More Trump Budget Woes

POLITICO’s Pulse is a daily report which appears to be sponsored in part by PhRMA, the drug-maker trade organization. Yesterday’s report included two items of special interest to research universities, especially those affiliated with teaching hospitals and medical centers.

  1. The first was a letter signed by 4 former FDA Commissioners, two of whom are now at Duke while another is associated with the National Academy of Medicine. It addresses concerns regarding proposed “importation ” legislation. We have commented before on the innovation ecosystem harms attendant to drug price controls and “Rube Golberg” controls promised by “importation”.

The U.S. has a “closed” prescription drug supervisory system. Drugs sold here are approved by the FDA as are their manufacturing faculties. FDA is already understaffed. They lack the resources to police importation. Counterfeit drugs already constitute 10% of US drug distribution principally through the internet. Drugs that come through Canada will be unsupervised. Like our own FDA, Canada’s supervisors lack sufficient resources to oversee conduit drug safety or their manufacture and has said it will not do so. The letter lists some of the risks assumed by enabling drug importation as a way to control drug pricing. Foreign-based criminals and terrorists may benefit but as the authors say, even if the medicine is real savings will be small and certainly not worth the risk.

There is an added concern for university affiliated distributors of counterfeit drugs which obviously are not labeled and are hard to detect. But because often they are distributed to patients who rely upon providers’ inherent assurances that the drugs are genuine, there will be liability issues triggered at university affiliated hospitals and medical centers . Any costs saved will likely be offset by increased insurance expense. Staff to hasten FDA drug approvals will expand competition. That is the safest, quickest way to lower prices.

  1. The second item involves new budget cuts to NIH (despite Cures Act increases). Since its harm to programs underway speaks for itself, we simply will quote from the POLITICO report.

TRUMP ADMINISTRATION WANTS $1.2 BILLION CUT AT NIH THIS YEAR – Overall, the administration has proposed $18 billion in cuts across more than 20 federal departments for the current fiscal year, according to a proposal sent to appropriators on Friday and obtained by POLITICO. The proposed NIH cut is one of the three largest reductions to individual agencies spelled out in the document – but the cuts are unlikely to be implemented. House appropriators have said that it’s too late for the Trump administration to request drastic cuts to agencies this year. The proposed reductions would come from long-settled discretionary spending bills and could prompt a major showdown with only a month left before the deadline to keep the government funded.

Where the cuts would come from – The NIH cuts would include a $1.18 billion reduction in research grants and the elimination of $50 million in spending on new grants. The White House also would cut more than $300 million from the CDC, with about $100 million coming from its HIV/AIDS programs and the remainder coming from various public health research programs, initiatives and preparedness.”

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