Trump budget to cost pharma industry

Dive Brief:

  • The White House released the first draft of the Trump administration’s proposed budget for 2018 on Thursday morning.
  • The proposal outlines increases to Department of Defense spending, but drastic cuts to the Department of Health and Human Services, including changes to the National Institutes of Health's budget and to fees charged by Food and Drug Administration for review of new drugs. 
  • The proposed budget requests $69 billion be allotted to HHS, a 17.9% decrease from the budget this year. The plan notes the funding includes further money for initiating the recently approved 21st Century Cures Act. 

Dive Insight:

The March 16 budget proposal is just a blueprint for spending, and will have to undergo negotiations with Congress. Yet, backlash to some of the cuts have already begun.

While President Donald Trump has repeatedly said he will speed up drug approval processes and make it easier for pharma companies to get drugs to market by deregulating the FDA, the proposed budget gives a little insight into just how he plans to do that.

The plan increases the medical product user fees paid by pharma and biotech companies to $2 billion, nearly double the current level. The prescription and generic drug user fees are paid by pharma and generics drugmakers to help fund the review of their products.

"To complement the increase in medical product user fees, the Budget includes a package of administrative actions designed to achieve regulatory efficiency and speed the development of safe and effective medical products. In a constrained budget environment, industries that benefit from FDA’s approval can and should pay for their share," the plan by the Office of Management and Budget says.

Another hit to industry will come in the form of research funding. The plan will reduce funding to the NIH by $5.8 billion to $25.9 billion. The NIH handles a lot of the early discovery research and awards grants to academia that do early research, with many of those discoveries eventually resulting in the products being developed by pharma companies.

"The Budget includes a major reorganization of NIH’s Institutes and Centers to help focus resources on the highest priority research and training activities, including: eliminating the Fogarty International Center; consolidating the Agency for Healthcare Research and Quality within NIH; and other consolidations and structural changes across NIH organizations and activities," noted the plan.

The administration says in the plan that it will create a new Federal Emergency Response Fund to respond to public outbreaks, and will allot a $500 million block grant to increase state flexibility for public health challenges.

The budget eliminates $403 million in health profession and nursing training programs, however, citing the ineffectiveness of these programs to meaningfully add jobs. 

Opioid addiction has become an increasingly serious public health problem, with more than 33,000 deaths in 2015 alone. In that light, the budget increases spending on substance abuse treatment services by $500 million above 2016 levels. 

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Filed Under: Regulatory / Compliance
Top image credit: Ad Meskens