Recent OMB Report & Other Factors Indicate U.S. Food Manufacturers May Pick up Tab For FSMA
In February of this year Cansler Consulting foretold of the fiscal challenges ahead at the Food and Drug Administration (click here to read article) in implementing the nation’s new food safety law, The Food Safety Modernization Act (FSMA). Late last week the Office of Management and Budget (OMB) released a congressionally-mandated report outlining potential impacts of budget sequestration on defense and non-defense discretionary programs verifying our analysis. The 400-page document showcases the impacts that budget cuts would have on all areas of government, including the safety of our nation’s food supply that is under the jurisdiction of the U.S. Food and Drug Administration and the Department of Agriculture.
Dept of Ag to Cut nearly $3 Billion Next Year
According to the OMB report the Department of Agriculture would be required to cut a total $2.996 billion in the remaining eight months of FY 2013 (January to September 2013). This includes $86 million from the Food Safety Inspection Service that is responsible for the safety of the nation’s commercial supply of meat, poultry, and egg products.
Are (Food Industry Paid) User Fees Next?
The U.S. Food and Drug Administration would be required to cut $318 million over the same timeframe. To date there’s been no decision made on what programs FDA intends to cut if budget sequestration becomes a reality.
The OMB report showcases the complicated irony of recently adopted federal food policy and budget realities. Moreover, and as we highlighted earlier, such austere budgets will force congressional leaders and government agencies alike to look more closely at policies like user fees in order to ensure adequate funds are available to pay for government, or third party inspections that offer the public assurances that their food is safe.
The FSMA currently maintains provisions directing the Secretary to assess and collect fees related to
- food facility re-inspection;
- food recalls;
- the voluntary qualified importer program; and
- importer re-inspection.
It also applies to export certification fees to food.
On July 31, FDA announced in the Federal Register the fiscal year FY 2013 (October 2012-September 2013) fee schedule for certain domestic and foreign facility re-inspections, importer re-inspections, and failure to comply with recall orders. The hourly rates are $221 if domestic travel is required and $289 if foreign travel is required. According to the Federal Register Notice, “The fee is based on the number of direct hours spent on re-inspections, including time spent conducting the physical surveillance and/or compliance re-inspection at the facility, or whatever components of such an inspection are deemed necessary, making preparations and arrangements for the re-inspection, traveling to and from the facility, preparing any reports, analyzing any samples or examining any labels if required, and performing other activities as part of the re-inspection until the facility is again determined to be in compliance.” FDA is accepting comments on the Notice until October 31, 2012: To file comments online go to Submit Comments.
Recall, last year FDA testified before congressional committees that it would require an additional $1.4 billion over the next five years to implement the new FSMA. Moreover, about two-thirds of the operations required to implement the new FSMA would have to come from state and local agencies, under significant fiscal constraints themselves, to inspect U.S. food manufacturing systems through cooperative agreements with FDA.
USDA & FDA Cuts Mean Food Industry Picks Up the Slack
Unless Congress acts to limit the impacts of budget sequestration on FDA, or makes changes to the FSMA, it is becoming increasingly evident that the fiscal burden to fund the FSMA will fall on U.S. food manufacturers. In fact, a precedent has already been set that showcases large bi-partisan congressional support for increased user fees in the health care industry.
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Having two decades of experience working closely with congressional leaders on key Committees and regulatory officials, Tim Cansler, Founder and Chief Strategist of Cansler Consulting, continues to successfully achieve legislative and policy initiatives vital to client interests. Tim’s successful strategies have consistently helped educate Members of Congress leading to federal budget authorization and appropriations sought by clients. He has also been successful in working with regulatory officials to ensure programs beneficial to his clients’ interests are implemented as intended.
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