Deficit standoff risks harming FDA user fee deal

The looming deficit reduction quagmire risks undoing the $6.4 billion FDA user fee agreement for medical device and drug companies, barely two months after President Obama signed it into law.

Right now, budget negotiations are at a standstill. And if an agreement to enact $1.2 trillion in government spending cuts over the next 10 years can't be reached by January, drastic, across-the-board cuts will kick in automatically. That's where the user fee agreement is at risk, Bloomberg reports, which calls for medical device companies to double their fees over five years to about $609 million to help the FDA boost its efficiency and speed during the regulatory process. Regulators can't spend any industry user fees until the FDA receives a minimum level of government funding first.

FDA spokeswoman Karen Riley told Bloomberg that as a result, there could be "a loss of whole user free programs, programs that have become essential to public health and medical product innovation."

The first sign of problems happened after Sept. 6. Bloomberg reports that the Office of Management and Budget botched a deadline to submit to Congress a framework covering an initial $109 billion in mandated spending reductions. As a result, the FDA could lose 8% of its appropriated taxpayer money for the fiscal 2013, amounting to about $200 million.

Still, the jury is out yet as to whether the reduction could prevent the FDA from turning to device and drug companies to collect the agreed-to fees. Some observers believe the government would make sure the FDA has the means to do its job. Steven Grossman, a deputy executive director of the Alliance for a Stronger FDA, said in the Bloomberg story that the $200 million cuts would be "devastating" but not necessarily ruin the program. It all depends on how the government will act, which for the time being, is an uncertainty at best.

- read the Bloomberg story
- check out FiercePharma's take

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