One of the many areas that Elon Musk has taken his chainsaw to is the National Institutes of Health (NIH). His team has haphazardly ended grants and slashed workers in ways that have no obvious logic. It is almost as though the purpose was to undermine medical progress in any way possible.
To be clear, there are always ways to cut an agency. Undoubtedly, in a $50 billion budget there are some items that are wasteful. There are also some areas where money is more useful than in others, and we would benefit from a reallocation between pools of spending.
But the route towards combatting this waste and inefficiency requires carefully studying where the money is going. This would be the sort of exercise that the Inspector General for the Department of Health and Human Services, which oversees NIH, would be doing. But Trump fired her on his first day in office.
There is zero evidence that Musk and his DOGE team did any analysis whatsoever of the parts of the NIH budget they were effectively cutting by laying off staff and blocking grants from being paid. President Trump gave us the logic behind the cuts when he said, “We didn’t get anything out of it.”
It’s not entirely clear who the “we” is that Trump was referring to. He may have been referring to what he and his family have gotten out of NIH funding. Given the way he has run his presidency, where has openly sold political favors, it’s not impossible that he was complaining that NIH research dollars weren’t lining his pockets.
But if we want to be generous, we can take his comment as yet another example of Trump’s incredible ignorance. We actually have gotten an enormous payback on NIH funding. Nearly every drug that has been approved by the FDA in the last fifteen years has benefited from NIH research. These drugs have hugely increased survival rates from cancer, heart disease, and many other diseases and conditions. Maybe Trump wants to dispute we’ve made any medical progress in recent decades, but just about every medical expert, along with the millions of beneficiaries from this progress, would disagree with him.
If we sabotage the funding stream that supports this research, it’s a safe bet that progress will slow substantially, unless other countries pick up the slack. Thankfully, many countries do seem prepared to take advantage of this opportunity. Europe, Canada, and other countries are looking to hire away many of our best scientists. This could mean that we will continue to see medical progress, but the forefront of the field will be elsewhere. That doesn’t seem quite like an America First policy.
There is also an important issue about pricing that reducing or eliminating NIH funding could affect. Under current law, the government has march-in rights that in principle allows it to force a lower price or compel compulsory licensing in a case where its research was essential for the development of a drug. While it has never used this authority, the threat to use it can be an effective way to discipline drug companies and force them to lower their price.
If drugs are developed by foreign drug companies, without any public funding from the US government, it would lose this tool. That may not matter with the Trump administration, since it shows little interest in lower drug prices (it cancelled the plans for negotiated drug prices in Medicare for next year). But it could matter with future administrations that may consider lower drug prices a high priority.
There is also a deeper issue about the way we finance drug development more generally. NIH mostly funds more basic research, but there have been cases where it has actually financed the development of a drug. For example, AZT, which was the first effective AIDS drug, was originally developed as a cancer drug in 1960s, using NIH funds.
There is no reason in principle that public funds can’t be used to bring drugs through the development and testing process. In this case, since all the research was paid for upfront, the drug could be sold as a cheap generic the day it was approved by the FDA. In that situation, new cancer drugs would likely be selling for hundreds of dollars, rather than hundreds of thousands of dollars.
It is rare that it is expensive to actually manufacture and distribute a drug; prices are high because we grant drug companies patent monopolies. There would be no point in granting the monopoly if the government paid for the research.
We had a recent example of this sort of deal in the pandemic with Operation Warp Speed. The government paid Moderna for the development and testing of its vaccine. Incredibly, Trump then turned around and gave Moderna control over the vaccine. As a result, it is charging $130 for its boosters which would likely sell in a free market, without protection, for around $5 a shot.
The Corbevax Covid vaccine developed by Dr. Peter Hotez provides a great example of this sort of alternative model. It has been distributed to hundreds of millions of people in India and Indonesia at a cost of around $2 a shot.
Anyhow, just because Trump made a bad deal doesn’t mean a more competent administration couldn’t do better. In addition, if the government is paying for the research, it can also require that it be fully open source so that all findings get posted on the web as soon as practical. This would likely make research more efficient, since researchers worldwide would be able to build on each other’s successes and learn from their failures.
It would be great if a future administration could look to pursue this sort of publicly funded open-source model, saving us around $500 billion a year ($4,000 per household) on prescription drugs and other pharmaceuticals. President Trump’s slashing of the NIH research budget takes us 180 degrees in the opposite direction.
This first appeared on Dean Baker’s Beat the Press blog.
