OIG and FDA 2016 Budgets Highlight Health Care Improvements, Reducing Waste and Improving Quality

The White House issued its fiscal year 2016 budget which devotes significant funding to health care related issues and improvements. The budget summary pledges investment “in America’s Future,” with funds targeting reduced health care spending, the promotion of reforms that reward value rather than volume, assistance with the development of new payment methods, and incentive for innovation. Of particular interest to diagnostic laboratories are the Food and Drug Administration (FDA) and the Office of the Inspector General (OIG) budget requests. Here are some highlights. FDA $4.9 Billion FY 2016 Budget Includes Focus on Precision Medicine The FDA is seeking 9 per cent more funding for fiscal year 2016, citing increased responsibilities including oversight responsibility for a new food safety system and the need to add scientists, physicians, analysts, and inspectors to its roster of experts needed to meet demands brought on by “five major pieces of groundbreaking legislation passed since 2009.” The FDA requested funding to support 2016 activities addressing: food safety, antibiotic resistance, implementation of the Food and Drug Administration Innovation Act (FDASIA), drug compounding, the Sunscreen Innovation Act, facilities updates, and medical countermeasures—including diagnostic tests—to combat “chemical, biological, radiological, nuclear, and emerging infectious disease threats.” Of most relevance to laboratories is a focus on precision medicine. A good portion of the $4.9 billion requestedbudget is devoted to “promoting the development and appropriate use of reliable molecular and genetic diagnostics—precision medicine tools—to ‘personalize’ the diagnosis, treatment, and prevention of disease.” Justifying the increased budget, FDA Commissioner Margaret A. Hamburg, M.D. stated in a Feb. 2 FDA Voice blog posting that products regulated by the FDA “represent over 20 cents of every consumer dollar spent on products in the United States.” She said each taxpayer contribute “approximately $8 per year for the vast array of protections and services provided by the Precision Medicine While acknowledging the significant benefits of precision medicine—namely its ability to “diminish duration and severity of illness, shorten product development timelines, and improve treatment success rates,” the FDA explains that: “Despite extraordinary advances in technology and understanding of disease processes, the development of precision medicine and its translation into clinical practice poses a number of scientific and regulatory challenges that block the promise of a new era of personalized treatment options.” The FDA expressed an intent to increase its resources including the addition of more “expert scientists and clinicians” to address the “premarket evaluation of these new technologies.” More specifically, the FDA promises to “develop Next Generation Sequencing (NGS) standards” that will set criteria for laboratories’ quality systems for performing NGS testing, quality assurance and control, and proficiency testing requirements. The FDA also wants to “advance the development and use of high quality curated databases to provide information on genetic variants and their link to disease.” In fact, the FDA has a workshop scheduled for February 20, 2015 devoted to discussing standards for NGS. Dora L. Hughes, MD, MPH, a senior policy advisor at Sidley Austin and former senior Obama Administration official, notes: “Of the $215 million in funding requested for the Precision Medicine Initiative, only $10 million is allocated for the FDA. The NIH (National Institutes of Health) will receive $200 million and $5 million will go to the Instead, the new dollars are expected to be invested in regulatory science and the development of new databases, both of which are needed to inform the review and approval processes for precision medicine related diagnostics and therapeutics. That said, I would expect that this new initiative could have a secondary impact on FDA’s regulation of LDTs given the overlap between the two areas of focus.” Antibiotic Resistance Another area of interest to diagnostic laboratories that received significant funding in the budget was the issue of antibiotic resistance. The FDA expressed a desire to “spur the development of breakthrough diagnostic tests to help control the spread of antibiotic resistance in the United States.” The requested funding will, among other things, support use of “an existing genome sequence repository to drive breakthrough research on antibiotic resistant bacteria.” The FDA indicated the resulting data should help develop “new molecular and genome based diagnostic tests and advance the rapid detection and control of resistant bacteria.” The Jan. 27 White House Fact Sheet addressing the 2016 Presidential budget also expressed a commitment to antibiotic resistance, noting that the requested funding for antibiotic resistance devoted efforts is nearly double the 2015 allocation. The White House emphasized the importance of diagnostic testing in these efforts: “Optimal, informed deployment of antibiotics relies on diagnostic tests that can quickly and accurately detect disease-causing bacteria, identify the presence of antibiotic-resistant bacteria, and characterize resistance patterns.” Specifically, the budget seeks to fund development of more rapid diagnostic tests including point-of-care diagnostic tests to hopefully reduce antibiotic use. LDTs Not Expressly Addressed Highlighting its 2014 accomplishments, the FDA’s budget justification mentions the October 2014 draft guidance for regulation of LDTs and its effort to “close well known regulatory gaps and provide clarity regarding the proposed enforcement for LDTs that pose the greatest risk to patients.” The remainder of the FY 2016 budget summary doesn’t expressly address future efforts with regard to LDT regulation, as noted above. OIG Budget Seeks Funding to Continue Combatting Fraud and Waste The Office of the Inspector General’s (OIG) requested fiscal year 2016 budget seeks $417 million for its oversight efforts related to the Department of Health and Human Services including its joint work with the Department of Justice through the Health Care Fraud Prevention and Enforcement Action Team (HEAT). The OIG cited in the Executive Summary of its budget justification that the “Institute of Medicine estimated that 30 per cent of U.S. health spending (public and private) in 2009—roughly $750 billion—was wasted.” Thus, the OIG said it would “target wasteful spending” including “improper payments, unreasonable payment methodologies, and unsafe or low quality health care.” It also expressed a commitment to focusing oversight efforts on programs such as “new payment and delivery models in Medicare and Medicaid.” Demonstrating its 2014 successes as support for its requested funding, the OIG reported 971 criminal proceedings (up 50 per cent from 2010) for violations against Health Care Insurance (HHS) programs and 533 civil and administrative actions including False Claims Act and Civil Monetary Penalty cases and Self-Disclosure Matters. It also reported the 2014 exclusion of 4,017 individuals and organizations from federal program participation; 1,310 of which are related to Medicare and Medicaid related violations. Finally, the OIG highlighted its negotiation of 39 new Corporate Integrity Agreements in 2014 and oversight of 2015 agreements. The OIG pledged that its 2016 budget request would allow it to offer more guidance, take more enforcement action, update safe harbor regulations, and provide other educational efforts to help providers improve compliance. Takeaway: Agency budgets target areas of concern for laboratories including innovation, regulation, and compliance enforcement.