Obama Budget Calls for Reform of Beleaguered FDA

President Barack Obama's new budget includes more than $1 billion to help the U.S. Food and Drug Administration strengthen its food safety efforts, $6 billion for cancer research and a program to send nurses to the homes of new mothers to check their babies.

The $76.8 billion allocated to the Health and Human Services Department also stresses, as Obama has said before, the adoption of healthcare information technology such as electronic medical records and a controversial plan to compare medical treatments head to head to find what works best.

"Some researchers believe that healthcare costs could be reduced by a stunning 30 percent — or about $700 billion a year — without harming quality if we moved as a nation toward the proven and successful practices adopted by the lower-cost areas and hospitals," the budget reads.

It projects that the changes would save $1.8 billion in 2010, $16.2 billion in 2011 and increasing amounts annually to create by 2019 a $633.8 billion fund to pay for healthcare reform.

Congress has already provided $25 billion to help newly laid-off workers pay for health insurance coverage under a law known by the acronym COBRA.

Obama's budget suggests that spending up front to get coverage for more of America's 46 million uninsured people will save cash if patients get preventive care and avoid expensive and chronic diseases.

The FDA has been under fire for several years for failing to protect the U.S. food supply from some high-profile outbreaks of foodborne illness — most recently the spread of salmonella food poisoning to 666 people in 44 states, traced to peanut plants with a poor history of inspections.

The budget includes $1 billion for the FDA to "increase and improve inspections, domestic surveillance, laboratory capacity and domestic response to prevent and control foodborne illness."

The budget would double cancer research at the National Institutes of Health to $6 billion — on top of $10 billion given to the NIH in a huge emergency stimulus package signed by Obama last week meant to jolt the economy out of recession.

Drug Reviews

The budget includes $1.1 billion for new reviews of competing drugs, treatments and head-to-head trials of drugs. The move is based on several recent studies that have shown cheaper and often generic drugs sometimes work better than new, patented and expensive medicines.

The budget also suggests that the Obama administration plans to negotiate with drug makers to lower drug prices, as the European Union and Canada now do.

"The administration will accelerate access to make affordable generic biologic drugs available through the establishment of a workable regulatory, scientific and legal pathway for generic versions of biologic drugs," the budget reads. Biologic drugs include some of the newest, and most expensive, cancer drugs such as monoclonal antibodies.

Money will be saved, Obama says, by finding and stopping overpayments in Medicare, the federal health insurance plan that covers 44 million elderly people.

"The Government Accountability Office has labeled Medicare as 'high-risk' due to billions of dollars lost to overpayments and fraud each year," the budget reads.

About $26 billion can be saved over 10 years by using a combination of incentives and penalties to prevent avoidable expensive readmission — when patients go back into the hospital within a month after treatment — the budget says.

Reforming the way doctors are paid will also eventually lower costs, by paying them to provide better care rather than simply more care, such as diagnostic scans or surgery that may not be necessary, it says.