Take Action Now to Support Rare Disease Research

Now that the election is well behind us, talks have resumed in Washington, DC about the Federal budget.  To recap — the only major piece of the larger budget puzzle that was addressed at the end of the year was the expiration of the current Federal income tax schedule, also known as the ‘Bush tax cuts’ as they were championed and signed into law by former President George W. Bush.

By way of background, budgeting in Washington is tied to a ‘baseline‘ that is tabulated by the Congressional Budget Office (CBO) (a nonpartisan, widely respected and trusted arbiter of financial accounting for the Federal Government.  CBO is housed in the US Congress itself), and changes to the budget are nearly always referenced for their effect in a 10-year timespan.

All of the other elements to the larger budget puzzle were pushed forward into this year.   We’ve all grown weary of the phrase “kick the can down the road”, but that is essentially what Congress did to all of the following (deadlines included):

• The “fiscal cliff” — also known as budget sequestration — an across-the-board cut to each federal department and program of between 8 and 10%.  This was originally set to occur at the end of last year, but was pushed forward and will now take place on March 1 unless Congress acts to avert this cut.  While 8-10% might not seem like a lot as a percentage, the effect of this kind of sloppy, imprecise across-the-board style cut is very real and appreciable.
• Also, the effects of furloughing federal workers that will result from these cuts can lag on for years afterward because you can’t retrain new workers at the drop of a hat. For example, it takes about three full years to prepare an FDA reviewer to review real applications for new drugs and biologics.  So by consequence, if members of that labor pool must be furloughed because of sequestration, and similar cuts are made to budgeting for training of new review staff in the form of hiring freezes etc., it can take years to re-staff to the previous level.
• As is, FDA seems to be working at the maximum capacity that it can, and even recently has missed deadlines for reviewing new product applications, presumably due to lack of resources.  This is an example of how sequestration is, to be generous, a clumsy way to cut a budget.  While the cuts are described as “across-the-board”, in actuality the operational effects of these cuts would be highly variable and fraught with unintended consequences.
• The federal government is currently being funded through what’s known as a “continuing resolution” (CR) from FY2012 levels — but the clock on the CR runs out on March 27th, so a government shutdown is imminent unless another continuing resolution can be agreed to, or of course Congress passes an actual budget, which seems less likely every day.
• Also, reasonable estimates place May 19th as the date when the legal ceiling will be reached on the amount of debt that the Department of the Treasury may issue, also known as the “debt ceiling”.  This will also need to be addressed soon or we risk another downgrade in America’s credit rating.
• The debate about the current balance of accounts on the Federal level and its long-term picture on economic growth is just dragging on and on.  There’s still no clear picture in sight.

In light of all this uncertainty, I’d like to take a moment to point out some reasonable projections about the NIH’s budget trend for rare disease research.

Here’s what we know:

• In fiscal year 2011, the federal government’s budget for the National Institutes of Health was about $30.92 billion (numbers include adjustments for supplemental appropriations (as fisacl stimulus) from the American Recovery and Reinvestement Act or ARRA).  That same year, NIH calculated that $3.53 billion of the budget was marked as spent for research on rare diseases, a combination of basic research and translational research.  According to this, 11.4% of the NIH budget in FY 2011 was spent on rare disease research.  This is the only data point available because NIH has only recently begun marking budget items allocated for rare disease research.  In the future, we expect more data points to be available.
• ASSUMPTION:  If we assume that the overall percentage of spending for rare disease research, year to year, is about the same, we come up with a graph that looks like this:

• The trend line shown in orange on this graph depicts the linear trend in the budget from 2003 through 2010.  In 2010, the overall budget pivoted from a steady trend, reflecting the effects of the 2008 recession.  So, in essence, the orange trend line shows us where we were, and where we could be today if we got back on track.

(Click to view a larger image)

• The trend line in black on this graph shows what the new trend would be, accounting for all budget years from 2003-2013 and assuming the reduction from the sequester.  By comparing slopes, we see that, even from this crude analysis, the significant decrease in NIH research dollars for rare diseases.  To get back on track, we would need to see the FY2013 NIH budget resume its original place at about $32.6 billion, whereby the 11.4% for rare diseases would come in at $3.72 billion.  To see a similar figure in the NIH budget, we would have to go back to FY2004.  In other words, if Congress does nothing to avert the sequester, we will see a nine-year setback in America’s commitment to the life sciences.