Breakthroughs Blog: DoD

Although we’re several days into sequestration, details about the full impact of funding cuts are still hazy. On Friday, the Office of Management and Budget (OMB) released a report to Congress, which details funding cuts required to offset $85 billion in the fiscal year (FY) 2013 budget. In order to reach this goal, the OMB report indicates that global health research and development (R&D) programs will be subjected to cuts of either 5 percent or 7.8 percent. But because the cuts must take place over a seven month period (instead of a full year) to fit within the fiscal year, OMB calculates that these cuts could actually be at a rate of 9 percent and 13 percent with the remaining funding for this year. OMB’s report provides some specific details on how the cuts are calculated. It also provides illustrative examples of what the sequestration cuts might look like if applied equally within federal agency budgets. However, because agency heads will have discretion over how specific cuts affect their agencies, the exact implications of sequestration will be determined in the coming weeks. Estimates are emerging regarding the widespread impact of sequestration on the agencies that support global health R&D. Photo credit: PATH While waiting for these details to come out, we are starting to see some estimates emerge regarding the impact of sequestration on the agencies that support global health R&D. For example: The National Institutes of Health’s discretionary budget will be reduced from $30,899,000 to $29,321,000 for FY13, a cut of over $1.5 billion. The sequester would equate to a $2.6 billion reduction to the State Department and US Agency for International Development (USAID) FY13 budget, translating to a $1.7 billion cut to foreign assistance programs. In particular, sequestration will cut over $400 million from global health initiatives at the State Department and USAID, including R&D initiatives. Global health programs at the Centers for Disease Control and Prevention are likely to be reduced by taking 5 percent from HIV and AIDS initiatives and then taking 5 percent from the remainder of the account. Discretionary spending for the Department of Defense (DoD) is subject to a 7.8 percent reduction, which would include any global health R&D initiatives embedded in DoD programs. Some reports indicate that the US Food and Drug Administration will lose about 9 percent of its budget for FY13. The Obama Administration is urging Congress to allow the agency to spend $41 billion-worth of user fees. In the meantime, the government is currently running on a Continuing Resolution, which expires on March 27. Congressional leaders and President Obama have expressed hopes about successfully negotiating a new spending bill by March 27, in order to avoid a government shut-down. These negotiations may also provide an opportunity to reverse the sequester, before the full impact of the cuts are felt across the government. The President’s budget request for FY14 is also on the horizon, with reports indicating that it might be released on March 25. The House and Senate will begin to take up FY14 budget resolutions, which each Chamber must pass by April 15. It’s becoming increasingly clear that sequestration is the wrong way to reduce the nation’s debt, especially when the impact would set back innovation and devastate global public health. Policymakers should use the upcoming budget negotiations as an opportunity to reverse sequestration and develop a long-term budget solution that protects and—where possible—increases funding for global health product development. Slashing funding will interrupt scientific progress and leave us without the urgent tools we need to address health needs now and in the future.

Since our last update on the latest budget action on the Hill, two significant events happened late last week in Congress and at the White House. First, the White House’s Office of Management and Budget (OMB) released a report on the potential impact of sequestration on federal agencies. Sequestration would require a reduction in government spending of $109 billion per year for nine years, beginning in January 2013. According to the report, most defense programs relevant to global health—including global health research and development (R&D) programs at the Department of Defense—would receive a 9.4 percent cut under sequestration. Non-defense programs—including most programs at the Centers for Disease Control and Prevention (CDC), the National Institutes of Health (NIH), the US Food and Drug Administration (FDA), the State Department, and the US Agency for International Development (USAID)—that are not exempt from cuts would receive an 8.2 percent cut. It’s important to note that some parts of these programs’ funds are exempt from cuts. For instance, out of a total budget of $34.249 billion for the NIH in fiscal year (FY) 2013, the sequestration applies to $30.861 billion. The rest is exempt. As for the primary agencies that fund global health and R&D programming, the report finds that: The total cut to NIH would equal $2.529 billion. This would put NIH’s total funding for FY 2013 at $31.720 billion. At USAID, the Global Health Programs account—the account responsible for all of USAID’s global health R&D work—would be cut by $670 million, leaving the final global health program’s funding level at $7.498 billion. The FDA, which plays a key role in regulating global health products, would see a cut of $318 million, with a final funding level of $3.624 billion (not including funding from user fees). The CDC would see a cut of $470 million from its overall funding, with $464 million coming from non-defense activities funding. This leaves CDC with a final funding level of $6.861 billion. These predictions are based on current FY 2012 funding levels. Many of these agency programs are already dealing with looming cuts to their funding levels for next year under various congressional budget proposals. If FY 2013 appropriations bills in Congress reduce agencies’ funding even further, the sequestration cuts would be even steeper than what’s outlined in the OMB report. Second, the House of Representatives late last week approved a Continuing Resolution (CR) for FY 2013, in order to keep the government running through the end of March 2013. The House approved the measure by a vote of 329-91, with 70 Republicans and 21 Democrats in opposition. The bill now moves to the Senate and is expected to pass this week. The CR funds the government at $1.047 trillion, consistent with the Budget Control Act. It also includes a slight 0.6 percent increase across the board for all federal programs, essentially maintaining spending at current levels. The CR provides a total of $55.2 billion for International Affairs, slightly higher than the $54.9 billion current level and higher than either the House or Senate FY 2013 appropriations recommendations. House Appropriations Committee Chair Hal Rogers (R-KY) said that lawmakers will aim to finalize appropriations bills when they return to work after the November elections. “We intend to use the lame-duck session to the fullest extent,” he said, adding, “Just because this CR will last until March 27 of next year, we will not rest on our laurels until that time.”

In this feature on Breakthroughs, we provide an update on what’s currently happening with global health in Congress and an outlook for future legislative activity. Following the August recess and Labor Day Holiday, Congress is now back for a very brief time before it takes another break to focus intensely on campaigning ahead of the November elections. We don’t expect much action on legislation specific to global health or research programs. Instead, Congress will focus on passing a Continuing Resolution (CR) for fiscal year 2013 in order to keep the government running through the end of March 2013, as members juggle the remaining legislative tasks on their plate. The CR actually includes a tiny 0.6 percent increase across the board for all federal programs, including those that fund global health research. However, the resolution will expire long after the looming budget sequestration goes into effect in January 2013 and will also run into the fiscal year 2014 budget process, effectively creating a budgeting perfect storm. Advocates for a wide range of federal programs are in high gear to convince Congress to delay sequestration or to pass a balanced budget in its place. Some of those advocates have found congressional allies willing to take on their cause. Also this week, we’re looking for a report from the Obama Administration on the potential impact of sequestration on federal agencies. As we outlined in our last update, sequestration could result in cuts ranging from 8.5 percent to 14 percent to most federal programs, depending on the outcome of the budget negotiations in Congress and the November elections. Sequestration would undoubtedly have a significant impact on global health and research programs at agencies like the Centers for Disease Control and Prevention, the Department of Defense, the US Food and Drug Administration, the National Institutes of Health, and the US Agency for International Development. We’re eager to see this report and learn more about how sequestration might impact efforts supported by these agencies to develop new lifesaving global health tools. Global health research and development (R&D) programs span the breadth of the US budget. Congress needs to work to protect these essential R&D programs from disproportionate cuts and ensure that funding is sustained—and increased if possible—for the coming years. Although the elections may be on the top of everyone’s to-do list for now, temporary budget fixes that leave these activities vulnerable to indiscriminate cuts and similar actions will not work forever. We need a plan that protects global health R&D and other key programs for the long-term, and right now, that job starts with Congress.

Did you know that Americans spend more money on ice cream in three weeks than the US Government spends on global health research and development (R&D) in a year? And despite this relatively modest investment in the creation of new global health tools, the United States is the worldwide leader in R&D for neglected diseases. When we at the GHTC tell US policymakers the story of how global health R&D has revolutionized people’s lives around the world, we highlight the prominent role that the US Government plays in funding and supporting the development of new global health tools. We’ve always believed that US leads the world in investment in global health R&D, and that this comparatively small investment has paid off many times over in lives and dollars saved. We’ve seen the effectiveness of US-funded technologies like the polio vaccine, oral rehydration solution, and HIV and AIDS drugs. We’ve known that tools in the pipeline would have similar game-changing effects. And now we have the evidence to prove it. A new report, released today by the GHTC and Policy Cures, provides important confirmation that the US is the largest global health R&D funder in the world, investing $12.7 billion over the last decade. A new report, released today by the GHTC and Policy Cures, provides important confirmation that the US is the largest global health R&D funder in the world, investing $12.7 billion over the last decade. In fact, the US government in the last decade more than doubled its annual commitment to developing new global health products, from $685 million in 2000 to $1.4 billion in 2010. These investments represent just 0.01 percent of US gross domestic product. Our report confirms the strong leadership role the US has played in the global health R&D landscape, and also includes new information on spending and support by key US federal agencies—the Centers for Disease Control and Prevention, Department of Defense, US Food and Drug Administration, National Institutes of Health, and US Agency for International Development. New information also details the public health impact of products already on the market, and new health and economic projections detail the possible impact for health tools still in development. There is an exciting pipeline of 365 new vaccines, drugs, diagnostic, and other products for global health, and the US Government is supporting 200 of them. These are just a few examples of the immense impact of global health R&D, and the incredible benefits it will continue to have if robust support continues. The US is not alone in this effort—many governments around the globe, philanthropic foundations, and private industry partners provide large amounts of funding, technical expertise, and key intellectual property to develop new global health tools. The global health R&D landscape would not be the same without these important allies. While the success of US investment in global health R&D is exceptional, the report makes clear that sustained and increased US support is essential to ensuring that the potential of global health research is not lost. The report provides recommendations for how the US Government can maximize its investments in new global health products. The recommendations are: The US Government should maintain its funding for global health R&D, and increase this funding where possible. The US Government needs to have a greater focus on the later stages of research and product development to fully leverage its global health R&D investments. The US Government should increase funding to partnering mechanisms that are focused on translation of global health research. With all of the amazing results of global health R&D we have seen—and with this new evidence that global health R&D is a worthwhile, cost-effective investment—it would be a shame to retreat now. With the US leadership role comes the responsibility to continue pushing the boundaries of science and leading the world in combating global health diseases.