FDA’s lost $85 million in users fees so far due to sequestration, OMB says

FDA lost $85 million in users fees so far due to sequestration, OMB says

Federal officials confirmed this week that the government shutdown and budget sequester had drained some $85 million from the FDA’s coffers, all from the fees that medical device and pharmaceutical companies pay directly to the agency.

The cuts are expected to continue, sapping portions of the FDA’s user fee collections and placing them in an account where they are all but out of reach. The White House’s Office of Management & Budget confirmed the cut in an October response to Congresswoman Anna Eshoo (D-Calif.), which she released this week.

The reports confirms Eshoo’s "worst fear," she said, pulling aside necessary resources that the FDA needs to do its job.

"Sequestration was intended to reduce public spending, not private dollars that companies agreed to pay in order to expedite the approval of safe and effective medicines," Eshoo said upon release of the OMB letter. "This reaffirms the need to pass legislation that exempts from sequestration the private money FDA collects in user fees so that they may be used by the agency in full for their intended use."

Efforts have been made to protect FDA user fees from sequestration and budget cuts as a sort of special revenue, given that they come directly from makers of drugs and devices who submit new products and applications for review. Efforts in the House and in the Senate have moved to shield FDA user fees, but nothing has passed yet.

"The sequestered offsetting collections will remain in the FDA Salaries & Expenses account, but will be unavailable unless they are subsequently appropriated by Congress," according to the OMB letter. "Any sequestered FDA user fees remain as an unavailable balance in the FDA’s Salaries & Expenses account and are not diverted to other uses."

"The sequestered fees would remain in the account as unavailable in subsequent years, although they could by appropriated or otherwise made available by subsequent legislation," the OMB continued.

That means the FDA may have a real tough time keeping up with its medical device and pharmaceutical review promises it made in exchange for the user fees, which companies pay when submitting applications for review of new products. Estimates released in May calculated that the FDA will have $210 million, or about 5.1% of its $4.1 billion budget, cut from its 2013 budget as a result of sequestration, the bargain between the White House and Congress.

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