1. Presentation to the Drug Information Associations US Conference on Rare Diseases & Orphan Products Government Shutdown 2013: The Impact on FDA and NIH October 7, 2013 For more information, contact: Steven Grossman, sgrossman@strengthenfda.orgsgrossman@strengthenfda.org

2. Macro vs. Micro Budget Considerations FDA/NIH funding: mix of macro/micro budget factors Macro: issues that affect the entire federal budget. Need for increased funding for FDA and NIH will not cause Congress to decide on higher overall spending targets, abandon sequester or set the Continuing Resolution at a higher level. Micro: how FDA and NIH do on their own merits relative to: previous years funding; other agencies within the same appropriations bill; growth in mission Current impasse is solely on macro budgetary issues Congressional support for FDA and NIH funding remains strong 1

3. Iron Triangle of Deficit Reduction To reduce annual deficit/control long-term debt: cut discretionary spending (appropriations), reduce the cost of entitlement programs, and raise additional revenue (taxes or closing loopholes). Discretionary spending is shrinking, but even cutting it to zero would have little effect on long-term deficits. Congress/President unable to agree on a package of entitlement and revenue changes. Until they do, discretionary spending will be subject to harsh macro budgetary constraints: notably low aggregate spending ceilings and sequestration, 2 Spending Revenue Entitlements

4. CR + Shutdown + Debt Ceiling = Chaos No approps or CR on October 1 forced govt shutdown House/Senate agreed on FY 14 short-term spending levels House Republicans insisted on changes to Affordable Care Act Confusing: is shutdown about ACA or about macro budget? Answer: yes Impending vote to raise debt ceiling complicates No idea how/when ACA/spending impasse will resolve Possible outcomes: overarching budget deal? debt ceiling passes; shutdown continues? something not yet part of the discussions? 3

5. Shutdown Ground Rules ALL Federal employees are furloughed Exceptions: Authorized by law Not affected by lapse of appropriations (e.g. Social Security) Presidential appointees (includes commissioned corps) Jobs whose continuation is implied by law (e.g. law enforcement) Exceptions: Safety of human life and protection of property Direct patient care Protect ongoing experiments, animal facilities, computer data What can be worked on is key, not who is doing it 4

6. FDA: Whos Working, Whos Not 5 8,180 employees working (55% of total FTEs) Of those working: 75% of retained employees work on user fee programs: reviews of medical product applications not requiring new fees programming specified in FDASIA technical agreements, and regulation of tobacco products 25% of retained staff most urgent safety/property protection issues narrow definition; patient, consumer and industry needs not factors Almost no one is working on: food inspections/food safety monitoring inspections of medical products facilities and clinical trial sites, development of regulations and guidance, esp. related to new laws research, laboratories, NCTR, medical innovation

7. NIH: Whos Working, Whos Not 6 4,948 employees working (27% of total FTEs) Of those working: 50% are involved in providing medical services Clinical Center operating; not accepting new patients Roughly 90% of normal patient load for first few weeks 25% are protecting ongoing medical experiments and maintaining lab animals, equipment and facilities Remainder working on orderly phase-down/suspension of operations, law enforcement, maintaining computer data Unless covered above, no one is working on: grants, awards and contracts intramural research maintaining databases, except clinicaltrials.gov (special exemption)

8. Shutdown Impact on Rare Diseases/Orphan Products Information is hard to get; may be inexact FDA General correspondence/IND applications: open NDAs or BLAs applications that only have orphan designated indications, or a supplement for an orphan designated indication: open Office of Orphan Drug Product: technically closed (?) but some staff may be working on FDASIA projects or be commissioned corps FDASIA job slots not filled NIH Clinical center: existing patients okay, no new ones No staff for rare disease office or undiagnosed diseases initiative? Extramural trials funded in FY 13 or before and not needing NIH sign-off or grant assistance should be fine for the short-term 7

9. After the Shutdown: Consequences of an Underfunded FDA FDAs vital, complex world-wide public health responsibilities cannot be accomplished within its existing budget, particularly post-sequestration. FDA is a staff-intensive organization. More than 80% of its budget is devoted to staff-related costs. If the agency budget fails to grow soon….. problems with imports and globalization will become more numerous, drug and device reviews will be slower, conflicting with promises made to consumers and companies, critical efforts to modernize the agency and improve its support for innovation will stall, and food will be less safe and consumers put at risk. 8

10. After the Shutdown: Consequences of an Underfunded NIH NIHs global leadership in basic and clinical biomedical research cannot be maintained within its existing budget. NIHs ability to fund research grants has already been diminished by flat funding, inflation and sequestration. If the agency budget fails to grow soon…. the hopes of American patients and consumers will be diminished by the slowed pace of knowledge-acquisition and therapeutic development support for our nations research universities will be reduced efforts to train young researchers and target support for the nations most productive laboratories will be undercut NIHs role as research information hub for researchers, patients, physicians and hospitals will be reduced 9

11. Alliance for a Stronger FDA Started in 2006, nearly 200 members Patient and consumer groups Health professional and research advocacy groups Industry groups and individual companies Individuals, including former commissioners Entire FDA community represented, including drug development, medical devices, food safety Goal: increasing FDA appropriations because a strong, well-funded FDA benefits all stakeholders 10