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FDA, NIH Brace for Sequester Cuts, Public Health Impact

By Mari Serebrov
Washington Editor

Although they hoped it wouldn't come to this, the FDA and National Institutes of Health (NIH) are preparing for the reality of the sequester sword.

In the run-up to March 1, the FDA analyzed how the across-the-board cuts would affect its ongoing activities. "A sequestration of the magnitude contemplated, and this late in the budget year, will have public health consequences for an agency that is already making every dollar count," it concluded.

That said, the FDA doesn't anticipate having to furlough employees, and it, like other agencies in the Department of Health and Human Services, did not circulate a draft Office of Management and Budget memo meant to inform employees of the potential need for furloughs. Instead, the FDA plans to absorb the cuts through other measures, such as reducing travel and training.

The sequester also will curtail agency contracts and outside collaborations, which allow the FDA to leverage its resources, giving it more programmatic flexibility. Another impact is possible delays in translating new science and technology into regulatory policy and decision-making, resulting in delays in new approvals, the agency said.

Unless user fees are exempted, the FDA said it also wouldn't be able to undertake some program activities specifically designated and paid for with user fees.

Progress on the biosimilar pathway could be another casualty, the Alliance for Safe Biologic Medicines (ASBM) warned, as sequestration could affect the FDA's ability to issue final guidance and begin reviewing biosimilar applications.

Noting that Europe and other countries already have made biosimilars available, the ASBM said, "We do not want budget cuts resulting from sequestration to slow down the process here in the U.S."

At the NIH, BARDA

Under the continuing resolution that's funding the government in lieu of a 2013 budget, all noncompeting continuation awards at the NIH are already being funded at a level below that indicated on the most recent Notice of Award. The funding for the awards may be reduced even more by the sequester, NIH said.

The agency expects to lose about $1.6 billion under the sequester. As a result, NIH Director Francis Collins said the agency will give "hundreds and hundreds" fewer grants than it would have awarded otherwise. That will slow down important research, he added.

NIH is trying to avoid employee furloughs, but Collins said he couldn't promise that furloughs won't occur, as the sequester is falling on the heels of several years of nearly flat budgets for the agency. As a result, NIH has lost nearly 20 percent of its purchasing power.

The news isn't as gloomy for biotechs working on medical countermeasures funded by the Biomedical Advanced Research and Development Authority (BARDA). Since BARDA is funded through transfers from Project BioShield, which received its appropriation in fiscal 2004, it will not be impacted by sequestration. Only appropriations made in fiscal 2013 will be affected by the sequester.