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Trump Budget “Blueprint”: 4 Ways It Will Impact Labs

President Trump’s 2018 budget proposal includes a number of items likely to affect your laboratory. Here are the four things lab managers need to know about the proposal.

What It Is & Is Not
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.

And based on the deep cuts to the U.S. Department of Health and Human Services (HHS), including the National Institutes of Health (NIH), biomedical funding is clearly not one of the new president’s spending priorities. In his introductory message to the budget proposal, President Trump explained that "defense and public safety" budget increases would be offset by "finding greater savings and efficiencies across the Federal Government. … We are going to do more with less, and make the Government lean and accountable to the people."

The Potential Impact
Not surprisingly, the spending priorities outlined in the proposal have attracted sharp criticism from the industry. "The Trump administration’s proposed budget would cripple the science and technology enterprise through short-sighted cuts to discovery science programs and critical mission agencies alike," according to Rush Holt, CEO of the American Association for the Advancement of Science. "Investments in federal research and development make significant contributions to economic growth and public well-being," Holt’s statement continues. "The administration’s proposed cuts would threaten our nation’s ability to advance cures for disease, maintain our technological leadership, ensure a more prosperous energy future, and train the next generation of scientists and innovators."

Let’s take a closer look at the three elements in the proposal most likely to impact labs and the diagnostic industry.

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. The proposed funding of $25.9 billion is below 2003 funding levels. By comparison, 2013 sequestration cuts reduced the NIH budget by 5 percent, a fraction of what the Trump administration is proposing. Even still, sequestration, the institute said, led to 700 fewer competitive research grants in fiscal year 2013.

"In the last 15 years, NIH-funded research has built the foundation for many of America’s biotechnologies, such as developments in cancer treatments, genomics, and medical diagnostics," says Darrell Kirch, M.D., president of the Association of American Medical Colleges, in a statement. "Medical research takes years to translate from the bench to the bedside and cannot be turned on and off like a faucet. The proposed cuts would set back progress toward critical advancements that could take decades to regain, prevent new ideas from being explored, and have a chilling effect on those who would potentially enter the biomedical research workforce."

The Trump administration says the budget proposal "reduces administrative costs and rebalance[s] Federal contributions to research funding." While details are scarce in the two pages dedicated to HHS, the budget proposal also mentions "a major reorganization of NIH’s Institutes and Centers."

2. More Money for Fraud Enforcement
In addition to the NIH cuts, the diagnostics industry would be impacted by the proposed increase in federal enforcement funding, particularly 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 Blueprint 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 Blueprint explains.

3. Higher FDA User Fees
Diagnostics would 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. The FDA had decreased user frees 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, given the current shortage of FDA reviewers and the federal hiring freeze, experts are skeptical, the increase in fees would achieve its stated goal.

4. Public Health Emergency Funding
The proposed Budget also "[r]eforms 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.

Additionally, the budget calls for 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.

Takeaway: If enacted, the Trump administration cuts to the NIH could have profound negative effects on biomedical research and would increase FDA user fees. While Congress will ultimately decide the budget, the White House proposal would be detrimental to the biomedical industry, including the diagnostics sector. Advocates for science and medical research remain hopeful that Congress will maintain its bipartisan history of "protecting" research investments, as Congressional members from both parties have expressed public concern over the proposed NIH cuts.

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