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21st Century Cures Is Good Health (And Fiscal) Policy


21st Century Cures Is Good Health (And Fiscal) Policy

Forbes July 9, 2015
Health PolicyDrug DevelopmentFDA Reform

The FDA's process for approving drugs is aging, and has failed to keep up with advances in basic science and modern analytic capabilities. Because of this, the cost of getting a new drug to market has grown from around $1 billion to over $2.6 billion. Effective patent life typically sits at around 11 years thanks to the length and complexity of FDA's clinical trials. Simultaneously, investment in the National Institutes of Health (NIH), which funds about half of all federal basic research (the foundation for all novel drug development) has stagnated since the early 2000s.

These are very difficult problems to address. Which is why the bipartisan 21st Century Cures Act — which would add additional oversight to the FDA and push it to embrace new tools like adaptive clinical trial designs and biomarkers — is so impressive. To help achieve its mission, the Cures Act authorizes an additional $10 billion for the NIH over 5 years to help develop the NIH's capacity to help the FDA in this mission.

Let's be clear: the bill isn't perfect. But if we wait for perfection from D.C. we might as well give up now. Making the perfect be the enemy of the good may be satisfying in the short run, but it gets you nowhere in the long run.

This bill, in some ways, kills two birds with one stone. Not only does it set the FDA on a better track, it also provides some semblance of consistency to the NIH's annual budget, helping create certainty for researchers who depend upon it to fund their work. This is not only superior to the status quo, but is also better than a simple one-off increase in the agency's budget.

Some have disagreed with the overall goal of the bill. Though these concerns are well-intentioned, they are somewhat misguided. But disagreeing over whether drug development should or shouldn't be more efficient is one thing. Reasonable people can disagree about which policies are optimal. These debates are healthy and help to generate new ideas.

Some fiscal conservatives have critiqued the bill for its potential fiscal effects. The problem here is that this isn't a real policy concern — it ignores the nature of spending in the bill, and ignores the fact that CBO has scored the bill as a net deficit reduction!

The critique is fairly simple — the funding under the bill falls into so-called "mandatory spending," which isn't subject to the annual budget process. Instead, it's the same category as entitlement spending (like Medicare and Medicaid) which flows according to existing law. The concern — which isn't unwarranted — is that adding more spending into the untouchable "third rail" makes fiscal reforms more difficult. And if this were creating a new, unfunded entitlement, critics might be warranted in making such a criticism.

But this isn't what the bill is doing. Far from it.

For starters, the increase in spending under the bill is temporary. Most of the funding is directed to a so-called "innovation fund," providing $1.8 billion annually over 5 years, with mandatory reviews of the strategic plan every 18 months. After 5 years, this funding stream would have to be reauthorized to continue.

Moreover, all of the increased spending is paid for. Granted, most of the spending is drawn from selling oil from the Strategic Petroleum Reserve (SPR). Conflating spending between policy areas perhaps isn't the best idea, but given that the SPR already holds significantly more than is required by law, a drawdown isn't the worst idea. At the same time, non-SPR related spending offsets include smart reforms to Medicaid (like limiting reimbursements for durable medical equipment to what Medicare pays) and Medicare as well.

Fiscal hawks need to step back and look at this trade-off carefully: they're getting short term spending increases (paid for by short-term spending cuts) that will pay long term dividends in improved health and medical innovation. That's a deal worth taking every day of the week and twice on Sunday.

A number of conservative legislators — including Marsha Blackburn (TN-7), Cathy McMorris Rogers (WA-5), and Michael Burgess (TX-26) are supporting the bill, and for good reason. They see it as a win for fiscal responsibility, a win for patients, and a win for America's medical innovation infrastructure.

This isn't just another Solyndra. Indeed, this may be one of the best investments we can make. After all, guaranteeing the FDA and the NIH a stream of funding to undertake a socially-vital mission — driving medical innovation forward — is undoubtedly a smart use of federal dollars.