive 141 NDA/BLAs and approve 15 priority applications and 72 standard applications in fiscal 2012.

While the median time from receipt of an application to approval is expected to remain the same as in fiscal 2010 – nine months for priority and 10 months for standard applications – CDER expects to cut the mean time to approval to 11 months from 11.8 months for priority NDA/BLAs, and to 16 months from 17.7 months for standard NDA/BLAs.

Other proposed allotments in the human drugs program include $174 million for drug quality, $148.6 million for post-market safety oversight, $21.2 million for oversight of drug promotion, and $96 million for information technology investments.

FDA proposes to spend $368 million on its biologics program, up by $64 million from 2010 level. Unlike in the human drugs program, Treasury funding of the program would still exceed fees – $225 million compared to $143 million.

One-Third Of Budget Goes To Safety

FDA plans to spend $1.4 billion, or almost one-third of its proposed budget, on what it characterizes as its Protecting Patients Initiative – safety activities that span across its several centers.

The agency does not provide figures of actual spending for the safety programs in fiscal 2010, but says the PPI funding would be $124 million more than provided for the comparable programs in fiscal 2010.

The new money would go to modernize and improve safety throughout the supply chain, FDA says. New money attributed to the initiative includes an increase of $42 million for the Office of Generic Drugs, with $40 million of that provided by the proposed generic user fees, as well as funding for a new biosimilars program (Also see "FDA's Budget Path To Biosimilars: 21 Applications By 2015?" - Pink Sheet, 21 February, 2011.). FDA proposes a total budget of $88.8 million for OGD.

The increase includes $11.6 million for import safety, with $3.3 million going toward an electronic drug registration and listing system. FDA has been developing an IT system to identify high-risk imports (Also see "High-Risk Drug Imports To Be Delayed, FDA PREDICTs; Focus On Data Quality Can Avoid New 20 Percent Dragnet" - Pink Sheet, 19 October, 2009.).

By Cathy Dombrowski

FDA's Competing Budget Aims: Frugality Versus Launching New Initiatives

More from Archive

More from Pink Sheet