Lawmakers are leaving no stone unturned in their struggle to free FDA user fees from indiscriminate sequestration cuts.
The latest effort was a letter, sent last week, asking congressional budget negotiators to clearly state in their final agreement Congress’ intent to spare all user fees from the sequester.
Signed by 22 representatives, most of whom are Democrats, the letter said Congress viewed user fees paid to agencies such as the FDA and the Patent and Trademark Office (PTO) as exempt from the across-the-board cuts because they are “voluntary payments to the government for goods or services.”
Despite congressional intent, the administration, through the White House Office of Management and Budget (OMB), determined the fees were subject to sequester since they aren’t expressly exempted in the 1985 Balanced Budget and Emergency Deficit Control Act (BBEDCA), which lays out the ground rules for sequestration. The law was passed seven years before drug user fees were first authorized. (See BioWorld Today, Oct. 18, 2013.)
BBEDCA does exempt federal activities funded by voluntary payments, contributions or donations from sequestration cuts, but OMB claimed user fees aren’t “voluntary payments.” By including user fees in the cuts, OMB can dull the sequestration blow to other federal programs supported with discretionary funding.
The depth of a sequester triggered under the 2011 Budget Control Act is based on discretionary spending caps. If the government exceeds the cap for the year, the overage has to be sequestered from the next year’s discretionary funding to pay down the deficit. The broader the base of programs subject to the cuts, the smaller the impact is to any one program.
While including FDA user fees in the mix helps reduce the injury to other agencies, it does nothing to pay down the deficit, as those fees, by law, can’t be used for any other purpose.
As a result of the fiscal 2013 sequester, nearly $150 million in inventors’ fees were diverted from the PTO, and the FDA was denied access to about $85 million in user fees, according to the letter.
The FDA’s sequestered fees – which include $56 million in prescription drug, generic, biosimilar and medical device fees – are locked up in a non-interest-bearing account where they will remain until Congress re-appropriates them. An additional $112 million in FDA user fees may be added to the locked stash under sequestration in fiscal 2014. (See BioWorld Today, Nov. 18, 2013.)
Congress isn’t likely to re-appropriate the fees as long as the threat of sequestration lingers, as any such appropriation would count against the discretionary spending cap, OMB said in a recent letter to Rep. Anna Eshoo (D-Calif.).
The lawmakers’ letter to the budget negotiators asked that they prevent OMB from sequestering user fees in the future and address the damage that has already been done to FDA and PTO fee-based programs because of the 2013 sequester.
The letter noted the fee increases and government promises made to stakeholders in the America Invents Act and the FDA Safety and Innovation Act. “By applying sequestration to fee-based agencies, we are going back on the deal we made with those users when we asked them to pay higher fees in exchange for improved services,” the lawmakers said.
Several of the representatives who signed the letter are among the 71 co-sponsors of a House bill that would specifically exempt FDA fees from the deficit-trimming cuts. The FDA Safety Over Sequestration Act, H.R. 2725, enjoys broad bipartisan support that ranges from Rep. Michele Bachmann (R-Minn.) to Rep. Henry Waxman (D-Calif.)
However, the bill has been sitting in the House Budget Committee since Rep. Leonard Lance (R-N.J.) introduced it in mid-July.
The Senate version of the legislation, which also has bipartisan support, has had a similar fate since being introduced in July by Sen. Mark Pryor (D-Ark.) But, in contrast to the House bill, the FDA User Fee Protection Act, S. 1413, has picked up only seven co-sponsors.
Neither bill addresses PTO fees.