Washington Focus

FDA Funding Hangs in the Balance as Congress Struggles with FY 2023 Budget, User Fee Reauthorization

Aug. 30, 2022 – When members of the House and Senate return to Washington Sept. 6 following the Labor Day holiday, they face competing priorities and tight timeframes to take action on the federal budget and user fees, which expire on Sept. 30. Failure to pass the fiscal year 2023 (FY 2023) budget and reauthorize user fees would jeopardize the Food and Drug Administration’s ability to operate, because roughly half of the agency’s funding comes from the federal budget and the other half comes from user fees.

“Very definitely, this is ‘no way to run a railroad,’ as the saying goes,” according to Coalition for Healthcare Communication Executive Director Jon Bigelow. “The delays in dealing with federal budget appropriations harm all departments and agencies in government, of course, but the FDA is especially affected because of the need to reauthorize user fees this year and the imminent danger of having to furlough a large proportion of its staff,” he said.

Recently the House and Senate reached a compromise on their different versions of the user fee reauthorization bills. This is a positive step, but different instructions on important policy and program issues still need to be resolved.

With the reauthorization not yet across the finish line, and with just days to go before the current user fees expire, there are ripple effects within the FDA. Specifically, FDA employees whose salaries are paid by user fee funds need to be provided with 60 days’ notice before any layoff. The agency has delayed sending those notices, counting on finding ways to stretch current funding into early November, but there is a limit to how far it can stretch the budget or prevent layoffs.

“The prospect of  furloughs or layoffs is obviously bad for staff morale and a barrier when trying to hire talent for unfilled positions,” Bigelow explained.

Meanwhile, the appropriations bills for the FY 2023 budget are held up, with no agreement to date on total spending for the federal government as a whole. The House has approved an FY 2023 appropriation of $3.645 billion in budget authority for the FDA, a 10-percent increase that is slightly more than what President Joe Biden requested. The Senate is considering a draft appropriations bill with $3.545 billion in budget authority for FY 2023, which would be a 7-percent increase.

These differences in the total numbers and in the breakdown of spending need to be resolved between the House and Senate for the federal budget to move forward. Until this happens, Bigelow asserted, the FDA is being held hostage to other priorities, including the level of defense spending and Sen. Joe Manchin (D-W.Va.) seeking energy project permitting provisions as a condition of his recent support for the Inflation Reduction Act.

With so much unresolved, there appears to be little-to-no chance this will be done on time. The timeline may be further complicated by Republicans in Congress who expect gains after the November midterm elections; these members may be motivated to delay budget negotiations until January 2023.

In past years Congress has missed the Sept. 30 budget deadline and passed Continuing Resolutions, which hold spending at prior-year limits for some months. It is likely to do so again, Bigelow predicted.

“This situation is particularly ridiculous, given there is strong, bipartisan agreement on the general levels of funding for the FDA from both the budget and the user fees,” he remarked. “The FDA can’t operate efficiently at a time of increasing public health demands nor solve its recruiting and staffing issues if it can’t count on its funding.”