Health care update (NIH)

Recent/upcoming developments… President-elect Trump has nominated Dr. Jay Bhattacharya to serve as the Director of NIH.  Dr. Bhattacharya is a professor of medicine at Stanford University.

Our outlook… While Republicans are increasingly critical of the NIH, that criticism tends to be focused on the administration of the agency and its research priorities rather than the existence of the agency itself.  The choice of Bhattacharya is largely reflective of this approach, as his record suggests he is interested in reforming rather than constraining the agency (i.e., streamlining its structure, increasing the reliability/replicability of research, eliminating conflicts of interest, liberalizing decision-making authority).  That said, these goals – pared with the influence of RFK Jr., who wants to reduce the NIH workforce and push the agency to reallocate funding to preventive, alternative, and holistic medicine – will have consequences for the availability/generosity of grants.  And, while some conservative groups have proposed significant cuts to NIH funding, Congressional Republicans have generally been supportive of maintaining NIH funding at a relatively steady growth rate.  NIH funding is likely to remain flat in the next couple of years, largely as a result of caps we expect Republicans to insist upon for the growth in government funding more generally.  Below we explore the areas where Bhattacharya, Kennedy, and Republican lawmakers can impact NIH programs through the legislative and regulatory processes.

* Funding… Essentially all of NIH’s funding (currently ~$46b) is divided between 27 “institutes” or “centers,” with most of that funding being targeted at research and grant programs.  Historically, NIH funding has grown on average by ~4.8% annually over the past decade.  However, in a future (i.e., 2026+) where caps on discretionary spending are put into place, the growth rate is likely to be lower than expected/the historical norm (i.e., under the Fiscal Responsibility Act caps currently in place, House Republicans have proposed keeping NIH funding flat from FY24 to FY25).  Though we believe actual cuts relative to current funding levels are unlikely, to the degree those occur (as suggested by Republican aligned groups like the Center for Renewing America, which has proposed a -21.5% in aggregate NIH funding), the cancer, allergy, aging, heart/lung/blood, general medicine, and neurological institutes are most likely to experience the greatest impact (as they account for ~60% of all NIH grant funding).

* Legislative Reforms… Republicans, led by House Energy & Commerce Chair McMorris Rodgers (R-WA), have proposed reform legislation that aims to alter NIH’s structure and administration.  The plan aims to streamline the agency’s structure by consolidating its 27 institutes and centers into 15 to enhance coordination and reduce redundancy.  It also suggests implementing term limits for institute and center directors to promote diversity in leadership.  To bolster accountability, the framework recommends establishing a congressionally mandated commission to conduct regular reviews of the NIH’s performance, mission, and programs.  In practice, such reforms would likely create more competition for grants (as institutes are merged, funding is consolidated), reduce predictability in the grant opportunities available and the processes for reviewing applications (as leadership shifts), and increase the risk of grant claw backs (as increased oversight could lead to more stringent reviews of questionable or failing research projects).  However, we believe it is unlikely such reforms will be enacted given Democratic pushback to these proposals (on the grounds that such reforms would reduce focus on specialized research that has historically required dedicated support and would reduce NIH’s institutional knowledge).

* Regulatory Reforms… There are a variety of regulatory levers that can be pulled that can alter the agency’s research priorities, its processes for reviewing and approving grants, and its engagement with industry.  For example, through strategic guidance or directives to NIH leadership, Bhattacharya could adjust the allocation of funding toward or away from specific research areas, such as vaccine safety or alternative treatments.  Additionally, Bhattacharya could influence NIH grant funding processes by revising the evaluation criteria or emphasis in peer review, such as prioritizing studies that align with Republicans’ or Kennedy’s focus areas or encouraging the funding of diverse scientific perspectives.  And Bhattacharya could adjust NIH policies to limit collaboration with pharmaceutical companies, focusing instead on independent or alternative research partnerships.  While merely examples, all three of these can be achieved unilaterally and would align with Kennedy’s desire to refocus the agency’s research processes away from disease treatment to prevention and limit the reach of corporate interests (i.e., drugmakers) into the research process.

Watch for these developments… As noted above, regulatory reforms are more likely than legislative reforms or appropriations cuts.  As such, it will be important to watch for specific comments from Bhattacharya as to how he plans to effectuate the high-level goals he has outlined for NIH and the degree to which they differ from those of Kennedy.  At this stage, Bhattacharya does not appear as interested as Kennedy in shifting funding away from “traditional” research or researchers.  However, if alignment emerges between Bhattacharya and Kennedy on this point, it will increase the likelihood of funding being diverted away from projects involving drugmakers or industry-linked researchers and toward independent projects aimed at alternative medicine.