S. 2516, Food and Drug Administration Safety and Innovation Act

Cost Estimate
May 11, 2012

As reported by the Senate Committee on Health, Education, Labor, and Pensions on May 7, 2012

S. 2516 would authorize the collection and spending of fees by the Food and Drug Administration (FDA) for certain activities to expedite the marketing approval of prescription drugs and medical devices and to regulate drugs after they enter the market. The bill would provide the FDA with additional regulatory authority to improve the safety of the drug supply chain and establish an early warning notification system to mitigate or prevent critical drug shortages. It also would create a new approval procedure for breakthrough drug therapies and offer financial incentives to drug sponsors to produce certain antimicrobial drugs. In addition, the legislation would streamline the process for reclassifying medical devices and permanently reauthorize programs that evaluate the use of drugs by children.

CBO estimates that enacting S. 2516 would:

  • Reduce direct spending, on net, by $71 million over the 2013-2017 period and by $358 million over the 2013-2022 period.
  • Increase federal revenues, on net, by $5 million over the 2013-2022 period.

Considering both the direct spending and revenue effects, we estimate that enacting S. 2516 would reduce budget deficits by approximately $71 million over the 2013-2017 period and by $363 million over the 2013-2022 period. Pay-as-you-go procedures apply because enacting the legislation would affect direct spending and revenues.

Implementing S. 2516 would also have several effects on spending subject to appropriation. CBO estimates that the bill would authorize increased funding for a variety
of FDA activities, but the majority of the gross increase in FDA spending would be offset by increased collections of fees that would be credited against discretionary spending. On balance, CBO estimates that net discretionary spending (primarily by FDA) would rise by about $330 million over the 2013–2017 period, assuming appropriation actions consistent with the bill.

S. 2516 contains both intergovernmental and private-sector mandates as defined in the Unfunded Mandates Reform Act (UMRA). Extending the requirement to pay fees for medical devices and expanding the registration standards applied to drug manufacturers would be intergovernmental mandates as defined in UMRA for state, local, or tribal governments that manufacture medical devices for commercial purposes. However, CBO estimates that the costs of complying with those mandates would be minimal and well below the threshold established in UMRA for intergovernmental mandates ($73 million in 2012, adjusted annually for inflation).

The legislation contains several mandates on the private sector as defined in UMRA. The most costly of those mandates would require that manufacturers of different types of drug and device products pay fees to the FDA. CBO estimates that the direct cost of all private-sector mandates in the bill would greatly exceed the annual threshold specified in UMRA ($146 million in 2012, adjusted annually for inflation) in each of the five years that the mandates would be effective.