The much needed modernization of the agency's IT systems and inspection capabilities will likely fall prey to budget shortfalls.

The new year begins on a note of optimism. A major breakthrough in stem cell research promises to open the door to new biomedical research opportunities. The drawn-out Congressional debate over user-fee reauthorization and drug safety regulation is over, and most parties seem satisfied with resulting compromises. The vaccine industry is experiencing a resurgence after years in the doldrums, with important new vaccines on the market and more under development. And unlike many previous years, the US Food and Drug Administration (FDA) had a confirmed commissioner for all of 2007 and relatively stable leadership.

The personalized medicine bandwagon is on a roll, offering a new model for calculating reimbursement of high-cost biotech therapies. Strategies for identifying patients who will respond to a certain therapy, as well as those most likely to suffer adverse events, promise to improve healthcare quality while eliminating waste and inappropriate spending. Interventions based on individual genetic characteristics may have limited sales, but support higher prices and less costly clinical research methods.

Congress postpones debate on follow-on biologics while adopting new policies likely to reshape drug development

Federal regulation of biologics began more than 100 years ago with the enactment of the Biologics Control Act of 1902. That act required licensing of establishments to manufacture and sell vaccines, sera, antitoxins, and other similar products in order to prevent deaths from contaminated vaccines, as had recently occurred with the diphtheria antitoxin.

The new legislation authorizes the use of fee revenues for drug safety oversight and assessment throughout a product's lifecycle.

The main testing and regulatory provisions of the FOB legislation reflect multiple trade-offs between the demands of innovators and generics firms.

Now equipment makers are designing new systems that can be deployed rapidly, are less costly to build, and require less water and power to operate.

FDA's approach involves adopting efficient strategies for targeting inspections to more high-risk operations likely to have the greatest impact on public health.