The Burrill Report

Federal funding for the U.S. Food and Drug Administration will remain roughly flat in fiscal 2013, with user fee programs funding about 45 percent of the agency’s overall budget, if President Barack Obama’s proposal for the agency is supported in Congress.

Overall, the president’s $4.5 billion budget proposal represents a 17 percent increase over the agency’s fiscal 2012 budget. But that increase stems almost entirely from fees to be paid by industry to support agency drug reviews, revenue from which will begin to approach the $2.5 billion government will provide.

“These are austere budget times, and the FDA budget request reflects this reality,” says FDA Commissioner Margaret Hamburg.

The new budget reflects the FDA’s priorities for accelerating the availability of new medical products, addressing the challenges of globalization for the safety of food and drug supplies, and will allow the FDA to fulfill its public health duties more efficiently, says Hamburg.

Industry user fees would fund 98 percent of the proposed budget increase for fiscal year 2013, which begins October 1.

In addition to recommending new user fees to support the review of generic drugs and biosimilars, the FDA budget contains $10 million to support closer collaborations with the agency’s Chinese counterparts with the goal of strengthening the safety of the food and drugs produced in China for export to the United States. Some of that money would go to hiring 19 inspectors to focus on China, according to Reuters.

National programs supporting biosecurity, public health, and a new domestic and import food safety system would also gain resources under the proposed budget.

The most unwelcome element of the budget for biotechnology innovators fearing the encroachment of new competition from less expensive biosimilars is that President Obama still wants to reduce the exclusivity period on brand name biologics to seven years from 12—a proposal that has found support in some quarters of Congress and that the president first advanced in a deficit reduction plan in September 2011. Reducing the exclusivity period would save federal health programs $4 billion over 10 years, Obama estimates.

The idea raises the ire of the Biotechnology Industry Organization, which says the change would discourage development of innovative medicines and undermine industry job growth.

The Alliance for a Stronger FDA, an advocacy group that seeks increased funding for the agency, was also rankled by the budget proposal. “The key thing to watch is the actual budget appropriation, and not the user fees,” says Margaret Anderson, president of the Alliance and executive director of FasterCures. “It is the appropriated dollars that are used to run the agency and pay for overseeing imported goods, assuring food safety, and stimulating medical product innovation and ensuring safety, as well as dealing with inevitable crises, such as seafood safety during the Gulf oil spill.”

Drugmakers are also facing the threat of an estimated $156 billion in mandated rebates on drugs provided to low-income seniors through Medicare over the next decade. The proposal would allow Medicare to garner the same rebates that Medicaid receives for brand name and generic drugs for beneficiaries receiving the Medicare Part D low-income subsidy beginning 2013. That amount is $80 billion in addition to discounts and rebates negotiated with industry as part of 2010’s landmark healthcare reform legislation.

The president’s budget request provides a starting point for negotiations that will now unfold in the House and Senate budget committees before a resolution is submitted for approval in April.


February 17, 2012
http://www.burrillreport.com/article-proposed_fda_budget_leans_on_industry_.html