Food and Drug Administration

FY 2001 Congressional Budget Request

^1/ Includes current law user fees for Certification Fund, Mammography Quality Standards Act, and Export Certification, proposed additive user fees and the Transfer of Seafood Inspection Program for FY 2001. The Seafood Inspection Program is not new revenue to the Government, having been user fees previously collected by the Department of Commerce (DOC). In FY 2001 these will be collected by the Department of Health and Human Services (DHHS).

EXECUTIVE SUMMARY

Americans rarely experience their government at its best in ways that are as personal, meaningful, and cost effective as the round-the-clock public health protections provided by the Food and Drug Administration (FDA). FDA protects all consumers in the United States with a broad umbrella of safeguards that enable them to go about their daily business without worries about the safety of the myriad of products FDA regulates - from the foods we buy and eat, to the medicines and vaccines we take, to the modern conveniences that emit radiation, such as microwaves that we use, to the medical devices, blood and blood products used in hospitals, to animal drugs and feeds, and even cosmetics.

The FY 2001 President's budget request for FDA is $1,390,831,000 an increase of $175,927,000 over the FY 2000 enacted level. This budget continues the emphasis on the dual goals of FDA - ensuring the highest level of safety for marketed products (postmarket), and ensuring timely availability of safe and effective new products that benefit the public (premarket) - which allow our nation to continue as the world leader in new product innovation and development. The request focuses on Assuring Safety through Strengthened Science, as well as ongoing Special Initiatives. Initiatives include:

• $22.9 million to further reduce the time needed to get safe and effective products to market;

• $10.0 million to help stop the illegal sale of drugs over the Internet;

• $12.8 million to reduce the number of Americans who die annually from medical errors, currently estimated at 100,000, by improving adverse event report systems;

• $3.1 million to improve adverse event reporting for dietary supplements and animal drugs;

• $13.5 million to better ensure the safety of products on the market, and get closer to statutory compliance by conducting more inspections;

• $20.0 million to better ensure the safety of imports by replacing the unacceptable Los Angeles laboratory facility;

• $5.0 million to move the Center for Food Safety and Applied Nutrition to its new facility;

• $4.8 million in increased rent charges from GSA;

• $37.3 million in proposals for new user fees and continuations of existing ones to further improve performance;

• $30 million to continue reducing illness and deaths resulting from contaminated food;

• $5.0 million to expand efforts to prevent children from using tobacco; and

• $11.5 million to ensure expeditious development and licensure of vaccines to be used in response to possible bioterrorist attacks.

FDA's Challenges

Traditionally, FDA has focused on assuring safety through its core activities of premarket application review and postmarket surveillance. However, as we move into the 21^st century with the explosion of new technologies and ever-growing threats to the public health, it is clear that our ability to assure safety is directly linked to maintaining a strong science base that keeps pace with accelerating technology. FDA must remain current in science to fully understand the risks associated with such new products, so as to formulate regulations leading to greater safety assurance. To illustrate: In the past twenty years expenditures in drug research have increased seven-fold; the drug discovery process is being driven by major breakthroughs in both biotechnology and information technology; medical device technology has shifted from x-rays and CAT scans to also include robotics, miniaturization and bio-materials; trade and the standards that guide it have become increasingly globalized; and consumers' purchasing cues have shifted dramatically from traditional print and electronic media to the Internet.

The Agency's stakeholder community is essential to the success of managing this complex range of product risks. To perform its regulatory role effectively, and to ensure a level playing field, FDA will join forces with its regulatory and health partners to rapidly recognize, and then minimize, threats to product-related public health and safety. The Agency will be unable to address 21^st century consumer protection challenges by working independently.

The challenge of an ever growing myriad of new products, means that FDA must strengthen its activities across the entire spectrum of product development and regulation. Premarket approvals are not a single event that the Agency undertakes. The Agency communicates with industry prior to submission of applications. This guidance improves the quality of submissions received and helps reduce product development times. Once a product is marketed, FDA must monitor it - this includes analyzing any adverse event reports that occur, inspecting the facilities that manufacture the product, and taking necessary action to remove a defective product from market.

FDA must address an environment - both domestically and internationally - that continues to broaden in scope and complexity. The strategies reflected in the FY 2001 budget represent the persistence of challenges that FDA faces every year. These strategies will begin but will not be completed in the short run because of the continuing dynamic of the science, trade, and regulatory environment. FDA's long-term goal is to strengthen its science base to intelligently regulate in an environment of increasing complexity.

This budget request begins to bring FDA into the 21^st century - a century with unforeseeable possible advances as a result of science and technology - with a strong, focused emphasis on managing risk, developing science within the Agency, and pursuing leveraging opportunities with industry and academia.

FDA Accomplishments

The Agency has several broad-reaching accomplishments that have been possible with increases provided by Congress, as well as focused efforts by FDA. The end result is that safe and effective products get to market much more quickly.

Prescription Drug User Fee Act (PDUFA). In the premarket arena, as a result of PDUFA and diligent efforts by the Agency, drugs are now being reviewed as fast or faster than anywhere in the world, allowing patients to reap the benefit of having new and innovative safe and effective medical products on the market more rapidly. Industry has similarly benefited far beyond its user fee investments paid to FDA. FDA is on track to meet or exceed all performance commitments associated with PDUFA for FY 2000.

Food Safety Initiative. FDA, in collaboration with Centers for Disease Control and Prevention (CDC), US Department of Agriculture (USDA), and State and local governments, continued progress towards development of a plan for a nationally integrated food safety system. All three 1999 milestones have been completed: Creation of a coordinating body to focus on a vision and next steps; establishment of work groups to draft proposed plans and projects; and solicitation of input from stakeholders. FDA has completed a method to detect as many as 13 foodborne pathogens from one sample, resulting in faster hazard detection and removal of potentially dangerous foods from the market place. The funding support to date has allowed for mechanisms that have been remarkably successful - several outbreaks of foodborne illness have been shortened; the result is fewer deaths and illnesses.

Important New Products. FDA has other successes in the product review area. Not only are an increased number of new products brought to market, but many of these products represent significant advances over those that were previously available. Recent approvals include new therapies for osteoarthritis, influenza, obesity, HIV, and diabetes. FDA has also reviewed new clotting agents for patients with hemophilia A, a new imaging device for the diagnosis of breast cancer, a new device for removing blood clots from blocked arteries, a new biological treatment for non-Hodgkins lymphoma, and major vaccines approved for Lyme disease, rheumatoid arthritis and blood disorders. Funding provided by Congress in FY 2000 will further these successes across all product areas.

Streamlining Premarket Activities. FDA has completed several reinvention efforts to streamline the premarket review process to accelerate review times for important new medical devices and animal drugs. These efforts relied on collaboration with health professionals and industry to assure public health and safety before and after market entry.

FDA Modernization Act (FDAMA). The Agency has successfully implemented FDAMA. The FDAMA Statutory Compliance Plan provides a strategic blueprint for our future direction, and identifies the gap between the Agency's current capacity, and the goals of statutory requirements and public expectations. FDA is implementing many suggestions to improve our processes and thereby our effectiveness, and is fully committed to interactive dialogues with our many stakeholders. Two themes that have emerged from stakeholder interactions are the need to strengthen the science and analytical base of the Agency for making regulatory decisions, and the need for improved communications, including maximizing the availability and clarity of information for consumers about new products and for industry about review processes. FDA has already made considerable gains in these areas and plans to build upon them.

FY 2001 Budget Request

Despite notable successes, there are important areas where FDA can and should do a much better job to assure safety through a strengthened science base. The FY 2001 budget requests the resources necessary for its core activities of premarket review and postmarket surveillance. The majority of the request clearly focuses on postmarketing activities. With the tremendous growth in new product development applications, the need for FDA to bolster its activities post-approval is critical. The following table shows our request by initiative, by program, and by a premarket and postmarket split.

Insert table showing budget authority increases by program, initiative, and by pre/postmarket.

ASSURING SAFETY/STRENGTHENING SCIENCE INITIATIVES

PREMARKET INITIATIVES

Bringing Products of New Technology to Market + $22.9 million, 63 FTE

Problem Identification: As technologies emerge at an increasingly rapid rate, FDA is challenged to keep pace with scientific advances while at the same time making prompt regulatory decisions. Delays in getting new products to market can postpone critically needed treatment, especially for a growing population of elderly and immune-compromised patients. In many of these new product areas, FDA does not possess an efficient and flexible review process coupled with "cutting edge" reviewers that will lead to an environment with industry that fosters innovation.

Proposed Response: FDA's request will be used to strengthen its science base with a focus on efficiencies in the premarket application review program. FDA must have well-trained and professionally respected scientific experts who can effectively review cutting edge technology. FDA efforts will:

• Enhance scientific capabilities to better manage risks associated with emerging biotech foods. FDA and industry have consulted on approximately 40 new bioengineered food products to date.

• Expedite reviews of generic drugs (versions of drugs already in the marketplace).

• Reduce review times for animal drugs for quicker market access.

• Improve the safety of children's vaccines through the National Vaccine Safety Program (NVSP), which will reduce the risk of disease transmission through vaccines.

• Improve the quality and safety of the nation's blood supply with better diagnostic tests that reduce the threat of emerging blood-borne infectious diseases being transmitted through blood.

• Improve pandemic flu activities to reduce the incidence and severity of influenza.

• Increase product review activities and develop standards for high-risk medical device re-use applications for reprocessed devices meant for single use.

Outcomes:

• Continue the trend where important new therapies routinely appear first in the American market due to the efficiency of the US product development process and the timely FDA regulatory response to this effort.

• Provide a predictable review process that will ease the burden on regulated industry by making clear what is expected and when.

• Continue US leadership in providing the quickest possible consumer and patient access to new products.

POSTMARKET INITIATIVES

Internet Drug Sales + $10.0 million, 77 FTE

Problem Identification: The Internet, while promising enormous benefits to business and consumers, is also being used by unscrupulous individuals to unlawfully promote and sell approved and unapproved prescription drugs to consumers. State and Federal laws require that certain drugs be dispensed only with a valid prescription, because they are not safe for use without the supervision of a licensed health care practitioner. Generally, before the practitioner issues a prescription for a drug the patient has never taken before, he or she must first examine the patient to determine the appropriate treatment. Patients who buy prescription drugs from Websites operating outside the law are at increased risk of suffering life-threatening adverse events, such as side effects from inappropriately prescribed medications, dangerous drug interactions, contaminated drugs, and impure or unknown ingredients found in unapproved drugs.

During FY 1999 illicit or illegal sites grew dramatically, and we anticipate that they will continue to increase in the coming years. As a result, there has been an increasing public call for greater FDA action.

Proposed Response: During the first quarter of FY 2000, FDA devoted over 30,000 staff-hours to investigate the hundreds of illicit Internet sites by reassigning investigative staff from other high priority efforts. That effort is inadequate to deal with the growing problem and has diverted resources from other critical public health objectives.

In FY 2001, FDA's overall goal is to reduce the illegal promotion, sales, and distribution of approved and unapproved prescription pharmaceuticals via the Internet. This action will protect consumers from obtaining unsafe, ineffective, and fraudulent products that present a real danger to the public health. FDA plans to enhance its enforcement effort of Internet sites that violate Federal laws relating to prescription drugs, and will also undertake a greater public education campaign to help consumer's shop wisely for approved prescription and non-prescription pharmaceuticals online.

FDA's strategy focuses on putting a halt to illicit or illegal activity by identifying the pharmaceutical Internet sites that pose the greatest threat. The Agency will use prevailing Internet hardware and software to carry out surveillance and investigative activities, and will focus on sites identified by FDA investigators, and those sites reported by consumers via FDA's Internet site (http://www.fda.gov/oc/buyonline/buyonlineform.htm). FDA will support a rapid response team to deal with these sites. FDA intends to work closely with State authorities on issues that affect the practice of pharmacy or the practice of medicine. FDA's close coordination with State regulatory officials and other Federal agencies will allow the Agency to leverage resources and expedite the process of eliminating fraudulent activity on Internet sites.

FDA's goal is to eliminate domestic Internet sites that sell illegal or potentially dangerous drugs to US consumers, and to stop the importation of such drugs from foreign countries. The Agency will work with the US Customs Service, the Drug Enforcement Administration, and the Postal Service to monitor prescription drug imports coming into this country from all sources.

Outcomes:

• Reduce the fraudulent distribution and sale of unapproved, misbranded, and possible counterfeit prescription drugs to consumers. 

• Reduce the sale of prescription drugs without a legitimate prescription. 

• Reduce practices that promote the sale of prescription drugs where there is no physician-patient relationship. 

• Reduce the health risks to individuals ordering pharmaceuticals.

Medical Errors + $12.8 million, 25 FTE

Problem Identification: A recent study by the Institute of Medicine (IOM) estimates that close to 100,000 Americans may be dying each year as a result of preventable medical errors because of failures within the complex systems of modern health care. Doctors, nurses and other health professionals represent the human component of the system. The rest of the system is largely comprised of a vast array of drugs, medical devices, blood and other biological products that are regulated by FDA. While the causes of medical error cover a broad spectrum, from errors attributable to only human mistakes, to errors that are almost entirely attributable to a medical product, most medical errors involve health professionals and the use of medical products. FDA's workload will surely increase as a result of the rising number of new drugs on the market and new surveillance initiatives.

Proposed Response: FDA and other agencies within DHHS are working with Departments across the Federal government to improve health care through the prevention of medical errors and enhancement of patient safety.

Features that contribute to errors in actual product use are not always identifiable before FDA approval. Once products are widely used in today's complex and fast-paced healthcare delivery system, these "human factors" can emerge as safety risks. The Agency has surveillance systems (Adverse Event Reporting Systems - AERS) to find harm resulting from use of FDA-regulated products, including reports from hospitals and other facilities and spontaneous reporting from health care professionals. When alerted to problems with a product, the Agency acts to understand harm with a thorough safety analysis by medical and scientific experts. The analysis identifies critical factors causing the problem, and may identify product features and safety procedures that should be changed. FDA may then take action to prevent harm to other patients, including communicating to doctors, other health professionals, and patients. If necessary, FDA may require changes to the medical product. The "lessons learned" about safe product features are also incorporated into the Agency's review of future products.

Recent and dramatic increases in the numbers of newly-approved drugs and other products, increases in patient use of medical products, and continuing time and cost pressures on health care providers, have raised the level of risk for human error in the use of medical products. FDA receives over 300,000 Adverse Event Reporting System (AERS) reports each year, but the data cannot yet be adequately sorted and analyzed in a timely manner. Automation is necessary to make this system more effective.

FDA needs to increase its capabilities to protect patient safety in each of its three safety activities. The request includes an additional $12.8 million which would allow FDA to speed initiatives to further reduce medical errors over the next few years.

Outcomes:

• Estimated costs for these medical errors are as high as $80 billion a year. If we reduce the incidence of these errors by only 10 percent, not only will we save lives, but we will reduce cost burdens on the health system by $8 billion a year.
• Build more capacity for active surveillance of problems with medical products through the Adverse Event Reporting Systems across the Agency.
• Develop links to hospital-based information systems, to better support hospital staff working on the "front lines" of patient safety. This includes improving the reporting systems for blood errors and accidents, continued implementation of the Medical Device Surveillance Network (MeDSuN) to address under-reporting and incomplete reporting of medical device problems, and to extend its capacity to include drug reports, as well as increased use of other electronic systems to monitor problems with use of drug products.
• Increase FDA's capacity to do the multi-factor analysis to correctly identify the sources of safety problems and potential solutions. This includes establishing links to safety databases maintained within community-level healthcare delivery systems and regional-level safety surveillance systems, and adding to expertise in medical epidemiology and statistical analysis.
• Increase FDA's capacity to act on safety findings, including better risk communication to providers and patients who use medical products; regulatory steps to correct product design and manufacturing problems; and partnerships with other health agencies and health care organizations.

Adverse Event Reporting System (AERS) - Dietary Supplements ($2.5 million, 2 FTE) and Animal Drugs ($0.6 million, 3 FTE)

Problem Identification: Dietary Supplements (Foods) - The dietary supplement industry is one of the fastest growing industries in the world. Dietary supplement sales have nearly doubled in the past five years and one study estimates that sales will increase by over 90 percent over the next six years. Surveys show that over half of the US population now uses some type of dietary supplement, spending over $12 billion per year for such products.

Dietary supplements are not subject to premarket safety review or approval by FDA. Moreover, dietary supplement manufacturers are not required to report adverse events associated with the use of their products. Recent experiences with serious adverse events - including deaths associated with the use of dietary supplement products like ephedra, digitalis-contaminated plantain, and others - underscores the severity of the situation. Because of the large number of new products entering the marketplace and the growing number of American consumers using these products, the risk of adverse events such as these is growing exponentially.

FDA's ability to monitor the safety of dietary supplements is dependent on the Adverse Event Reporting System. Unfortunately, the system is outdated and does not permit FDA to adequately monitor and evaluate adverse events associated with the use of dietary supplements.

Animal Drugs - The animal health industry and veterinary professionals rely on information gathered on the safety and effectiveness of marketed products in general animal population use. Information is gathered on over 1,200 products through 12,000 adverse experience reports annually. Because FDA does not have the resources to process all reports in a timely manner, and currently has a backlog of 6,000 AERS reports, reports must be triaged, and only the most serious health hazards are evaluated.

Proposed Response: Dietary Supplements - FDA will enhance its system for monitoring and evaluating adverse events associated with the use of dietary supplements with an integrated science-based system that will provide a faster, more efficient way to evaluate adverse reports and shorten the time needed for taking responsible action that could save lives.

Animal Drugs - Funding will provide for additional document processing staff, and maintenance and enhancements for the Center for Veterinary Medicine AERS Oracle database to improve efficiency in data entry and evaluation. As a result, FDA will be equipped to reduce the currently existing backlog of adverse event reports related to animal drugs.

Outcomes:

• Dietary Supplements - Provide greater assurances to consumers that problems will be identified and action taken promptly. Provide access to data through the FDA Home Page. 

• Animal Drugs - Reduce in-depth review times for pending AERS reports with added contractual support staff and database enhancements. This will reduce the existing backlog of reports and improve the quality of assessing and managing risk identified from AERS reports related to animal drugs.

Inspectional Activities + $13.5 million, 89 FTE

Problem Identification: FDA's ability to physically verify the safety of domestic and imported products has eroded considerably in all product areas, even as consumer expectations continue to rise. This level of effort is also falling significantly short of the minimum inspection obligations required by the FDA Modernization Act.

FDA inspections, laboratory analysis, and related surveillance activities are the primary means of assuring safety once products are in use by consumers. Despite their effectiveness as both corrective and preventive public health tools, America relies on significantly fewer inspection-based quality assurance programs than many other industrialized countries. New technologies, international regulatory commitments, and increasing coordination with State partners require new and challenging expansions of FDA's traditional inspection role. Import entries alone increased 14 percent in FY 1999, and over all, less than one percent of import entries are physically examined. Even in conjunction with its State regulatory partners, FDA is able to annually inspect less than a third of the domestic firms within its purview. The number of FDA inspections for foods, drugs, and devices (excluding mammography), foreign and domestic, including inspections by State agencies under contract to FDA has decreased from 28,000 to 22,000 between 1991 and 1999. This decrease of 6,000 inspections, or 21 percent, reflects the impact of the time required to perform the complex science based inspections now necessary to assess safety, and the almost static level of investigational personnel in the past eight years. In the area of imports, the total volume of FDA-regulated imports is estimated to exceed $50 billion per year. Imports continue to grow in volume, complexity, and diversity of sources.

Proposed Response: FDA will utilize the $13.5 million in additional funding to make modest improvements in statutory inspection coverage through additional FDA inspections and the use of leveraging and expanding existing State contracts. The requested funds will prevent the FDA from falling behind the FY 2000 level of inspectional effort and offset absorptions of inflationary increases.

Outcomes:

• Conduct more inspections for Human Drugs, Biologics, Animal Drugs and Medical Devices, where the law requires specific inspection frequency. 

• Expand State contracts to further leverage inspectional coverage in all program areas. Improve the existing levels of annual inspectional coverage. Buildings and Facilities (Los Angeles Laboratory) + $20.0 million

Problem Identification: FDA's field laboratories provide critical laboratory and analytical support to the domestic and import inspection effort and are a key element in the science base of FDA. One of the key field laboratories in the FDA inventory is located in Los Angeles, CA. The existing Los Angeles laboratory is an outmoded facility in a high crime area. The Los Angeles District annually reviews nearly 1.2 million import line entries, almost 24 percent of the Agency total. In FY 1999 alone, the Los Angeles laboratory analyzed 22.9 percent of the imported Foods samples taken by FDA.

FDA cannot remain in the present Pico Boulevard facility. If funding is not provided, the Agency will have to shift work to laboratories in other states, further from the point of entry. This will inevitably have a significant negative impact on FDA's import surveillance capability, and on the southern California food import industry.

Proposed Response: FDA will utilize the $20.0 million to fund a portion of the construction of the Los Angeles Laboratory and Office project. This first phase will construct the core and shell of the project.

With funds from a previous appropriation, the FDA purchased land and contracted with a firm to develop a design concept for the replacement laboratory and district office, housing 75 laboratory staff and 120 office personnel. Design work is essentially completed. Estimated construction cost totals $43.0 million which includes laboratory casework, fume hoods, construction management, and escalation costs due to phased construction. The budget requests the remaining $23.0 million as an advanced appropriation for FY 2002.

Outcomes:

• Consolidate three Los Angeles district sites (the laboratory on Pico Boulevard, the current district office in Irvine, and the San Pedro Resident Post) into one location, replacing three existing leases totaling $2 million annually.
• Provide a safer location and a vastly improved working environment for FDA employees and partnering State laboratory personnel.
• Provide a concentration of scientific talent available which will permit better management of the analytical workload and will provide significant improvement in operational efficiency, especially during emergencies.

College Park Relocation + $5.0 million

Problem Identification: Construction on the Center for Food Safety and Applied Nutrition facility in College Park, Maryland is scheduled to be completed in FY 2001.

Proposed Response: In FY 2001, FDA requests funds for one-time costs to equip and occupy the facility located in College Park, Maryland. The FY 2001 requested funds will support telecommunications equipment and necessary connections, and moving costs.

Outcome:

• Begin relocation of the Center for Food Safety and Applied Nutrition to a new state-of-the-art facility scheduled to open in 2001.
• Consolidate most Center activities in one location, resulting in more effective and efficient operations.

GSA Rental Payments + $5.0 million

In FY 2001, FDA requests an increase of $5.0 million, for a total of $105.0 million, which includes $99.1 million in Salaries and Expenses and $5.960 million in PDUFA funds. FDA's Other Rent and Rent Related account remains at $25.855 million.

USER FEES

Proposed New User Fees

FDA is requesting $19.5 million in new additive user fees for premarket review of direct food additive petitions, food export certificates, and medical device review of 510(k)s.

Direct Food Additive Petition User Fees + $8.4 million, 55 FTE

Problem: FDA has made recent improvements in reducing direct food additive petition review time, while still assuring safety, but more needs to be done. Food safety technology is continually moving toward more complex food additives.

Proposed Response: Some industry support exists for additive user fees for food additive petitions. The food industry has indicated that its objective is to have a food additive approval process that can regularly deliver high quality and timely scientific reviews and decisions on food additive petitions so that food safety is protected and innovation in food technology is not deterred by the regulatory process.

These proposed fees would supplement rather than replace funding from general revenues for review of direct food additive petitions. Additional resources would enable the Agency to take a number of steps to improve its review of products, including enhanced training to support the scientific expertise of reviewers that need to keep pace with increasingly complex products, and pre-filing consultations with petitioners.

• Provide a stable source of revenue that ensures the timely review of scientific safety data.

• Provide FDA with the resources necessary to make significant progress toward meeting its petition review goals.

• Improve review performance will help maintain consumer confidence in the safety of direct food additives and gets new, safe products to market much more quickly.

Food Export Certificate User Fees + $5.3 million, 23 FTE

Problem: Collection of user fees for export certificates for human drugs, animal drugs, and devices is authorized in Section 801 (e)(4)(B) of the Federal Food, Drug, and Cosmetic Act (the Act). However, this section does not cover collection of user fees for export certificates for foods. FDA expends significant resources for these certificates.

FDA Response: Food exporters are required to comply with an increasing number of European Union (EU) requirements for certificates attesting to the safety of animal-derived foods. Such certificates attest to product compliance with EU directives and standards, not FDA regulations. In order to provide such certificates to US food exporters, the Agency may need to conduct more frequent inspections or analyze products for the presence of substances that may not be considered significant public health risks in the US. FDA would like to recoup the costs incurred as a result of such inspections or laboratory analyses, and administrative costs associated with issuance of export certificates.

FDA currently issues export certificates for foods when requested by an exporter. Collection of user fees for food export certificates will enable the Agency to fully support this program through these fees and limit the current redirecting of existing monies from other food safety programs. FDA expects to issue approximately 30,000 export certificates per year at a cost of $175 per export certificate under this provision. This would yield $5.25 million per year in revenue. Private sector exporters would bear the cost of the program and reap the benefits through the Agency's enhanced ability to facilitate product exports in compliance with the importing countries' requirements.

Outcome:

• Collect user fees that will enable FDA to provide food export certificates in a timely manner, without impacting other food safety initiatives.
• Improve the ability of food producers to export their products, thus enhancing the global competitiveness of US industry.

Premarket Medical Device Additive User Fees + $5.8 million, 30 FTE

Problem Identification: Medical device manufacturers currently face a significant financial disincentive to use the third party review option created by FDAMA. Ninety-seven percent of the firms, mostly small businesses, facing the choice between out of pocket expenses for a third party review or the free FDA review, opt for the least cost option of FDA review. FDA currently faces a workload/staffing imbalance which limits the Agency to achieving final actions within 90 days for only 70 percent of all 510(k)s.

Proposed Response: FDA will provide services and funding that will rapidly transform the fledgling market for third party reviews into a mature and self-sustaining service industry. User fees will provide funding support that will alleviate the perceived cost barrier to third party review. FDA will also apply user fee revenue to reduce information barriers to third party review by constructing a virtual electronic marketplace where fully informed applicants can quickly weigh cost and performance options offered by different third parties and initiate their desired review option.

This user fee mechanism will likely be only a temporary incentive that will prove unnecessary after third party reviews mature to demonstrate their positive impact on more timely market access.

Outcomes:

• Encourage a majority of medical devices eligible for third party review to use this mechanism and thereby rapidly mature this service.
• Bring the volume of reviews to a level that will yield economies of scale, closely competitive pricing, and performance substantially quicker than in-house FDA reviews.

Proposed Transfer of User Fees

Seafood Inspection Transfer + $12.7 million, 139 FTE

FDA is requesting the transfer of the Seafood Inspection Program currently under the US Department of Commerce. The program under the Department of Commerce is authorized to collect user fees of $12.7 million derived from the seafood industry for services. The program provides voluntary inspections and certification services for fish and fishery products on a fee-for-service basis and addresses issues of wholesomeness, economic integrity and quality. Legislation is being developed to transfer the program to FDA.

Current Law User Fees + $5.2 million

Current law User Fees total $170.4 million, include Prescription Drug User Fee Act (PDUFA) fees of $149.3 million, Mammography Quality Standards Act (MQSA) fees of $15.1 million, Export Certification Fees of $1.5 million, and Certification Fund of $4.5 million.

PDUFA was reauthorized for an additional five years by the FDA Modernization Act (FDAMA), signed on November 21, 1997. FDAMA provided substantial additional resources and staffing to accelerate the drug evaluation process without compromising review quality. FDA has developed a five-year plan for the strategic management of PDUFA II. This document, updated annually, will provide a blueprint to assure that PDUFA II achieves the same levels of success as PDUFA I. This increase includes $0.2 million in GSA rent for space utilized in support of PDUFA.

FDA proposes to revise the distribution of projected spending of PDUFA fees for FY 2001 among the Human Drugs, Biologics, and Other Activities programs to reflect recent patterns of actual spending within the PDUFA program. This is similar to reallocations approved by the Appropriations Committees in both FY 1998 and FY 1999, and will not increase FDA's total spending for Other Activities. The net change for this reallocation is zero.

The reallocation within PDUFA is necessary to assure that PDUFA fee revenues are used to pay their fair share of the costs of FDA management (Other Activities). To make this change permanent, our FY 2001 budget request reflects our proposal to fully utilize these funds for Other Activities and possibly avoid a reprogramming request later in the year. This $5 million of Salaries and Expenses funds will be made available to FDA operating programs (excluding Tobacco), as a partial alleviation of the cost impact of the recent 4.8 percent general pay raise.

The Mammography Quality Standards Act of 1992 was reauthorized in 1998 for an additional five years (P.L. 105-298). MQSA required that mammography facilities be certified by

October 1, 1994, to remain in operation and inspected annually to ensure compliance with national quality and safety standards. FDA requests an increase of $0.3 million in MQSA authorized inspection user fees to cover inflation, for a total of $15.1 million and 50 FTE in

FY 2001. The fees collected will pay for the costs of the inspections.

Other authorized user fees include $1.5 million and 13 FTE for Export Certification, and $4.5 million and 35 FTE for color certification activities. We are requesting an increase of

$1.1 million to cover inflation and projected workload growth for these activities.

SPECIAL PROGRAM INITIATIVES

Food Safety Initiative + $30.0 million, 131 FTE

Problem Identification: The world of food has changed significantly and the methods used to assure a safe food supply must change as well to protect the American consumer. Food contamination can happen anywhere along the farm-to-table continuum, which starts with production from meat, poultry, agriculture, dairy and produce farms, continues with processing and distribution, to the retail level (restaurants, grocery stores, daycare establishments, institutional settings), and ends with handling and preparation by the consumer, with transportation occurring between each step.

Consumer diets are more varied and include foods that are more susceptible to foodborne pathogens. In the 1940s, the average consumer diet consisted of meat and potatoes, which were locally grown and produced, plus canned vegetables. In addition, only a few pathogens were typically found in foods. In the 1990s, diets have changed to include more seafood, fresh domestic and imported produce, and convenience or ready-to-eat foods. Also, a much larger percentage of meals are prepared and consumed outside the home. Vulnerable populations have increased to as much as 25 percent of the US population to include pregnant women, children, the elderly, and immuno-compromised persons. Finally, the number of identified pathogens found in food has more than tripled. But more importantly, these pathogens are more deadly. Foodborne pathogens used to cause stomach aches and diarrhea; now they cause severe, life-threatening illness, and sometimes kill.

Proposed Response: The Food Safety Initiative represents a multi-year, inter-agency effort to improve food safety. This initiative has successfully built a strong foundation for a science-based, integrated food safety system, and has promoted partnering among the key Federal agencies (FDA, CDC, and USDA), States, academia, industry, and consumers. A total of $30.0 million is requested for FY 2001 to as follows:

• Expand domestic inspections to ensure annual inspections of all high-risk food establishments and enhance laboratory capabilities for the analytical support associated with inspectional activity.
• Implement State audit programs to ensure consistent application of regulations and develop consistent nationwide standards for on-farm preventive controls for egg producers and food handling practices at retail.
• Implement the Hazard Analysis Control Control Point (HACCP) system for fruit and vegetable juices.
• Develop and evaluate on-farm intervention strategies and/or technologies to improve testing methodologies for Salmonella Enteriditis (SE) on the farm and in eggs, evaluate commercial processing technologies and practices, and conduct research to understand the ecology and epidemiology of SE in the hen and farm environment.
• Complete the National Antimicrobial Resistance Monitoring System (NARMS) by adding national and international data collection sites as well as including major species of micro-organisms that cause foodborne disease.
• Target areas of greatest risk through assessments that provide the scientific basis for prioritizing food safety research and surveillance activities including antibiotic resistance monitoring.
• Expand support and expertise in molecular methods that can be used to rapidly identify markers of toxicity of foodborne pathogens.
• Develop new methods for routine surveillance of fluoroquinolone resistant Salmonella and Campylobacter to provide the data needed to make informed risk decisions concerning the use of quinolone-based antimicrobials in poultry and antibiotic resistance.

Outcomes:

• Provide the US with a consistent, uniform system to respond to foodborne illness, that has contributed significantly to shortening outbreaks and reduced incidence of illness and death.
• Improve research and risk assessment activities that provide the cornerstone for a science-based food safety system. Contamination is no longer detectable through a visual review involving sanitation issues - it is bacterial, microscopic, and requires sophisticated, state-of-the-art technologies to detect and control.
• Complete surveillance systems that identify, contain, and respond to foodborne outbreaks, as well as assess antimicrobial resistance. FoodNet, PulseNet, and the National Antibiotic Resistance Monitoring System (NARMS) are critical to the early detection and containment of foodborne outbreaks and to the detection of emerging antibiotic resistant pathogens that FDA, CDC, USDA and the States work on cooperatively.
• Increase the number of inspections to promote and verify the use by industry of techniques that prevent microbiological contamination.
• Target educational messages to people along the farm-to-table continuum, particularly those in the most vulnerable groups. These messages provide information to improve awareness and knowledge of safe food practices.
• Continue the successful efforts to date that have resulted in shortening many outbreaks. The risk of foodborne illness and death related to microbiological contamination of both domestic and imported foods has decreased.

Tobacco Program - Promoting and Protecting the Health of Our Nation's Youth + $5.0 million

Problem Identification: Tobacco products are responsible for more than 400,000 deaths annually due to cancer, respiratory illness, heart disease, and other health problems, representing five million years of potential life lost each year. Each day, nearly 3,000 young people across the country begin smoking regularly. Of these 3,000 young people, 1,000 will die prematurely because of a decision made as a child. Conservative estimates are that children and adolescents illegally purchase tobacco products 250 million times each year.

Proposed Response: The Agency's approach is threefold: enforcement and evaluation, compliance outreach, and product regulation. With the additional $5.0 million, FDA will:

• Increase leveraging contracts with State and local tobacco stakeholders. This funding will allow (1) more compliance checks of age and ID restrictions; and (2) 100 percent re-checks of violators. FDA will also develop a reliable, national list of tobacco retailers and complete installation of an information technology system to automate the program's business and communications processes.
• Increase the scope of the media campaign aimed at increasing retailer awareness of, and compliance with, the tobacco regulation.

Outcomes:

• Reduce, by 50 percent, young peoples' use of tobacco within seven years of full program implementation. To help reach this goal, FDA will continue to work with other organizations within the Department of Health and Human Services, (DHHS), other agencies, the States, and other stakeholders.
• Continue leveraging efforts through State contracts and extensive interactions with stakeholders.

Countering Bioterrorism + $11.5 million, 26 FTE in Budget Authority (+$4 million increase on a comparable basis)

Problem Identification: Preparing for and responding to an attack involving biological agents is complicated by the large number and characteristics of potential agents. These characteristics include: a large number of potential agents, most of which are rarely encountered naturally; their sometimes long incubation periods and a delayed onset of disease; their potential for secondary transmission; and their potential for being genetically engineered to resist current therapies and evade vaccine-induced immunity. While there is a need to develop specialized vaccines for these biological agents, there are limited commercial interests or market incentives in addressing this problem, thus it falls upon the Federal government to be prepared.

Due to the highly toxic nature of the agents identified as potential bioterrorist agents, specialized equipment and facilities are necessary to understand these agents to prevent, diagnose and treat outbreaks. For the most part, FDA does not currently have the necessary equipment or facilities for either preventing or treating potential outbreaks.

Proposed Response: FDA is an important contributor to the Nation's capability to respond to potential chemical and biological threats from bioterrorism. FDA's role includes assuring that new vaccines and drugs are safe and effective, safeguarding the food supply, and conducting research for diagnostic tools and treatment of disease outbreaks. Unlike other DHHS agencies that are participants in the Administration's anti-bioterrorism initiative, FDA plays a critical but less visible role with respect to its programs. Whether the issue is the development and use of rapid diagnostics to quickly identify a suspected biological agent or the capability to make available and administer large quantities of a vaccine or drug to counter the effects of a bioweapon, FDA's research is the linchpin that makes it possible for the Centers for Disease Control and Prevention (CDC), the National Institutes of Health (NIH), the Office of Emergency Preparedness (OEP), the Department of Defense (DOD), and others to carry out such activities.

FDA's research includes the development of new analytical approaches and methodologies, and determines if new products provide needed benefits without causing adverse side effects that would outweigh those benefits. This research includes both laboratory and non-laboratory investigation to address FDA regulatory responsibilities both immediately, and in the long-term.

The key elements of FDA's approach to counter bioterrorism is to:

• Develop vaccines in collaboration with NIH, CDC, DOD academia and private industry. The goal is to ensure expeditious development and licensure of vaccines for smallpox, anthrax, plague, tularemia, Q-fever, encephalitis-causing alphaviruses, and botulinum.
• Coordinate vaccine, drug and device stockpiling and prepare for emergency response including rapid detection and decontamination procedures.
• Develop new diagnostic products, rapid methods development, and comprehensive reviews for new drugs, therapeutics, and vaccines including new uses of existing products; expand research to identify toxicity indicators associated with biological warfare agents; and initiate global animal feeds monitoring system.

Outcomes:

• Expeditiously review and approve every drug, therapeutic, vaccine, and anti-toxin to be administered to humans.
• Complete the FDA review process for safety and efficacy for the pharmaceuticals, rapid diagnostics, and vaccines that are needed in the event of a bioterrorist attack. Since this regulatory process can sometimes be lengthy and complex, it is essential, in the interest of national security and public health, that FDA engages in the process as early as possible with sponsors and organizations that are developing the therapeutics, vaccines and rapid diagnostics.
• Work pro-actively, by outlining the individual steps that must be taken to obtain FDA approval for: pre-clinical toxicity testing; protocols for conducting the clinical trials; review and analysis of trial results; review of proposed manufacturing procedures; inspection of the manufacturing process to assure compliance with Good Manufacturing Practices; and post-marketing surveillance of adverse events.

Current Services Absorption

For the past seven years, FDA, along with much of the Federal government, has absorbed the annual inflationary increases for pay and non-pay. At first, the impact of absorption was negligible as FDA was able to offer efficiencies. However, as new opportunities to streamline disappeared, inflationary increases were absorbed by reducing staffing levels each years. The FY 2001 request reflects a reduced staffing level of 160 FTE. Fewer FTE translate into fewer people to perform FDA's core activities of premarket review and postmarket assurance. This hampers FDA's ability to assure safety through strengthened science and meet our public health mission.

Effects of Rescission - $3.0 million, 20 FTE

On October 28, 1999, Congress passed a government-wide rescission as part of the Omnibus Consolidated Appropriations Act. This reduction was not imposed across-the-board, but targeted to reflect specific areas. The Department-wide reduction from the FY 2000 budget totaled $165.8 million. Each agency within the Department received a reduction and no agency was reduced by more than $100 million. FDA's reduction totaled $2.977 million.

Edited 3/1/2000