Ashley Bennett

Earlier this week, the GHTC and other global health and international development advocates called on the House Appropriations State and Foreign Operations subcommittee to fully fund key programs in the foreign affairs budget. Advocates presented testimony regarding the fiscal year (FY) 2014 budget for State and Foreign Operations, which includes funding for the US Agency for International Development (USAID) and many other global health and research programs. Subcommittee Chair Rep. Kay Granger (R-TX) and Ranking Member Rep. Nita Lowey (D-NY) ran the proceedings, and Reps. Barbara Lee (D-CA) and Henry Cuellar (D-TX) also attended. Granger and Lowey kicked off the hearing with statements in support of continued US leadership in global health and foreign aid programs. Lowey stated that she is “proud of the progress that US government funding has made against diseases like tuberculosis, malaria and HIV and AIDS.” Global health research and development (R&D) efforts funded by agencies like USAID play an inextricable role in this progress, through innovations such as new HIV drugs, tuberculosis (TB) diagnostics, and advanced insecticides to bolster the use of mosquito nets to prevent malaria. Rep. Kay Granger (R-TX) (right) and Rep. Nita Lowey (D-NY) (left) ran the hearing, which focused on the FY 2014 budget for USAID. Photo credit: PATH. The GHTC and many of its members were invited to testify at the hearing, and spoke about the value of global health research in terms of saving lives, improving health outcomes, furthering American innovation, and increasing cost-savings in public health over the long term. According to the GHTC’s written testimony, every day “more than 35,000 people die from AIDS, TB, malaria, and other neglected diseases around the world. … These issues highlight the urgent need for sustained investment in global health research to deliver new tools to combat these devastating diseases.” Fortunately, previous “US investment in global health R&D has generated great success in treating devastating diseases and improving the lives of millions through new technologies.” And there are “several very promising technology candidates in the R&D pipeline; however, these tools will never be available if the support needed to continue R&D is not supported and sustained.” Other GHTC members stressed the importance of sustained support from USAID and other US agencies for global health research initiatives. For example: Jennifer Katz, policy director for the North America office of the Drugs for Neglected Diseases initiative (DNDi), highlighted the need for USAID to expand its neglected tropical disease (NTD) program to include research and product development through the story of William, a boy stricken with sleeping sickness in Uganda a few years ago. William was treated with the only medicine available at the time—an arsenic-based drug called melarsoprol. Michael died not from sleeping sickness but from the side effects of the toxic medication. Katz then explained that if William were treated today, he would receive a non-toxic and effective drug developed by DNDi. Katz stressed that support from USAID to develop new and improved NTD treatments would mean that more lives could be saved worldwide. International AIDS Vaccine Initiative (IAVI) CEO Margaret McGlynn described how even a 70 percent efficacious HIV vaccine distributed to 40 percent of the population in low- and middle-income countries would avert 8.9 million new infectious over 10 years. This impact would be a groundbreaking step forward in public health. USAID is a leading funder of IAVI’s efforts to develop a safe and effective HIV and AIDS vaccine, and McGlynn emphasized that Congress should continue to support USAID’s HIV vaccine research programs so this research can continue. Sabin Global Network for Neglected Tropical Diseases Managing Director Dr. Neeraj Mistry described the success that USAID’s NTD control program has had in delivering more than 587 million treatments and training hundreds of thousands of community health workers. Mistry also noted that USAID should increase its support for NTD research and product development efforts. Indeed, USAID can repeat its success in delivering existing treatments by also funding NTD research and product development, as new and improved drugs and other tools are desperately needed. PATH’s Senior Director of Policy and Advocacy Rachel Wilson described how a New Jersey company, in partnership with PATH and USAID, developed and produced a vaccine vial monitor that is now used to ensure the quality of every vaccine that UNICEF and other global agencies deliver worldwide. This is just one example of the economic benefit global health research holds for the United States. For example, 64 cents of every dollar invested in global health R&D goes directly to US researchers, many of which conduct research with domestic universities and academic centers—thereby providing jobs and jumpstarting new economic activity. Other global health community members such as the Non-Communicable Disease Roundtable, Bread for the World, and the GAVI Alliance also testified in support of global health and development programs. Witnesses at the hearing strongly demonstrated that even in this extremely challenging fiscal climate, when difficult decisions must be made in the face of budget cuts, is it essential that Congress prioritize effective programs that save lives at home and abroad. Global health research and product development programs at USAID save millions of lives, spur economic activity in the United States, and save money in the long run. These programs must be protected, and the US leadership in this area must not falter. To achieve this goal, Congress must ensure that global health research programs at USAID and across the government are robustly funded in FY 2014.

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.

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. Over the past several weeks, Congress has been incredibly active on the federal budget and other pieces of legislation that could have implications for global health research and development (R&D). Below, we provide an overview of the most recent action, and what the next several weeks could bring. Yesterday, the House Foreign Affairs Committee approved the Foreign Relations Authorization Act with no amendments. The bill only authorizes the State Department’s operations—there is no policy or programmatic language included for international development or global health. During a much different hearing than last year’s controversial two-day event, both Democrats and Republicans worked to create a compromised bill that contains suggested funding levels in line with the fiscal year (FY) 2012 final budget levels dictated last year by the House Appropriations Committee. Late last week, the House Energy and Commerce Committee held a hearing on the progress and future of the National Institutes of Health (NIH). NIH Director Francis Collins testified during the hearing, saying that looming sequestration—or across-the-board cuts in the federal budget—“could do serious damage to the progress that we now see in medical research.” Collins also discussed how the NIH’s new National Center for Advancing Translational Sciences would likely take large cuts in funding under sequestration. Earlier this week, the Senate passed the FDA Safety and Innovation Act, which includes a reauthorization of both the Prescription Drug User Fee Act (PDUFA) and Medical Device User Fee Act (MDUFA). The bill will now go to President Obama, and he is expected to sign it into law. While reauthorizing PDUFA and MDUFA does provide the Food and Drug Administration with much needed funding, the bill also contains the Generating Antibiotics Incentives Now (GAIN) provision, which contains some controversial elements regarding R&D data exclusivity. Additional information is available here and here. There are two recent measures in Congress and the Administration that could impact the federal budget in the coming weeks: The House Budget Committee may soon introduce legislation (HR 5872) that could help delay the implementation of sequestration—some in the global health community estimate that sequestration could amount to cuts for global health R&D between 8 percent and 12 percent across the US Government. The proposed legislation, authored by Budget Committee Chair Paul Ryan (R-WI), would require President Obama to report within 30 days on the impact of automatic cuts to the federal government at “program, project, and activity” levels. Office of Management and Budget (OMB) Acting Director Jeffrey Zients recently sent a memo to department and agency heads with guidance on agency submissions for FY 2014 budgets. The memo asks agencies to cut lower-priority spending to allow for continued investment in "areas critical to economic growth and job creation, including education, innovation, infrastructure, and research and development." The memo also directs agencies to exclude the across-the-board sequestration from their requests. Of course, most people in Washington are talking about the Supreme Court, and today’s ruling on the Affordable Care Act. The Court’s ruling, as well as the rapidly heightening politics surrounding the Presidential campaigns, could affect progress on finalizing a FY 2013 budget and securing a deal to avoid total sequestration. With everything that Congress needs to complete before the end of the calendar year, we may know the election result before we know next year’s final funding levels for key global health R&D programs.

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. As Congress starts the August recess, there have been a few developments in the fiscal year (FY) 2013 appropriations process, and both House and Senate committees have completed debate on nearly every account. Additionally, both the Administration and Congress have intensified their discussions about the upcoming sequestration cuts, and Congress has proposed continuing resolution to keep the government running at least until March. Below, we provide an overview of recent activity. FY 2013 Appropriations In the past two weeks, the Senate appropriations committee approved its Department of Defense appropriations bill, funding the department at a level $5 billion below President Obama’s request. Language and funding was included in the bill to establish a Peer-Reviewed Medical Research Program, which will set research priorities across the defense department for certain conditions and diseases, including malaria, and the neglected tropical diseases dengue fever, and leishmaniasis. The program is funded at $50 million in the legislation. Additionally, another $50 million was allocated to the Joint Warfighter Medical Research Program, which would accelerate health research for solutions and treatments in projects that the defense department is already funding, including some priority diseases for global health. With the passage of this bill, the Senate appropriations committee completed its work on individual appropriations bills for the year. The only account it did not approve funding for was the Labor-HHS account, which includes funding for the National Institutes of Health and Centers for Disease Control and Prevention, both of which fund global health research programs. On the House side, the full House of Representatives passed its own legislation funding the Department of Defense, which its appropriations committee approved back in May. That legislation approves a funding level above the amount agreed to in last year’s Budget Control Act agreement. Eventually, the differences between the House and Senate versions of the defense legislation will have to be rectified to fund the department for FY 2013. FY 2013 Continuing Resolution It’s been clear for a few months that Congress would not complete FY 2013 appropriations before the next fiscal year begins. In an interesting turn of events, Congress has agreed that it will need a Continuing Resolution (CR) in order to keep the government running into October and beyond, and members have already agreed on the terms of the CR, which will provide $1.047 trillion in discretionary spending. This will prevent further budget debates leading up to the presidential election, and takes one item off of Congress’ to-do list for the post-election session in November and December. Congress will write the agreement during August, and will vote on the deal in September. Sequestration There are roughly 20 days left in the congressional calendar, given the election and upcoming recesses. When the Budget Control Act was passed, Congress was expected to develop a plan to reduce spending or face severe, automatic cuts starting January 2, 2013. As Congress has not been able to agree on an alternative and has very little time left to do so, in January these, roughly, 8.5 percent cuts will likely take place.However, since the CR will delay FY 2013 budget levels from actually being finalized until March, the rate of the cuts for the last part of the FY 2013 fiscal year (March 1-September 30) could be higher—possibly as high as 14 percent. This scenario is still months away, and is dependent on several factors, including an election that could change the Presidential administration and the leadership in Congress. A deal could still be reached that would delay or eliminate sequestration, although there is very little time left to do so. New OMB Guidance Office of Management and Budget (OMB) Acting Director Jeffrey Zients recently sent a memo to department and agency heads with guidance on federal agency submissions for FY 2014. In the memo, Zients asked agencies to cut their bottom-line FY 2014 requests by 5 percent below spending levels appropriated for FY 2013. Zients sent another memo on July 31, informing agency leads of upcoming discussions on the implications of sequestration. Under current law, agencies are restricted in how much they can plan ahead of time for sequestrations. However, without an agreement from Congress on an alternative to the cuts, and with Congress’ insistence, the Administration has started to take steps to plan for the cuts.

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.