Effects of budget cuts proposed for the NIH will not only be felt by drug and diagnostic research, and the companies that carry it out, but likely extend into the clinical application of tools and technologies to benefit patients, according to Kalorama Information.
President Donald Trump earlier this month proposed slicing the NIH’s budget by 18%—a reduction of $5.8 billion, to $25.9 billion—in the spending outline his administration unveiled today for the 2018 federal fiscal year, which starts October 1.
While instrument providers and reagent suppliers can expect immediate effects from whatever budget cuts get enacted, there could be additional long-term effects beyond FY2018 if the transformation of research into clinical practice is slowed, Kalorama added.
Bruce Carlson, publisher with Kalorama, noted that many innovations in clinical diagnostics had their origins as research tools, notably mass spectrometry, liquid chromatography, and next-generation sequencing (NGS). Also, biomarkers and mechanisms of infectious disease and cancer discovered in the research setting, such as in general study of disease, have often translated into clinical uses such as diagnosis of specific patients.
“Logically speaking, if research labs are seeing a reduction, progress on these types of future clinical, functional discoveries may also be reduced,” Carlson said.
He added that the migration of diagnostics technologies into the clinic has occurred at a time of generally increasing funding for research grants. In December 2015, Trump's predecessor, Barack Obama, and Congress ended years of fluctuating budgets for FY2016 by agreeing to a $2 billion spending hike for the agency. No budget has been approved for the current 2017 fiscal year; the federal government is now funded at FY2016 levels through a continuing resolution set to expire April 28.
NGS technology appears vulnerable to budget cuts, Kalorama noted, since half of users are academic and government institutions—users that will feel especially pinched if NIH responds to budget cuts by cutting its spending on research grants.
“Less grants, less projects, less sequencing runs perhaps,” Carlson said. “That could hurt your Illuminas, Qiagens, Thermo Fisher [Scientific], Agilent, Rain Dance [technologies]—makers of NGS technologies used by research labs.”
RainDance has been acquired by Bio-Rad Laboratories in a deal announced in January and completed the following month for an estimated $87 million plus certain assumed net liabilities, the buyer said on February 23.
Sellers of instruments and consumables for NGS may be able to find growth due to greater use and the potential for expansion as drug developers look to expand their pipelines, Kalorama said.
“There may still be a thriving, growing market in these fields—instruments and reagents for NGS—but it could have been larger, perhaps,” Carlson said. “NIH funding cuts also mean products might not be developed. Significant cuts to the NIH budget would slow national biomedical research and undermine concurrent White House efforts to expedite biopharmaceutical and medical device development and market introduction.”
Trump has repeatedly promised to cut red tape for drug and diagnostic developers in order to speed up decisions on new products, while criticizing the FDA’s approach to reviewing new drugs—most notably during his February 28 address to Congress. Trump’s “America First: A Budget Blueprint to Make America Great Again” budget outline stated that the administration’s eventual FY2018 budget will include “a package of administrative actions designed to achieve regulatory efficiency and speed the development of safe and effective medical products.”
Carlson cautioned: “While the FDA review period may be shortened, drug and device candidates could remain stalled or take long to progress through research and validation.”
Trump’s budget blueprint has also called for doubling, to $2 billion, the amount in fees that the FDA would collect from drug and diagnostic developers to review their applications, with the administration citing a need for industry to pay more during a time of constrained federal spending.
Speeding up regulatory reviews of new drugs and devices was among goals of the 21st Century Cures Act, enacted in December by Obama following lopsided bipartisan majorities in Congress.