FDA’s Budget Challenge August 22, 2007 Wayne Pines

1. FDA’s Budget Challenge August 22, 2007 Wayne Pines The FDA Alliance www.StrengthenFDA.org

2. FDA Budget Basics • FDA’s relatively small: $1.57B appropriated in FY 2007 plus $400M in user fees • 83% of FDA costs are staff-related: salary, benefits, rent, supplies, telecom, travel, etc. • FDA’s appropriation must increase $80 to $100 million per year to “stay even” with increased costs • FDA’s crunch • more responsibilities + more complex task +, small budget increases = eroding credibility • E.g., could not complete analysis of diabetes drug data before Avandia adcom July 30

3. Two Groups Formed • FDA Alliance formed in April, 2006 at urging of patient and research advocacy groups • More than 100 members, including six former commissioners and a broad range of patient, consumer and industry interests • Coalition for a Stronger FDA formed in September, 2006 by BIO, GMA and three former HHS Secretaries • Broad membership representing consumers, patients, trade associations, and companies

4. A Common Goal • Two coalitions, two voices, one goal: Increased Appropriations for FDA • Both organizations have campaigned to educate and persuade Congress, Administration, media, general public • Model: Multiple advocates contributed to doubling of the NIH budget

5. Basic Messages • FDA touches every American, every day • FDA needs more resources to: assure safety; foster innovation; and ensure that the United States remains the “gold standard” for food, drug, device and cosmetic regulation. • A strong FDA benefits both public health and the U.S. economy • All FDA stakeholders – consumers, patients, professional societies, and industry – support increased funding

6. Consequences of Underfunding FDA • New therapies/devices for major diseases and conditions could be seriously slowed • Public confidence in drug safety wavering • Europe forging ahead, investing $250M/yr. in “critical path” • Scientist turnover double that of NIH, CDC • Public confidence in food safety sinking • Uninspected food imports skyrocketing • Foodborne disease outbreaks increasing • Food bioterrorism a realistic threat, few countermeasures

7. Wavering Public Confidence in FDA Harris Poll: How well does FDA ensure safety and efficacy of new Rx drugs? PositiveNegative • 56% 37% 2006 36% 58% (after Vioxx, stents) 2007 45% 49% (May 22-24)

8. FDA Staffing Since 2003 “bump:” overall staff levels have declined; user fees pay for an increasing proportion of staff

9. 1994 - Animal Medicinal Drug Use Clarification Act 1994 - Dietary Supplement Health and Education Act 1995 - Federal Reports Elimination and Sunset Act 1995 - Unfunded Mandates Reform Act 1995 - The Paperwork Reduction Act 1996 - Freedom of Information Act (FOIA) 1996 - Safe Drinking Water Act Amendments 1996 - Animal Drug Availability Act 1996 - Food Quality Protection Act 1996 - Economic Espionage Act of 1996 1996 - Electronic Freedom of Information Improvement Act 1996 - Comprehensive Methamphetamine Control Act 1996 - Health Insurance Portability and Accountability Act 1996 - Drug-Induced Rape Prevention Punishment Act 1997 - Food & Drug Administration Modernization Act (FDAMA) 1997 - Better Pharmaceuticals for Children Act 1997 - PDUFA II 1998 - Antimicrobial Regulation Technical Corrections Act 1998 - Sec. 615 Ag. Research, Extension and Education Reform Act 1998 - MQSA Reauthorization 1998 - Sec. 654, Omnibus Approps. (Family Impact Assessments) 1999 - Government Employees Training Act 1999 - Fed. Financial Assistance Management Improvement Act 2000 - Responsible for Clinical Laboratory Improvement Amendments (CLIA) 2000 - Approps Act (FDA) - FY 2001 2000 - Medicine Equity and Drug Safety Act 2000 - Prescription Drug Import Fairness Act 2000 - Approps. Act (HHS), Sec. 516, HPV-Condom Labeling Review Congress Keeps Adding Responsibilities—60 since 1994 2000 - Ryan White AIDS Care Act 2000 - Date Rape Drug Prohibition Act 2000 - Children’s Health Act 2000 - Technology Transfer Commercialization Act 2001 - Animal Disease Risk Assessment 2002 - Medical Device User Fee and Modernization Act (MDUFMA) 2002 - Hatch-Waxman-Amendments 2002 - Drug Importation Report 2002 - Farm Security & Rural Investment Act 2002 - Bioterrorism Act 2002 - PDUFA III 2002 - Best Pharmaceuticals for Children Act 2002 - Rare Diseases – Orphan Product Development 2002 - E-Government Act 2003 - Mosquito Abatement for Safety and Health Act 2003 - Animal Drug User Fee Act 2003 - Pediatric Research Equity Act (PREA) 2003 - Medicare Prescription Drug and Modernization Act 2004 - Minor Use and Minor Species Animal Health Act 2004 - Food Allergen Labeling and Consumer Protection Act 2004 - Medical Devices Technical Corrections Act 2004 - National Defense Authorization Act 2004 - AIDS (PEPFAR) 2004 - Project BioShield 2004 - Anabolic Steroid Control Act 2004 - MQSA Reauthorization 2004 - Homeland Security Pres. Directive (HSPD) #12, ID Standard 2005 - Protecting America in the War on Terror Act 2005 - Patient Safety & Quality Improvement Act 2005 - Medical Device User Fee Stabilization Act (MDUFSA) 2005 - Stem Cell Therapeutic and Research Act 2006 - Combat Meth Act

10. Volume of Adverse Event Reports Becoming Unmanageable

11. Imports of FDA-regulated food productsImported food lines subject to FDA review has quadrupled since 1999 19.8 MILLION import lines

12. ORA Field Budget History - FTEs

13. FDA Funding Has Lagged Other Public Health Agencies

14. Congressional Appropriations Grow Quicker in Grant-Centered Agencies Compared to FDA and Other Salary-Intensive Agencies

15. FDA Funding Compared To Local School Systems FY 06FY07CR FY08 Proposed Fairfax County (VA) $1.89B $2.1B $2.2B Montgomery County (MD) $1.72B $1.85B $1.98B FDA (appropriated funds) $1.48B $1.57B (Pres. Request $1.64B) Prince George's County (MD) $1.35B $1.49B $1.66B

17. President’s Annual Appropriations Request for FDA • Never includes the full cost to FDA of the increased costs of pay and benefit increases • Never includes increases for increased non-pay costs • Almost always include reductions in FDA’s budget under a variety of headings • –Administrative Savings • –IT Consolidation • –Strategic Redeployment, etc…. • Usually proposes new priorities without adding enough new money

18. Congress is Listening to Us • FDA Alliance has held about 80 meetings with Congressional staff and members themselves • Alliance’s “ask” is for $2 billion in FY 2008 plus user fees (about another $500 million) • This would restore FDA to its FY 2003 operating level • Congressional reception has been excellent but committees must deal with competing demands • Plus controversies have undermined FDA • E.g., story about bonuses to senior officials

19. The Outcome • Senate appropriators raised FDA budget to $1.755B • increase of $186 million, 12% more than FY07 and almost as many new dollars as in last three years combined • House appropriators raised FDA budget to $1.697B • increase of $128 million, 7.7%, but nearly $60M below Senate • Schedule: compromise numbers will be worked out by House/Senate in mid-to-late September • Impacted by Bush threat to veto appropriations bills

20. FY07 Appropriations vs. House, Senate FY08 Levels and Alliance Recommendations # = Funds made available by the House for July 1, 2008 to September 30, 2009, conditional on committee approval of a food safety plan from FDA ## = Of which $6.25 million is an increase for review of DTC ads, in lieu of funds that would come from a new user fee for review of DTC television advertisements contained in authorizing legislation that is likely to pass Congress shortly. ### = FDA receives $4.95 million for “buildings and facilities repair” every year. It is sometimes included in summation charts, but is not reflected in these charts, which are the numbers being reported by the Committees as their totals and include only “salary and expenses.” Note: FDA Alliance recommendations and allocations do not include any new authorities that may result from pending legislation and do not include user fee revenue.

21. How FDA Will Use Money • Up to FDA, OMB and Congress • Both groups advocated for overall spending, not specific program needs • Largest immediate needs • IT • Inspectors • Usable adverse events data bases for foods, drugs and devices • User fees in PDUFA will ease pressures in drug/device review divisions and drug safety initiatives; food will be most in need of new funds

22. Appropriations Committees’ Report Language Priorities for FDA • Senate: • Assuring resources for Critical Path • Drug safety • Improve MedGuides • Speeding generic drug reviews • Medical device unique identifies • Food safety and import inspections • No closure of FDA Labs • House • Upgrade FDA field force, enforcement, no closure of labs • Funds DTC review without new user fees • Postmarketing studies • Sunscreen monograph • Microbial resistance

23. Steven Grossman Executive Director FDA Alliance PO Box 4305 Silver Spring, MD 20914-4305 info@StrengthenFDA.orgwww.StrengthenFDA.org 301-879-9800 For More Information The FDA Alliance www.StrengthenFDA.org