Obama’s FY 2017 Budget Request: $5.1B for FDA, New Ways to Tackle High Drug Prices

Posted 09 February 2016 | By Zachary Brennan 

Obama’s FY 2017 Budget Request: $5.1B for FDA, New Ways to Tackle High Drug Prices

President Barack Obama unveiled his final budget request on Tuesday, and though Republicans have said it’s dead on arrival, the US Food and Drug Administration (FDA) would receive an 8 percent increase in funds to help further address drug compounders, device submissions and supply chain security. New ways to combat high prescription drug prices were also included in the request.

The overall request from Obama and FDA includes a net increase of $14.6 million in budget authority and $268.7 million in user fees for tasks such as improving medical product safety and quality, and implementing the FDA Food Safety Modernization Act (FMSA).

The agency also previously requested $75 million in new mandatory funding to support the National Cancer Moonshot initiative led by Vice President Joe Biden.

Medical Product Details

The request for $2.8 billion in FY 2017 for FDA’s Medical Product Safety and Availability programs is an increase of $116.2 million above the FY 2016 enacted level. The request includes $1.3 billion for budget authority – an increase of 0.2 percent or $3.2 million compared to the FY 2016 enacted level -- and an increase of $38 million in user fees.

With the requested increase, FDA says it will establish the National Medical Device Evaluation System (NES), which it already said is a strategic priority for this year, to identify patients who benefit from specific types of devices. FDA also said it will continue to invest in precisionFDA, which provides a crowdsourced, cloud-based platform to advance regulatory science around NGS-based analytical tools and datasets.

The requested increase in funding would also be used to support speeding up ongoing reviews of medical device applications, as well as addressing public health safety concerns associated with antimicrobial drug use in animals to better protect antibiotic effectiveness for both human and animal populations.

In addition, the FY 2017 request will allow FDA to improve its oversight of human drug compounding through increased inspection and enforcement activities, policy development, and state collaboration and coordination.

“These efforts are in concert with other top priorities such as identifying solutions to prevent prescription opioid abuse, speeding the access to safe and effective generic drugs and reducing the number of drug shortages,” FDA said.

New User Fees

Meanwhile, as a way to further protect the security of the drug and device supply chains, FDA has requested $6 million as part of a new user fee program that would increase surveillance of FDA-regulated commodities at express courier hubs. About 20%, or $1.2 million, of this proposed fee will support imported food safety, while almost 80%, or $4.8 million, will support imported medical product safety.

FDA is also proposing an increase of $4.3 million for the export certification program by increasing the statutory maximum for the certification fee from $175 to $600 per certification and including an inflation adjustment factor.

“Because of this cap and increases in the costs of maintaining the export certification program since the program’s inception, the certification program expenditures significantly exceed the current revenue of the program,” FDA says.

The agency is also seeking an additional $3 million in building and facilities funding to enable the agency to carry out its mission and respond to food safety and medical product emergencies.

Drug Pricing

As far as stemming the tide of rising drug prices, the request also seeks to grant new authority to Health and Human Services Secretary Sylvia Burwell to suspend coverage and payment for questionable Medicare Part D prescriptions and increase data collection to demonstrate the effectiveness of medications in the Part D program. The request also provides states with a new, voluntary tool to negotiate lower drug prices through the creation of a federal-state Medicaid negotiating pool for high-cost drugs.

The request also would provide Burwell with the authority to require drug manufacturers to publicly disclose certain information, including research and development costs, discounts and other data as determined through regulation. It also includes three previously proposed reforms, all of which were previously blocked, including lowering the exclusivity period for brand biologic manufacturers to seven years, rather than 12 years under current law, and by prohibiting additional periods of exclusivity for brand biologics due to minor changes in product formulations.

In addition, the budget proposes to accelerate discounts for brand name drugs for seniors who fall into Medicare’s coverage gap by increasing manufacturer rebates from 50 percent to 75 percent in 2018.

Cancer Moonshot, NIH, Zika

The increase of $75 million in mandatory funding for FDA under Biden’s Moonshot initiative would help FDA create a virtual Oncology Center of Excellence to leverage the skills of regulatory scientists and reviewers with expertise across the gamut of FDA-regulated drugs, biologics and devices.

“This center will expedite the development of novel combination products and support an integrated approach in: evaluating products for the prevention, screening, diagnosis, and treatment of cancer; supporting the continued development of companion diagnostic tests, and the use of combinations of drugs, biologics and devices to treat cancer; and developing and promoting the use of methods created through the science of precision medicine,” FDA says.

Overall, Obama has requested $33.1 billion for the National Institutes of Health (NIH), which represents a $1.1 billion increase over the recently approved 2016 NIH budget, which saw the largest funding boost for NIH in more than a decade.

Inside those NIH appropriations, NIH’s brain research initiative would receive $195 million, a $45 million increase over the current year, to further understanding of psychiatric and neurological disease, including Alzheimer’s disease, autism, depression, schizophrenia and addiction. 

About $680 million would also be used to try to expand clinical trials to include more minorities and others suffering from higher cancer rates. The additional funds would also be used to develop new vaccine technology and research into the causes, treatment, prevention and detection of cancer.

In addition to federal agency budgets, the Obama administration is seeking $1.8 billion in emergency funding to respond to the Zika virus. Nearly half of that, $828 million, would go to the Centers for Disease Control and Prevention to reduce transmission in the most vulnerable parts of the US.

The request also is looking for about $500 million to continue and expand current state-level prescription drug overdose prevention strategies, and $1 billion in new mandatory funding over the next two years to boost efforts to help individuals seek treatment, successfully complete treatment and sustain recovery from addiction to prescription drugs.

FDA Justification of Estimates for Appropriations Committees

Obama Budget Proposal

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