We have previously discussed the effect of sequestration on FDA user fees. Pharmaceutical and device manufacturers pay these user fees into a fund, which the FDA then draws upon to accelerate approval of new products and devices. However, despite the fact that these funds are paid by private industry and are not derived from general revenue, they are still subject to mandatory spending reductions under the Budget Control Act. The FDA was estimated to collect approximately $1 billion in user fees in fiscal year 2013, including $100 million from medical device manufacturers. Because of sequestration, approximately $85 million of the funds were off-limits to FDA.
Recently, the Office of Management and Budget (OMB), in a letter to Congress, explained the fate of the $85 million of sequestered user fees. Specifically, the letter explained that “any sequestered [funds] will remain in an unavailable balance in FDA’s Salaries and Expenses account.” And, the sequestered funds will remain unavailable until Congress authorizes use of the sequestered fees through appropriations legislation, though such appropriations would count against FDA’s discretionary cap for that fiscal year. This OMB letter came as a response to an inquiry from a bipartisan group of Members of Congress.
Congressional sponsors of legislation to exempt the user fees from sequestration — the FDA Safety over Sequestration (SOS) Act-– have highlighted the Agency’s response in their advocacy efforts. Congresswoman Anna Eshoo of California wrote that OMB’S response “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.” It remains to be seen whether Congress will act on the SOS Act, or its Senate companion, the FDA User Fee Protection Act.