Budget Blueprint: Funding for Tech Down But Increases for Enforcement

The headlines are harsh. “Terrible,” devastating,” and “crippling,” are words the biomedical industry is using to describe President Trump’s proposed cuts to science and medical research in his 2018 budget proposal. On the flip side, some increased funding targets enforcement and public health.

While only Congress has the authority to make budget and appropriation decisions, the administration’s budget is considered a “blueprint” of the president’s spending priorities. Experts say based on the deep cuts in the 2018 budget proposal to the U.S. Department of Health and Human Services (HHS), including the National Institutes of Health (NIH), biomedical funding is clearly not a priority for President Trump.

The diagnostics industry would be impacted by both the proposed cuts to the NIH, as well as the increase in U.S. Food and Drug Administration (FDA) user fees proposed in the budget.

In the proposal, $69 billion is requested for HHS, a $15.1 billion decrease (or 17.9 percent) from the current level. The NIH stands to lose $5.8 billion (an almost 20 percent reduction), bringing its funding to $25.9 billion, which is below 2003 levels.

The Trump administration says the budget proposal “reduces administrative costs and rebalance[s] Federal contributions to research funding.”

In addition to the proposed cuts to NIH funding levels, the administration’s proposal looks to “recalibrate” medical product user fees, which could double what pharmaceutical companies and medical device manufacturers (including diagnostics companies) would pay in review costs. The FDA had decreased user frees in 2017 to what the Regulatory Affairs Professionals Society says are the lowest fees since 2013. The White House says the proposed increase in fees is “designed to achieve regulatory efficiency and speed.” However, given the current shortage of FDA reviewers and the federal hiring freeze, experts are skeptical, the increase in fees would achieve its stated goal.

One area receiving a budget increase rather than cuts is Medicare and Medicaid fraud enforcement. The Blueprint includes a commitment to “investing in activities to prevent fraud, waste, and abuse and promote high quality and efficient health care.” Recognizing that “[a]dditional funding for the Health Care Fraud and Abuse Control (HCFAC) program has allowed the Centers for Medicare & Medicaid Services in recent years to shift away from a “pay-and-chase” model toward identifying and preventing fraudulent or improper payments from being paid in the first place,” the budget raises HCFAC discretionary funding for 2018 by $70 million to $751 million.

The proposed Budget also “[r]eforms key public health, emergency preparedness, and prevention programs”—such as changing preparedness grants to “reduce  overlap,” save expense and channel funding to states most in need. Additionally, the budget calls for a new Federal Emergency Response Fund to address public health crises such as the Zika Virus outbreak. Finally, the Centers for Disease Control and Prevention would get a $500 million block grant designed to provide more flexibility and address state-specific needs.