Washington Focus

Federal Government and FDA Operating under Continuing Resolution as FY 2021 Begins

Oct. 5, 2020 – Because Congress has not yet passed a budget, the federal government began fiscal year (FY) 2021 on Oct. 1 operating under a Continuing Resolution (CR). The CR sets a new deadline of Dec. 11 for passage of the full budget, but a further extension until February or March is very possible. As a result, for at least the first quarter of this fiscal year and possibly well beyond that, the Food and Drug Administration (FDA) will not see any budget increase and will have limited ability to begin new initiatives.

“Lost in the past week’s noise about the first Trump-Biden debate, the nomination of Judge Amy Coney Barrett to the Supreme Court, and President Trump’s COVID-19 infection was the fact that yet again Congress has been unable to agree on a budget,” noted Jon Bigelow, executive director of the Coalition for Healthcare Communication. “This failure, essentially freezing most spending across our government at prior-year levels without considered review of relative needs, is especially unfortunate at a time when the FDA is dealing with the need to review and approve COVID-19 tests, vaccines and therapeutic agents, in addition to its normal and considerable workload guarding food security and regulating pharmaceuticals.”

President Trump had proposed $3.206 billion in budget authority for the FDA for FY 2021, which would represent an increase of about $46 million (1.5 percent). In July, the House of Representatives approved an increase of about $41 million, which would set the budget authority at $3.210 billion. The Senate has not yet acted to either approve or change this funding (nor, for that matter, has it approved any of the 12 major appropriations bills that will determine discretionary spending by the federal government). Especially given heated battles over a U.S. Supreme Court nomination and another round of COVID-19 relief, further action is unlikely until the next deadline nears, and may be delayed until a new Congress convenes in January.

The CR continues the budget authority funding at last year’s level of $3.168 billion. In addition, the FDA also expects about $1.9 billion in user fees for medical products; these fees will continue to be collected but may be spent only for the purposes outlined in the authorizing legislation, such as the Prescription Drug User Fee Act. The FDA also has another $70 million in funds to spend on specific medical product development goals set in (and funded by) the 21st Century Cures Act, plus $700 million in user fees related to tobacco.

Because a CR continues funding at the prior budget’s levels, ordinarily it would prevent the FDA from spending on new initiatives. A special concern for the FDA is that, as part of one of the COVID-19 relief acts passed last spring, the FDA was given authority to reform the over-the-counter (OTC) monograph process beginning on Oct. 1, using funds to come from a new set of user fees. The CR includes a clause allowing these user fees to begin. Another provision in the CR provides a special extension, also to Dec. 11, for the Pediatric Priority Review Voucher (PRV) program; otherwise this would have expired at the end of the last fiscal year.