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FDA Backgrounder
November 29, 2001

President Signs Record FDA FY 2002 Budget

For the first time in several years Congress has provided a budget for the Food and Drug Administration over and above increases requested for the Salaries and Expense account. The biggest impact will result from the funding for the full pay raise of 4.6 percent. The FDA's total program level is $1.4 billion and includes full funding for the Buildings and Facilities account as well as Prescription Drug User Fee Act and Mammography Quality Standards Act user fees, and the Export Certification and Certification fund. The Salaries and Expenses appropriation totals $1.345 billion, including $1.2 billion for Salaries and Expenses, and $161.716 million for PDUFA.

The proposed budget reflects the commitment of the administration and Congress to continue strengthening public health protection by basing its regulatory decisions on sound, unbiased, state-of-the-art science; assuring the safety of products throughout their entire life cycle; optimizing the agency's standards-enhancing and harmonizing operations within the global marketplace; leveraging programs in cooperation with stakeholders; and maintaining the highest, science-based standards as a critical precondition for effective health-care delivery and continued consumer confidence.

The appropriation increases, which focus on urgent public health hazards, include the following:

• $45.2 million to meet mandated cost-of-living and pay-related increases for the FDA's employees. From FY 1993 to FY 2000, the FDA has had to absorb $284 million in mandatory pay raises and other unfunded inflationary costs by reducing its staffing of all programs not supported by user fees by almost 1,000. During the same period, research and development spending by the pharmaceutical industry and the National Institutes of Health-which generates new medications for the FDA's review and surveillance-increased from approximately $22 billion to almost $45 billion. These funds will enable the agency to maintain current levels of performance, and will support about one-half of the staff that reviews generic and other drugs not covered by the Prescription Drug User Fee Act of 1992.
• $15 million to protect consumers against the variant Creutzfeldt-Jakob disease (vCJD), a fatal illness that has been associated in Europe with the consumption of meat from cows with Bovine Spongiform Encephalopathy (BSE), or "mad cow disease." Since 1997, the FDA has banned the use of mammalian proteins, which are believed to cause BSE, in feed for cattle and other ruminants. The FY 2002 funding is designed to ensure the strengthening of and 100 percent compliance with FDA guidances and rules to help prevent the spread of BSE and vCJD through FDA-regulated products, including drugs, biologics, medical devices, pet foods, food additives, and dietary supplements.
• $10.3 million to prevent substandard food and health-care products from reaching the U.S. market. In FY 2002, the FDA will be responsible for ensuring the safety, or the safety and effectiveness, of $1 trillion worth of food and health-care products, both domestic and imported. Since it is not feasible to reliably sample and test such vast quantities of finished goods, the FDA inspects both domestic and foreign facilities for compliance with the agency's good manufacturing practices, which offer the best assurance that the products meet the FDA's high public health standards. The funding will enable the FDA to increase its inspection coverage, surveillance, sampling, and analysis of regulated products, as well as criminal investigation of fraudulent drug imports.
• $9.4 million to significantly reduce the incidence of foodborne illness that is estimated to affect 76 million Americans each year, more than 300,000 of whom are hospitalized, and 5,000 die from the disease. To counter this human suffering and the resulting $8 billion annual economic cost in medical expenses and lost productivity, the FDA will expand the highly successful Food Safety Initiative beyond microbiological contaminants to cover chemical and physical food hazards.
• $10 million to safeguard patients against adverse events associated with the use of drugs, biological agents and medical devices by improving the FDA's system for monitoring marketed products. According to recent estimates, more than a million people are accidentally injured each year in the United States in the course of medical therapy, and as many as 98,000 die from preventable medical errors. To minimize this hazard, which increases the nation's health-care costs by up to $75 billion a year, the FDA plans to use the funds primarily for strengthening its capacity to learn about, identify and respond to adverse events; increase education programs for dietary supplements; and educate consumers and health-care professionals on the importance of preventing and reporting medical errors.
• $10 million to protect human subjects and the integrity of research data in clinical trials. The FDA is responsible for protecting patients enrolled in clinical studies, and ensuring that the resulting data about the safety and effectiveness of the tested products are accurately stated in the application for marketing. The agency currently performs about 1,100 trial-associated inspections a year of the 30,000 clinical sites that are testing FDA-regulated products. The funding will be used to increase the number of inspections by one-third, focus them on high-risk studies, and cover clinical investigators, institutional review boards, sponsors, monitors, and contract research organizations.
• $10.1 million to enhance the FDA's scientific potential and operational efficiency through infrastructure improvements. The resources provided will fund $3.1 million to prepare the FDA for migration to a new advanced financial management system as part of an effort by the Department of Health and Human Services to replace antiquated and inflexible systems, and to comply with the requirements of the Government Performance and Results Act; $3 million to complete the construction of a new facility in Los Angeles, which includes a new FDA laboratory that analyzes 25 percent of all imported food samples; and $4 million to equip and occupy a new laboratory for the FDA's Center for Drug Evaluation and Research as part of the agency's long-range move to a consolidated headquarters in White Oak, Md.
• $13.1 million in current user fees, to enhance the review process of new human drugs and biological products, and in fees for applications, establishments and approved products. The $162 million for drug and biologic reviews under the Prescription Drug User Fee Act includes an increase of $12 million, and the request for fees under the Mammography Quality Standards Act of $15.6 million includes $500,000 for inflation. Export Certification and the Certification fund received their budget requests of $1.5 million and $4.7 million respectively. Unauthorized user fees were not provided.
• $10.5 million in additional funding was provided by Congress without impacting the President's budget request. Earmarks include: (1) $ 3 million for dietary supplements-$1.5 million for adverse events monitoring; $500,000 for enforcement activities and $1 million for continued work with the National Center for Natural Products Research to identify botanical ingredients; (2) $2.5 million for Generic Drugs program-$2.25 million for review and $250,000 in new funding for education; (3) $1 million for the Orphan Grants Program-$850,000 for orphan grants and $150,000 for administration of the program; (4) $500,000 for a gene therapy data base; (5) $3 million for activities related to antibiotic drugs; and, (6) $500,000 for the Office of Women's Health to develop an agency-wide database focused on women's health activities.

FDA FY 2002 Appropriation (in millions)

(BG 01-5)

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