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First glimpse at 2018 budget outlook not a rosy picture for the FDA and NIH

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By Mari Serebrov
Regulatory Editor

In the vocabulary of President Donald Trump, his budget blueprint for fiscal 2018 could be "bad" and "very sad" for the FDA and NIH.

Billed as a "budget blueprint to make America great again," the proposal unveiled Thursday would cut the NIH budget by 18 percent and make the FDA more reliant on industry funding by doubling user fees as part of a plan to slice $15.1 billion from the Department of Health and Human Services (HHS). The cuts are intended to help pay for a $54 billion increase in military spending, as well as increases for border security and law enforcement.

The president is promoting the blueprint as a long-overdue reprioritization of federal spending that focuses on the safety and security of Americans without increasing the deficit. "Without safety, there can be no prosperity," Trump said. He called the offsetting cuts – like the 18 percent HHS decrease – sensible and rational.

The proposal lays out top-line figures for discretionary spending for each federal department and some of the agencies. The departments will flesh out the details for the full budget that the administration plans to release in May. In putting details to the dollars, Trump said every agency and department would "be driven to achieve greater efficiency and to eliminate wasteful spending."

At HHS, that will mean supporting the department's core mission "through the most efficient and effective health and human service programs," according to the blueprint, which funds HHS' highest priorities, including Ryan White HIV/AIDS providers, medical products review and innovation, urgent public health issues such as prescription drug overdose, and program integrity for Medicare and Medicaid. The budget will eliminate duplicative programs and those that have limited impact on public health, while providing additional funds for program integrity and implementation of the 21st Century Cures Act.

RECALIBRATING USER FEES

In Trump's words, the blueprint "recalibrates" the FDA drug and device user fees to generate more than $2 billion in 2018, as compared with the $1 billion to be raised by the fees this year. "In a constrained budget environment, industries that benefit from FDA's approval can and should pay for their share," the administration said.

As a bit of a sweetener, the budget includes a package of administrative actions intended to achieve regulatory efficiency and speed the development of safe and effective medical products. If Congress were to go along with that part of the president's budget, it could fundamentally change how user fees are set, making it a top-down process.

Historically, the fees and the FDA's performance commitments are negotiated between the agency and industry every five years and then submitted to Congress for approval. While lawmakers have attached new programs to the must-pass bills, they usually don't interfere with the fee structure itself. With the current fee agreements expiring Sept. 30, Congress has already started holding hearings on the agreements the FDA negotiated with industry last year that would govern fees through 2022. (See BioWorld Today, March 6, 2017.)

Higher user fees also could translate into higher drug prices, something Trump has vowed to fight. With sponsors already paying millions of dollars in fees for each drug or device they bring to market, a substantial fee increase could be used to justify even higher prices.

NIH CUTS

Nearly 40 percent of the proposed HHS cuts would be felt at the NIH. The president's plan would cut the NIH budget to $25.9 billion – $5.8 billion less than the current $31.7 billion. To achieve the savings, the budget calls for a reduction in administrative costs, a "rebalance" of federal contributions to research and a major reorganization of the NIH's institutes and centers to focus resources on the highest priority research and training.

The NIH offers tremendous opportunities for savings by combining facilities and addressing mission creep, Mick Mulvaney, director of the White House Office of Management and Budget, said at a press conference Thursday.

As part of the reorganization, the Fogarty International Center, which supports global health initiatives, would be eliminated and HHS' Agency for Healthcare Research and Quality would become part of the NIH.

Reducing the NIH budget could be a hard sell, as increased NIH funding is one thing that both Democrats and Republicans agree on in Congress. Sen. Roy Blunt, chairman of a Senate Appropriations subcommittee, said at a hearing just a few weeks ago that Senate appropriators are committed to a $2 billion annual increase in the NIH budget, with the goal of boosting NIH funding to more than $44 billion over the coming decade. (See BioWorld Today, March 9, 2017.)

Although Congress has not passed a 2017 budget, Blunt noted that it recently had provided a $2 billion annual increase in 2017 NIH funding, along with the $480 million annual increase for cancer research included in the 21st Century Cures Act. The senator stressed the need for "consistent, sustained increases in funding" at the NIH.

The ranking member of the subcommittee, Sen. Patty Murray (D-Wash.), said the NIH is "on the cusp of major breakthroughs in so many diseases." But in a foreshadowing of the president's budget blueprint, she cited considerations such as an increase in defense spending as "a very real threat to this committee's ability to fund future research."

Other proposed budget changes at HHS include:

• a $500 million increase above 2016 enacted levels to expand opioid misuse prevention efforts and increase access to treatment and recovery services;

• reforms to key public health, emergency preparedness and prevention programs, including a new Federal Emergency Response Fund to rapidly respond to public health outbreaks, such as the Zika virus – something many in Congress have pushed for;

• a new $500 million state block grant program at the CDC that would increase flexibility and let states focus on their leading public health challenges;

• investments in mental health activities to be awarded to high-performing entities for high-priority areas, such as suicide prevention, serious mental illness and children's mental health.