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Trump’s Budget Slams Biotech

Let’s be honest. This was never going to be a love affair with a fairy tale ending. Even before he took office, President Donald Trump wasn’t a friend to the U.S. biopharmaceutical industry. Last December, in his Person of the Year interview with Time magazine, he said, “I’m going to bring down drug prices. I don’t like what’s happened with drug prices.” The NASDAQ Biotechnology Index promptly dropped nearly 3 percent.

In early January, he said at a press conference, “What we have to do is create new bidding procedures for the drug industry, because they’re getting away with murder.” The index dropped another 3 percent. (And don’t forget the tweet about drug prices in March that sent an additional shudder through the stock market.)

At this point in the young administration, it’s pretty clear that government imposed price controls are no longer a Trump priority. Even if they were, there’s no chance they’d get through the House and Senate. But Trump’s attacks on the industry keep on coming. The latest are in his proposed budget released last week. They confirm the draconian cuts that were hinted at in the “skinny budget” released in March and include these severe blows to our industry and the future of medicine in the US:

 

  • $1 billion cut in funding for the National Cancer Institute
  • $838 million funding cuts for National Institute of Allergy and Infectious Diseases
  • An 18 percent cut in Centers for Disease Controls’ global health program
  • Elimination of the Agency for Healthcare Research and Quality
  • In addition, Trump’s budget would impose steep increases in the prescription drug user fees paid by the pharmaceutical industry. According to several reports, the budget would raise fees paid by industry to $2 billion in 2018, twice as much as in 2017.

    This is all pretty tough to take from a president who only weeks ago, in an interview with The Economist, claimed he had originated the phrase “priming the pump.” (The phrase has been used since the early 19th century, and has been commonly used to refer to government economic spending since the 1930s.)

    But the worst, from an industry standpoint, would be Trump’s proposed 31 percent cut in funding for the Food and Drug Administration, from $2.74 billion to $1.89 billion. The expectation is that this difference would be made up by the above increase in user fees paid by drug and medical device makers. However, the budget proposal would tear the carefully negotiated user fee agreements only recently hashed out between the agency and the drug industry to shreds. The budget cuts would undoubtedly lead to higher turnover in agency staff, who might be lured to other jobs during the inevitable period of turmoil while the budget makes its way through Congress, and make it difficult for FDA to attract experienced staff at a time when it most needs them. Senator Lamar Alexander, Republican of Tennessee and chairman of the Senate Committee on Health, Education, Labor and Pensions, actually warned of an FDA “brain drain” if the existing user fee agreements were allowed to expire. Fortunately, Scott Gottlieb, M.D., Trump’s newly appointed FDA commissioner, is planning to overturn Trump’s government-wide hiring freeze and move forward with filling existing vacancies at the agency. According to Gottlieb, “One of my highest priorities is to ensure that the FDA is well staffed in order to meet the challenges posed by scientific innovation, globalization, and the increasing breadth and complexity of the products that we regulate.” Time will tell if he can find the dollars necessary to do so within Trump’s highly restrictive proposed budget.

    Ironically, if enacted, the biggest share of the burden of higher user fees would hit small startup biotech companies who are leading the way in developing novel new medicines and are universally acknowledged as the innovation pipeline for the entire industry. They are typically venture funded and run lean from funding round to funding round, scraping by until they’re able to generate enough clinical data to spur a strategic partnership with an industry incumbent or a successful IPO.

    President Trump is nothing if not a man of contradiction. Maybe that’s why it’s not surprising that after nominating a respected industry professional like Dr. Scott Gottlieb to be the new FDA commissioner, he seems intent on throwing the industry into disarray with a set of budget recommendations that would inevitably slow the development and approval of desperately needed new medications.

    Blog article by: Howard Levine and Al Doig