Food Companies Face Fees Under Obama Budget Proposal - WSJ

Food Companies Face Fees Under Obama Budget Proposal - WSJ


WASHINGTON—Food companies and drug makers could face more than $250 million in new fees under a proposal included in the Food and Drug Administration budget Monday by the Obama administration.

The fees would be used to review applications for generic drugs, improve inspections of food facilities and cover the costs of reinspecting drug manufacturing plants.



The fees would have to be enacted by Congress before they could be collected, and the idea faces opposition from the food industry. Presidents have proposed such fees before without success.

Food inspection and registration fees were in a House food-safety bill passed last year. The Senate hasn't moved forward on a companion bill.

Kraft Foods Inc. spokeswoman Susan Davison said the company supports increased funding for the FDA but believes the money should come from direct government spending rather than fees on food companies. General Mills Inc. spokeswoman Kirstie Foster said, "We support the proposed funding. Ensuring food safety is the highest priority of our industry."

Overall, the Obama budget would boost funding for the FDA by $80 million to $2.43 billion for fiscal year 2011. The overall budget figures don't include user fees the agency collects from companies to review product applications and inspect facilities. Including such fees, Obama's budget request totals $3.7 billion compared with $3.2 billion in fiscal 2010.

Some of that increase stems from a law President Barack Obama signed last year giving the FDA the authority to regulate the tobacco industry. The budget calls for the agency to collect $215 million in user fees from tobacco companies in 2011.

Last year, the FDA received a $300 million budget increase, the largest in its history. Considering inflation, this year's proposal is "basically a flat budget," said Bill Hubbard, a former associate commissioner for policy and planning at the agency.

The administration cited food safety as a major focus. The proposed budget for the Department of Health and Human Services includes $1.4 billion to strengthen food safety initiatives and enforcement, and implement core principles of the president's Food Safety Working Group, which he announced in March, 2009 in the wake of deaths from bacteria-infected peanut butter, and the recall of some pistachio products. It wasn't immediately clear what mix of existing and new programs was included in the $1.4 billion figure.

The working group is designed to coordinate efforts by the Department of Health and Human Services, including the FDA, with the Department of Agriculture. Its mandate includes more inspections of plants and warehouses, as well as programs designed to prevent contamination and food-borne outbreaks of diseases from salmonella and E. coli bacteria.

The FDA has already taken one step proposed by the working group, creating a new position of FDA deputy commissioner for food. Michael Taylor, a food safety expert and former FDA official, was named to that post last year.

Some lawmakers, such as Rep. Rosa DeLauro (D., Conn.), who heads the House appropriations panel that handles the FDA budget, have pushed for the creation of a separate food safety agency. That proposal isn't part of the Obama budget, but Mark Mansour of the Bryan Cave lobbying firm in Washington said the strengthening of the working group is a step in that direction.

"There's evidence, such as this budget item, suggesting people are working around the current system to implement a separate, food-directed agency, even if it doesn't formally exist," Mr. Mansour said.
—Paul Ziobro contributed to this article.