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Brief Your CEO: Explaining How Trump Budget Will Affect Your Lab

As lab manager, you may want to ensure your CEO understands how President Trump’s 2018 budget proposal may affect your laboratory. Here are four things to cover in your briefing.

What the Budget Proposal Is—And Is Not
Technically, the proposal is not a budget. Only Congress has the constitutional authority to make budgets and appropriations. But while presidents do not "make" budgets, they play a leading role in the process by establishing spending priorities. The 2018 budget proposal is best understood as a "blueprint" of President Trump’s spending priorities.

1. NIH Budget Cuts
The proposal requests $69 billion for HHS, $15.1 billion (or 17.9 percent) less than current levels. The NIH stands to lose $5.8 billion (almost 20 percent) in funding. To put things into perspective, you might want to let your CEO know that the proposed $25.9 billion for NIH funding is actually below 2003 levels.

You can also give your CEO a sense of the potential impact by explaining what happened in 2013 when the NIH’s budget was slashed 5 percent via sequestration cuts. The result: In fiscal year 2013, the NIH awarded 700 fewer competitive research grants. And the cuts Trump is proposing for fiscal year 2018 are five times greater than in 2013!

It is also worth mentioning that the proposal also refers to "a major reorganization of NIH’s Institutes and Centers" without listing any details.

2. More Money for Fraud Enforcement
Another item in the proposal directly affecting the diagnostics industry to tell your CEO about is the increase in federal enforcement funding, particularly with regard to Medicare and Medicaid fraud initiatives under the Health Care Fraud and Abuse Control Program (HCFAC). The proposed budget would raise HCFAC discretionary funding for 2018 by $70 million to $751 million.

The proposal also calls for "reforms to key public health, emergency preparedness, and prevention programs"—such as changing preparedness grants to "reduce overlap," save expense and channel funding to states most in need.

The proposal declares the administration’s commitment to "investing in activities to prevent fraud, waste, and abuse and promote high quality and efficient health care" and points to the high return on investment associated with fraud enforcement activities. "Additional funding for HCFAC program has allowed the Centers for Medicare & Medicaid Services in recent years to shift away from a ‘pay-and-chase’ model toward identifying and preventing fraudulent or improper payments from being paid in the first place," the proposal explains.

3. Higher FDA User Fees
Your lab may also be impacted by the proposal’s attempt to "recalibrate" medical product user fees, which could include doubling of what pharmaceutical companies and medical device manufacturers (including diagnostics companies) pay in review costs. Explain to your CEO that the FDA had decreased user fees in 2017 to what the Regulatory Affairs Professionals Society says are the lowest fees since 2013. The White House says the proposed increase in fees is "designed to achieve regulatory efficiency and speed." However, you may want to add that given the current shortage of FDA reviewers and the federal hiring freeze, experts are skeptical that the increase in fees would achieve its stated goal.

4. Public Health Emergency Funding
The proposal also calls for "reforms to key public health, emergency preparedness, and prevention programs"—such as changing preparedness grants to "reduce overlap," save expense and channel funding to states most in need. It also proposes a new Federal Emergency Response Fund to address public health crises such as the Zika virus outbreak. Finally, the Centers for Disease Control and Prevention would get a $500 million block grant designed to provide more flexibility and address state-specific needs.

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