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From: Food Quality & Safety magazine, April/May 2014

Will FDA's New Budget Cover Food Safety Costs?

by Ted Agres

Will FDA’s New Budget Cover Food Safety Costs?

For Fiscal 2015, which begins ­October 1, the FDA is requesting $1.48 billion to support food safety activities, a $263 million (22 percent) boost over current year ­levels. Of this amount, $253 million would be directed to implement provisions the Food Safety Modernization Act (FSMA). But only $24 million of that would be provided by public taxpayer funds with the lion’s share of $229 million coming from industry user fees, including proposed new fees for food import and food facility registration and inspection.

President Obama released his Administration’s Fiscal 2015 budget request on March 4. FDA’s total budget comes to $4.74 billion, a $358 million (8 percent) increase of over Fiscal 2014. Of the total, $2.58 billion would come from public funding and $2.16 billion would be obtained from new and existing user fees, imposed mostly on manufacturers of prescription and generic drugs, medical devices, and tobacco products. New and existing food industry fees constitute a smaller but rapidly growing portion of these assessments. Overall, more than 93 percent of FDA’s $358 million increase comes from industry user fees, which would jump by $335 million or more than 18 percent, while the agency’s public support would increase by only $23 million or less than 1 percent.

The agency’s overall increase “is really quite a positive outcome for FDA in this tight budget environment,” said FDA Commissioner Margaret A. Hamburg, MD, in a statement accompanying the budget release. “I consider the additional funding for the agency to be a tribute to the important work FDA performs on behalf of the American people, the hard work and dedication of FDA employees, and our ability to meaningfully demonstrate the value of our work to stakeholders.”

FDA says the proposed food safety increase will allow it to focus on five main activities: rulemaking and guidance development to support regulatory action; technical support to ensure safety standards are effective and efficient; food safety regulatory training and capacity among stakeholders and partners, including federal, state, local, tribal, and international entities; risk analysis to support priority setting; and research to better understand the impact of antimicrobial resistance on public health.

‘Insufficient Funds’

FDA’s proposed increase “looks trivial compared with the resource needs for FSMA implementation,” says David Acheson MD, president and CEO of the Acheson Group LLC and a former FDA associate commissioner for foods. “And this is not just about more inspections. It is about having the resources to raise awareness around FSMA and training for inspectors so they fully understand FSMA,” Dr. Acheson tells Food Quality & Safety magazine.

Having sufficient funding for FSMA is essential. “Without adequate funding, FDA will be unable to adequately fulfill its oversight responsibilities,” said Michael R. Taylor, FDA deputy commissioner for foods and veterinary medicine, in congressional testimony earlier this year. “This includes implementing the Foreign Supplier Verification Program, which requires new staff and skills to audit and verify the adequacy of the importer’s verification plan; conducting more foreign inspections; working more closely on food safety with foreign government to leverage their efforts; and improving our data and import systems to facilitate prompt entry of foods that meet our safety standards,” Taylor told the House Committee on Energy and Commerce Subcommittee on Health in February.

When FSMA was signed into law in January 2011, the Congressional Budget Office estimated that FDA would need more than $580 million in additional funding to implement the law’s requirements. Last year, the Department of Health and Human Services, FDA’s parent agency, lowered that estimate to $400 million to $450 million based on different assumptions and a commitment to efficiency. To date, FDA has received $78 million for FSMA, an agency spokesperson tells Food Quality & Safety.

Boost in User Fees

The proposed new user fees include a $169 million food import fee and a $60 million food facility registration and inspection fee. The import fee would target activities associated with implementing the Foreign Supplier Verification Program, which includes recruiting and training FDA import staff to assess the adequacy of importer supply chain management and verification programs. The agency says it will also invest in the staff, information technology, and process improvements needed to make timely import entry decisions. “These fees will enhance both the safety protections for imported food and feed and the efficiency and speed of food and feed entry decisions, thus supporting international trade in safe food and feed,” the agency says in its “Justification of Estimates for Appropriations Committees.”

Under FSMA, firms are required to renew and update their registration information every two years. In addition, all “high-risk” domestic facilities must be inspected by 2016 and no less than every three years afterwards. The law directs FDA to inspect at least 600 foreign facilities annually and double those inspections every year for the next five years. Despite deficiencies in its database systems, FDA had been aiming to inspect all foreign and domestic high-risk facilities within three years, two years earlier than directed by FSMA, and is attempting to inspect all non-high-risk facilities within seven years, according to the agency’s “2013 Annual Report on Food Facilities, Food Imports, and FDA Foreign Offices” released last November.

The new food facility registration fee would be used to upgrade FDA’s inspection system “by increasing the effectiveness of inspections through adoption of preventive controls, training of personnel to inspect against the new prevention standards, and developing new ways to educate and inform industry,” the agency says. The fee would also support improvements in food and feed safety science and risk analysis, “so that knowledge of the methods of food and feed contamination can better prevent outbreaks and ensure that resources are better focused on areas of greatest risk.”

Authorization to impose the new user fees will require passage of new legislation, something that is far from certain. The FDA’s Fiscal 2014 budget request had also proposed the facility registration and import user fees. In his February congressional testimony, Taylor said the registration fee would allow FDA to increase its capacity to establish an integrated national food safety system “and further strengthen food safety inspection, research, and import review.” The proposed import user fee would assess a “minimal amount (approximately $20)” per line entry, defined as each portion of an imported shipment that is listed as a separate item on an entry document. “The improvements to the import process with not only facilitate the entry of safe products, but also improve public health by enabling FDA to focus its attention on higher-risk products,” Taylor said.

If the new user fees are approved and enacted next year, FDA will use the funds for comprehensive retraining of federal and state inspectors to ensure inspection quality and consistency; training and technical assistance for small and mid-size growers and processors; and building the import oversight system mandated by FSMA. “A central theme of these investments is supporting and leveraging the food safety efforts of both public and private partners to make the most effective use of available resources,” the agency says in its congressional justification.

But Dr. Acheson is skeptical that Congress will give FDA the green light. “Once again the FDA has asked for user fees, and they did not get them the last several times, and they will not likely get them this time, either,” he says. “The last several budgets have also had amounts for re-inspection fees, but as far as I am aware the FDA

has not put the system in place to collect any of those. Maybe that is a ‘Catch-22’ in that they don’t have the resources to put the system in place to collect the resources they so desperately need,” Dr. Acheson says.

Indeed, the current year’s $15 million food reinspection user fee would be cut to $6 million in Fiscal 2015, while a current $13 million food recall fee would drop to $1 million. The already authorized Voluntary Qualified Importer Program, which is intended to expedite imports from certified foreign suppliers and importers, would collect $5 million in new user fees starting next fiscal year. In addition, FDA is requesting a new $5 million food contact notification user fee “to better position FDA to reduce microbial food contamination through premarket notification to ensure the safety of food contact substances.”

In a related area, the Fiscal 2015 budget request for USDA’s Food Safety and Inspection Service, which provides federal inspection of domestic meat, poultry, and processed egg products establishments as well as inspection of imported meat, poultry, and egg products, would remain relatively flat at around $1.0 billion. The budget anticipates implementation of “modernized poultry inspection practices,” including efficiencies through the rollout of the Public Health Information System to states, resulting in more streamlined administrative and scheduling processes, USDA says in its budget document.

Budget Outlook Murky

Traditionally, release of the president’s annual budget request marks the start of the congressional appropriations process, with committees in the House and Senate holding hearings on agencies under their jurisdictions. But it’s been five years since Congress has passed a budget this fashion, with legislators having largely ignored the White House’s proposals. The situation is further complicated this year because Congress has already agreed to two-year federal spending levels through a budget deal spearheaded in December 2013 by House Budget Committee Chairman Rep. Paul Ryan (R-WI) and Senate Budget Committee Chairwoman Sen. Patty Murray (D-WA).

In fact, Murray announced in February that Senate Democrats would not bother passing a budget this year because “it wouldn’t be productive to relitigate it so soon after our two-year deal.” Ryan has said that Republicans in the House would wait to see Obama’s budget request before beginning the process of crafting a “balanced budget” of their own for FY 2015.


Agres is based in Laurel, Md. Reach him at tedagres@yahoo.com.

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