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Presentation to the FDA Alumni Association

April 11, 2007

Bill Hubbard Steven Grossman

The FDA Alliancewww.StrengthenFDA.or

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FDA Budget Basics• FDA’s budget is relatively small: $1.5B

appropriated; $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

• User fees, user fee triggers, earmarks, and counterterrorism grow, while FDA’s base erodes

• Need for a multi-year public effort to ensure FDA has sufficient resources, and to maintain and build public confidence and trust in FDA

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FDA Stakeholders Responding

• FDA Alliance formed in April, 2006 at urging of patient and research advocacy groups

• More than 100 members, including seven 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

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A Common Goal

• Two coalitions, two voices, one goal:

Increased Appropriations for FDA

• Both organizations have campaigns underway to educate and persuade Congress, Administration, media, general public

• Model: Multiple advocates contributed to doubling of the NIH budget

• FDA’s budget problems are so great and the stakes so high, there cannot be too many voices!

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Budget Environment Difficult, But Congress is Listening

• Most federal agencies will get the same dollars in FY 2007 (current year) as they did in FY 2006

• FDA received $90M more in FY 2007 than in FY 2006 (+$65M appropriation; +$25M in user fees)

• President’s FY 2008 budget request calls for further increases (in appropriation and user fees)

• Alliance/Coalition urging Congressional focus on adding appropriated dollars to meet FDA mission

• Members/staff encouraging; hard fight still ahead

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What are we telling Congress?

• New product submission flat, drug development too long

• Uninspected food imports skyrocketing

• Foodborne disease outbreaks increasing

• New therapies/devices for major diseases and conditions could be seriously slowed

• Public confidence in drug safety sinking

• Scientist turnover double that of NIH, CDC

• Europe investing $250M/yr. in “critical path”

• Food bioterrorism a realistic threat, few countermeasures

• Demands to shift resources to counterterrorism from food additives, international harmonization, etc.

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Public Confidence Plummeting

Harris Poll:

Fair/poor job Excellent/good job

2000 37% 61%

2004 47% 56%

2006 58% 36%

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Earmarks

User Fee Triggers

User Fees

Payroll Shortfall

Counterterrorism

$ Thousands of Current Dollars

Appropriations dropping as percentage of FDA’s total costs

$839,258$677,988

$570,890$550,092

$747,593

$0

$200,000

$400,000

$600,000

$800,000

$1,000,000

$1,200,000

$1,400,000

$1,600,000

$1,800,000

$2,000,000

FY 2001 FY 2002 FY 2003 FY 2004 FY 2005

$1.78 M$1.68 M

$1.64 M$1.54 M

$1.28 M

Facilities

Core Functions

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FDA StaffingFood and Drug Administration

Full Time Permanent (FTP) Positions / Full Time Equivalents (FTEs)

5,000

6,000

7,000

8,000

9,000

10,000

11,000

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

Fiscal Year

FT

E

USER FEES****

FDA S&E*,**,***

* Prior to 1980, FDA counted each federal employee as a Full Time Permanent (FTP) position.

** Listed are program level FTPs or FTEs only. User Fees, Revolving Fund for Certification and Other Services, Advances & Reimbursable, and Parklawn Computer Center FTPs or FTEs are NOT included in the FDA S&E column.

*** Source: DHHS/FDA J ustification of Estimates for Appropriations Committees

**** Source: FDA's data submission to Bio and PhRMA PDUFA IV information request; Source: MDUFMA Industry Chart; Source: ADUFA Industry Chart

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Congress Keeps Adding Responsibilities—60 since 19941994 - Animal Medicinal Drug Use Clarification Act1994 - Dietary Supplement Health and Education Act1995 - Federal Reports Elimination and Sunset Act1995 - Unfunded Mandates Reform Act1995 - The Paperwork Reduction Act1996 - Freedom of Information Act (FOIA)1996 - Safe Drinking Water Act Amendments1996 - Animal Drug Availability Act1996 - Food Quality Protection Act1996 - Economic Espionage Act of 1996 1996 - Electronic Freedom of Information Improvement Act1996 - Comprehensive Methamphetamine Control Act1996 - Health Insurance Portability and Accountability Act1996 - Drug-Induced Rape Prevention Punishment Act1997 - Food & Drug Administration Modernization Act

(FDAMA)1997 - Better Pharmaceuticals for Children Act1997 - PDUFA II1998 - Antimicrobial Regulation Technical Corrections Act1998 - Sec. 615 Ag. Research, Extension and Education

Reform Act1998 - MQSA Reauthorization1998 - Sec. 654, Omnibus Approps. (Family Impact

Assessments)1999 - Government Employees Training Act1999 - Fed. Financial Assistance Management

Improvement Act2000 - Responsible for Clinical Laboratory

Improvement Amendments (CLIA)2000 - Approps Act (FDA) - FY 20012000 - Medicine Equity and Drug Safety Act2000 - Prescription Drug Import Fairness Act2000 - Approps. Act (HHS), Sec. 516, HPV-Condom

Labeling Review

2000 - Ryan White AIDS Care Act2000 - Date Rape Drug Prohibition Act2000 - Children’s Health Act 2000 - Technology Transfer Commercialization Act2001 - Animal Disease Risk Assessment 2002 - Medical Device User Fee and Modernization Act (MDUFMA)2002 - Hatch-Waxman-Amendments2002 - Drug Importation Report 2002 - Farm Security & Rural Investment Act2002 - Bioterrorism Act2002 - PDUFA III2002 - Best Pharmaceuticals for Children Act2002 - Rare Diseases – Orphan Product Development 2002 - E-Government Act2003 - Mosquito Abatement for Safety and Health Act2003 - Animal Drug User Fee Act2003 - Pediatric Research Equity Act (PREA)2003 - Medicare Prescription Drug and Modernization Act2004 - Minor Use and Minor Species Animal Health Act2004 - Food Allergen Labeling and Consumer Protection Act2004 - Medical Devices Technical Corrections Act2004 - National Defense Authorization Act2004 - AIDS (PEPFAR)2004 - Project BioShield2004 - Anabolic Steroid Control Act2004 - MQSA Reauthorization 2004 - Homeland Security Pres. Directive (HSPD) #12, ID Standard2005 - Protecting America in the War on Terror Act2005 - Patient Safety & Quality Improvement Act 2005 - Medical Device User Fee Stabilization Act (MDUFSA)2005 - Stem Cell Therapeutic and Research Act 2006 - Combat Meth Act

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0

20,000

40,000

60,000

80,000

100,000

120,000

140,000

160,000

180,000

1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004

Year

Ind

ivid

ual

Saf

ety

Rep

ort

s R

ecei

ved

MFR 15-day

Volume of Adverse Event Reports Becoming Unmanageable

12

0

4,000

8,000

12,000

16,000

20,000

24,000

1993 1995 1997 1999 2001 2003 2005 2007 est

FISCAL YEAR

IMPORT LINES (000)

19.8 MILLION

Imports of FDA-regulated products

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ORA Field Budget History - FTEs

3493 3488 3488

3633

38724003

2002 2003 2004 2005 2006 2007

Fiscal Year

FT

Es

FTE Level

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Has FDA Been Given Enough Resources?

FDA Funding Has Lagged Other Public Health Agencies

$0

$5,000,000

$10,000,000

$15,000,000

$20,000,000

$25,000,000

$30,000,000

19

86

19

88

19

90

19

92

19

94

19

96

19

98

20

00

20

02

20

04

20

06

Th

ou

san

ds

of

Do

lla

rs

FDA CDC NIH

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Has FDA Been Given Enough Resources?

FDA Funding Comparable to Local School Systems

FY 06 FY07CR 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 $1.55B (Pres. Request $1.64B)

Prince George's County (MD) $1.35B $1.49B $1.66B

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Annual Appropriations...

• Never include the full cost to FDA of the increased costs of pay and benefit increases

• Never include 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….

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What would FDA look like?

What would FDA’s budget look like today if it had gotten the full costs of these inflation increases?– Assume 2003 starting point– 5.8% Inflation increases– Budgeted program increases also increased

at same rate in future years– No annual budget cuts

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Total FDA AppropriationsTotal FDA Appropriated S&E Budget Authority, If…1. Appropriated Budget Authority had increased at 5.8% per year over FY 2003 level, and2. All funds for program increases had really been added to the Appropriation

FY 2003 FY 2004 FY 2005 FY 2006 FY 2007 FY 2008 Amt if 2003 increased by 5.8% per year 1,373$ 1,453$ 1,537$ 1,626$ 1,720$ 1,820$

Additions Shown in Budget, and then increased in Subsequent years at 5.8% 1) Food Safety Counterterrorism/Defense 20.5$ 83.7$ 94.4$ 2) Patient Safety 3.0$ 3.2$ 3.4$ 3) OTC Drugs 0.7$ 0.7$ 0.7$ 4) Generic Drugs 8.0$ 8.5$ 9.0$ 5) BPCA 3.5$ 3.7$ 3.9$ 6) Medical Device Review 1.0$ 26.6$ 34.2$ 7) Orphan Product Grants 1.2$ 1.3$ 8) Influenza (transfer from OC) 0.3$ 0.3$ 9) Medical Product Countermeasures 5.0$ 5.3$ 10) BSE/Mad Cow Disease 8.0$ 8.5$ 11) Drug Safety 10.0$ 12) Critical Path 0.8$ 13) DTC Advertising 0.9$ 14) Pandemic Preparedness 20.0$

Total Additions 37$ 141$ 192$ 203$ $215

What would have been: 1,373$ 1,489$ 1,678$ 1,819$ 1,924$ 2,035$

Actual Appropriation: 1 1,373$ 1,379$ 1,450$ 1,487$ 1,574$

Difference (110)$ (228)$ (332)$ (366)$

Percent Difference -7% -14% -18% -19%

1 From S&E Budget Authority in All Purpose Tables in Congressional Budget Justifications

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The Need• Renewed public commitment to the FDA• Recognition that FDA cannot keep up without

a concerted, bipartisan, multi-stakeholder commitment

– Administration– Congress– Patient Groups– Consumer Groups– Industry

• Multi-year effort to:– Ensure FDA has sufficient resources, and – Maintain and build public confidence and trust in

FDA

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Success Will Have Broad Benefits

• Increased public health protection– Longer, healthier lives– Reduced health care costs

• Safer food supply, less vulnerable to bioterrorism• Greater public confidence in FDA decisions and

the products it regulates• Improved patient access to new therapies• FDA leadership in promoting science-based

standards nationally and internationally to improve American competitiveness

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For More InformationSteven Grossman

Executive Director

FDA Alliance

PO Box 4305

Silver Spring, MD

20914-4305

info@StrengthenFDA.org

www.StrengthenFDA.org

Bill Hubbard,

Senior Advisor

Coalition for a Stronger FDA

1333 New Hampshire Ave., NW,

Suite 429

Washington DC, 20036

william.hubbard@fdacoalition.org

www.FDAcoalition.org

The FDA Alliancewww.StrengthenFDA.

org