With the US Food and Drug Administration (FDA) set to lose about 9% of its budget for fiscal 2013 as part of the $85.3 billion automatic federal spending cuts - "sequestration" - that took effect on March 1, the Obama Administration is urging Congress to allow the agency to spend $41 billion-worth of prescription drug and biosimilar user fees.

The fees have been collected under the latest reauthorisation of the Prescription Drug User Fee Act (PDUFA V), but they are covered by the sequestration law, limiting the amount of fee-derived funds which can be spent by the agency, whose budget will be cut by about $210 million over the rest of this year.

But the BioCentury newsletter reports that the Administration is requesting Congress to allow the FDA to use the fees and also to remove them from the sequestration law, which would provide the Agency with about $36 million for the rest of the financial year.

The FDA has said it does not expect to have to introduce furloughs (temporary unpaid leave) for its staff as a result of sequestration, but the White House has warned that the agency's Center for Drug Evaluation and Research (CDER) would face delays in translating new science and technology into regulatory policy and decision-making, resulting in delays in new drug approvals.

"The FDA would likely also need to reduce operational support for meeting review performance goals, such as the recently-negotiated user fee goals on new innovative prescription drugs and medical devices," it says.

The White House also warns of the effects that sequestration will have on research and innovation. "In order to compete for the jobs of the future and to ensure that the next breakthroughs to find cures for critical diseases are developed right here in America, we need to continue to lead the world in research and innovation. Most Americans with chronic diseases don't have a day to lose, but under a sequester, progress towards cures would be delayed and several thousand researchers could lose their jobs. Up to 12,000 scientists and students would also be impacted," it says.

Also, cuts to the AIDS Drug Assistance Program could result in 7,400 fewer patients having access to life-saving HIV medications, while around 424,00 fewer HIV tests could be conducted by Centers for Disease Control (CDC) state grantees, it adds.

The cut in the CDC's budget for this year, of close to $450 million, will have exactly the opposite effect of decreasing federal spending, given that disease prevention represents the most economically-viable method of reducing long-term healthcare costs, according to one expert.

The incidence of chronic infections would also be expected to increase with the elimination of prevention programmes, says Dr Christopher Pace, infectious disease analyst for business intelligence provider GlobalData. 

"These chronic infections require lifelong treatment that can become expensive," he says.

The cuts will also affect the pharmaceutical industry, GlobalData adds, pointing out that a report from the Senate Appropriations Committee majority staff has estimated that around 650,000 fewer people would be tested for HIV and that 12,000 fewer uninsured HIV patients would receive therapy this year.

"These decreases are not expected to have a major effect on the HIV therapy market, but the sequestration could push providers towards lower-cost therapies, decreasing demand for high-prices HIV regimens such as Gilead's Stribild" [elvitegravir/cobicistat/emtricitabine/tenofovir disoproxil fumarate]" says Dr Brad Tebbets, a member of GlobalData's infectious disease team.