Cutting the N.I.H.’s Budget Would Have Serious Side-Effects
July 12, 2017
In late May, newly elected President Donald Trump released his first full budget proposal detailing the administration’s fiscal priorities. At surface-level, the $4.1 trillion budget for 2018 appeared comparable to that of last year’s; however, upon closer review, it became clear that funds dedicated to scientific research – among other departments – had been significantly reduced .
In his proposed budget, Trump allocates only $26.9 billion to the National Institutes of Health (NIH), roughly $7 billion less than the agency was afforded in 2017 . To balance these cuts, Trump proposes an approximate 10% increase in defense spending, half of which will go to the construction of a US-Mexican border wall . Likewise, the budgets for the Department of Homeland Security and the Department of Veterans Affairs are set to increase by upwards of 5.8% each .
Although each department will likely face major changes due to this new budget, this post will specifically explore the implications of reduced funding to the NIH, an agency of the U.S. Department of Health and Human Services. To understand the potential side-effects of these financial cuts, one must first understand the importance of the NIH budget, the political discourse surrounding the topic, as well as the long-term effects it will have on American business and the economy.
There is a consensus across politicians, scientists, academics, and medical corporations that the NIH must be adequately funded if there is to be any hope for the future development of lifesaving drugs. Historically, scientists and politicians have been in support of increasing the NIH budget in an effort to remain competitive in the international scientific community and foster a healthy domestic industry . At the beginning of May this year, Congress elected to pass a $2 billion increase to the NIH’s budget, a move supported by both Democrats and Republicans .
The desire for increased federal spending on science and research stems from a need for basic scientific research or “research further away from the marketability of products” as the New York Times defines it . Oftentimes, large medical corporations do not have the capacity or desire to invest in these preliminary studies, and therefore it falls on the government to fulfill this need .
The NIH funds these initiatives via grants to academic institutions, and in turn, this basic research lays the foundation necessary for pharmaceutical and biomedical companies to make new, transformative medicines for millions of Americans. Thus, it is imperative that this basic research continues to be funded by the federal government as “pharmaceutical and medical device industries are not prepared to conduct essential basic research to this degree, [and] without that, there is no foundation for tomorrow’s medical innovations,” states Dr. Kenneth C. Anderson, president of the American Society of Hematology .
Tom Price, Secretary of Health and Human Services, defended Trump’s cuts during Senate hearings in late May. Price justified the proposal by stating that if pharmaceutical corporations faced fewer regulations, they would develop new drugs faster due to increased savings . Yet at a recent meeting to discuss the NIH, leaders in both the scientific community and the pharmaceutical industry both felt that these advancements would not occur without federal funding for basic research .
Tom Price went on to state that the NIH could maintain the amount it currently dedicates towards research by eliminating the $6.4 billion it spends on overhead payments to research institutions . Price assured researchers that eliminating these overhead costs would thus have no effect on research spending. Republican Representative Andy Harris from Maryland agreed, stating that many private foundations limit their overheard payments to grantees to less than 10% . However, NIH Director Dr. Francis Collins defended the agency’s spending on indirect costs, oftentimes as much as 30% per grant, by stating that “even NIH’s rate doesn’t cover the full costs of supporting NIH-funded research… If the payments matched what foundations paid, some universities… would not be able to continue hosting NIH-funded research” . This sentiment has been echoed by universities and research institutions who believe that the indirect payments they receive on top of grants fall short in covering costs associated with managing facilities necessary for conducting research, thus limiting opportunities.
A cut to the NIH budget would not only affect the quantity and quality of scientific research, but a lower budget could have major consequences for the industry and economy as a whole. The NIH has had a record of benefiting business with an estimated $8.38 return on investment for every $1 in NIH funding . The NIH also supports 379,000 jobs “through the development of medicines and devices, surgical techniques, [and] public health improvements” (Anderson 2017). Thus the potential for a cut in NIH funding creates uncertainty for the next generation of scientists, researchers, and medical professionals.
According to new analysis conducted by the United for Medical Research, the budget cut may eliminate up to 90,000 jobs . Likewise, the proposed 1/5 decrease in funding would mean 5000-8000 fewer grants issued to aspiring research scientists . If talented individuals fear that their research will likely not be funded, they may abandon the field or emigrate to countries like Germany where scientific research is prioritized . “We’re likely to lose a whole generation of researchers” states retired aerospace executive Norman Augustine . An intellectual flight away from science and technology could have detrimental consequences on medical innovation, the industrial economy, and America’s competitive standing in the scientific community.
Rush Holt, the CEO of the American Association for the Advancement of Science, states in the Washington Post: “there’s this rosy optimism that somehow growth will magically occur, and yet it cuts the principal source of that growth… [the proposal] savages research. Economists are clear: That’s where we ultimately get our economic growth” . Thus, undercutting support for the NIH not only puts Americans and their access to new medicines at risk, but it also upsets an important economic sector and discourages an entire generation of scientists from pursuing their passions and conducting life-saving research.
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The views expressed on the Student Blog are the author’s opinions and don’t necessarily represent the Wharton Public Policy Initiative’s strategies, recommendations, or opinions.
Additional Blog Posts
 Achenbach, Joel and Lena H. Sun. “Trump budget seeks huge cuts to science and medical research, disease prevention.” The Washington Post. 23 May 2017. https://www.washingtonpost.com/news/to-your-health/wp/2017/05/22/trump-budget-seeks-huge-cuts-to-disease-prevention-and-medical-research-departments/?utm_term=.60ad6e815b64.
 Anderson, Kenneth. “Cutting the NIH budget is bad for health and business.” STAT News. 9 June 2017. https://www.statnews.com/2017/06/09/nih-budget-cuts/.
 Baumgaertner, Emily. “Trump’s proposed budget cuts trouble bioterrorism experts.” The New York Times. 28 May 2017. https://www.nytimes.com/2017/05/28/us/politics/biosecurity- trump-budget-defense.html?_r=0.
 Kaiser, Jocelyn. “Lawmakers decry Trump plan to slash NIH 2018 budget.” Science. 17 May 2017. http://www.sciencemag.org/news/2017/05/lawmakers-decry-trump-plan-slash-nih-2018-budget.
 Kaiser, Jocelyn. “Trump wants 2018 NIH cut to come from overhead payments.” Science. 29 May 2017. http://www.sciencemag.org/news/2017/03/trump-wants-2018-nih-cut-come-overhead-payments.
 Krieg, Gregory and Will Mullery. “Trump’s budget by the numbers: What gets cut and why.” CNN Politics. 23 May 2017. http://www.cnn.com/2017/05/23/politics/trump-budget-cuts-programs/index.html.
 Robbins, Rebecca. “Trump wants to cut billions from the departments that regulate drugs, stop infections, and research cancer.” Business Insider. 23 May 2017. http://www.businessinsider.com/trump-proposed-2018-budget-cuts-to-nih-cdc-fda-hhs-2017-5.