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The Obama administration's fiscal year 2014 budget proposal, released April 10, seeks $2.6 billion in budget authority and $4.7 billion in total program resources for the Food and Drug Administration.
The overall FY 2014 request is $821 million, or 21 percent, above the 2012 enacted level and supports a new effort to improve drug import safety, according to the budget proposal. Of the $821 million increase, only $52 million is from budget authority.
The agency said in a press release that industry user fees would fund 94 percent of the proposed budget increase, including new fees to support the Food Safety Modernization Act (FSMA) and strengthen FDA's ability to oversee imported food.
For specific program activities, the budget requests $466 million for human drugs (in congressional funding, not counting user fees). Biologics would receive about $211 million from Congress, and the Center for Devices and Radiological Health would receive about $321 million.
Additionally, the budget includes $10 million in new resources to improve the safety of food and medical product imports to the United States through a greater FDA presence in foreign countries such as China.
FDA's budget proposal also includes investments to advance medical countermeasures, strengthen regulatory science, and continue regulatory and public health activities to decrease tobacco use.
The agency said the budget cuts spending in several areas, including a $15 million decrease in budget authority for human drug, biologics, and medical device programs.
“These are tight budget times, and the FDA budget request reflects this reality,” FDA Commissioner Margaret A. Hamburg said in a statement. “Our budget increases are targeted to strategic areas that will benefit patients and consumers and overall strengthen our economy. Through the good work of the FDA, Americans will receive life-saving medicines approved as fast as or faster than anywhere in the world, confidence in the medical products they rely on daily, and a food supply that is among the safest in the world.”
The FY 2014 request covers the period from Oct. 1, 2013, through Sept. 30, 2014.
The budget also proposes to increase the availability of generic drugs and biologics by authorizing the Federal Trade Commission to stop companies from entering into “pay for delay” agreements. Under these agreements, brand-name drug manufacturers pay generic makers to stop patent validity challenges in court and stay out of the market until the patent expires or just before it expires.
Additionally, the budget proposes to decrease the length of exclusivity for brand-name biologics. Beginning in 2014, this proposal would award brand biologic manufacturers seven years of exclusivity, rather than 12 years under current law. It also would prohibit additional periods of exclusivity for brand biologics due to minor changes in product formulations, a practice often referred to as “evergreening.”
Pharmaceutical Research and Manufacturers of America (PhRMA) Senior Vice President Matthew Bennett said in a statement that the budget “is bad for patients, bad for innovation, and bad for the economy.”
He said the budget “would jeopardize medical advances and economic growth by reducing the incentives to invest in the development of new biologic medicines.”
“The President's budget also proposes to restrict agreements that allow generics to reach the market before brand patents expire,” Bennett said. “This interference with settlements of complex legal issues creates an uncertain business environment and can lead to higher costs for consumers.”
He said “the right path is to work toward policies that benefit patients and the economy instead of continuing to promote counterproductive proposals that would undermine both the biopharmaceutical research sector and the Administration's own goals of creating new medical advances, promoting innovation and creating jobs.”
The Generic Pharmaceutical Association said in a statement that it welcomes the budget, hailing the recognition of several cost-saving measures that embrace generic medicines. It urged Congress, however, to reject other provisions that would increase drug costs and dampen generic competition.
“This budget affirms the cost-saving role that generic alternatives can play,” Ralph G. Neas, president and chief executive officer of GPhA, said. “By maximizing the cost savings of biosimilar medicines and encouraging increased generic use by key populations, such as those in government programs, we know that the government can save billions.”
GPhA said it urges consideration of the remaining cost-saving measures, outlined in a letter sent by the association to Congress in March. Those include closing the loopholes in the current risk evaluation and mitigation strategy (REMS) policy; passing policy prohibition against state carve-outs that block generic access; integrating incentives to improve generic utilization/adherence in chronic disease management reforms; and growing Medicaid payments to states that increase the use of the least-costly drugs available.
“Taken together, these solutions hold the promise to save the government additional tens of billions of dollars,” GPhA said.
However, GPhA said it “strongly opposes the patent settlement ban in the budget, which is based on outdated assumptions and faulty methodology.”
The Advanced Medical Technology Association (AdvaMed) “is carefully examining the Administration's budget proposal for its impact on medical technology companies and the patients they serve,” Stephen J. Ubl, president and chief executive officer of AdvaMed, said in a statement. “While we appreciate the need to address the deficit, the medical technology sector has already borne the brunt of significant reimbursement cuts and the $30 billion device tax.”
Ubl said AdvaMed is “deeply concerned that some of the policy proposals in the budget such as reductions in payments for clinical lab services and for durable medical equipment in Medicaid and, if adopted, unprecedented prior authorization for advanced imaging, will chill continued medical innovation affecting current and future Medicare beneficiaries as well as significantly harm access to life-saving, life-enhancing medical technology.”
“We look forward to discussing these issues with the Congress and the Administration to find constructive solutions as consideration of the budget moves forward,” Ubl said.
By Bronwyn Mixter
The president's FY 2014 budget for FDA is at http://www.hhs.gov/budget/index.html.
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