News

Going into December 2012, Congress had neither completed its work on the federal budget for fiscal year (FY) 2013 nor decided how to avoid sequestration—widespread and indiscriminate cuts to all federal programs. On January 1, just before sequestration was scheduled to take place, a deal was finally reached between the White House and Congress. However, instead of approving a long-term balanced solution, policymakers have transferred and delayed sequestration only temporarily. Below, we provide a summary of what the compromise means for the federal budget, and what might happen to global health and international development programs. Sequestration Just after the New Year, President Obama signed into law and Congress enacted the American Taxpayer Relief Act (ATRA). The legislation delays sequestration for over two months. It also reduces the level of the total cuts that would occur under sequestration from $109 billion to $85 billion. The new ‘fiscal cliff’ date is March 27, which is when the new FY2013 sequester is now scheduled to occur. Not coincidentally, that is the same day that the FY2012 continuing resolution, now funding the government, expires. And it will also be about a month after the United States will reach its debt ceiling. Negotiations on raising the debt ceiling will no doubt be tied to the debate over a long-term budget plan to avoid further sequestration cuts. For now, we don’t know exactly what the impact of the new sequestration would be on global health research and development programs. Assuming that all programs are cut proportionately, most global health and research programs would likely be cut by 5.9 percent in fiscal year 2013. The fiscal cliff deal instructs the Administration to release a report on sequestration on March 1, before the cuts occur. For now, we don’t know exactly what the impact of the new sequestration—which is looking more and more likely—would be on global health research and development (R&D) programs for FY2013. Assuming that all programs are cut proportionately, most global health and R&D programs would likely be cut by 5.9 percent in FY2013 (instead of the previous value of 8.2 percent). As an example, global health programs at the State Department and US Agency for International Development (USAID) would see an estimated cut of $482 million, and the overall National Institutes of Health (NIH) budget could be cut by an estimated $1.8 billion. During the discussions in March, it’s possible that Congress will make any number of decisions regarding the budget and sequestration—including constructing a long-term budget deal that nullifies sequestration, or delays it yet again. Given the lack of transparency around the budget negotiations, any attempt to quantify the impact on agencies and programs is just speculation at this point. FY2013 & FY2014 The difference between the old sequestration level and the new one is paid for through changes in retirement savings and tax laws, as well as a reduction in the federal budget caps for FY2013 and FY2014. FY2013’s budget cap is now $4 billion lower than it was two weeks ago. Therefore, if Congress creates a new spending package for the rest of FY2013 in March, a total of $4 billion will need to be cut from the total federal budget. This would translate to roughly a 0.4 percent cut across global health programs—if the cuts are distributed proportionately. However, Congress also has the option to extend the continuing resolution FY2013 through the rest of the fiscal year, which would result in cuts higher than 0.4 percent. During December 2012, congressional appropriations staff did agree on most of the FY2013 appropriations legislation. It appears that funding for global health programs at USAID fared well, and could be as high as $8.4 billion. This compares with USAID’s funding level of $8.167 billion for FY2012. However, until Congress debates these issues in March, we won’t know for sure if that agreed level will stick. For other global health and R&D programs at NIH, the Centers for Disease Control and Prevention (CDC), and the US Food and Drug Administration (FDA), it’s less clear whether there has been agreement in Congress. The legislation that funds NIH, FDA and CDC, for example, is always one of the most contentious budget debates in Congress. Adding one more wrench to the usual appropriations process going forward, the Obama Administration needs more time to prepare its budget request for FY2014. While normally we would expect this in early February, it is more likely that this will be at least a month late, which could result in a contracted appropriations season. The sweeping, indiscriminate cuts that sequestration—both old and new—would entail will ultimately damage progress in global health R&D. As the March debates over the federal budget begin, Congress should find a way to get the appropriations process back on track and commit to a balanced, thoughtful, long-term plan that protects smart, effective, life-saving investments in global health R&D and other humanitarian programs.

In this regular feature on Breakthroughs, we highlight some of the most interesting reads in global health research from the past week. The US Agency for International Development has released a report to Congress on its activities in global health research and development (R&D). The report also outlines the agency’s strategy for global health R&D from 2011 to 2015. While the Obama Administration is expected to continue including science and technology (S&T) in its diplomacy agenda, US diplomatic efforts in S&T may be more reliant on collaboration with the private sector due to expected government spending cuts. The Global Alliance to Prevent Prematurity and Stillbirth has released a new video, called “Born in Silence,” that sheds light on stillbirth worldwide. Approximately three million babies are stillborn each year worldwide. amfAR—the Foundation for AIDS Research—released updated estimates for the potential human impact of federal budget cuts to US global health programs. A candidate dengue vaccine developed by scientists at the National Institutes of Health has been found to be safe and effective in most vaccine recipients, according to results from an early-stage clinical trial. The World Health Organization Executive Board this week approved a draft resolution on neglected disease R&D financing and coordination. The resolution will be considered at the next World Health Assembly in May.

The New Year has brought some much-needed good news in the fight against tuberculosis (TB). The US Food and Drug Administration (FDA) recently announced that it has approved a new treatment for multidrug-resistant TB that can be used as an alternative when other drugs fail. The approval is the first time in 40 years that the FDA had approved a drug that attacks TB in a different way from currently available treatments. The new drug, bedaquiline, is made by Janssen Therapeutics. It will be sold under the brand name Sirturo, and is the first drug developed specifically to treat multi-drug resistant TB involving the lungs. Sirturo was approved under the FDA’s accelerated approval program, which allows the agency to approve a drug to treat a serious disease based on clinical data showing that the drug will likely benefit patients in need. According to the FDA, this program provides patients earlier access to promising new treatments while the drug developer conducts additional studies to confirm the drug’s benefits and safety. The FDA has approved a new treatment for multidrug-resistant TB that can be used as an alternative when other drugs fail. The approval is the first time in 40 years that the FDA had approved a drug that attacks TB in a different way from currently available treatments. Photo credit: PATH. A study in September in The Lancet found that almost 44 percent of patients with TB in countries like Russia, Peru, and Thailand showed resistance to at least one second-line drug. “Multidrug-resistant tuberculosis poses a serious health threat throughout the world, and Sirturo provides much-needed treatment for patients who have don’t have other therapeutic options available,” Edward Cox, director of the Office of Antimicrobial Products in the FDA’s Center for Drug Evaluation and Research, said. Given that the standard drugs used to treat the disease were developed in the 1950s and 1960s, it is no surprise that the TB bacterium has become more and more resistant to these older drugs over the past 50 years. There is a pressing and urgent need for even more new TB drugs, which makes this new FDA approval so significant. It is also noteworthy that the FDA approved Sirturo under its accelerated approval program, in addition to granting the drug fast track, priority review, and orphan-product status. Beyond the lifesaving benefits of the drug itself, these FDA programs resulted in quicker access to this much-needed new TB drug and should serve as models for other drugs desperately needed around the world. It’s critical that the FDA continues to support its priority review, fast track, and similar programs, which can help speed access to safe and effective global health drugs. It’s equally critical that Congress provides the FDA with sufficient funding to carry out this global health work. With the threat of sequestration—which would result in a cut of $318 million for the FDA—still looming, policymakers in Congress must prevent sequestration and protect FDA’s global health activities. Otherwise, approvals for new global health drugs like Sirturo could suffer. “There is no question that we need more and better treatments for drug-resistant TB. And we’ll continue to need new drugs as the disease mutates or changes,” FDA Commissioner Margaret Hamburg wrote in a blog post about the approval. “Meanwhile, Sirturo is a welcome addition to the drugs that we have available to treat patients who have multi-drug resistant TB who need this drug as part of their treatment regimen.”

In this guest post, Dr. Nick Chapman, policy analyst at Policy Cures, writes about the recently released G-FINDER survey on neglected disease research and development (R&D). Sometimes the best news is no news at all. That’s one of the thoughts that struck me while pondering the results of the latest G-FINDER survey on global funding of R&D for neglected diseases. This year marks the G-FINDER report’s fifth birthday, and so provides a good opportunity to step back and consider what’s really going on with the global funding picture. Impact of the global recession not as bad as feared Which brings us to the ‘no news is good news’ point: despite our previous concerns, the global financial crisis has so far not had a dramatic impact on overall neglected disease R&D funding. Public funding has remained essentially stable in the face of stiff budgetary pressures affecting most governments around the world, and philanthropic sector cuts (down by over a quarter since 2008) were largely offset by increased investment by industry. Overall, just over three billion dollars was invested into R&D for new neglected disease products in 2011—an increase of nearly half a billion dollars since 2007. Importantly, funding remained steady compared to 2010, arresting the decline we saw the year before and hopefully setting the scene for a return to positive funding growth in the years ahead. US public funding only minimally lower in 2011 The US maintained its position as the pre-eminent funder of neglected disease R&D, accounting for around 70 percent of all public funding. Its 2011 contribution of $1.4 billion was ten times larger than the next largest public funder (the UK, with $133 million). However, US public funding dropped by $31 million (or 2.2 percent) in 2011. Although only a moderate drop, this marks the second consecutive year of funding cuts, and means that US public funding of neglected disease R&D is now more than $100 million below its 2009 peak. The vast bulk of US public funding (nearly 90 percent) is delivered via the National Institutes of Health (NIH), so it is no surprise that the $28 million cut in NIH investment accounted for the bulk of the nation’s funding decrease (although there were also smaller funding cuts from the US Agency for International Development and the Centers for Disease Control and Prevention). For this reason, the implications of the current budgetary negotiations (and threat of sequester) on NIH funding will be important to follow closely. So the resilience in overall neglected disease R&D funding despite the global recession is the good news. But, like the Phantom of the Opera’s mask, this rather bland façade hides some troubling features underneath. And this is where some of the not so good news comes in. Industry is concentrating its funding One of the unfortunate trends is, somewhat surprisingly, linked to the consistent growth in pharmaceutical industry investment over the last half-decade. Since 2008, investment in neglected disease R&D by multinational pharmaceutical companies increased by nearly $200 million, reaching $525 million in 2011. It’s a positive trend that big pharmaceutical companies continue to fund across a range of neglected diseases. However, we did find that their biggest investments are increasingly into late-stage product development for a limited number of diseases with some commercial overlap, such as dengue fever, bacterial pneumonia and meningitis, and tuberculosis (TB). These diseases, while in great need of R&D support from industry and others funders, now account for two-thirds (65 percent) of all industry funding, up from half (50 percent) in 2008, with dengue vaccines and TB drugs accounting for virtually all the increase in industry R&D investment. This change has resulted in a moderate shift in the overall global funding picture towards these ‘semi-commercial’ diseases, which increased their share of global neglected disease R&D funding from 22.4 percent of total funding in 2008 to 28 percent in 2011. Public funding has shifted away from product development What we’ve also seen – and this is particularly concerning – is that the public sector is increasingly investing in academic basic research at the expense of product development. Over the five years of the G-FINDER survey, public investment in basic research has increased by 28 percent ($124 million), while public product development investment has actually slightly declined (down 1 percent). As a result, basic research is now nearly one-third of public funding (31.2 percent in 2011), up from one-quarter (26 percent) in 2007. This is a major shift on a public funding base of around $2 billion per year. This is important, because governments are still the mainstay of neglected disease R&D funding; they were by far the largest source of funding before the global financial crisis, and remain so after, despite growth in industry funding. And, as we’ve seen, the sectors that traditionally fund product development—industry and philanthropy—have either cut or re-focused their funding over the past five years. The potential problem with these changing investment patterns is that what may appear to be a relatively modest overall change can have a significant effect on the type of research that is funded for a given disease. For example, on average over 70 percent of total funding for semi-commercial diseases is invested into product development, compared to 60 percent for diseases with a significant philanthropic stake, and 45 percent for diseases that rely heavily on the public sector. A high reliance on public sector funding is less of an issue for high-funded diseases such as HIV, but if a disease has both low funding and a low focus on product development, outcomes are likely to be poor, as we’re seeing for the most neglected diseases. Funding patterns a threat to PDPs What does all this mean for product development partnerships (PDPs)? If the public sector shifts away from funding product development and the cuts in philanthropic funding were to continue, then PDPs are one group who should be particularly concerned. Funding for PDPs is down $129 million since 2008, and—although they appear to be diversifying their funding sources (including towards science and technology agencies)—PDPs still rely on the Bill & Melinda Gates Foundation and government aid agencies for over three-quarters of their funding. However, both these groups have cut their PDP funding substantially since the financial crisis. The Bill & Melinda Gates Foundation reports that its funding drop is cyclical, but PDPs will want to monitor this trend closely. The 5th annual G-FINDER report was launched in London on the 3rd of December 2012 by the report’s lead author, Dr. Mary Moran, director of Policy Cures, and an international panel. Conducted by Policy Cures and funded by the Bill & Melinda Gates Foundation, G-FINDER reports on global funding of R&D for new products for neglected diseases.