Labs and Diagnostics Central to 2017 Federal Budget Requests

Diagnostics figure prominently in key portions of the federal budget for Fiscal Year 2017. Significant funding is devoted to precision medicine, cancer, antibiotic resistance, and of course, Medicare enforcement. Here’s a rundown on some of the numbers in the budget requests from key agencies of interest to labs:

Office of Inspector General
The U.S. Department of Health and Human Services (HHS) Office of Inspector General (OIG) is requesting a total budget of $419 million to oversee the administration of the HHS programs—that includes $334 million for oversight of Medicare and Medicaid and the Health Care Fraud Prevention and Enforcement Action Team (HEAT) initiative. Specific targets for enforcement will be “fraud and wasteful spending, including improper payments, unsafe or poor quality health care and security of data and technology.”

The OIG justified its budget requests stating, “The OIG is a leader in the fight against Medicare and Medicaid fraud and we will continue to use sophisticated data analytics and state-of-the-art investigative techniques to detect and investigate fraud.” The OIG boasts its most recent return on investment for the Health Care Fraud and Abuse Control Program (which fights fraud and abuse against public and private payers) at “approximately $7.7 to $1, the third highest in the history of the program.”

U.S. Food and Drug Administration
The U.S. Food and Drug Administration (FDA) budget request for 2017 totals $5.1 billion—8 percent more than the budget enacted last year. The importance of diagnostics is demonstrated throughout FDA budget requests. Three of five key areas cited by the FDA in its $2.8 billion budget request for Medical Product Safety and Availability involve diagnostics: 1) evaluating Precision Medicine-based diagnostics and treatments, 2) combating antibiotic resistant bacteria, and 3) improving cancer diagnostics and treatments.

While there is no specific mention of the FDA’s intentions with regard to oversight of laboratory developed tests, there are plenty of references to precision medicine. The FDA’s budget justification document notes the “success of Precision Medicine depends on having accurate reproducible, and clinically useful companion diagnostic tests to identify patients who can benefit from targeted therapies.” With that in mind, $200,000 is earmarked for the FDA’s precisionFDA platform, which “supplies a platform where the commercial and academic communities can test, pilot, and validate new approaches to ensure the accuracy of genetic tests.”

But receiving the most coverage and public interest is the Vice President’s Cancer Moonshot Initiative, which President Obama announced in his recent state of the union address. A White House Fact Sheet explains that this a “$1 billion initiative to provide the funding necessary for researchers to accelerate the development of new cancer detection and treatments.” The budget allocates $195 million to the National Institutes of Health (NIH) for cancer-related efforts, $755 million for cancer-related research activities.

The Budget also calls for establishing an Oncology Center of Excellence “to streamline collaboration across FDA’s Human Drugs, Biologics, and Devices and Radiological Health, Programs.” The center will involve staff from other programs and will work closely with the NIH National Cancer Institute. One goal is development of “new and advanced diagnostics for early screening and detection of cancer.” Highlighting the need for developments in companion diagnostics and precision medicine, budget discussions explain the FDA “needs to take an integrated approach in its evaluation of products for the prevention, screening, diagnosis, and treatment of cancer.”

The FDA’s budget justification document also indicates other laboratory-related efforts that will benefit from budgeted funding:

• Bioinformatics—the FDA acknowledges that “with the increasing amounts of data being generated by new technologies, FDA must have the software and database tools to manage the large amount of scientific data required to improve product development, safety assessments, and risk analysis.” Indeed, informatics and bioinformatics are expected to significantly affect future operations for labs. The rise of informatics is the subject of a one-day workshop presented by G2 Intelligence in collaboration with Arizona State University International School of Biomedical Diagnostics, April 6, 2016 in Chandler, Ariz.

• Antibiotic resistance—Diagnostics are also a component of the FDA efforts to fight antibiotic resistant bacteria—an item that also got significant attention and funding in last year’s budget. The Administration’s Combating Antibiotic-Resistant Bacteria (CARB) National Action Plan includes efforts to “advance the development of diagnostics to detect antimicrobial resistance.”

• Next generation sequencing (NGS)—The budget justification indicates the Devices Program “aims to ensure that NGS tests provide accurate, reproducible, and meaningful results relevant to a person’s medical condition while continuing to foster innovation so that people have access to the best available results possible.”

CDC and ONC
Finally, funding for the Centers for Disease Control and Prevention (CDC) should also be of interest to laboratories. HHS’s rundown on the budget requests indicates “CDC is committed to continuous improvements in laboratory science and safety, as well as the quality of its public health laboratory services” and $33 million of the budget is pegged to support CDC’s “implementation of laboratory safety recommendations.”

“This funding will enable CDC to maintain its ability to respond to outbreaks, determine unexplained illnesses, support state and local diagnostics, improve pathogen identification of emerging and re-emerging diseases and maintain the world’s most advanced, state-of-the-art infectious disease and environmental public health laboratories,” according to HHS.

Takeaway: 2017 Budget requests indicate continued government attention to fraud enforcement and support for precision medicine, particularly with regard to the fight against cancer. Labs and diagnostics will play a role in many of the areas receiving funding attention.