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Performance Budget Overview

<< Return to FY 2007 Budget Summary

 

Introduction

 

As we prepare to celebrate the centennial of the 1906 Pure Food and Drugs Act, the Food and Drug Administration (FDA) faces important challenges and opportunities for the 21st century.  Innovations in science and technology, shifting market trends in regulated industries throughout the global economy, and emerging diseases and other public health threats have magnified the importance of FDA's role in protecting and advancing the public health.  At the same time, budget realities challenge us to formulate new approaches to meet the expanding scope and complexity of our public health mission.  These challenges serve as catalysts for change.  FDA recognizes the need to modernize and transform our operations to address the emerging needs of the 21st century.   FDA will meet these challenges while maintaining its century-old commitment to principles that have made us the world's "gold standard" for regulating food and medical products.  These principles reflect our: 

  • Dedication to the safety of the products that we regulate.
  • Dedication to protecting Americans against persistent and emerging public health threats.
  • Commitment to advancing the public health by empowering consumers to make healthy nutrition choices.
  • Commitment to accelerating the development and availability of promising new medical therapies and technologies that will extend and improve lives. 

FDA has designed a budget request for FY 2007 that responds to 21st century challenges and meets the opportunities that lie ahead, including the following high-priority areas:

  • Pandemic Preparedness - To prepare our nation for the threat of pandemic flu, FDA proposes a suite of activities to safeguard the public health.  These include collaborating with the U.S. and international health community to recognize and respond to emerging threats, accelerating manufacturing capability to quickly produce and deliver sufficient quantities of safe and effective vaccines, and addressing pandemic-related impacts on the animal and food sectors that FDA regulates.
  • Critical Path - FDA proposes funding for its Critical Path Initiative to accelerate the field of personalized medicine and to translate discoveries in medical science into safe and effective new medical treatments.  The Critical Path Initiative will focus on bottlenecks in the medical product development pipeline that impede the ability to transform investments in basic medical research into products that improve patient health.
  • Food Defense - We will expand the network of laboratories that analyze samples in the event of a terrorist attack on our nation's food supply.  This is a cooperative effort involving States and other federal agencies, where FDA will enhance the capacity of our laboratory surveillance network to rapidly detect and respond to threats to the food supply.  FDA will also protect our nation from the threat of bioterrorism by proposing a program of targeted food defense research.    
  • Medical Product Safety - To improve patient safety, FDA proposes significant new investments in our human drug and transplantable human tissue safety programs.  To increase our capacity to recognize and act on emerging drug safety issues, FDA will modernize its adverse drug event information systems and broaden the sources of data that we analyze for drug safety signals.  To manage the risks of human tissue transplants, which have grown to over a million procedures a year, FDA is implementing new risk-based program to detect, analyze, and respond to actual or potential disease transmission involving human tissues.

As we explain in detail below, FDA conducted a deliberate, strategically focused process to formulate our FY 2007 budget request, in consultation with the Department of Health and Human Services (DHHS) and the Office of Management and Budget (OMB).  We set priorities that align with the Secretary's 500-Day Plan, DHHS goals, the President's Management Agenda, and FDA's vision for how we need to perform our public health mission in the 21st Century.  We are seeking ways to leverage our resources responsibly through collaboration with other public health agencies and stakeholders.  For the tax dollars that we spend, we are targeting high-yield investments that will significantly reduce health risks or improve the ability of the product innovators to translate medical discoveries into important new products.  We view these strategies as essential to maintaining our position as the world's premier regulatory agency, and protecting the FDA "brand" that has served as a symbol of trust for the American public during the past hundred years.

In the remaining sections of this Performance Budget Overview, we present the statement of FDA's mission, a discussion of FDA's strategic plan, a summary of FDA's performance, and an overview of FDA's FY 2007 budget request, including justifications for proposed initiatives.

 

 Statement of FDA Mission

 

As a scientific regulatory agency and an operating division of the DHHS that is responsible for protecting and advancing the public health in the United States, FDA's responsibilities cover a wide range of regulatory activities.  FDA decisions affect every American on a daily basis.  Annually, consumers spent nearly $1.5 trillion, or more than 20 percent of all consumer expenditures, on FDA-regulated products.

FDA's Mission

 

The FDA is responsible for protecting the public health by assuring the safety, efficacy, and security of human and veterinary drugs, biological products, medical devices, our nation's food supply, cosmetics and products that emit radiation.

FDA is also responsible for advancing the public health by helping to speed innovations that make medicines more effective, to provide the public accurate, science-based information needed regarding medicines and foods to improve their health.

Finally, FDA plays a significant role in addressing the Nation's counterterrorism capability and ensuring the security of the food supply.

FDA's mission derives from a variety of statutes, beginning with the Pure Food and Drugs Act of 1906, which prohibited interstate commerce in misbranded and adulterated foods, drinks, and drugs.  The Food, Drug, and Cosmetics Act (FD&CA) of 1938 extended FDA's responsibilities to cover cosmetics and therapeutic devices, and granted FDA important new authorities, including the requirement that manufacturers demonstrate the safety of drugs before they can be marketed.  Over the years, amendments to the FD&CA have expanded or clarified FDA responsibilities.  They are the basis for our current programs for foods, human drugs, biologics, medical devices and radiological health, animal drugs and feeds, supporting toxicological research, and crosscutting programs such as combination products, international programs, pediatrics, and women's health.  More recently, FDA's mission expanded in the area of counter-terrorism and homeland security, under the Public Health Security and Bioterrorism Preparedness and Response Act of 2002, the Project BioShield Act of 2004, and Homeland Security Presidential Directives.

 

 FDA Strategic Plan

 

FDA advances its broad public health mission by managing efforts to achieve a comprehensive set of long-term strategic goals and linking budget resources to program performance.

 

2003 Strategic Action Plan

 

In 2003, FDA developed a Strategic Action Plan that identified five broad strategic goals:

  • Efficient risk management.
  • Improving health through better information.
  • Improving patient and consumer safety.
  • Protecting America from terrorism.
  • More effective regulation through a stronger workforce.

Within each strategic goal area, FDA identified high-level objectives and specific action items that the Agency could accomplish within approximately two years.  We internally track progress on these action items.  In 2004, FDA reported on its accomplishments toward achieving the objectives and action items in the document, FDA Progress and Priorities 2004:  Protecting and Advancing America's Health.  By the end of FY 2005, FDA had accomplished nearly all of the action items that the agency established for itself.

 

2005 Review of FDA's Operating Strategy

 

In early 2005, FDA recognized that some emerging external trends, coupled with changes in the federal budget environment, called for a reexamination of FDA's operating strategy.  During a series of strategic planning meetings, agency leadership developed a draft vision for FDA operations in the 21st Century that reflects many of the principles embodied in the President's Management Agenda and the e-Government initiative.  FDA leaders also recognized that to achieve this vision in an era of budget austerity, we would need to achieve break-through improvements in productivity.  This led us to adopt a theme of transforming FDA operations. 

FDA’s Revised Goal Framework. It is shown as a triangle figure with four divisions in the figure. The first division is entitled, “Annual Performance Goals and Short-Term Action Items.”

One of the first steps FDA is taking to achieve this transformation is to revise FDA's strategic goal framework.  Our intention is to better align the strategic goals with FDA's business process model, while simultaneously streamlining FDA's performance management system so that there is a single, coherent hierarchy of strategic goals, long-term goals and objectives, annual performance goals and measures, and short-term action items.  Figure 1 represents the elements of the strategic goal framework, through the concept of a pyramid.  Table 1 (see below) shows how the revised strategic goals align with FDA's three core business processes.  This alignment and streamlining will help make the performance management system easier to understand across all of FDA's operating units.  As the alignment of the framework matures, the annual performance measures will cover a greater portion of FDA's day-to-day activities.  This will increase the relevance and usefulness of the performance information to FDA managers.  With the realignment of lower-level goals to strategic goals, FDA can more effectively show how its activities and outputs contribute to accomplishing Departmental initiatives and strategic goals, which ultimately support seven Presidential Initiatives (healthcare reform, health information technology, healthier living, protecting the homeland, Project Bio-Shield, the President's Emergency Plan for HIV/AIDS relief, and President's Management Agenda).  FDA is currently engaged in a long-term planning effort to complete this revised strategic goal framework and improve our performance management system so that we will more fully satisfy the intent of OMB Circular A-11 and the PART evaluation process. 

The transition to the new strategic goal framework and performance management system will ensure that we develop well-formulated goals and measures, establish appropriate baseline data and targets, and complete existing goal tracking and reporting commitments.  FDA is developing a transition plan that we will synchronize with the PART review cycle, so that the PART review process remains a valuable catalyst and feedback mechanism for performance improvement at FDA.  This will help ensure that we effectively allocate resources through priority setting in our budget formulation process.  FDA is developing a revised strategic plan in FY 2006, which will include the revised goal framework. 

   Table 1 - FDA's Revised Strategic Goals Align with the Agency's Core Business Processes
FDA Core Business Processes Revised Strategic Goals

Pre-Market Review:

Fostering innovative technologies to improve health, and assessing the safety and effectiveness of new medical products and the safety of new food ingredients.

Increasing access to innovative products and technologies to improve health

Product Safety and Compliance:

Setting standards for manufacturing quality and safety and inspecting manufacturing facilities and products to assure safety, quality and compliance with FDA regulations.

Improving product quality, safety, and availability through better manufacturing and product oversight

Consumer and Patient Safety:

Conducting post-marketing surveillance and informing the public to ensure the safety for consumers and patients who use FDA-regulated products. 

Enhancing patient and consumer protection and empowering them with better information about regulated products

[cross-cutting support functions]

Transforming FDA business operations, systems and infrastructure to support FDA's mission in the 21st Century

  

Developing FY 2007 Budget Priorities

 

Agency leadership made a deliberate choice about the criteria it used to evaluate the FY 2007 budget priorities.  These criteria focused on supporting high-yield returns, advancing the Secretary's 500-Day priorities and DHHS strategic goals, and meeting agency-wide public health priorities.  FDA developed the following table to illustrate how these various priorities were aligned and support our priority setting for FY 2007. 

 Table 2.  FDA Strategic and Outcome Goals Aligned By HHS Strategic Goals & Secretarial "500 Day" Priorities
(We have used the numbering sequence found in the HHS Strategic Plan)
HHS Strategic Goals and Objectives Secretary's 500-Day Priorities FDA Strategic Goals FDA LONG-TERM Goals
2. Enhance the ability of the Nation's health care system to effectively respond to bioterrorism and other public health challenges. Build the capacity of the health care system to respond to public health threats in a more timely and effective manner, especially bioterrorism threats

-- Transform Health Care System;

-- Advance Medical Research

-- Secure the Homeland; and,

1. Increasing access to innovative products and technologies to improve health

1.1. Increase the number of safe and effective new products by increasing the predictability, efficiency and effectiveness of product development, including products for unmet medical and public health needs, emerging infectious diseases and counterterrorism;

1.2.  Sustain access to safe and effective new products by improving rapid, transparent and predictable science-based review of marking applications; and,

1.3. Increase access to safe and effective veterinary products, and to safe and nutritious food products, including products for unmet animal and human health needs.

Improve the safety of food, drugs, biological products, and medical devices
3.  Improving product quality, safety, and availability through better manufacturing and product oversight

3.1.  Maximize the quality of medical products and dietary supplements and the safety of tissues and foods, as well as ensure their availability, by stimulating use of improved manufacturing technologies and product characterization techniques and by modernizing regulatory standards; and,

3.2.  Prevent harm from products by increasing the likelihood of detection and interception of substandard manufacturing processes and products.

4. Enhance the capacity and productivity of the Nation's Health Science Research Enterprise Accelerate private sector new drug development

-- Advance Medical Research

-- Improve the Human Condition Around the World

[FDA's applied research programs directly support all three of the above core mission-oriented strategic goals.] [FDA's outcome goals 1.1 and 1.3 above directly support acceleration of private sector development of new drugs.]
Improve coordination, communication, and application of health research results [FDA's outcome goals 2.1, 2.2, 2.3, and 3.1 directly support improved coordination, communication, and application of health research results.]
Strengthen mechanisms for ensuring protection of human subjects & the integrity of the research process [FDA's research policies, peer review practices, Good Clinical Practices regulations and guidelines, and training programs directly ensure the protection of human subjects and integrity of the research process.]
5. Improve the Quality of Health Care Services Reduce medical errors

-- Transform Health Care System

-- Advance Medical Research

-- Secure the Homeland

-- Improve the Human Condition Around the World

2.  Enhancing patient and consumer protection and empowering them with better information about regulated products

2.1. Increase ability of consumers to make food choices and to use food handling practices associated with health benefits and reduced risk of food-borne and chronic diseases;

2.2.  Improve safe and effective use of medical products with better information technology and effective risk/benefit communication; and,

2.3.  Improve problem detection and take timely and effective risk management actions with all FDA-regulated products. 

Increase consumer/ patient use of health care quality information
Improve consumer and patient protections
8. Achieve Excellence in Management Practices   -- Transform Health Care System 4.  Transforming FDA business operations, systems and infrastructure to support FDA's mission in the 21st Century

4.1.  Improve the efficiency and effectiveness of program management through focused performance budget and financial management strategies, aligned with FDA and HHS business strategies;

4.2.  Increase the quality, effectiveness, and adaptability of the FDA workforce by implementing a human capital management strategy that is responsive, proactive, and continually improving;

4.3.  Increase capability to efficiently and cost effectively maintain an information technology (IT) environment to support FDA business goals; and,

4.4. Coordinate and integrate operations to enhance consistency and quality of resource management, and to achieve economies of scale. 

  

 Overview of FDA Performance

 

Over the past year, FDA has worked hard to address key challenges in fulfilling our public health mission. Our goal is to maximize the benefits and minimize the risks from the products we regulate by providing high quality and consistent oversight in an environment of changing public health risks, new technologies, and changing market dynamics. We do this by continuously applying the best science and most effective management to get the greatest public health gains for taxpayer dollars. We take our charge as guardians of the public health very seriously. FDA met or exceeded performance targets for all but one FY 2005 performance goal in cases where final results have been reported.

The public health environment is continually evolving due to the rapid growth in scientific advances. At the same time, we are called upon to carry out our public health responsibilities in an atmosphere of budget austerity. To do this well, we have persistently examined our strategic direction and performance measures. In the past year, FDA's senior leadership has refined the agency's long-term goals and objectives, resulting in four strategic goals and 12 long-term goals, all designed to fulfill our commitment to public health, contribute to the success of Secretary Leavitt's 500-day plan, and contribute toward achievement of key Presidential Initiatives to advance public health and homeland security. We continued the process of aligning our annual performance goals to these strategic and long-term goals. Over the next year, we plan to continue to develop better risk-based, outcome-oriented goals and measures.

In 2003, OMB conducted its FY 2005 Program Assessment Rating Tool (PART) review of FDA and issued the following findings:

  • FDA has a clear mission and unique Federal role in protecting public health.
  • FDA is well managed, and has a strong and comprehensive strategic planning process.
  • FDA annual performance goals allow for measurement of performance results. FDA generally meets most annual performance goals.
  • Financial management at FDA is sound; FDA has received a clean audit free of internal material control weaknesses for five consecutive years [started in FY 2003].
  • FDA is improving collaborative efforts with stakeholders and other Federal agencies.

FDA's PART Summary Table (see next page) summarizes the latest progress with PART.  FDA will continue to improve our performance management system by reviewing and revising our annual performance goals and long-term outcome goals so that they align well with our revised strategic goal framework.  Moreover, FDA will continue to improve how we used performance information to support resource allocation and other management decisions. 

 

 Program Assessment Rating Tool (PART) Summary

Food and Drug Administration
FY 2005 - 2007
(Dollars in Millions)

Program FY 2006 Enacted FY 2007 Request FY 2006 +/- FY 2007 Narrative Rating
FY 2005 PART
Food and Drug Administration

$1,876

$1,947

$71

Moderately Effective
FY 2006 PART
No PART was performed in FDA during the FY 2006 budget cycle.
FY 2007 PART
No PART was performed in FDA during the FY 2007 budget cycle.

Narrative

FDA's funding request for FY 2007 supports the Department's strategic goals and Secretary's priorities, and will enable continued progress toward Long-Term Outcome Goals that FDA developed after the FY 2004 PART.   During FY 2005 and continuing into FY 2006, FDA has engaged in a reinvigorated strategic planning process that is designed to ensure that annual performance goals align with a coherent framework of strategic and long-term outcome goals, as envisioned in the PART process and OMB Circular A-11.  Of its eight outcome goals, FDA has completed the efficiency goal and is achieving significant progress toward the other seven goals, as reported annually to OMB.  FDA has developed a new efficiency measure related to human drug safety surveillance for the FY 2007 performance budget.   Further information on FDA's PART summary may be found at www.expectmore.gov.

1 Includes the 1 percent rescission in the FY 2006 column.

 

 Overview of FDA's Budget Request

 

The Food and Drug Administration (FDA) performance budget request for FY 2007 is $1,947,282,000, which is $70,798,000 higher than the President's FY 2006 enacted level.  This request is funded through new budget authority, a strategic redeployment of base program resources, and current law and proposed new user fees.  It supports the President's public health and bioterrorism initiatives and Secretary Leavitt's 500-Day priorities. 

Recognizing competing national priorities - from deficit-reduction to the war on terror - FDA leadership conducted a deliberate, comprehensive review of programs needs, performance commitments, and agency, departmental, and administration public health goals and priorities.  Our Agency leadership established criteria to evaluate FY 2007 budget priorities based on whether they generated high-yield returns and advanced these priorities.  After conducting this exercise and identifying priority initiatives, FDA leaders employed marginal cost principles to determine appropriate funding levels. 

The FY 2007 program level increase of $70,798,000 will enable the agency to fund six critical initiatives:  pandemic preparedness, food defense, drug safety, critical path to personalized medicine, human tissues, and additional budget authority to meet statutory obligations under the animal drug and medical devices user fee programs.  To fund these priorities and other important activities, FDA is proposing a strategic redeployment of resources from base programs to achieve program reductions and redirection.  Under this budget, FDA would reduce or eliminate lower priority work while redirecting staff and resources to higher priority activities. 

 

FY 2007 Summary of Budget Changes

 

Table 3 shows the FY 2007 summary of budget changes at the program level and demonstrates the willingness of Agency leadership to make difficult programmatic choices.  FDA will use program offsets to fund initiatives that advance these priorities.

The FY 2007 budget submission is reflects the Administration's strong support for meeting our human capital and infrastructure needs while allowing us to advance targeted initiatives that will yield high public health impact.  Ever conscious of the need for budget restraint, FDA is proposing a pragmatic approach based on program offsets to achieve the funding necessary to advance our specific public health initiatives. 

 

 Table 3 - Summary of Change - Program Level

Program Resource Change*

Total

Budget Authority

Pandemic Preparedness +$30,490,000**
Food Defense +$19,873,000
Critical Path to Personalized Medicine +$5,940,000
Drug Safety +$3,960,000
Tissues +$2,475,000
Statutory Trigger Needs for ADUFA and MDUFMA +$7,425,000
Cost of Living +$20,267,000
Unified Financial Management System (UFMS) +$1,180,000
Infrastructure +$14,265,000
Buildings and Facilities (2,970,000)
Budget Authority Offsets ($52,277,000)

User Fees

Prescription Drug User Fee Act +$15,268,000
Medical Device User Fee and Modernization Act +$3,426,000
Animal Drug User Fee Act +$286,000
Indefinite User Fees +$1,190,000

Total Program Level

+$70,798,000

Proposed User Fees (Non-Add Reclassified as Mandatory)

Reinspection User Fee $22,000,000
Food and Animal Fee Export Certification User Fee $3,536,000

* This table uses the same order as the FY 2007 Crosswalk to Summary of Change - Program Level.
  ** This level is compared to the FY 2006 enacted and includes supplemental appropriation from PL 109 - 148.

 

Alignment with Administration Priorities

 

FDA's public health initiatives directly contribute to the Secretary's 500-Day priorities.  Moreover, our FY 2007 budget request will enable FDA to advance important Presidential priorities.  FDA initiatives support Presidential proposals for healthcare reform, health information technology, healthier living, protecting the homeland, Project Bio-Shield and the President's Emergency Plan for HIV/AIDS relief.  We also believe FDA's success in meeting the Secretary's 500-Day Priorities will measurably contribute to the success of Presidential initiatives, and thereby improve the health and security of the American public.  Table 4 shows budget items arrayed by Secretarial priorities and the infrastructure support that also contributes to core public health initiatives. 

 Table 4 - Budget Summary Supporting Secretary Leavitt's 500-Day Priorities And Core Public Health Activities

Secretary's 500 Day Priority
and
FDA Responsibilities

FDA Budget Item

Dollar Amount

Specific FY 2007 Initiatives

Transforming Healthcare

 -- Adverse Drug Incident Reporting
 -- Drug Safety Board

1. Drug Safety +$3,960,000
2. Human Tissues +$2,475,000
3. Trigger Needs for ADUFA and MDUFMA +$7,425,000

Advancing Medical Research

 -- Enhance medication safety based on patient's personal characteristics
 -- Improving clinical research and product development

4. Critical Path to Personalized Medicine +$5,940,000

Securing the Homeland

 -- Prepare for potential H5N1 Flu pandemic
 -- Support efforts to improve the size & readiness of the Strategic National Stockpile
--Improve awareness of, and effective response to, a potential terrorist attack on the food supply.

5. Pandemic Preparedness +$30,490,000
6.  Food Defense +$19,873,000
Infrastructure Support for Core Public Health Activities
[Infrastructure for core activities directly supports FDA responsibilities under the Secretary's-500 day priorities.] Cost of Living/Pay +$20,267,000
UFMS +$1,180,000
Infrastructure +$14,265,000
Current Law User Fees +$20,170,000
Proposed New User Fees - Reclassified $25,536,000

The six FDA public health initiatives for FY 2007 identified above directly support three of the Secretary's 500-Day Priorities:  Transforming Healthcare, Advancing Medical Research and Securing the Homeland.[1] 

 

FY 2007 Initiatives and Offsets

 

We present an overview of the FY 2007 Initiatives and Offsets in Table 5.  Following Table 5, we present business case papers that justify the fund for the FY 2007 initiatives.  These business case papers describe our initiatives and explain the public health benefits we will achieve with the funds we request.  We have also included papers presenting our justification for recurring infrastructure items.   

 Table 5 - Overview of FY 2007 Initiatives and Offsets
Initiative Amount FTE Synopsis
Pandemic Preparedness

$30,490,000

85

Provide a comprehensive program to prepare and respond to the pandemic flu outbreak.
Food Defense

$19,873,000

6

Protect the nation's food supply by developing improved methods to screen food and feed imports; update prevention strategies and plans; conduct outreach to industry, state and local stakeholders.
Critical Path to Personalized Medicine

$5,940,000

6

Improve medical product development by developing review standards, tools, and methods necessary for meeting FDA review requirements. 
Drug Safety

$3,960,000

8

Modernize the Adverse Event Reporting System and integrate with Centers for Medicare and Medicaid Services (CMS) to obtain access to drug safety information housed in the CMS population-based database.
Tissues

$2,475,000

18

Improve the human safety of cell and tissue products and monitor human tissue transplant adverse events. 
Trigger Needs for MDUFMA and ADUFA

$7,425,000

45

Maintain animal drug and medical devices user fee programs and meet performance commitments negotiated with industry.
Cost of Living

$20,267,000

0

Provide the cost of living increase for agency personnel, enabling them to continue FDA's mission. 
Unified Financial Management System

$1,180,000

0

Support FDA's efforts to fully utilize UFMS across the agency and improve the quality and timeliness of financial information in agency decision-making.
Infrastructure

$14,265,000

0

Enable FDA to pay for its GSA's rental charges for FDA's GSA space.  Provide the building fit-out and move costs associated with the relocation to the WhiteOakFederalResearchCenter. 
Budget Authority Offsets

($52,277,000)

(189)

Provide resources for FDA's high priority initiatives through strategic redeployment of resources from base programs and activities. 
Buildings and Facilities Offsets

($2,970,000)

0

FDA will provide for the repair and maintenance of its facilities through the FY 2007 Budget request of $4,950,000 and remaining unobgligated balances.
Current User Fees

$20,170,000

56

Enable FDA to review medical products in a timely manner and reimburse FDA for two services (color certification and export certificates) that we provide to industry.
Proposed User Fees Reclassified as Mandatory

$25,536,000
(Non Add)

141

Proposed new user fees to reimburse for two  services (reinspection of FDA-regulated facilities and issuing of food and feed export certificates).

 


 [1] In the case of the Secretarial fourth priority "Advancing the human condition around world", the six FDA initiatives as well as activities funded by FDA's base programs advance this initiative.

 

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