Biomed and pharma sectors likely victims of Trump budget

Biosimilars generic

The pharmaceutical industry has been left scratching its head over the Trump administration’s proposed 2018 budget, the first draft of which was released Thursday, March 16. While the draft budget (titled ‘America First: A Budget Blueprint to Make America Great Again’) honors a campaign commitment to cut through regulatory tape and speed up drug approval processes, the way this is being achieved is by hitting pharma companies with vastly increased drug review fees. Although all bets are off until an approved budget comes through Congress, some are describing it as a pyrrhic victory for the sector and a sign of worrying things to come.

Drug review fees

Under the proposed Trump budget, medical product user fees paid by generic and pharma companies will increase to $2 billion, almost doubling the current cost of drug reviews. The administration says the price hike is complemented by “a package of administrative actions designed to achieve regulatory efficiency and speed the development of safe and effective medical products”, and that “industries that benefit from FDA’s approval can and should pay for their share.”

Impact on biomedical research

The research pipeline is also set to be hit by the funding package. The National Institutes of Health is to have its budget cut by $5.8 billion, or almost a fifth, potentially crippling the biomedical research sector in certain areas. A reduced scope for NIH to carry out early stages research and to issue grants to academia means that fewer drugs may reach the stage where they can be developed by pharma companies.

In going after NIH, the Trump administration is breaking with what has amounted to bipartisan consensus for years. As recently as two years ago, Newt Gingrich advocated for the NIH, saying it was “irresponsible and shortsighted, not prudent, to let financing for basic research dwindle.”

The wider picture for healthcare

On the whole, the proposed budget is not kind to health services, with nursing training programs one of the areas likely to lose out. While spending on the Department of Defense would increase, the Department of Health and Human services would be hit by a swingeing cut of $69 billion – just under 18% of its current budget. This funding plan includes money for the 21st Century Cures Act Obama signed off on in December.





Wilson Sonsini Goodrich & Rosati is the premier legal advisor to technology, life sciences, and other growth enterprises worldwide. In today’s fast-growing, highly regulated generic pharmaceutical market, companies require specialized legal guidance beyond the scope of general corporate and securities counsel. WSGR has an experienced team of experts in key practice areas, including intellectual property, litigation, antitrust, FDA/regulatory, technology transactions, exports and FCPA, trade secret, and trademark and copyrights. Learn more at www.wsgr.

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