Regulatory Focus™ > News Articles > FDA Could Soon Have Better Information to Plan for Massive Budget Cuts

FDA Could Soon Have Better Information to Plan for Massive Budget Cuts

Posted 08 August 2012 | By Alexander Gaffney, RAC 

Officials at the US Food and Drug Administration (FDA) may soon have a better sense of the impact of an upcoming budget sequestration measure thanks to a new piece of legislation signed into law 7 August by President Barack Obama.

The bill, the Sequestration Transparency Act of 2012, comes as partisan wrangling over the impact of the Budget Control Act of 2011 comes to a head. The act was the culmination of a tense budget standoff between congressional Democrats and Republicans, and set into motion a trigger for automatic cuts to come into effect if Congress was for any reason unable to come up with $1.2 trillion in savings over the coming decade.

One of the potential issues related to the law: a little-known piece of legislation known as the Worker Adjustment and Retraining Notification (WARN) Act. The legislation requires 90 days of advance notice if an employer-including FDA and regulated industry-is expected to need to lay off employees. Because the Budget Control Act requires an approximately 7.8% cut across all agencies, contractors, grant recipients and agency staff could be let go if the cuts go into effect.

Legislators on both sides of the aisle have expressed concern regarding the political fallout of the WARN Act, saying it could come right before the election or be influenced by incorrect assessments of the impact of the cuts.

Planning for Coming Cuts

Thus was created the Sequestration Transparency Act.

The bill requires the president to submit a report to Congress detailing an estimate of the cuts necessary to comply with the terms of the

In addition, the report would be required to include an estimate of the budget sequester on each account-in this case, an agency budget such as FDA's-and the impact of the cuts on each program's projects and activity level.

The report will be due by 7 September-potentially around the same time an agreement on the fiscal year 2013 budget might be unveiled barring any delays. Congressional negotiators are reportedly nearing such an agreement to fund the government for six months at current levels, though it has yet to be signed into law.

The White House Office of Management and Budget (OMB) on 27 July instructed agencies to begin preparing for the cuts on a tentative basis, noting it would be difficult to predict their exact funding levels in advance of the 2013 budget's passage. Should both the report and the budget emerge around the same time, agencies may find themselves in a much better situation to plan in advance for potential cuts.

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