Trump Budget Boosts FDA, Squeezes Resources for NIH and Healthcare

FDA advocates on all sides applauded the request to increase funding significantly for FDA under the Trump administration’s budget for fiscal year 2019, which seeks more than $400 million in additional outlays for oversight of drugs, biologics, and medical devices. The Alliance for a Stronger FDA praised the budget plan for recognizing the important work of FDA in advancing innovative drugs and medical devices, while Friends of Cancer Research noted the $20 million allocation to support FDA’s Oncology Center of Excellence, which had not received full funding previously.

The budget plan seeks $5.8 billion in total resources for FDA, with $3.25 billion coming from federal appropriations and the rest from industry user fees [detailed information available at

 and https://www.whitehouse.gov/wp-content/uploads/2018/02/msar-fy2019.pdf]. The $473 million increase is the largest boost in public funding ever for the agency, according to the Alliance. The administration also advises FDA to use its resources to speed the approval of more new generic drugs, support development of new diagnostics and abuse-deterrent drugs to fight the opioid epidemic, modernize over-the-counter drug regulation, and advance therapies, vaccines, and devices to counter public health emergencies and disease outbreaks.

At the same time, the medical research community raised concerns about resource reductions for other health and research agencies. The National Institutes of Health (NIH) faces cuts under this latest plan, despite the appearance of a funding increase; most of any added funds come from shifting other parts of the Department of Health and Human Services (HHS) into NIH, including the Agency for Healthcare Research and Quality (AHRQ). The Centers for Disease Control and Prevention (CDC), moreover, faces steep budget reductions, despite added resources to fight the opioid crisis.

In addition, the administration proposes to realize significant “savings” from Medicare and Medicaid, with a particular focus on reducing outlays for prescription drugs. One proposal calls for Medicare Part D plans to return a portion of drug company rebates to beneficiaries starting in 2019, a move strongly opposed by pharmacy benefit managers (PBMs) but applauded by pharma companies. There are further changes to catastrophic coverage of drugs for Medicare beneficiaries, and to reimbursement for drugs covered by Medicare Part B. Most interesting is an administration proposal for a demonstration that authorizes up to five state Medicaid programs to test methods for negotiating prices directly with manufacturers, utilizing closed formularies and gaining an exemption from best price reporting under the Medicaid drug rebate program.

Congress hits pharma

Similar changes in Medicare drug benefits are authorized in a broad budget bill approved by Congress and signed into law by the President just before unveiling the 2019 budget plan. The measure extends government funding through March 23 to prevent another government shutdown, providing Congress once again with more time to hash out an appropriations deal for the current year.

The bill hits pharma companies hard by making a significant increase in the portion industry pays for coverage of drugs in the Part D coverage gap, or “donut hole.” Avalere Health estimated that the measure could have a “multi-billion dollar impact on some large companies,” boosting manufacturer costs significantly, but without making any real significant reduction to beneficiary spending. The main winners are health plans, which will see costs decline over time, as will the federal government.

The new budget law also revises reimbursement for biosimilars in the coverage gap, kills the Independent Payment Advisory Board, and updates provisions of the Medicaid drug rebate program. It won bipartisan support on Capitol Hill by extending the Children’s Health Insurance Program through 2027 and for increasing funds to combat the opioid crisis.