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Regulatory Focus™ > News Articles > More than $110 Million in FDA User Fees to be Seized Under Sequestration

More than $110 Million in FDA User Fees to be Seized Under Sequestration

Posted 17 September 2012 | By Alexander Gaffney, RAC 

The US Food and Drug Administration (FDA) stands to lose more than $300 million in funding and industry-paid user fees under a budget sequestration process scheduled to come into effect in January 2013, according to a new report released by the Office of Management and Budget.

The report, "OMB Report Pursuant to the Sequestration Transparency Act (STA) of 2012," came in response to legislators' demands that the executive branch release more information regarding the impact of mandatory budget cuts.

Those cuts were established in late 2011 under the Budget Control Act (BCA), which stipulated that the government would need to cut $1.2 trillion from the federal budget under the coming decade and mandated that most agencies submit to cuts.

OMB's 14 September report details that FDA would stand to lose more than just its congressionally appropriated funding during the 2013 fiscal year. Of the $318 million expected to be taken from FDA, approximately $112 million would come from user fees paid by industry with the expressed intent that they be used to expedite the review of new drug and device applications, while the remaining $206 million would come from FDA's appropriated funding.

The total amount to be taken from FDA represents about 8% of its budget. Just $67 million of FDA's budget would be exempt from the sequestration cuts.

The industry would presumably still be required to pay the user fees, but FDA would be unable to spend them. The funds would instead be sent to the treasury and used to pay down the deficit, or for other functions.

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