Alliance Sees Battles Ahead for FDA Funding

The Alliance for a Stronger FDA foresees funding battles for the agency as the incoming Trump Administration looks at deficit reductions through cuts in discretionary spending. In its weekly update (reprinted below), the Alliance predicts that discretionary spending (which makes up a large portion of FDA’s budget) is likely to stay flat or possibly even decline, regardless of the important national and human needs met by such spending. “Non-defense discretionary spending may be subject to even greater downward pressure because president-elect Trump and many members of Congress are advocating for substantial increases in defense spending,” the group says. “Pressures may also build further if tax reform produces a net decrease in revenue (a possible outcome, but not a certain one).” Appropriation hearings are expected to begin next month.

The Alliance believes that with $518 billion in FY 17 allocated to non-defense discretionary spending, “there is still ample room to give FDA funding increases that match its growing responsibilities. However, that growth almost certainly will have to come at the expense of other programs. Needless to say, that will be difficult. All of this suggests that every year will be a battle to get FDA the funding it needs. We will need to be even more effective advocates for FDA’s budget in 2017 and beyond.”

If all this isn't enough concern for FDA stakeholders, the Alliance also points out that a budget sequester may follow the 4/28 expiration of the current fiscal year continuing resolution. On 1/10, the Office of Management and Budget released its latest interim evaluation of the potential for sequestration in FY 2017. “Its conclusion: if current funding levels for non-defense discretionary spending are maintained for the remainder of the fiscal year, then the budget limit is exceeded by $1.4 billion,” the Alliance says. “This could result in a sequestration of 0.3% on all non-exempt, non-defense programs. This would include FDA.”

Alliance for a Stronger FDA
1/13 Advocacy Update

• Sequester May Follow April 28 Expiration of FY 17 CR. Several times each year, OMB informs the President and Congress as to the possibility of sequestration of current-year appropriated funds based on the 10-year budget caps enacted in 2011. On January 10, OMB released its latest interim evaluation of the potential for sequestration in FY 17.  Its conclusion: if current funding levels for non-defense discretionary spending are maintained for the remainder of the fiscal year, then the budget limit is exceeded by $1.4 billion. This could result in a sequestration of 0.3 percent on all non-exempt, non-defense programs. This would include FDA.

Sequestration is not the only budgetary uncertainty facing FDA. This week’s Analysis and Commentary (below) takes a look at the situation.

• HHS Secretary Burwell: Robust Funding for FDA Needed. In her cabinet exit memo, outgoing HHS Secretary Burwell urged the next Administration to increase FDA funding. In her rationale, she points to the need to improve regulatory science and states that “a robust FDA will help improve competition in the marketplace, especially the pharmaceutical marketplace where health care consumers want access to safe and affordable options.” Elsewhere in her exit memo, she points to accomplishments in food safety and advocates for empowerment of families with information about the foods and beverages they consume.

• FDA Is #1 on Top Ten Medical Research Issues for 2017. Margaret Anderson, President of FasterCures and former Alliance Board Member had an opinion piece published in Huffington Post that details her list of the top ten medical research issues and trends for 2017. We are pleased that her number 1 issue was FDA’s path forward in the new year and the need for continued support of the agency.
• Administrative Item – Dues Payments.  In December, we sent a 2017 dues invoice to the primary contact of each Alliance member. Please let us know if you did not receive one. To the extent you can put it into processing as early as possible, we greatly appreciate it.

Analysis and Commentary

This week, Washington was all about confirmation hearings and repealing the Affordable Care Act. Both will continue during the upcoming shortened week (MLK’s birthday is Monday and the Inauguration on Friday is a federal holiday in the DC area). Yet this month, we expect that the Congress will begin working on tax reform and, also, a federal budget. It is unclear when the appropriations committees will gear up, but hearings on FY 18 appropriations might start as early as mid-February.

With a new Administration that has a different set of priorities than the prior Administration—and with tax reform, budgets and appropriations upcoming in Congress—it is a good time to revisit “the iron triangle of deficit reduction.” This concept, which we have discussed a number of times in prior years, focuses on the three ways in which annual government deficits can be reduced or eliminated: discretionary spending cuts (defense and/or non-defense); reduction in entitlement payments; and increases in federal revenue through economic growth or additional taxes. Deficits, already large, are projected to increase for years because growth in our aging population causes higher levels of entitlement spending.    

Of relevance to the FDA stakeholder community is the outsized attention paid to cutting discretionary spending, especially relative to the other two pathways. Based solely on political rhetoric, it would be easy to imagine that the federal budget could be balanced if we only eliminated fraud, waste and abuse in government, maybe along with two or three government departments that some deem unneeded. However, the numbers say otherwise. Eliminating ALL discretionary spending (defense, as well as non-defense) would still not be enough to balance the budget 5 to 8 years from now.

Eventually Congress will need to deal with either entitlements or revenue. Until that occurs, discretionary spending is likely to stay flat or possibly even decline, regardless of the important national and human needs met by such spending. Non-defense discretionary spending may be subject to even greater downward pressure because President-elect Trump and many Members of Congress are advocating for substantial increases in defense spending. Pressures may also build further if tax reform produces a net decrease in revenue (a possible outcome, but not a certain one).

Looking at the big picture of non-defense discretionary spending (about $518 billion in FY 17), there is still ample room to give FDA funding increases that match its growing responsibilities. However, that growth almost certainly will have to come at the expense of other programs. Needless to say, that will be difficult.  

All of this suggests that every year will be a battle to get FDA the funding it needs. We will need to be even more effective advocates for FDA’s budget in 2017 and beyond.