Is President Obama's $4 Billion Budget a Big Enough Paddle for the FDA?

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Reported by Annette Kreuger, Industrial Info Resources (Sugar Land, Texas)--Despite an announced freeze on discretionary spending in the 2011 budget, President Barack Obama has proposed a 23% jump to $4.3 billion in funding for the Food and Drug Administration (FDA). While this is an impressive sum by almost any estimation, in actuality the amount is only a fraction of the estimated $1 trillion worth of products (drugs, medical equipment and about 80% of the food supply) that the beleaguered agency oversees. To put this figure in perspective, the FDA regulates products that account for approximately 25 cents of every dollar spent by U.S. consumers.

Approximately a third--$1.5 billion--of the proposed 2011 FDA budget is forecast to come from user fees paid by businesses that make payments for FDA services, such as reviewing generic drug applications and mandatory reinspections of drug-manufacturing plants. This would be a jump of 63% from the $920 million the agency now collects annually for these services. A portion of the proposed funds would go to the immediate increase of the agency's workforce by at least 10% percent by hiring more than 1,200 full-time employees.

As discussed in more detail in the Industrial Info 2010 Pharmaceutical-Biotech Outlook, even if the desperately needed increase in funding passes, it remains to be seen if the FDA will succeed in establishing and implementing plans to address the myriad challenges that the agency has faced for more than a decade. The agency has a riddled past when it comes to leadership, having been without a leader for half of the past dozen years.

After having served only two years, the previous commissioner, Dr. Andrew C. von Eschenbach, resigned shortly before President Obama took office in January 2009. After months of speculation, President Obama finally named his picks for the top two jobs at the embattled agency. Dr. Margaret Hamburg, a former New York City health commissioner, is the new FDA commissioner, and Dr. Joshua Sharfstein, Baltimore's former health chief, is the new deputy chief. The duo faces the daunting task of taking over the helm of an agency that the government's own investigators have judged to be "at risk."

Obama could not delay the appointments a moment longer, as the agency was at the time reeling from the recall of hundreds of products tied to salmonella-tainted peanuts that sickened more than 500 people, including numerous children, and possibly led to eight deaths. Public confidence is at an all-time low in the FDA's ability to keep the population's food and drug supply safe. The onset and rise of the swine flu and the apparent lack of available vaccine only added to the mix.

A Government Accountability Office (GAO) report issued in January 2009 stated that the FDA "is facing significant challenges that compromise its ability to protect Americans from unsafe and ineffective products." The new commissioner also will have to deal with a move to split off the FDA's food-safety division, creating a completely new agency.

The GAO report listed other challenges for the FDA, including improving inspections of foreign drug-manufacturing plants and ensuring that drug companies that win provisional approval to market products deliver on promised safety studies.

A good place for the FDA to start would be in addressing an alarming accusation cast by the GAO in November 2009 that the agency does not know exactly how many foreign drug-manufacturing plants even exist. This is a serious problem, as these "phantom" companies, located in places such as China and India, supply drug products consumed in the U.S.

Industrial Info Resources (IIR) is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy related markets. For more than 26 years, Industrial Info has provided plant and project spending opportunity databases, market forecasts, high resolution maps, and daily industry news.