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President's 2019 budget comes up short for NIH, but spreads the love to FDA

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By Mari Serebrov
Regulatory Editor

Embracing the new budget caps the U.S. Congress approved last week, the Trump administration released a fiscal 2019 budget proposal Monday that's generous to the FDA and the opioid fight, but once again short on love for the NIH.

Under the $4.4 trillion proposal, FDA's discretionary funding would grow by $473 million to nearly $3.3 billion (that's not including more than $2.5 billion in user fees), with most of the increase targeted toward advancing the availability of innovative drugs and medical devices. "This is the largest increase ever proposed for the FDA," according to the Alliance for a Stronger FDA, which applauded what its Executive Director Ladd Wiley styled as "an enormous vote of confidence" and "a recognition that the agency is doing its job well and making a critical public health difference."

Some of the new resources proposed for the FDA would be used to develop regulatory science tools to help stem the misuse and abuse of opioids, one of the top priorities in President Donald Trump's budget. The proposal calls for an additional $10 billion for the Department of Health and Human Services (HHS) in fiscal 2019 to combat the opioid epidemic by expanding access to prevention, treatment and recovery support services, as well as support for mental health.

That's more than double the amount Congress aimed at the fiscal 2019 opioid fight as part of the Bipartisan Budget Act that Trump signed into law Friday. That act, which included a continuing resolution to keep the government running through March 23 and revised budget caps for fiscal years 2018 and 2019, committed an additional $3 billion this year and another $3 billion next year toward fighting opioid addiction and misuse. (See BioWorld, Feb. 9, 2018.)

The administration proposes using the increased opioid funding to help cover medication-assisted treatment, expand prescription drug monitoring programs, prevent prescription drug abuse in Medicare Part D, improve first responder access to overdose-reversal products and invest in related medical research.

As part of the research, the request tags $500 million in NIH funding to be used to support a public-private partnership with industry to develop overdose-reversal products, nonaddictive pain treatments, and better ways to prevent and treat addiction.

Despite the role the NIH is expected to play in curbing the opioid crisis, the administration isn't as generous as Congress has been with the agency's overall budget. The president's plan initially asked for a reduction in NIH spending. But after last week's budget deal raised the spending caps and included $2 billion in new funding for the NIH, to be split over fiscal 2018 and 2019, the administration proposed keeping next year's NIH spending at $33.8 billion – about its enacted fiscal 2017 level.

As it has in the past, Congress likely will ignore the request, as increasing NIH funding enjoys strong bipartisan support in both the House and Senate. For the past two fiscal years, Congress exceeded the NIH budget request proposed under President Barack Obama, and it's on track to reject Trump's fiscal 2018 request to cut the NIH budget by about 24 percent. (See BioWorld Today, May 18, 2017.)

Signaling Congress' intentions for the fiscal 2018 spending bill, which has yet to be passed, Sen. Richard Durbin (D-Ill.) noted last week that because of the additional NIH funding included in the Bipartisan Budget Act, 2018 would be the third straight year that the agency has exceeded the 5 percent real growth for research funding that Director Francis Collins said was needed to retain a strong research community.

Pricing reforms

Besides proposing spending levels, the president's budget plan calls for reforms in how the U.S. pays for prescription drugs and the Medicare 340B program that's intended to help hospitals provide charity care. The proposal recognizes that the current drug pricing system prevents price competition because of its "inefficient, opaque maze of segmented channels" and "poorly understood network of pricing schemes," according to a White House fact sheet.

Following recommendations made by the president's Council of Economic Advisors, the budget plan proposes changes to how the government pays for drugs under Medicare Parts B and D, as well as Medicaid. The five-part strategy to lower Part D prescription drug spending recommends increased formulary flexibility to enhance plans' negotiation power with drug manufacturers. For instance, it would require a plan to cover a minimum of one drug per category or class rather than two. Other parts of the strategy are:

  • • eliminating cost-sharing on generic drugs for low-income beneficiaries;
  • • requiring plans to share, at the point of sale, at least one-third of the rebates they receive from manufacturers with beneficiaries;
  • • excluding the manufacturer discounts from the calculation of beneficiary out-of-pocket costs in the Medicare Part D coverage gap, or donut hole;
  • • setting an out-of-pocket maximum for beneficiaries in the Medicare Part D catastrophic phase, increasing the plans' responsibility for the costs to 80 percent, with Medicare covering the remaining 20 percent. The idea is to encourage plans to better manage spending throughout the entirety of the benefit.

The proposed changes for Medicare Part B drugs are intended to discourage manufacturers from increasing prices faster than inflation and improve payment accuracy, according to the fact sheet. For instance, the budget calls for an inflation limit for reimbursement of Part B drugs. It also recommends:

  • • reducing the wholesale acquisition cost add-on from 6 percent to 3 percent for new Part B drugs;
  • • requiring all Part B drug manufacturers to report average sales price data and giving HHS the authority to penalize manufacturers that don't do so;
  • • authorizing HHS to leverage Medicare Part D plans' negotiating power for certain Part B drugs;
  • • modifying the payment for drugs hospitals purchase through the 340B discount program and requiring a minimum level of charity care for hospitals to receive a payment adjustment related to uncompensated care. The proposal also would provide the regulatory authority to set enforceable standards for participation in the 340B program and would require all 340B entities to report on their use of program savings.

In addition, the budget proposal recommends broader measures to reduce drug pricing, including new Medicaid demonstration authority for up to five states to test drug coverage and financing reforms that build on private-sector best practices. It also calls for legislative changes to stop some of the shenanigans of brand and generic drug companies. One request is to clarify the Medicaid definition of brand drugs to prevent manufacturers from gaming the Medicaid drug rebate program. Another would ensure first-to-file generic applicants that have been awarded a 180-day exclusivity period do not indefinitely block subsequent generics from entering the market beyond the exclusivity period.