CBO: NIH budget cuts, slower FDA reviews would have significant impact on drug development

The US Congressional Budget Office (CBO) says a permanent cut to the National Institutes of Health (NIH) budget and extending drug review times at the Food and Drug Administration (FDA) would likely have significant detrimental effects on bringing new drugs to market, though the effects might not be immediately evident.

CBO is a nonpartisan federal agency that responds to economic and budgetary questions from congressional leaders and their offices. On 18 July, it responded to top Democratic congressional leaders in the House and Senate on what would happen if NIH funding were permanently reduced by 10% and FDA new drug applications (NDA) were delayed by nine months. The report comes as the Trump Administration has made sweeping cuts to US health agencies, including NIH and FDA.

“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,” said CBO. “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.”

More specifically, CBO estimated that cutting 10% funding to NIH would result in one less drug coming to market in the first decade, nine fewer drugs in the second decade, and 20 fewer drugs in the third and subsequent decades.

Similarly, CBO warned that increasing drug review times at FDA would not only reduce the number of drugs that reach market but would also increase research and development costs to drug manufacturers.

“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,” said CBO. “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,” the agency added.

CBO explained that drug development is based on funding from private and public entities but what kind of research they support differs. It said that in 2022 drugmakers spent $116 billion on research and development, of which about two-thirds was for clinical trials and related activities, and the rest was to pay for pre-clinical research. Similarly, the agency said that in 2020, NIH spent $43 billion on research and development of which about 80% was spent on preclinical research and 15% was spent on clinical trials and related activities.

CBO said extending NDA review times would also affect its ability to approve new uses drugs already on the market and generic drugs. The agency said in the first year that a drug review extension goes into effect, it would also push approvals of supplemental NDAs and abbreviated NDAs by nine months.

"CBO estimates that a nine-month increase in FDA review times would boost the cost to develop new drugs, resulting in 3 fewer drugs entering the market in the first decade after the increase and 10 fewer drugs in both the second decade and the third decade," said CBO. "By the second decade, when the policy had taken full effect, the increase in FDA review times would be associated with a 2 percent decrease in the number of new chemically made drugs and biologic products coming to market.

"CBO also expects that the FDA would issue fewer supplemental approvals for drugs already on the market because of the increase in costs, since approving new uses follows a regulatory process that is similar to that for new drugs," the agency added.

CBO report

CBO: NIH budget cuts, slower FDA reviews would have significant impact on drug development

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