FDA SOS Act Makes Reappearance as Concern Over Sequestration Grows

By Kurt R. Karst –      

Amidst concern that the 2013 sequester could make a repeat appearance and reduce both FDA’s budget from Congress and industry-financed user fees to the Agency, Representatives Anna Eshoo (D-CA) and Leonard Lance (R-NJ) have introduced legislation to exempt FDA user fees from the ravages of sequestration.   Sequestration refers to automatic spending cuts to the U.S. federal budget that went into effect as a result of the Budget Control Act of 2011.  The Congressional Budget Office recently opined that sequestration will not be required for 2015; however, that is by no means certain and depends on several factors (see here). 

The FDA Safety Over Sequestration Act of 2015, or FDA SOS Act (H.R. 1078), would amend the Balanced Budget and Emergency Deficit Control Act of 1985 – the law first establishing sequestration procedures – to exempt user fees collected pursuant to FDC Act Sections 736 (Prescription Drug User Fee Act), 738 (Medical Device User Fee and Modernization Act), 740 (Animal Drug User Fee Act), 741 (Animal Generic Drug User Fee Act), 744B (Generic Drug User Fee Amendments), and 744H (Biosimilar User Fee Act).  “The FDA’s user fees are 100 percent private sector dollars,” wrote Rep. Eshoo in a press release.  “If the intent of sequestration is to limit public spending, withholding private monies is counterintuitive.  Whether one agrees or disagrees with sequestration, private dollars should not be held hostage by the policy.  It discourages investment in medical innovation and denies patients access to timely and potentially lifesaving therapies.”  The FDA SOS Act is supported by several organizations and companies, including PhRMA, BIO, AdvaMed, the Medical Device Manufacturers Association, the California Healthcare Institute, the Leukemia Lymphoma Society, Gilead, Genentech, Patient Services Inc., and the National Health Council.

H.R. 1078 is the second legislative go-around at saving industry user fees from sequestration.  As we previously reported, Reps. Eshoo and Lance introduced a nearly identical bill in July 2013 (H.R. 2725), which was later introduced in the Senate as the FDA User Fee Protection Act (S. 1413).  Neither bill was passed; however, the Consolidated Appropriations Act of 2014 (Pub. L. No. 113-76) permitted FDA in 2014 to use fees that were withheld because of the 2013 sequester.  Enactment of the FDA SOS Act would avoid Congress having to go through that procedure again with respect to FDA.