The Food and Drug Administration: Budget and Statutory History, FY1980-FY2007
Released: 2008-01-29T00:00:00

Introduction

There is growing debate about whether the Food and Drug Administration (FDA) has the ability to accomplish its mission with the resources provided by congressional appropriations and industry user fees. FDA plays a central role in protecting the public health in the United States by regulating most of the food supply and vitally important medical products, including drugs, devices, and biologics that affect American lives on a daily basis. A 2006 report on drug safety by the Institute of Medicine (IOM) made the following observation in a chapter devoted to FDA resources:

The Food and Drug Administration lacks the resources needed to accomplish its large and complex mission today, let alone to position itself for an increasingly challenging future.... There is little dispute that FDA in general is ... severely underfunded.

Several individuals who previously held high-ranking positions in FDA or the Department of Health and Human Services (HHS) have organized advocacy groups to lobby for increased funding for the entire agency. These groups present data to support their position that FDA has fallen behind in overall funding in the last 25 years. They warn that the agency is at risk of being unable to adequately fulfill the many statutory responsibilities that Congress has assigned it. While the call for more resources has been heard from many quarters, including some in Congress, some agency critics are concerned about inefficiencies within FDA and that it needs to do a better job managing what resources it does have.

In general, former FDA Commissioners and interest groups argue that FDA is underfunded for its mission. Calls for cutting the FDA budget or maintaining it at the current level come from organizations, like CATO and the Hoover Institute, that propose limitations on FDA's authority and, therefore, the need for funding. The main voices in support of FDA budget levels, past and present, have been representatives of the various presidential administrations. Over the last 25 years, incumbent FDA Commissioners, when asked during congressional hearings about the adequacy of the FDA budget, have testified that the budget is sufficient to accomplish the job before the agency. However, in non-congressional venues, those same Commissioners have expressed concerns about the constraints on FDA resources and that the agency's core budget has not increased in concert with its rising responsibilities. They have expressed concern about whether the agency can continue to be considered the world's premier consumer protection agency when it is forced to focus its priorities based on the current level of resources that it receives.

This report examines FDA's appropriations history and traces the evolution of the agency's statutory responsibilities. The information is presented to help inform the ongoing discussion about FDA. CRS takes no position on whether the agency has the necessary resources to meet its statutory responsibilities.

The report first provides an overview of FDA's budget and personnel levels from FY1980 through FY2007. That is followed by a more detailed examination of the budget and personnel level over the same period in each of the agency's major activity areas. For each activity area, the report also summarizes the major pieces of legislation that have been enacted since FY1980. Unless noted otherwise, all budget data have been adjusted for inflation to permit comparison across the 28-year period under investigation. The information presented in this report is intended to facilitate an examination of the impact that administrations' budget requests and congressional decision making have had on the ability of FDA to accomplish its public health mission.

Agency Scope and Congressional Jurisdiction

FDA regulates a wide range of products valued at more than $1 trillion in the U.S. economy. About 25% of American consumer dollars are spent on these FDA-regulated products. As one of the agencies within HHS that comprise the Public Health Service, FDA is responsible for the safety of most foods (human and animal) and cosmetics. FDA also regulates both the safety and the effectiveness of human drugs, biologics (e.g., vaccines), medical devices, and animal drugs.

The Federal Food, Drug, and Cosmetic Act (FFDCA), as amended, is the principal source of FDA's authority. The agency also derives some of its authority from certain provisions in other laws, most notably the Public Health Service (PHS) Act. Under the PHS Act, FDA licenses biological products and performs other activities, such as setting standards for mammography quality. An extensive list of the public laws that significantly affect FDA activities is in Table A-4 in the Appendix .

In addition to statutory responsibilities that directly involve product regulation, the FDA must also comply with statutory requirements affecting all or most federal executive agencies, regarding such matters as information management, strategic planning, performance measurement, financial management, property management, and human resources management. Additional requirements apply only to those agencies, including FDA, that have regulatory responsibilities. FDA's role in implementing provisions of some general federal management laws is substantial. For example, the agency supports more than 50 advisory committees, most of which are mandated in statute and are subject to requirements of the Federal Advisory Committee Act. Also, the agency reports that in FY2006 it processed more than 20,000 information requests pursuant to requirements of the Freedom of Information Act.

The congressional authorizing committees that oversee FDA activities are those with jurisdiction over public health issues: the Senate Committee on Health, Education, Labor, and Pensions, and the House Committee on Energy and Commerce. Because Medicare pays for FDA-regulated products, the agency also falls under the jurisdiction of the Senate Committee on Finance and the House Committee on Ways and Means. Other committees that exercise oversight roles regarding FDA include the House Committee on Oversight and Government Reform, and the Senate Committees on Aging, Homeland Security and Governmental Affairs, and the Judiciary.

The House and Senate Appropriations subcommittees on agriculture have jurisdiction over FDA's appropriations. This arrangement reflects, in part, the agency's origin within the Department of Agriculture as the Bureau of Chemistry in 1862. Since 1940, FDA has administratively been part of federal health agencies, specifically HHS and its predecessors.

Advocates for increasing FDA funding point to this jurisdictional separation of FDA appropriations decisions from the rest of PHS and HHS as a contributing factor to what they see as underfunding. In 2002, former Acting FDA Commissioner Michael Friedman recommended moving the FDA budget process from the purview of the agriculture appropriations subcommittees to the Labor, Health and Human Services, Education and Related Agencies subcommittees. Five years later, former FDA Commissioner Frank Young raised the same concern and made the same recommendation in congressional testimony. Former FDA Commissioner Jane Henney made a similar observation in February 2007:

[T]here are other things Congress can do that directly impact this agency's resources ... if they really wanted to look long and hard, FDA would no longer be under the purview of the Agriculture Appropriations Committees. Those people that serve on those committees do it with honor, but they do it primarily because of their interest in agricultural issues. By the time the allocations come out and the interest of the agriculture areas are satisfied, there are very limited resources that the agency [FDA] can ever hope to receive out of that process. If somebody wanted to do something bold ... it would be looking at appropriations in an area that is more compatible ... with the interests of the members of that committee particularly the ones that oversee health issues.

FDA Budget and Personnel

Overall FDA Budget

The primary indicator of FDA resources is its budget. The agency's FY2007 total budget is approximately $2 billion. The total FDA budget, also called the program level , consists of (1) direct appropriations and (2) other funds (i.e., funding from other sources that are acknowledged in the appropriations acts). Direct appropriations are the amount of funds that Congress assigns to the agency from the annual total available for appropriations as set by the budget committees. Other funds include reimbursables, cooperative research and development agreement (CRADA) resources, intra- and inter-agency services (such as the Parklawn Computer Center), mammography fees, color certification fees, export certification fees, prescription drug user fees, medical device user fees, and animal drug user fees.

FDA annually prepares budget data for Congress that it presents in the Justification of Estimates for Appropriations Committees ( Justification ) documents. FDA transmits its draft through HHS to the White House Office of Management and Budget (OMB). The final Justification documents, reflecting any HHS and OMB adjustments, are published with the President's annual budget request to Congress. The final Justifications are the major source of FDA budget figures and tables in this report. Like most federal agencies, FDA has, over time, reorganized its structure, activities, and budget accounting, which makes historical budget analysis a difficult endeavor. For further information on the difficulties in compiling a budget history of the agency, and the steps taken to address those problems for this report, see the Methodology section in the Appendix .

Until FY1992, direct appropriations formed over 95% of FDA's total program level, with other funds contributing the small remainder. A shift began in FY1992 when Congress authorized: (1) the assessment and collection of user fees from pharmaceutical manufacturers for the review of human drug and biologics applications, and (2) fees for the inspection of mammography facilities. Congress subsequently authorized the collection of user fees for the review of medical device applications in FY2002 and animal drug applications in FY2004. By FY2007, other funds, primarily user fees, accounted for almost a quarter of FDA's total program level budget.

Another indicator of agency resources is personnel, available in the Justification documents as the number of full-time equivalent employees (FTEs). This is, however, an imperfect measure of personnel strength because it is not weighted by type of position, pay grade, or responsibility, each of which would provide a different measure of the agency's human resources. FDA has described how adjusting salaries for standard measures of inflation is inadequate because of the unique elements of its staff expenses, such as higher than average employee salaries, cost of health and retirement benefits, and resources required for recruitment and retention. FTE numbers do not include contractors and, therefore, provide only a partial measure of workforce strength. If FDA's use of non-employee workers has changed during the 28-year period covered in this report, the numbers of FTEs may be an inaccurate measure of agency personnel strength.

Figure 1 shows the total FDA budget (i.e., program level) for FY1980 through FY2007, all adjusted to FY2000 dollars. The FDA program level is composed of direct congressional appropriations, what FDA calls budget authority, and other funds. Using constant FY2000 dollars allows comparisons of purchasing power over the 28-year period. The stacked bars of the figure show the two broad sources of budget dollars: direct appropriations and other funds (primarily user fees). The figure also provides FTE data over the same fiscal years: FTEs funded by budget authority and total FTEs funded at program level (budget authority plus other funds, primarily user fees).

As can be seen in Figure 1 , inflation-adjusted budget authority was relatively flat from FY1980 to FY1988, began to increase from FY1989 until FY1993 when it leveled off, coincident with the introduction of user fees in 1993. Figure 1 also shows a decline in budget authority FTEs from FY1993 to FY2001, although the total FTEs remained relatively constant due to positions funded by user fees.

Congressional intent in authorizing user fees was that these fees would supplement—rather than replace—resources provided by Congress to FDA. Level funding from Congress—without adequate allowances for inflation, mandatory salary and health insurance increases, as well as other workload-related unfunded mandates—has resulted in declines in FTEs in areas of the agency that do not receive user fees. A 2002 Government Accountability Office (GAO) report on the impact of user fees resulting from the Prescription Drug User Fee Act (PDUFA) states that:

According to FDA officials, the agency reduced staffing levels ... to cover the costs of unfunded pay raises. From fiscal years 1994 through 2001, FDA paid about $250 million to cover mandatory federal pay raises for which it did not receive increases in its appropriations. ... [T]his situation reduced the agency's ability to support activities not funded by PDUFA. FDA reduced the staffing levels for non-PDUFA activities each year, leaving the agency fewer resources to perform its other responsibilities. For example, in its budget justification for fiscal year 2002, FDA reported that inspection of medical device manufacturers has decreased and the agency does not routinely inspect the manufacturers of lower-risk products. Although FDA staffing in fiscal year 2001 was about the same as in fiscal year 1992, about 1,000 more FTEs were allotted to drug and biologic review activities in fiscal year 2001 and about 1,000 fewer FTEs were allotted to other FDA programs that ensure food safety, approve new medical devices such as heart valves and pacemakers, and monitor devices once on the market.

Figure 1 also shows that budget authority and FTEs increased markedly between FY2001 and FY2002, coincident with increased emergency funding following the domestic terrorist attacks. However, during the FY2002 through FY2007 period, while budget authority remained flat and other funds increased, FTEs once again declined.

In a related matter, the 2002 GAO report expressed concern about attrition among FDA staff which it found to be noticeably greater than in similar disciplines at the National Institutes of Health (NIH) and the Centers for Disease Control and Prevention (CDC). The 2002 GAO report states that:

[T]he agency continues to experience high turnover for reviewers because of the high demand for regulatory review personnel in the pharmaceutical industry and the higher salaries that experienced FDA reviewers can obtain in the private sector.... FDA officials reported that to retain experienced staff with certain skills, they have increased the pay for approximately 250 [product] reviewers. Specifically, FDA conducted studies of staff turnover and found that toxicologists, pharmacologists, pharmacokinetists, and mathematical statisticians were leaving FDA to work in private industry and academia for higher salaries. Under [federal personnel] regulations, FDA is authorized to pay retention allowance of up to 10 percent of an employee's basic pay to a group or category of employees in such circumstances.

The GAO report also found that "FDA reviewers, particularly those in CBER [Center for Biologics Evaluation and Research], did not participate in training and professional development activities ... to ensure that the agency meets PDUFA goals." The 2006 IOM report commented on the attrition of FDA personnel by stating that "although one explanation for the turnover is that FDA staff leave for promising opportunities in industry ... it is possible that turnover is indicative of a less-than-ideal organizational culture that requires attention."

A potential indicator of the difficulty FDA has in keeping experienced staff is the agency's issuance of retention bonuses to some employees. This practice is controversial and is under investigation by the House Committee on Energy and Commerce:

The payments ... attracted bipartisan criticism from lawmakers ... [who] say that at the FDA many of the bonuses went to the highest-paid officials rather than the scientists, inspectors and doctors most at risk of jumping to the private sector. To critics, the payments bore little relationship to the agency's performance and reputation or to the likelihood that someone might depart. Agency officials disagree and call the program a success.... In 2002, the FDA lost 12 to 13 percent of its employees, while in 2006, with the bonus program in place, it lost 5 percent.... The bonuses—which are funded in part with fees paid by industry for product reviews—bring no guarantee of retention.

Comparison of FDA Budget with Other Agency Budgets

Figure 2 compares the funding, over time, for FDA, NIH, and CDC, the primary federal agencies with public health duties. In FY1980, CDC and FDA had similar funding and NIH funding was sevenfold greater than the other two agencies, as shown in Figure 2 . Since FY1980, Congress has increased the budget ninefold for CDC, almost fourfold for NIH and about twofold for FDA (in FY2000 adjusted dollars). Other regulatory agencies similar to FDA, in that they are science-based and health-related, such as the Environmental Protection Agency (EPA), the Occupational Safety and Health Administration (OSHA), and the Consumer Products Safety Commission (CPSC), have received flat or declining budgets (adjusted for inflation) over this same time period.

Concerns raised in the late 1970s about the cumulative effects of federal regulations on business resulted in the substantial changes made by the Reagan Administration in the 1980s in "how federal agencies develop and publish rules, and the degree to which federal regulations were overseen by the Executive Office of the President." The relatively flat funding experienced by FDA and other regulatory agencies may in part be due to the Reagan regulatory reform efforts combined with attempts to control federal spending and shrink the overall size of government.

Former FDA Commissioners, speaking on various public panels, have addressed FDA funding. In prepared testimony for a May 1, 2007 hearing before the House Committee on Oversight and Government Reform, four former FDA Commissioners, Donald Kennedy, Frank Young, David Kessler, and Jane Henney, all agreed that FDA is underfunded. Dr. Kessler made the following observations on the funding Congress has provided for NIH, CDC, and FDA.

While Congress has attempted to provide resources for burgeoning public health needs on other fronts, support for the FDA has faltered in comparison. In 1986, FDA's budget was comparable to 97% of the budget for CDC and 8% of the NIH's budget. By [2006], it had dropped to 28% of CDC's budget and 5% of NIH's. Significantly, while the NIH's budget to fund the research that leads to discoveries that ultimately fill the FDA's drug pipeline has doubled over the last five years, FDA's budget has not grown.

On this same point, former Acting FDA Commissioner Michael Friedman made the following observations:

It is myopic to fund a minimal FDA when we have doubled the NIH budget roughly every 10 years for the past 40 years ... or when the pharmaceutical industry annually invests more than $30 billion in research and development. Because regulatory review is the final common pathway for all translational medicine, this lack of resources is rate-limiting. I cannot predict everything that our citizens demand from FDA, but I am sure they are not currently getting it. The issue is not what the FDA "needs;" it is rather what the American public deserves.

The 2006 IOM drug safety report notes that over the years various groups have examined the same questions about the FDA and its budget and have made a variety of proposals and recommendations to improve the agency that have not been fully implemented. The IOM report goes on to state that:

A primary obstacle ... may be the chronic underfunding of core FDA activities owing to inadequate attention to resource needs by Congress and the Office of Management and Budget.

Some Members of Congress also have expressed concern over the FDA funding level, and have voiced their frustration at the inability to obtain clarification from the agency on the adequacy of the FDA budget. A source of apparent frustration to those Members, including some who serve on the appropriations subcommittees and have indicated their willingness to increase appropriations to the agency, are the FDA officials who, year after year, neither ask for increased funding in their testimony, nor, in response to Members' questions, acknowledge what some observers perceive to be the agency's needs for additional resources. For example, in written testimony regarding the FY2004 proposed budget, FDA Commissioner Mark McClellan stated:

We believe our budget request will allow FDA to fund ongoing operations at the current level and also support more than 1,000 recently hired investigators and analytical staff to fight counterrorism [sic].... The President's 2004 Budget was developed within a framework that set a proposed total for discretionary spending in 2004, and each agency and program request reflects the [George W. Bush] Administration's relative priority for that operation, activity or program.

In contrast to the above testimony which occurred when he was Commissioner, former FDA Commissioner Mark McClellan made the following statement at a March 2007 hearing of the Senate Committee on Health, Education, Labor, and Pensions:

First, the FDA will need significantly greater appropriations to improve post-market safety. The FDA is over-stretched, and a lack of trained staff and technical capabilities to perform the oversight necessary on thousands of prescription drugs is an even more pressing issue than providing the FDA with new regulatory authorities.

Current FDA Commissioner Andrew von Eschenbach provided the following statement when commenting on the adequacy of the FY2008 budget at a Senate Appropriations Committee hearing:

These resources are an essential step in building a 21 st century FDA that responds to the new opportunities and new challenges of science and technology. Our budget allows FDA to strengthen the tools we use to ensure the safety of foods, evaluate new products, and better predict—earlier and more accurately—the safety and efficacy of drugs, biologics and medical devices. With these resources, we will work to ensure that Americans enjoy the benefits of personalized medicine, a safe and wholesome food supply, and the promise of a better, healthier future.

The IOM committee that worked on the 2006 drug safety report also was not able to ascertain the agency's funding requirements:

Convention dictates that federal agencies do not publicly articulate resource needs that differ from those offered in the President's budget, so the [IOM] committee was unable to understand fully what ... FDA leadership estimate[s] is needed to meet current objectives, let alone the expanded responsibilities the committee envisions for the future.

In his May 1, 2007 testimony, former Commissioner Donald Kennedy confirmed this point:

I hope you and your staff will be diligent about pursuing FDA resource needs. But you may have to rely on grizzled veterans like me, because budget authorities at HHS and OMB specifically prohibit present officials in the agency from speaking out publicly about the need for more funding.... [I]t is important that Americans know, when they hear FDA officials say they are satisfied with their budget allocations, that they have their fingers crossed underneath the witness table.

Like all federal agencies, FDA's budget history reflects both Administration requests and congressional decisions on appropriations. In general, previous Administrations have not argued before Congress for increased FDA funding over the years. In some situations, however, Congress has decided to grant additional funds to agencies above an Administration's request. For example, the relevant House and Senate appropriations bill reports demonstrate that Congress has often chosen to increase NIH funding when an Administration has not requested additional appropriations. Congress is supported and encouraged in its efforts to increase the NIH budget by various health and research advocacy groups which promote their individual causes.

Some agencies are able to bypass budget adjustments made by HHS and OMB via alternative mechanisms. For example, the National Cancer Institute (NCI) at NIH is mandated by the National Cancer Act of 1971 (P.L. 92-218) "to prepare and submit, directly to the President for review and transmittal to Congress, an annual budget estimate (including an estimate of the number and type of personnel needs for the Institute) for the National Cancer Program, after reasonable opportunity for comment (but without change) by the Secretary, the Director of NIH, and the Institute's advisory council." The so-called NCI Bypass Budget received by Congress describes the increase required to maintain NCI's present level of operations and the increases required to expand existing initiatives. Similarly, CDC has prepared a "Professional Judgment" budget in response to requests from a congressional appropriations committee.

A regulatory agency, such as the FDA, may be perceived as an impediment to achieving the goals of advocacy groups concerned with the expeditious approval of new drugs or devices for the treatment of specific diseases. However, when drug or device adverse events occur, there is heightened concern about FDA's approval process. In general, attention to FDA's state of affairs seems to be dependent on reaction to crisis. The public and Congress tend to focus on the agency when its regulatory processes fail to meet their expectations. This phenomenon is perhaps best exemplified by the thalidomide episode in 1962. However, even significant legislative solutions, such as the Kefauver-Harris Drug Amendments of 1962 (which required demonstration of effectiveness prior to drug approval), were not accompanied by an increase in funding for FDA. In his history of FDA and its regulation of the pharmaceutical industry, Philip J. Hilts, referring to passage of Kefauver-Harris, reported that:

Unfortunately, when Congress took this step forward, getting serious about science and testing to protect the public, it did what it had often done before: it voted to give the agency new duties and responsibilities while failing to provide the money to allow the agency to carry them out. The error would cause years of dissension and trouble, and would not be remedied for three decades.

Presumably, the remedy Hilts is referring to is PDUFA and the implementation of user fees by FDA in 1993. Some critics argue that user fees have not solved FDA's funding problems and have led to additional complications for the agency. Critics also suggest that the way the agency has been managed and the resource structure imposed by statute contribute to the agency's perceived problems in accomplishing its mission.

FDA Activity-Area Budgets

FDA is organized into six centers, which cover the broad activity areas for which the agency has responsibility, and two offices that perform agency-wide functions. The traditional activity areas are somewhat parallel to the current centers. FDA's major activity areas are: Foods; Human Drugs; Biologics; Animal Drugs and Feeds; and Medical Devices and Radiological Health. This report focuses on the activity areas rather than the centers, to be consistent with the presentation in the historical Justification documents. Center names and their activity area responsibilities have changed over time to reflect shifts in agency organization, but the agency's activity areas have stayed fairly constant over the past 25 years.

Although FDA consistently reports its budget recommendations broken out by activity areas, it is not possible, using the publicly available Justifications , to determine whether these categories have always included the same activities. Therefore, as with other federal agencies, it is not always possible to accurately compare categories of budget or staffing over long periods of time. An example of this, as discussed below, is the changing placement of Biologics in the agency's budget. Biologics was encompassed for a time within the Human Drug budget, and FDA's Justifications provide no means of separating the two activities. This report contains the most consistent accounting that was possible from the information provided in the FDA Justifications . For further information on the difficulties in compiling a budget history of the agency, and the steps taken to address those problems in this report, see the Methodology section in the Appendix .

The Office of the Commissioner and the National Center for Toxicological Research do not have direct regulatory responsibilities and, therefore, are only described briefly in this report. Their funding and personnel are included, however, in the FDA totals. The Office of Regulatory Affairs (ORA) conducts FDA's compliance activities, including inspection and enforcement, across all activity areas. The agency's budget justification documents allocate ORA funding to each activity area as "field activities."

After adjusting for inflation, FDA's total budget increased by 136.6% between FY1980 and FY2006 (see Table 1 ). Over the same period, total FTEs increased by 18.5%. Each activity area within the agency reflects a greater increase in budget than in FTEs during the period. As noted above, tracking FTEs is typically an imperfect measure of changes in an agency's level of effort over time. A variety of factors might account for the differing rates of growth of FDA's budget and staffing. A precise accounting of the possible causes of these differences was not available in FDA budget Justifications . Further exploration of the reasons for the differing rates of growth in budget and FTEs is, however, beyond the scope of this report.

Figure 3 compares the FDA budgets for FY1980 and FY2006, displaying the major activity area budgets relative to each other and to the whole agency. The figure also illustrates the relative proportions of the activity-area budgets that user fees finance. In FY2006, user fees comprised 41% of the Human Drugs budget, 30% of Biologics, 14% of Devices and Radiological Health, 8% of Animal Drugs and Feeds, and 0% of Foods. The proportion of the total FDA budget provided in direct appropriations as budget authority was 96% in FY1980 and 80% in FY2006.

Impact of New Statutory Authorities on FDA Budget

New statutory authorities, assigned to specific FDA activity areas, frequently mandate initiatives without resources for implementation. The implementation of major new initiatives requires adequate time and resources to meet congressional intent. Former FDA Commissioner Frank Young indicated that, while he was Commissioner, there were "mandates for 22 new activities without accompanying appropriations," which he categorized as unfunded mandates. He also attested to the difficulty for the agency in the implementation of new statutory language. In the case of implementing the Hatch-Waxman Act for the expeditious evaluation of generic drug products, he stated the following:

[T]here were major problems in the development of procedures within FDA, inadequate resources available for crafting the regulations, and difficulties in the implementation of the initial ANDA [Abbreviated New Drug Application] processes. Similarly, there were substantial budgetary needs for adequate enforcement of procedures, for approval of products developed by industry during the initial implementation of the act. The agency was in uncharted water.

Likewise, implementation of the FDA Modernization Act of 1997 (FDAMA), required the agency to "develop 42 new regulations, 23 guidances and numerous reports and studies," many within a year. At the time, HHS Secretary Shalala commented on the complications and costs of carrying out the effort, which she estimated to be $50 million.

The $1.58 billion that FDA has collected in prescription drug user fees since FY1993 has helped the agency improve the timeliness of its drug review process. These benefits may mask what some FDA advocates see as PDUFA's distorting effects on within-activity-area budgeting. Congress included in PDUFA an important limitation, often referred to as a trigger, to ensure that the user fees would supplement rather than supplant appropriated funds. To collect and spend the drug user fees, FDA must maintain at least the same level of effort on activities related to human drug review as it had before PDUFA. That limitation would not affect other parts of the FDA budget if other funding were to keep pace with both inflation and the needs of the agency. However, according to FDA documents and the observations of external experts, FDA's financial situation has changed over the 15 years since PDUFA began. FDA has had to use directly appropriated funds to keep the PDUFA-related activities at least constant over time, thereby diverting those funds from other uses. FDA financial reports, required under PDUFA, have claimed that this unanticipated PDUFA effect has resulted in "an erosion of core FDA programs."

FDA Regulatory Research

The research program at FDA provides scientific support for regulatory issues addressed by the agency. Research has been a part of the agency almost from the time of its inception in 1906. All five FDA activity areas support research with Foods conducting the largest program in FY2006, followed by Biologics, Devices and Radiological Health, Animal Drugs and Feeds, and Human Drugs, which has a very small research program. Research performed in the five FDA activity areas comprises about 50% of the FY2006 FDA research budget. Other entities within FDA that perform research are the National Center for Toxicological Research (33%), Office of Orphan Products (11%), Program Management (3%), and Buildings and Facilities (3%). Figure 4 shows the amount of support for research within the five FDA activity areas from FY1993 through FY2008.

The appropriate role of research in fulfilling FDA's mandate to license and approve safe and effective products has been a contentious issue at least since the early 1970s. At the request of former Deputy Commissioner for Operations Michael Friedman, a review of FDA research was conducted in 1996 by a subcommittee of the FDA Science Board. The Chairman of the subcommittee, Dr. David Korn, stated that "Congress has not been asked to support research explicitly; [research] has always been buried in the agency's budget." Dr. Korn suggested that it would require a major educational effort by industry to convince Congress that research is essential to the function of FDA because "industry is, in a sense, the FDA's customer," and "if the thrust came from industry, it would carry weight with the Congress." The final report of the subcommittee, dated March 1997, stated that:

The decreasing agency [research] budget is of overarching concern. Although there is general appreciation of the fact that in times of constrained resources the agency must take particular care that its mandated regulatory responsibilities are competently discharged, there is a widely held perception among agency scientists that the research programs do not have strong advocacy at the highest levels of agency leadership and are front-line targets for curtailment or elimination as discretionary resources decline. The subcommittee believes strongly that starving the agency's base of intramural scientific expertise must inevitably compromise the quality of review and regulatory activities.

The role of FDA research and the level of resources required for its support continues to be identified as an issue for the agency. During the May 1, 2007, congressional hearing, the former Commissioners specified the lack of financial support for the research program at FDA as a major concern. Former commissioner Frank Young stated that "research at CBER has been eviscerated through a recent reorganization and is almost non-existent in CDER. To maintain the expertise necessary for expeditious but highly competent decisions on new breakthrough products,... it is essential to have a well trained scientific staff that is given the time to not only maintain scientific expertise but to pursue career development in their chosen field of science." On this same point, former commissioner David Kessler stated that:

The erosion of funding has struck hard at the Agency's ability to support its proud tradition of groundbreaking research in regulatory science. While in the past, the Agency led the way in developing new scientific paradigms for approving biologics and assessing food contaminants—to the benefit of both industry and consumers—resources for FDA to lend its intellectual firepower to addressing key regulatory questions are increasingly scarce.

FDA Science Board Report

A report that assessed "whether science and technology at the FDA can support current and future regulatory needs" was released in November 2007. The report was requested by FDA Commissioner Andrew von Eschenbach in December 2006 and was prepared by the FDA Science Board, a group of independent advisors. It found that FDA "suffers from serious scientific deficiencies and is not positioned to meet current or emerging regulatory responsibilities." The report points at two reasons for the deficiency: the demands on FDA have soared, and resources have not increased in proportion to the demands. It states that "due to constrained resources and lack of adequate staff, FDA is engaged in reactive regulatory priority setting or a fire-fighting regulatory posture instead of pursuing a culture of proactive regulatory science."

The FDA Science Board was specifically asked to review the status of science and technology at FDA, and not to evaluate the available resources. However, the report states that the status of science and technology was "so intertwined with two decades of inadequate funding that it was impossible to assess technology without also assessing resources." The Science Board also looked at reports on FDA issued by previous review committees, each given a similar charge over the past 50 years. It found that the concerns outlined in past reports were the same as those in the present and that FDA has consistently been unable to implement the needed changes. An advisor to the Science Board, Garret A. FitzGerald, blamed a faction of "congressional majorities and presidential administrations that has serially stripped the agency of assets."

Representative Rosa DeLauro, who in the 110 th Congress was appointed chair of the House Appropriations Subcommittee on Agriculture, Rural Development, FDA, and Related Agencies, stated that the November 2007 report confirms facts that she believes have been apparent to Congress and FDA for some time. "[S]cience at the FDA is deteriorating and the agency lacks the planning, management structure, and resources to restore their scientific capabilities." She further states that although her subcommittee is working on providing additional funds for the agency, "money alone will not resolve the problems at FDA—these additional funds need to be supported by an adequate management structure and a sound plan on how these funds will be used to ensure that they are not wasted."

The FDA Science Board report concluded that "FDA can no longer fulfill its mission without substantial and sustained additional appropriations," and that the agency is in danger of "losing its remaining dedicated staff" if the "chronic underfunding of the agency" is "not addressed immediately." The report stated that there is "insufficient investment in professional development [for FDA staff], which means that the workforce does not keep up with scientific advances.... Inadequately trained scientists are generally risk-averse, and tend to give no decision, a slow decision or, even worse, the wrong decision on regulatory approval or disapproval." The report also concluded that funding increases recommended by other groups, such as IOM and the Coalition for a Stronger FDA, are insufficient to allow all the changes necessary for the agency to fulfill its mission. "Without a substantial increase in resources, the agency is powerless to improve its performance, will fall further behind, and will be unable to meet either the mandates of Congress or the expectations of the American public. This will damage not only the health of the population of the U.S., but also the health of the economy."

Major Activity Areas: Budget and FTEs

The next sections of this report provide, for each FDA major activity area, a brief description of the statutory responsibilities in 1980 and an overview of how the agency's responsibilities have expanded over the years up through 2007. Juxtaposed with the presentation of increasing responsibilities for the activity area is a presentation and analysis of the budget and number of FTEs for the period FY1980 through FY2007. The descriptions of FDA's responsibilities and resources provide a background against which to examine FDA funding needs. Other CRS reports examine the particulars of many FDA activities and their funding.

Foods75

FDA is responsible for promoting and protecting the public's health in part by ensuring that the food supply is safe, sanitary, wholesome, and accurately labeled. The agency regulates all foods, except for meat and poultry which are regulated by the U.S. Department of Agriculture (USDA). It is also responsible for assuring that cosmetic products are safe and properly labeled. The agency regulated $417 billion worth of domestic food, $49 billion worth of imported food, and $60 billion worth of cosmetics in 2001. These numbers encompass the economic activity of about 50,000 food establishments (manufacturers, processors, and food warehouses) and 3,500 cosmetic firms. Not included in these figures are the roughly 600,000 restaurants and institutional food service establishments and 235,000 supermarkets, grocery stores, and other food outlets that are regulated by state and local authorities, for which FDA provides guidance, model codes, and other technical assistance.

Although FDA is responsible for ensuring the safety of the food supply, its role is primarily reactive since most foods and their ingredients are not subject to prior approval or even review before they enter interstate commerce. The agency does have responsibility over some product ingredients that require premarket approval, such as food and color additives. FDA also performs postmarket monitoring of food labels and investigates food safety problems that arise. The agency's surveillance program tests food samples to determine if pesticide residues or heavy metals are present in unacceptable amounts. It also sets standards for label information to assist consumers in determining the ingredient and nutrient content of the foods that they are purchasing. The agency's current activities related to foods are primarily conducted by the Center for Food Safety and Applied Nutrition (CFSAN).

The Pure Food and Drug Act of 1906 gave the agency its initial authority to prohibit the interstate commerce of adulterated or misbranded food products, along with the authority to assess criminal penalties for violations and seize offending products. The Federal Food, Drug, and Cosmetic Act of 1938 (FFDCA), building on the provisions of the 1906 Act, required the agency to promulgate definitions and standards for foods and informative labeling. It also prohibited false advertising and the addition of substances that would render the food adulterated. Over the years, several amendments to the act added authorities that required FDA to establish (1) tolerances (safe levels) for pesticides on agricultural commodities; (2) premarket approval systems for food and color additives, and packaging substances; (3) rules for labels to facilitate price comparisons; and (4) rules to assure that packages contain the amount of product the label claims.

By FY2007, Congress had added a number of new FDA authorities to those that existed before FY1980 (see Table 2 ). Under the Infant Formula Act of 1980 ( P.L. 96-359 ) FDA established requirements for the manufacturing, labeling, and nutrient standards for these products. The Nutrition Labeling and Education Act of 1990 (NLEA, P.L. 101-535 ) provided authority for (1) mandating nutrition labels on most food products, and (2) following the agency's review, allowing nutrient content and health claims. In addition, NLEA preempted most state and local requirements for labeling, giving FDA responsibility for regulating all aspects of nutrition labeling information. NLEA resulted in the promulgation of a significant number of new regulations and revisions of old rules for consistency with the new authorities. The Dietary Supplement Health and Education Act of 1994 (DSHEA, P.L. 103-417 ), provided specific authority for the regulation of supplements and placed the burden of proof on the agency to demonstrate that a supplement already on the market was unsafe and needed to be removed.

The Food Quality Protection Act of 1996 ( P.L. 104-170 ) established a single health-based standard for pesticides in all foods and provided special safety provisions for infants and children. After FFDCA provisions were amended by the FQPA of 1996, FDA continued to monitor pesticide residue levels in food in interstate commerce (which it does through its total diet study) and enforce tolerances through its food inspection programs, while EPA remains the lead agency on setting tolerances and related issues. The Food and Drug Administration Modernization Act of 1997 ( P.L. 105-115 ) eliminated premarket approval of food-contact substances (i.e., packaging materials), replacing it with a notification process, along with expanding procedures for FDA authorization of health and nutrient content claims under the NLEA statutory standard.

The Public Health Security and Bioterrorism Preparedness and Response Act of 2002 ( P.L. 107-188 ) required all domestic and foreign facilities that manufacture, process, pack, or hold food for U.S. consumption to register with FDA and maintain records for agency inspection. The act also required prior notice to FDA of products being imported into the United States and provided the agency with administrative detention authority and penalties.

The Food Allergen Labeling and Consumer Protection Act of 2004 ( P.L. 108-282 ) required that a specific statement appear on a food label when any of the most common allergens are present in a food. In 2006, the Dietary Supplement and Nonprescription Drug Consumer Protection Act ( P.L. 109-462 ) was enacted, which created a system for reporting to FDA any serious adverse events associated with the use of a dietary supplement, as well as record keeping and inspection authority that may be necessary in cases of a reported adverse event.

Food safety provisions within the Food and Drug Administration Amendments Act of 2007 ( P.L. 110-85 ) required the creation of a registry for reportable information on foods with safety problems. It also allowed for the identification of the supply chain of the questionable food item.

Adjusted for inflation, FDA's foods budget doubled between FY1980 and FY2007; the number of FTEs increased by 15.2% during the same period. Despite substantial increases in statutory authority during the period, FDA's Foods activity did not gain the authority to collect user fees, unlike the other activity areas (discussed below).

In Figure 5 , changes in the foods budget and FTEs reflect certain events and policy initiatives during the 28-year period. The budget was relatively flat through the 1980s with requests primarily for mandatory costs and no program increases. The increase in budget and FTEs in the early 1990s reflect the considerable amount of work required to implement NLEA and the simultaneous CFSAN reorganization. Food safety activities also contributed to the modest increase in FTEs and funding. The subsequent drop off of FTEs from FY1992 to FY1997 represents both deficit reduction efforts and a shift in FTEs to elsewhere in the agency as noted in the 2002 GAO report. The new CFSAN building opened in College Park, MD, in 2001; construction costs were part of the budget increases from 1997 until 2001. Increases in both funding and FTEs in the late 1990s also signaled President Clinton's food safety initiative. Increases in the FY2002 budget and FY2003 FTEs represent increased agency attention to the food supply following the domestic terrorist attacks and subsequent passage of the Public Health Security and Bioterrorism Preparedness and Response Act of 2002. However, the increases did not continue. The foods budget has remained flat, while the number of FTEs has decreased since FY2002. Another reorganization of the foods portion of the agency occurred after 9/11 as a result of a reordering of the Center's work and priorities. Recent concerns about food safety problems have drawn attention to both the foods budget and FTEs.

Human Drugs80

No manufacturer may offer a prescription or over-the-counter drug for sale in the United States without first obtaining FDA's approval. The agency's Center for Drug Evaluation and Research (CDER) works with a manufacturer throughout the application process, from permitting human clinical trials of an Investigational New Drug (IND), to evaluating for evidence of safety and effectiveness the data from those trials that are part of a New Drug Application (NDA). Up to a drug's approval, CDER wields tremendous influence, as the law authorizes, on required studies for the decision to grant marketing approval (hence, known as "premarket approval" or "premarket review"), wording and layout of materials for the prescribing clinician and the patient, and other aspects of the drug's labeling.

Once a drug is on the market—a period known as both "postmarket" and "postapproval"—FDA continues its activities to ensure the product's safety and effectiveness, although the law does not provide the agency with postapproval authority equivalent to its preapproval function. FDA staff examine the results of studies conducted and submitted by manufacturers; review adverse event reports from manufacturers, clinicians, and consumers; follow the scientific literature regarding other drugs with similar mechanisms of action; and review labeling, packaging, and promotional items to both consumers and clinicians. CDER staff also analyze data that the manufacturer submits and look for trends in large databases of pharmaceutical use.

Figure 6 illustrates the resource history of the FDA Human Drugs program from FY1980 through FY2007. Between FY1980 and FY2007, the total inflation-adjusted funding available for FDA human drug activities increased 234% (that is, it more than tripled) and the number of FTEs increased 34%.

Beginning in FY1994, user fees have made up an increasing proportion of FDA's budget for human drug activities. While total funding has increased over the period, this has been entirely due to the increase in user fees. Congressional appropriations have remained essentially flat.

Separating FTEs by funding source shows that the overall increase in personnel comes solely from the user fees first collected in FY1993 and that the overall increase in FTEs obscures a 19% decrease in congressionally funded (budget authority) personnel from FY1992 to FY2007.

The 1992 Prescription Drug User Fee Act, in providing FDA with an additional source of funding, explicitly stated that the funds were to supplement, not supplant congressional appropriations. The law included complex formulas, known as "triggers," to enforce that goal. FDA may collect and use fees only if the direct appropriations for the activities involved in the review of human drug applications and for FDA activities overall remain funded at a level at least equal to the pre-PDUFA budget, adjusted for inflation as specified in the statute.

These triggers, in particular, and the relative contributions of appropriations and user fees to FDA's budget for human drugs have implications for budget planning both within the human drugs activity area and in agency-level decisions across all activities.

The drug-related tasks for which FDA is responsible have evolved along with the social, economic, scientific, and technologic developments in the United States. Even before there was a Bureau of Chemistry in the Department of Agriculture (established in 1862, the ancestral origin of the current FDA), Congress passed legislation to "prevent the importation of adulterated and spurious drugs and medicines." The 1906 Food and Drugs Act heralded the future influence of the federal government on drug (and food) regulation to protect the public's health. Many laws followed (see brief descriptions in the Appendix , Table A-4 ). Among the most significant are: the 1938 FFDCA, which required that drugs be safe; and the 1962 Kefauver-Harris Amendments to the FFDCA, which required that drugs also be effective.

Subsequent laws addressed many issues for FDA, such as aiming to boost pharmaceutical research and development; to speed the approval of new medicines, including by supplementing FDA resources with user fee revenue; and to encourage research in pediatric drugs. Between FY1980 and FY2007, Congress added to FDA's responsibilities new areas (or expanded existing ones) that involved scientific, legal, and enforcement expertise (see Table 3 ). Most recently, the FDA Amendments Act of 2007 ( P.L. 110-85 ) amended dozens of FFDCA sections. These included human drugs provisions to reauthorize certain programs (such as the assessment, collection, and use of prescription drug user fees); to enhance FDA's authority in ensuring safety and effectiveness over a product's life (both pre- and postapproval). It required the Secretary to maintain an Internet website with extensive drug safety information. New authorities include civil monetary penalties for failure to comply with certain postmarket study, labeling, and television advertisement requirements; mandates and incentives for pediatric drug research and labeling; and requirements for making available to the public material such as minutes of agency-industry performance goal negotiations, pediatric assessment findings and reviews, reviews of adverse event reports, and advisory committee recommendations on action.

Biologics85

Biologics are medical preparations made from living organisms. Examples of such products include traditional biologics (such as vaccines, blood, blood products, antitoxins, and allergenics ) and human therapeutic agents produced by the biotechnology industry (such as insulin, interferon, growth hormone, and epoetin). FDA ensures the purity and effectiveness of biologics by (1) issuing a license for each new product that is shown to be safe, pure, and potent and (2) inspecting manufacturing facilities to assure the product continues to be safe, pure, and potent. Unlike most chemically synthesized drugs (e.g., aspirin) with a known structure, biologics are often complex mixtures that are not easily identified or characterized. Biologics might also be living entities, such as cells and tissues. Biologics may be isolated from a variety of natural sources (human, animal, or microorganism) or may be produced by biotechnology methods and other cutting-edge technologies. FDA is also responsible for the safety of the nation's blood supply and routinely examines blood bank operations for record keeping and testing of donations for contaminants.

Regulatory responsibility for biologics was first delegated in the early 1900s to the Hygienic Laboratory, a precursor of the National Institutes of Health (NIH). In 1972, regulatory authority for biologics was transferred from the NIH Division of Biological Standards to the FDA Bureau of Biologics. During the early 1980s, the FDA merged the Bureau of Drugs and the Bureau of Biologics to form the National Center for Drugs and Biologics. In 1984, all of the "National Centers" within FDA were redesignated simply as "Centers." In 1987, the FDA's Center for Drugs and Biologics was split into the Center for Drug Evaluation and Research (CDER) and the Center for Biologics Evaluation and Research (CBER). CBER continues to use NIH facilities and buildings until the expected move in 2012 to the new FDA headquarters in White Oak, MD.

Because biotechnology products frequently cross the conventional boundaries between biologics, drugs, and devices, determining the jurisdictional status of these new products has been difficult for both the FDA and industry. Some products have had characteristics that met multiple statutory and scientific definitions. In 1991, the FDA published an Intercenter Agreement between CBER and CDER. In general, the agreement stated that traditional biologics as well as most biotechnology products, would be regulated by CBER. In 2002, however, the FDA announced its intention to reorganize review responsibilities, consolidating review of new pharmaceutical products under CDER; CBER retains review responsibility for vaccines, blood safety, gene therapy, and tissue transplantation. On June 30, 2003, responsibility for most therapeutic biologics was transferred from CBER to CDER. Remaining at CBER are traditional biologics such as vaccines, allergenic products, antitoxins, antivenins, venoms, and blood and blood products, including recombinant versions of plasma derivatives (clotting factors produced via biotechnology).

Figure 7 shows the total FDA budget for Biologics, composed of budget authority and user fees, for FY1980 through FY2007, adjusted to FY2000 dollars. It also provides FTE data over the same years: FTEs funded by budget authority; and total FTEs funded at program level (budget authority plus user fees). The impact on funding and FTEs of the FDA reorganization in the 1980s can be clearly seen in Figure 7 . Although budget authority and FTEs for biologics were rising in the late 1980s and early 1990s, the graph shows that both decline and then remain flat coincident with the introduction of user fees in 1993. Budget authority and FTEs increased between FY2001 and FY2003, coincident with increased emergency funding following the domestic terrorist attacks. The drop in biologics funding and FTEs from FY2003 to FY2004 is due to the reorganization of review responsibilities for therapeutic biologics. Following the reorganization, budget authority and FTEs for biologics have remained relatively flat.

FDA's responsibilities related to the approval and regulation of biological products have changed somewhat between 1980 and 2007 (see

Table 4 ). In 1980, FDA's authority with respect to the approval of biological products was governed primarily by Section 351 of the Public Health Service Act (P.L. 78-410). In addition, because most biological products also meet the definition of "drugs," they are subject to regulation under the FFDCA (P.L. 59-384). FDA also regulates medical devices involving biologics under various medical device laws. Examples include devices used in blood banks to produce various blood products, such as automated cell separators, empty plastic containers and transfer sets, and blood storage refrigerators and freezers.

By 2007, the passage of additional laws had created more responsibilities and authorities for FDA in the area of biologics. The Pediatric Research Equity Act of 2003 ( P.L. 108-155 ) requires a pediatric assessment of safety and effectiveness as part of an application to license a new biologic, or, if the Secretary considers it necessary, for an already licensed biologic. The Project Bioshield Act of 2004 ( P.L. 108-276 ) requires FDA to provide an expedited review of vaccines and other countermeasures to bioterrorism agents.

Congress is also currently considering proposed legislation that would expand the agency's regulatory activities by opening a pathway for the approval of so-called follow-on biologics, which are similar, but not identical, to the brand-name products made by the pharmaceutical or biotechnology industry. The new regulatory pathway would be analogous to the FDA's authority for approving generic chemical drugs under the Drug Price Competition and Patent Term Restoration Act of 1984 (P.L. 84-417), often referred to as the Hatch-Waxman Act. FDA personnel have been actively involved for some time in working with Congress on this potential new responsibility.

Animal Drugs and Feeds93

The FDA Center for Veterinary Medicine (CVM) regulates animal feeds (such as livestock feeds and pet foods), and veterinary drugs and devices. CVM is responsible for premarket approval of veterinary drugs, based on a sponsor's demonstration of safety and effectiveness. CVM regulates veterinary devices, but does not require their premarket approval. Veterinary biologics are regulated by the USDA. Much of CVM's authority is based in FDA's general authorities in the FFDCA, such as the authority to take enforcement actions if a regulated product is adulterated, to require facility registration, and to conduct inspections. For example, animal feed is included in the definition of "food" in Section 201 of the FFDCA, and must meet the same general standards of safety as human food, pursuant to Sections 401 et seq. of the act. Additional specific requirements may also be applied to CVM-regulated products.

Though USDA and FDA-CFSAN have primary responsibility for the safety of products intended for human food, CVM is responsible for some specific aspects of the safety of human foods derived from animals, such as determining tolerances (safe levels) of certain chemicals in meat and poultry, and evaluating the food safety aspects of animal clones and their offspring. Also, before CVM approves an animal drug, its use in animals must be shown to be safe for humans as well. Drug sponsors must demonstrate that a method is available to detect and measure any drug residues left in edible tissues of food-producing animals. Farmers and veterinarians who use drugs on food-producing animals must adhere to guidelines about how much time must elapse before a treated animal can be slaughtered, or before its milk can be marketed, and any other constraints or warnings that are stated on the drug label.

Figure 8 shows the total FDA budget for animal drugs and feeds, composed of budget authority and user fees, for FY1980 through FY2007, adjusted to FY2000 dollars. Figure 8 also provides FTE data over the same period: FTEs funded by budget authority; and total FTEs funded at program level (budget authority plus user fees). During that time, the budget in adjusted dollars increased from $46.7 million in FY1980 to $87.6 million in FY2007. FTEs totaled 516 in FY1980, and 619 in FY2007, though there were fewer than 500 FTEs for most of the intervening years. Drug user fees provided a small portion of CVM's overall budget between FY2004 and FY2007, and made up about 11% of the FY2007 total. (FDA did not have authority to collect user fees for new animal drug reviews until FY2004.)

The budget for animal drugs and feeds, in adjusted dollars, almost doubled in the three-year period from FY1999 to FY2002, from $44.3 million to $82.4 million. FTEs increased from 393 to 570 in the same period. (The budget was relatively stable in the years before and after this period of growth, when adjusted for inflation.) The funding increases largely paralleled increasing budget requests for those years. Increases were requested to support new statutory requirements as well as several initiatives, some of which were agency-wide. These initiatives included activities in food safety, antimicrobial resistance, and postmarket surveillance of drug safety, as well as efforts to reduce drug review times. They also included a bioterrorism preparedness initiative, and the expansion of feed safety programs to protect against Bovine Spongiform Encephalopathy (BSE, or "Mad Cow disease"). In each case, funding was expanded prior to a related high-profile incident, namely the 2001 anthrax attacks, and the 2003 emergence of BSE in North America.

Prior to 1980, CVM was responsible for evaluating veterinary drugs for approval based on demonstrations of safety and efficacy, and for assuring the safety of animal feeds and feed additives. Several laws enacted since 1980 were aimed at improving the availability of veterinary drugs (which are typically not as lucrative for sponsors as are human drugs), clarifying the use of human drugs in animals, or streamlining the drug approval process. FDA's authority for animal products generally begins with the same statutes as those that regulate human drugs and foods (see Table 2 and Table 3 ), with additional specific requirements applied in some cases. This is consistent with FDA's long-standing obligation to assure that veterinary drugs and animal feeds are manufactured and used in ways that are safe for both animals and humans.

Major laws affecting CVM's regulation of animal drugs and feeds are summarized in Table 5 . In 1988, the Generic Animal Drug and Patent Term Restoration Act ( P.L. 100-670 ) authorized abbreviated applications for generic new animal drugs. In 1994, the Animal Medicinal Drug Use Clarification Act ( P.L. 103-396 ) permitted veterinarians to prescribe, for animals, extra-label uses of certain approved animal and human drugs, under certain conditions. In 1996, the Animal Drug Availability Act ( P.L. 104-250 ) granted FDA more flexibility in evaluating and approving new animal drugs by amending the definition of substantial evidence of effectiveness. Among other provisions, the law also permitted the use of veterinary drugs in animal feeds, with veterinary prescription.

In 2002, the Public Health Security and Bioterrorism Preparedness and Response Act ( P.L. 107-188 ) required the registration of all domestic and foreign facilities that manufactured, processed, packed or held animal feeds. In 2003, the Animal Drug User Fee Act ( P.L. 108-130 ) authorized FDA to collect fees for the review of certain animal drug applications. In 2004, the Minor Use and Minor Species Animal Health Act ( P.L. 108-282 ) authorized, along with other approaches and incentives for limited-market drugs, the conditional approval for drugs to treat minor animal species and uncommon diseases in major animal species, which allows the sponsor to make a drug available before collecting all necessary effectiveness data, but after proving that the drug is safe. In 2007, the FDAAA ( P.L. 110-85 ) required, for pet foods, the development of ingredient, processing and labeling standards, and a surveillance system to detect disease outbreaks. Additional provisions that apply to both human foods and animal feeds require, among other things, that FDA establish a reportable food registry, and that persons in charge of FDA-registered food facilities report any instances of tainted foods that may harm humans or animals.

Devices and Radiological Health104

FDA is responsible for ensuring the safety and effectiveness of medical devices and eliminating unnecessary human exposure to man-made radiation from medical, occupational, and consumer products. There are thousands of types of medical devices, from heart pacemakers to contact lenses. Radiation-emitting products regulated by the agency include microwave ovens, video display terminals, and medical ultrasound and x-ray machines. FDA reviews requests to research or market medical devices; collects, analyzes, and acts on information about injuries and other experiences in the use of medical devices and radiation-emitting electronic products; sets and enforces good manufacturing practice regulations and performance standards for radiation-emitting electronic products and medical devices; monitors compliance and surveillance programs for medical devices and radiation-emitting electronic products; and provides technical and other nonfinancial assistance to small manufacturers of medical devices. The agency's current activities related to devices and radiological health (DRH) are primarily conducted by its Center for Devices and Radiological Health. As previously noted, CBER regulates some devices—specifically those associated with blood collection and processing procedures, as well as with cellular therapies (e.g., stem cell treatments).

In FY1980, after adjusting for inflation, FDA's DRH budget was $97,427,000, which supported 1,399 FTEs (see Figure 9 ). At that time, the agency's responsibilities with respect to devices were governed primarily by the Medical Device Amendments of 1976 (MDMA, P.L. 94-295 ). MDMA was the first major legislation passed to ensure the safety and effectiveness of medical devices, including diagnostic products, before they could be marketed. The amendments required manufacturers to register with FDA and follow quality control procedures in their manufacturing processes. They also required FDA to conduct premarket review of some products, and to generate performance standards that devices had to meet before they could be marketed.

Between FY1980 and FY2007, several major pieces of device legislation were passed (see Table 6 ). Some of these added new types of responsibilities. In 1990, Congress gave FDA the authority to enforce postmarket requirements for devices, to act on postmarket adverse event reports, and to recall unsafe devices ( P.L. 101-629 ). In 1992, Congress gave FDA the authority to require that manufacturers of defective products implement certain consumer accommodations and pursue penalties for postmarket surveillance noncompliance ( P.L. 102-300 ). In 1997, Congress passed the Food and Drug Administration Modernization Act (FDAMA), major FDA reform legislation that tasked the agency with accelerating its premarket review and regulating unapproved uses of approved devices ( P.L. 105-115 ).

Other legislation contained provisions that could reduce or minimize, rather than simply increase, the regulatory burden on FDA. For example, while the Mammography Quality Standards Act (MQSA) added the responsibility of requiring the agency to certify mammography facilities, it also provided the authority to collect associated certification fees, creating a new revenue stream ( P.L. 102-539 ). MQSA also allowed certain accredited third-parties to conduct inspections in order to relieve FDA of some of that responsibility.

In 2002, Congress passed the largest revenue-generating, non-appropriations legislation for FDA's DRH-related activities in the 28-year period under examination: the Medical Device User Fee and Modernization Act (MDUFMA, P.L. 107-250 ). The law gave FDA the authority to collect user fees for premarket device review, creating another significant source of revenue. It also accredited third-parties to conduct inspections, a measure designed to reduce FDA's regulatory burden. To preclude user fees from supplanting direct appropriations, MDUFMA contained a "trigger," requiring a certain amount of DRH-related direct appropriations for the collection of user fees to continue. In 2005, direct appropriations did not meet the trigger amount. Congress subsequently reduced the trigger amount so FDA could continue to collect the user fees ( P.L. 109-43 ).

Between FY1980 and FY2007, congressional appropriations for DRH-related activities generally followed the agency's budget requests. As Figure 9 indicates, the number of FTEs and budget remained relatively flat through the 1980s. Both then increased in the early 1990s. Beginning in the late 1990s, the budget and FTEs began to track somewhat differently than they had in the past. The flat budget in the late 1990s did not occur with a fairly constant number of FTEs as it had in the 1980s, but rather with a decrease in FTEs. Likewise, the budget increases that have occurred thus far in the 2000s have increased the number of FTEs, but not by as much as with similar budget increases in the early 1990s. Readers should note that the drop in FTEs between FY2006 and FY2007 apparent in Figure 9 is misleading, as the FTE numbers are based upon a continuing resolution (which had no allowance for user fees), while the budget numbers are based upon a cost estimate (which did include user fees).

The net result of the changes described above was that, over the 28-year period studied, FDA's budget and its number of FTEs dedicated to DRH-related activities increased, although by different amounts. Adjusted for inflation, the total DRH-related budget has increased by 124.5%. The number of FTEs increased by 7.1%. Over the same 28-year period, adjusting for inflation, the budget authority for DRH-related activities increased by 94.2%, while the number of FTEs supported by the budget authority decreased by 5.1%. User fees, which comprised none of the device-related budget in FY1980, comprised 13.5% of it in FY2006. User fee-funded FTEs, which comprised none of the FY1980 budget, comprised 11.3% of the FY2006 budget.

Other Activities and Responsibilities

The above analysis focuses on areas in which FDA has product-specific regulatory responsibilities. However, certain components of FDA's budget and responsibilities do not fall within these categories (e.g., toxicological research, and headquarters and office of the FDA Commissioner) or whose funding is included within each activity area budget (e.g., FDA's field activities). While an in-depth analysis of these areas is not included in this report, we have provided a brief description of each one below.

Toxicological Research

FDA's activities related to toxicological research are conducted by the National Center for Toxicological Research (NCTR), in Jefferson, AR. NCTR, which was established by Executive Order in 1971, does not have an explicit authority in law, and does not have direct regulatory responsibilities. NCTR conducts peer-reviewed scientific research and provides expert technical advice and training to support FDA regulatory activities. NCTR uses Interagency Agreements, CRADAs, informal collaborations, and visiting scientists to advance its research activities.

Headquarters and Office of the Commissioner

The FDA Commissioner has broad authority and responsibility to conduct research to support the agency's mission. The Office of the Commissioner (OC) is made up of several components, including the Ethics Program, Good Clinical Practice Program, History Office, Office of Combination Products, and Office of Crisis Management, among others.

As reported in the FY1982 budget Justification , FY1980 funding for the OC was included in FDA's Program Management budget line. This line also included funding for the Associate Commissioners and the general management personnel responsible for the central program direction and administrative support functions of the agency. As reported in the FY2008 budget Justification , funding for the OC in FY2006 was included under the title FDA Headquarters and Office of the Commissioner . It consisted of agency-wide program direction, and administrative services to ensure that FDA's consumer protection efforts were managed and that available resources were put to the most efficient use.

Field Activities: The Office of Regulatory Affairs

The lead office for FDA's inspection and enforcement activities (which FDA calls "field activities") is the Office of Regulatory Affairs (ORA). ORA is comprised of its Headquarters, the Office of Resource Management, the Office of Regional Operations, the Office of Enforcement, and the Office of Criminal Investigations. In almost every Justification , field activity budget and FTEs are included in each activity area.

Concluding Comments

This report provides information on changes in FDA's resources, both budget and FTEs, as well as the evolution of its statutory responsibilities. Resources and responsibilities are juxtaposed because, as Congress requires more from the agency, it is important to assess whether FDA has the necessary financial resources to meet all those statutory responsibilities. The report is intended to assist Members and their staff in evaluating whether FDA's resources have fallen short, and, if so, how to enhance FDA's performance.

The status of FDA resources and agency performance is important to Congress because each day FDA-regulated products touch the lives of every American citizen as well as people around the world. As stated previously, about 25% of American consumer dollars are spent on these FDA-regulated products. Among the industries that FDA regulates are some of the most successful and innovative in the U.S. economy. The agency regulates a wide range of products valued at more than $1 trillion. Problems with their safety or effectiveness could affect anyone, as is evident from the following sample of things FDA regulates:

the calorie and fat content information on food labels; permissible and required information in televised prescription drug ads; the coloring in foods, medicines, and cosmetics; the purity of ingredients in prepared foods—for people and animals; inspection requirements for mammography and MRI equipment; and antibiotics in the feed fed to animals bred for human consumption.

The data in this report, assembled from the annual material that each President submits to Congress for the next year's appropriation, indicate some year-by-year variation, but mostly illustrate a few trends. For FDA as a whole, comparing FY2006, the most recent year for which we have parallel data sources for both dollars and FTEs, to FY1980 yields these inflation-adjusted findings (see Figure 1 ):

FDA Budget:

almost a doubling of direct congressional appropriations (budget authority); more than an 10-fold increase in other funds, mostly user fees; resulting in an overall budget in FY2006 almost 2-1/2 times that in FY1980.

FDA FTEs:

less than a 1% increase in budget authority-funded FTEs; an almost fourfold increase in FTEs funded by other sources, mostly user fees; resulting in an overall 19% increase from FY1980 to FY2006.

Similar relationships are observed in each of the major activity areas that receive user fees (the Foods program does not have user-fee funds) and are discussed in this report. The human drugs program, along with biologics, was the first to include user fee revenue in its budget and is a good example to illustrate the relationship over time between congressionally appropriated dollars and user fee generated dollars. Again from FY1980 to FY2006, the data show that the human drugs total budget (program level), which included user fee revenue, more than tripled (a 231% increase) although the direct congressional appropriations (budget authority) increased by 78%. The effect of user fees is even more evident in comparing the number of FTEs. The budget authority funded FTEs decreased by 14%, but the overall human drug FTE level increased by 40% because of user fee funding. For the human drug program in FY2006, user fees contributed 46% of the budget and funded 39% of the FTEs.

In general, Congress has either kept direct appropriations in line with inflation (FY1980-FY1988, FY1994-FY1997, and FY2002-2007) or increased them gradually (FY1989-FY1993 and FY1998-FY2001). The exception is FY2002, when Congress increased direct appropriations to FDA by 23%, along with increases to other public safety agencies in response to the attacks of September 11, 2001, and the anthrax mailings soon after.

Congress and various administrations have allowed FDA's research program to diminish and its many data systems are not meeting the agency's needs. The context of this report does not allow a distinction between program decisions made by budget constraints and those made by policy intent.

The focus of this report is the FDA budget. The discussion does not, therefore, explore other possible constraints on FDA's meeting its responsibilities and the public's expectations. Such factors could include the agency's lack of strong advocates, both externally (such as NIH has with its patient advocacy groups) and internally (because of chronic vacancies in key leadership positions, including the Commissioner). Independent of whether the FDA budget is sufficient to cover agency responsibilities is how FDA manages the resources it does have. The influence of non-budgetary factors likely complicates agency actions, though analyzing that is beyond the scope of this report.

From 1980 through 2007, 36 new major statutes were enacted that address FDA activities. This report does not evaluate the impact of individual statutory requirements on the workload and resources needs of the agency. However, an examination of the FDA Amendments Act of 2007 (FDAAA, P.L. 110-85 ) provides examples of the funding issues discussed in this report. Some news coverage of FDAAA hailed it as "the most sweeping overhaul of the Food and Drug Administration in a decade." In addition to the widely expected reauthorization of drug and device user fees and pediatric drug research incentives, FDAAA, among other things, authorized demonstration grants, including ones for improving pediatric device availability; established mechanisms for public-private partnerships to support FDA's mission to accelerate medical product innovation, translational therapeutics, and enhanced medical product safety; required an expanded clinical trial registry databank; and strengthened FDA's authority to require studies and labeling changes for drugs already on the market.

Implementation of these and other provisions is to involve the development of new regulations and extensive communication with industry and the public. Carrying out these new responsibilities will require time and resources. To fund all these provisions, FDAAA authorized annually an additional $250 million in appropriations and $32 million in user fee revenue. Absent appropriations, these authorizations remain congressional statements of intent.

This report has focused on the presentation of FDA's financial and human resources and statutory responsibilities over time. In presenting that information in context, the report also identifies actions—other than a straightforward increase in direct appropriations—that others have suggested as possible steps to help FDA's budget situation. These propose to:

Restructure the PDUFA trigger mechanism to minimize its unintended effect of pulling resources from non-PDUFA activities. Authorize FDA to bypass the HHS and OMB budget offices in submitting its request for appropriations to Congress. Require, in addition to the OMB-processed budget request, that the FDA Commissioner submit to Congress a Professional Judgment budget based on his or her personal expertise and experience. Move FDA appropriations from the appropriations subcommittees on agriculture to the Labor-HHS subcommittees, which handle most other agencies involved in protecting the public's health.

Appendix. Methodology

This report tracks, as consistently as possible with publicly available material, the FDA budget numbers and employee numbers (FTEs) from FY2007 back to FY1980. The goal was to provide about 25 years of budget and FTE history accompanied by changes in the agency's statutory responsibilities. Only limited budget and FTE data are available from bills and reports of the congressional appropriations committees. Citing constraints on its staff time, FDA indicated that it would only be able to provide data for recent years. Therefore, this report used data prepared annually by FDA for Congress at the beginning of each budget cycle and presented in the Justification documents. The Justifications are prepared initially by FDA and transmitted through HHS to OMB, often with adjustments made by HHS and OMB. These documents provide detailed budget and FTE data along with an extensive narrative.

Over the years, changes in agency organization, accounting methods, definitions, and other conditions resulted in variations in data presentation in the Justification documents. Although some data inconsistencies found in the documents could be explained, other inconsistencies could not. This section of the report provides the basic approach used to calculate historical budget and FTE numbers, highlights inconsistencies among the Justification documents, and describes the steps taken to make the data as consistent as possible. There may be additional data inconsistencies that were not found because they were less readily apparent.

The annual Justification documents present first the overall FDA information (narrative, and budget and FTE data) followed by information for the various activity areas within the agency. Except as noted below, this report uses data from the Actuals column in tables labeled: All Purpose Table—Total Program Level ; All Purpose Table—Budget Authority ; and All Purpose Table—User Fees . These tables are found at the beginning of each Justification document. The report also uses activity-specific data from similar tables that are included at the beginning of the Justification ' s narrative section on each activity area.

Overall FDA Budget

The FDA's total budget, also called the program level , consists of (1) direct congressional appropriations, referred to by FDA as budget authority , and (2) funds collected or transferred from other sources, which this report refers to as other funds and which FDA lists under user fees in recent Justifications . Other funds include all of the financial and FTE resources that are available to FDA as itemized in the Justifications that are from sources other than direct congressional appropriations. In recent years, the largest component of other funds comes from user fees collected under the authority of the Prescription Drug User Fee Act, the Medical Device User Fee and Modernization Act, and the Animal Drug User Fee Act. Grouped separately in some years' Justifications are other fees obtained under the Mammography Quality Standards Act, and fees collected for color certification, export certification, and Freedom of Information Act (FOIA) requests. Additional sources itemized in the Justifications include advances and reimbursements; Parklawn Computer Center FTEs; CRADAs; and P.L. 83-480 (Agricultural Trade Development and Assistance Act of 1954) funds. Note that overall FDA budget authority includes appropriations for both "Salaries and Expenses" and "Buildings and Facilities." (In contrast, as indicated below, activity-area budgets include only "Salary and Expenses.")

Activity Area Budgets

This report follows the order in the FY2008 Justification document in presenting information on FDA's five major activity areas: Foods, Human Drugs, Biologics, Animal Drugs and Feeds, and Medical Devices and Radiological Health. For each activity area, the Justification provides the amount given by direct congressional appropriations ( budget authority ) and user fees (a narrower category than other funds ), the total of which is the program level .

The Justification documents do not allocate an amount for Buildings and Facilities to each activity-area. Buildings and Facilities is recorded as a separate line within the overall FDA budget. Activity area amounts in this report's tables and graphs are for Salaries and Expenses.

The report groups remaining FDA activities (Toxicological Research), agency-wide responsibilities (Headquarters and Office of the Commissioner) and expenditures (Rent, Buildings and Facilities) into an "Other Activities" category. Tables A2 and A3 in the Appendix of this report include budget and FTEs for Other Activities within the FDA Total columns, but do not provide a separate Other Activities column. Budget amounts for Other Activities are included in Figure 1 and Figure 3 , which present overall FDA data.

Inflation Adjustment

Data in Table A-2 in the Appendix are as reported in the Justifications and have not been adjusted for inflation. For Figures 1 and 2 as well as Figures 4-9 , data have been adjusted for inflation using "Total Non-Defense" deflators from Table 10.1, Gross Domestic Product and Deflators Used in the Historical Tables: 1940-2012, found on pages 192-193 in: Office of Management and Budget, Historical Tables, Budget of the United States, Fiscal Year 2008 .

Basic Approach

As stated above, this report uses data found in the Actuals column of tables in the Justification documents. Budget and FTE information for each activity area found in the overall summary tables at the front of the Justification document was compared with information found in the tables within the activity-area sections of the same document for confirmation. When a Justification included inconsistent information, Justification documents from the preceding and succeeding fiscal years were used to resolve the problem. The steps taken to resolve specific inconsistencies are described below in Table A-1 in the Appendix . The reporting format that FDA has used within the Justification documents to describe both its overall budget and those of its various activities has changed over the past 28 years. The format in this report was kept as consistent as possible with the format found in the FY2008 Justification .