Little to Like in Obama’s Last Budget

February 11, 2016

There was scant praise from the medical community for the eighth and final budget plan from the Obama administration.

There was scant praise from the medical community for the eighth and final budget plan from the Obama administration, as the $4.1-trillion spending plan for fiscal year 2017 proposes only limited increases in funding for FDA and the National Institutes of Health (NIH) and seeks to curb R&D incentives as part of its plan to rein in drug prices. 

The Alliance for a Stronger FDA, a coalition of industry, patient, and research organizations that seeks to ensure adequate resources for FDA operations, expressed “alarm” over the proposal to boost FDA funding by only $15 million above the 2016 level. FDA would receive $2.7 billion in appropriated funds, with the rest of its $5 billion budget provided by user fees-some of the $2.3 billion fee total not previously authorized and unlikely to move forward. The proposal would “require FDA to choose among competing public health priorities,” said Alliance Vice-President Troy Zimmerman, with the National Kidney Foundation, as appropriations would remain flat for FDA offices that oversee drugs and biologics and increase only slightly for food and medical devices. While FDA could gain an added $75 million through the President’s $1-billion cancer “moonshot” initiative, that would occur only if Congress authorizes that program.

NIH similarly would gain a mere 3% budget increase to $33 billion, far less than its boost for 2016. And much of the added funding would come from special research initiatives that Congress has to approve. The administration also requests $1.8 billion in emergency funding to respond to the Zika virus, much of that going to the Centers for Disease Control and Prevention to prevent transmission in the United States.

Most troubling to biopharmaceutical companies are proposals to curb drug spending by allowing Medicare to negotiate prices for high-cost drugs and biologics covered by Part D plans. This would require manufacturers to disclose R&D costs, payer discounts, and production costs on certain drugs. The administration also reiterates earlier proposals to prohibit “pay-for-delay” arrangements and to reduce the exclusivity period for biologics from 12 to 7 years. The Biotechnology Innovation Association (BIO) predicted that these proposals would “severely restrict” investment in innovation by biomedical companies, while the Pharmaceutical Research and Manufacturers of America (PhRMA) objected to such fundamental changes in Medicare Part D as “jeopardizing access, driving up premiums, and reducing choice” in the process. And reduced intellectual property incentives would undermine investment in developing new therapies to fight cancer, Alzheimer’s, and other diseases.

The FDA budget highlights initiatives to improve oversight of drug compounding, prevent prescription opioid abuse, reduce drug shortages, and speed approval of safe and effective generic drugs; the challenge will be to find the resources to accomplish these tasks as well as its many other obligations.