How Changes to Funding for the NIH and Changes in the FDA's Review Times Would Affect the Development of New Drugs
Report
CBO was asked to assess the effects of a permanent 10 percent reduction in NIH funding and a nine-month increase in FDA review times of new drug applications.
CBO provides information about how changes to funding for the National Institutes of Health (NIH) and changes in the Food and Drug Administration's (FDA's) review times would affect the development of new drugs. In particular, CBO was asked to assess two hypothetical scenarios:
A permanent 10 percent reduction in the amount of funding that the government provides to the NIH, and
A nine-month increase in the time it takes the FDA to review new drug applications (NDAs).
To assess the effects of the hypothetical reduction in NIH funding, CBO focused on how the reduction would affect external preclinical research—that is, research conducted before clinical trials begin by organizations that receive money from the NIH. CBO estimated that a reduction in the NIH's funding of external preclinical research would ultimately decrease the number of new drugs coming to market by roughly 4.5 percent, or about 2 drugs per year. That result would not be immediate; rather, the impact of the reduction in funding would grow over a 30-year period and would take full effect in the third decade after the reduction began. A reduction in other components of the NIH's budget would further decrease the number of new drugs coming to market; CBO has not assessed the magnitude of that effect.
A nine-month increase in FDA review times for NDAs would reduce the number of FDA-approved drugs in the first year following the increase because all but three months' worth of drug approvals would shift to the next year. In addition to that initial delay, the increase in review times would reduce the number of such approvals by raising the cost to develop new drugs. The number of drug approvals deterred by the increase in development costs would grow over time and would reach its full effect of a 2 percent reduction—amounting to about one less new drug—each year in the second decade after the increase in review times began.
CBO was also asked to analyze the implications of reducing NIH funding by 35 percent to 38 percent. CBO has not yet assessed whether historical evidence can be generalized and reliably used to estimate the effects of a reduction in funding of that magnitude.
