FY 2005 Budget in Brief

Food and Drug Administration

On this page:
Salaries and Expenses
Protecting the Food Supply
Medical Devices
Human Drugs and Biologics
Facilities
Management Improvements

The FY 2005 budget request for FDA is $1.8 billion, a net program level increase of $149 million.  Within this total, there are program increases of $179 million, partially offset by $30 million in management and other savings.  Of the funds requested, $350 million will be derived from industry-specific user fees.  Significant increases are included to ensure the safety and protection of our food supply; and accelerate the availability of new, safe and effective drugs and medical technologies, including biodefense medical countermeasures.  The budget also supports FDA's administrative consolidation efforts – including moving 1700 staff into their consolidated headquarters currently under construction at White Oak in Maryland.

Protecting the Food Supply

FDA is responsible for protecting the food supply directly through its oversight of approximately 80 percent of the U.S. food supply, and indirectly through it's efforts to improve the health of food animals regulated by the U.S. Department of Agriculture (USDA).  In FY 2005, through its Foods program, FDA will ensure consumers are protected against intentional and accidental risks against the safety of our food supply and also ensure the safety of dietary supplements and cosmentics.  For this work, the budget includes $470 million, a net increase of $60 million.  The Animal Drugs and Feeds program protects the health and safety of all food producing, companion or other non-food animals; and, assures that food from animals is safe for human consumption.  This program is responsible for ensuring the availability of safe and effective veterinary drugs and has the primary role in Bovine Spongiform Encephalopathy (BSE) or "Mad Cow" prevention efforts.  For this work, the budget includes $99 million in the Animal Drugs and Feeds program, a net increase of $11 million.  Of this total, $7 million is derived from industry-specific animal drug premarket review fees.

Food Defense: Over the past three years, FDA has bolstered the nation's food defense through increases in port security, food import inspections and additional food security personnel.  Specifically, the Agency hired more than 655 additional food security personnel, and, as a result, achieved a five-fold increase in field import examinations between FY 2001 and FY 2003.  This feat was accomplished in part as a result of the heightened alert during Operation Liberty Shield when FDA ramped up domestic and import inspection coverage – increasing import inspections to 80,000 by staffing 50 more ports of entry for a total of 90.  FDA will soon finalize and implement provisions of the Public Health Security and Bioterrorism Preparedness and Response Act of 2002.  These new safeguards will require registration of food facilities, advance notice of food imports, improved record-keeping for imported foods, and will provide authority to detain food when there is credible evidence that it poses a threat of serious adverse health consequences or death.

The budget requests a $65 million major expansion for a total of $181 million dedicated to FDA's efforts to protect Americans from risks of deliberate food contamination.  This government-wide strategy will be in coordination with the Department of Homeland Security and the U.S. Department of Agriculture's Food Safety and Inspection Service with the common aim of increasing the ability to detect threats to our nation's food supply.  Within the increase, $35 million will be directed to efforts to increase analytic surge testing capacity for biological, chemical and radiological threat agents by enhancing the Food Emergency Response Network (FERN).  When completed, FERN will encompass a nationwide network of Federal and State laboratories, greatly promoting the country's ability to respond immediately to terrorist attacks.  $15 million of the increase will fund research on technologies capable of detecting and preventing threats to the food supply.  Development of these protection strategies will shield the food supply from potential attacks and enable rapid response if needed.  To reduce the risk of contaminated food products entering domestic commerce, $7 million will be devoted to increasing import inspectional activities and domestic food establishment inspections.  In FY 2005, FDA will conduct 97,000 import field inspections, a more than 60 percent increase over FY 2004 and seven times the amount in FY 2001.  FDA will also conduct over 25,500 domestic exams, nearly eleven times the amount in FY 2001.  In addition, $3 million will be used outside Foods to support crisis response operations. 

FDA will also direct an added $5 million to finance its role in the government-wide biosurveillance effort designed to provide the earliest possible detection of the international release of deadly pathogens into food, water, or the environment.   This increase will help coordinate existing food surveillance capabilities with public health and environmental officials at the State and national levels under a unified system.

Bovine Spongiform Enciphalopathy (BSE) "Mad Cow Disease":  In FY 2005, the budget seeks an additional $8 million in Animal Drugs and Feeds to expand BSE or "Mad Cow Disease" prevention efforts for an agency-wide total of $30 million.  Since contaminated feed is the only known way for BSE to spread among cattle, efforts will be expanded to ensure their food supply is safe and free of potentially contaminated products.  The contamination of cattle feed occurs when byproducts, derived from a contaminated animal, are included in animal foods.  All firms handling potentially contaminated products are inspected annually to ensure they are not distributed to animal feed mixers, providing assurance of their exclusion from the animal food supply.  In response to the recent case in the State of Washington, FDA halted the distribution of byproducts derived from the contaminated cow, preventing their entrance into commerce.  In other program areas, $6 million of the agency-wide total will ensure substances used in the production of drugs and dietary supplements are free of contamination, and donated blood and tissue products are safe.

Animal Drugs Premarket Review:  In FY 2004, Congress enacted the Animal Drug User Fee Act (ADUFA).  The budget includes $8 million derived from industry-specific fees, bringing the total spending on animal drug premarket review to $36 million.  These funds will allow FDA to improve review times on 90 percent of original new animal drug applications by 35 days.

Medical Devices

The FY 2005 budget includes $217 million, a $26 million increase in budget authority to ensure medical technologies are safe, effective and available to Americans as quickly as possible.  This level of funding is consistent with the intent of the Medical Device User Fee and Modernization Act of 2002 (MDUFMA).  Including $35 million derived from industry-specific user fees, the budget includes a total of $252 million for the Medical Devices program.
The Medical Devices increase will support the necessary investments, including hiring 50 additional staff, to accomplish review goals that become increasingly aggressive through FY 2007.  In FY 2005, FDA expects to meet goals related to the review of applications for improvements to existing devices and certain new devices that manufacturers claim are as safe and effective as ones currently in the marketplace.  FDA will review 75 percent of applications for each of these application types within 180 and 90 days respectively.  This percentage of applications reviewed will become more challenging each year through FY 2007.  For breakthrough technologies and other new, innovative devices, ambitious review goals take effect in FY 2006, and in FY 2007 when decisions will be made on 90 percent of applications within 320 days.

Human Drugs and Biologics  

In FY 2005, the budget includes $499 million, an increase of $23 million for the Human Drugs program and $173 million, an increase of $4 million in Biologics.  Of the total spending on these activities, $253 million will be from industry-specific user fees.  These funds will ensure the safety and efficacy of new and existing human drugs and biologics – helping to make medicines safer, more affordable and more available.  All new drugs will be evaluated for safety and efficacy before entering the market and monitoring efforts will be directed toward the 10,000 drugs that are already on the market to be sure they continue to meet the highest standards of safety and efficacy.  In addition, existing and emerging biological products, including whole blood and blood products; vaccines; and therapeutic products, including cells, gene therapies, and tissues will be assessed for safety and effectiveness.  In FY 2003, FDA approved 466 new and generic drugs and biological products, many of which represent significant therapeutic advances.

Biodefense Countermeasures: An increase of $5 million will be used to accelerate the availability of safe and effective biodefense countermeasures.  The first request for proposals for procurement of a new generation anthrax vaccine through Project BioShield will be initiated shortly.  FDA has been working closely with NIH and industry researchers, and must expand its work on this and other needed countermeasures.  In FY 2005, FDA anticipates dedicating a total of 119 staff years in the Biologics program and 81 in the Drugs program to these critically important activities.

Patient Safety: The budget includes $77 million to finance efforts targeted at reducing preventable adverse events.  Improving the reporting of adverse events that were potentially related to the proper or improper use of regulated products is a major function of the Agency.  Efforts are now underway to take that a step further, helping medical providers avoid medical errors.  It is estimated that 45 percent of drug-related medical errors occurred when the wrong drug was dispensed.  New requirements for bar code labels on prescription drugs will enable hospitals and pharmacies to avoid many of these errors by implementing new bar code controls.
Increased attention will be directed towards ensuring that new drugs and biologics are not only safe and effective for use in adults, but also in the pediatric population.  In FY 2003, manufacturer-requested pediatric studies were used to change the labels of 21 medications, making them available for use by children.  In FY 2005, efforts to implement the Pediatric Research Equity Act will result in pharmaceutical companies conducting pediatric studies on new drugs and biologics, as well as provide information on the appropriate pediatric dosage and administration.

Generic Drugs: In FY 2005, $53 million is included within the Drugs program to accelerate the availability of safe and effective generic drugs. Generic drugs that are approved are just as safe and effective as their brand-name counterparts, and they often cost 70 percent less.  New regulations have been implemented to prevent inappropriate delays related to patent filings – speeding the availability of generic drugs to American consumers and saving them an estimated $35 billion over the next ten years. In FY 2005, it is expected that 399 generic drug applications will be approved, with an 18-month average review time.  This is a 50 percent increase in approvals and 14 percent acceleration in review time since FY 2002.

Prescription Drug User Fee Act (PDUFA):  The budget includes $284 million from the Prescription Drug User Fee Act (PDUFA) fees, of which $245 million is available for the Human Drugs and Biologics programs and the remaining $39 million for rent and other costs related to the management and operations of the program.  The PDUFA program has been highly successful in reducing the time needed to review applications for new drugs and biologics, while maintaining the safety standards essential to the public's health.  These fees have also enabled the provision of substantially more technical assistance, advice, and rapid responses to special inquiries during the drug development and testing period.  As a result, industry has been able to significantly shorten the time needed for drug development and testing.

Facilities

The FY 2005 budget includes $186 million for rent and facilities for staff, a net increase of $28 million.  This includes $123 million for rental payments to the General Services Administration, and $63 million for costs related to rent and construction.  No new appropriations are requested in FY 2005 for facility repair needs, utilizing funds available from prior years instead.
New Headquarters Facility:  The FY 2005 budget includes $33 million for the consolidation of FDA's headquarter facilities into their new campus the General Services Administration (GSA) is constructing at White Oak in suburban Maryland.  These funds will support telecommunications cabling and equipment, records management consolidation and office hardware and equipment.  In December of FY 2004, the Agency completed the move of 125 scientists and laboratory equipment related to drug review into their new Life Sciences laboratory.  In FY 2005, 1,700 of Center for Drug Evaluation and Research (CDER) administrative personnel will be relocated to the new CDER Office building that is 50 percent complete and will be ready for occupancy next April.  The FY 2005 GSA budget includes $88 million for White Oak – directed primarily at building a medical device and radiological products laboratory to be occupied in FY 2006.

Management Improvements

Consistent with the President's Management Agenda (PMA), the FY 2005 budget request also includes cost savings from FDA completing implementation of its new shared services approach for internal administrative support functions – i.e., facilities management and operations, telecommunications, procurement, travel, information technology support and project management.  This will include customer advocated, service level agreements, governance boards, etc., to ensure the quality as well as the cost-effectiveness of these services.  These efforts will achieve $23 million in savings throughout the Agency.  FDA's budget also includes a $14 million increase in pay.

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