Service cuts may be necessary for the US Food and Drug Administration if Congress enacts a budget that cannot accommodate an already implemented staff pay increase, Commissioner Robert Califf warned.
In part to compensate for rising inflation in 2023, President Biden instituted a mandatory 5.2% pay increase on average for federal employees. Califf told the Alliance for a Stronger FDA during a 31 January webinar that the agency is looking for ways to find the money in the existing budget to pay for the salary bump since Congress has yet to enact fiscal year 2024 appropriations.
“If the budget is flat given our inflationary pay increases that have already been approved, that means we’re gonna have to look for offsetting reductions in activities that we do because we have a limited number of people and an overwhelming amount of work,” he said. “Given inflation I think [the pay increase is] a very justifiable situation so we just have to reduce things that we do for the number of people that we have.”
The pay increase became effective on 14 January and was the largest for federal employees since the 1980s.
Given the narrow Republican and Democratic majorities in the House and Senate, respectively, reaching agreement on a funding level has proven difficult. Congress has passed three continuing resolutions since the start of FY 2024, the most recent extending the previous fiscal year’s FDA appropriations until 1 March to allow more time for negotiations.
The threat of a government shutdown remains, although is unlikely. The FDA would be forced to furlough thousands of workers if Congress does not extend appropriations, but application review and other activities could continue running temporarily thanks to user fee carryover balances. (Also see "Shutdown Prep: US FDA Updates Plan To Furlough More Employees" - Pink Sheet, 16 January, 2024.)
Service Cuts One Of Many Options To Make-Up Shortfall
The FDA would not comment on how it has handled instances where its budget could not support salary increases without cuts.
Several options could be on the table. In addition to cutting existing services, planned service expansions could be postponed or some payments for purchases could be deferred. The agency also could not replace departing employees quickly or reduce the number of new hires.
Alliance Executive Director Steven Grossman said FDA officials in the past have allocated pay raises by center, which made it difficult to know whether agency officials left the shortfalls to individual centers or the entire agency to resolve. No matter what is done, the process is “painful,” he said.
“The mix and amounts are certain to be different each time,” Grossman said.
The House Appropriations Committee sent an FY 2024 FDA funding bill to the floor with a $26m cut in non-user fee funding and major policy changes on the use of the abortion drug mifepristone. The Senate appropriations bill would provide a $20m increase in budget authority over the FY 2023 level. (Also see "House FY 2024 Approps Bill Nixes US FDA Mifepristone REMS Changes, Cuts Funding" - Pink Sheet, 16 June, 2023.)
President Trump’s FY 2017 budget request included a $40m reduction for the FDA that was to be achieved through slower hiring and “non-pay administrative reductions.” (Also see "US FDA Faces Hiring Slowdown, Funding Cuts In Trump's FY 17 Plan" - Pink Sheet, 29 March, 2017.) The enacted appropriations bill that year ended up increasing non-user fee dollars for the agency, but user fee revenue decreased. (Also see "US FDA Gains Budget Increase In FY 2017… And Not Through Fees" - Pink Sheet, 1 May, 2017.)
Year-Round Cuts And Shutdown Prep
Califf said the seemingly annual budget uncertainty “can be excruciating,” but almost has become an expectation. He said the FY 2024 budget situation is unique because of the multiple funding extensions.
Califf said preparations, including for potential cuts, now happen throughout the year.
“That sort of thinking and work has been going on for a while,” he said during the webinar. “It’s really almost continuous now because this comes up almost every year.”
Califf added that the problem also penalizes efforts to strengthen the foods program after the infant formula crisis.
“It’s maybe doubly hurtful in that the budget as proposed would have some nice increases for the areas particularly in food safety and nutrition where we’ve had a big focus for the last couple of years,” he said.
The FDA is undergoing a substantial reorganization of the human foods program and Office of Regulatory Affairs, in part because of the problems from contaminated and subsequent shortage of infant formula in 2022. Most of the FDA’s 21 offices will be impacted by the proposed changes, which include moving most compliance functions and staff to the various product centers. (Also see "‘The Largest Reorganization In FDA’s History’: ORA Overhaul Better Thought Of As Agency-Wide Reorg" - Pink Sheet, 21 January, 2024.)
