FDA Layoffs and Extended Approval Times Anticipated if Budget Cuts Trigger Loss of User Fee Funds

September 21, 2012

Fiscal 2013 user fee payments by industry may be inaccessible to FDA if planned budget cuts take effect. While the user fee program largely supports drug and device reviews, it requires that FDA receive a baseline amount of taxpayer funds before FDA can use any of that industry money.

The purpose of this baseline “trigger” is to ensure that the user fees are supplementary to congressional appropriations. However, as a result of the 2011 Super Committee’s failure to cut $1.2 trillion from the federal deficit, the across-the-board cuts to the FDA’s budget may reduce the taxpayer funds below the baseline amount. If the trigger is not reached, the government may choose to sequester the user fees and the FDA would be unable to use the money.

Because an estimated 90 percent of user fees go toward personnel costs, it is projected that FDA will be forced to lay off employees, the time for review and approval of drugs and devices will increase and ultimately the market will suffer the loss of medical product innovation programs.

Anna Edney, “FDA Drug Review Deal Set to Unravel as Fiscal Cliff Looms