HHS Secretary Appears Before House Appropriations Subcommittee, Suggests NIH Budget Cuts to Come From “Efficiencies” in Indirect Costs

On March 29, newly appointed Secretary of the U.S. Department of Health and Human Services (HHS) former Rep. Tom Price (R-GA) made his first appearance before the House Appropriations Subcommittee on Labor, Health and Human Services, Education and Related Agencies. Welcoming the Secretary, Subcommittee Chairman Tom Cole (R-OK) began the hearing by pointing out that the proposed cuts in the Budget Blueprint (aka “skinny budget”) released by the Administration on March 16 “are extensive and span the reach of [the] agency.” Cole asked Price how the Department intends to solve “some of the challenges” the budget poses to HHS, including those related to the Indian Health Services. He emphasized the subcommittee’s need to understand the detail of the cuts proposed, as well as any proposed downgrading or elimination of agency missions.

Cole stated that he agrees with the President regarding the need to spend more on defense. At the same time, he disagrees with the approach of the skinny budget to identify offsets only in non-defense discretionary (NDD) funding, particularly with respect to HHS. The chairman expressed his “considerable pride” that a Republican Congress with Democratic support once doubled the budget at the National Institutes of Health (NIH). He also lamented the fact that the increase in NIH’s budget was followed by a “dozen years of flat funding” amounting to a reduction in funding for the agency, taking inflation into account. As a result, a “lot of good science was left on the table,” said Cole.

The chairman expressed pleasure at being able to restart the “virtuous cycle” of providing increased funding for NIH in 2016 and again in 2017, referencing the $2 billion increase provided to NIH in FY 2016 and the proposed $2 billion increase in FY 2017. Cole emphasized that going forward, the NIH and the Centers for Disease Control and Prevention (CDC) “are every bit as important for the national defense and national security of the American people as the Pentagon.” He observed that Americans are much more likely to die in a pandemic than they are in a terrorist attack. It is Congress’ role to think broadly across the entire budget,” the chairman stated.

Cole asked Price to “describe how the Administration’s proposed budget would allow the U.S. to maintain the biomedical research enterprise. Price noted the need for “efficiencies and decreasing duplication” and cited that 30 percent of the grant money “goes for something other than the research that’s being done,” specifically referencing indirect costs, the administrative costs associated with implementing a grant such as general expenses (lights and building upkeep), rent, and other overhead costs. Rep. Andy Harris (R-MD) suggested that the issue surrounding indirect costs negotiated by institutions should be examined. He pointed to the indirect costs negotiated by various institutions, including such organizations as the American Lung Association, which he said did not pay indirect costs to researchers.

Subcommittee Ranking Member Rosa DeLauro (D-CT) stated that she did not have “anything complimentary” to say about the budget request. She said that the President’s budget request “is a disaster that will have literal life-and-death consequences for American families; $15 billion in cuts to HHS is untenable.” It would “decimate” the NIH and have “severe negative consequences for public health departments across our country.” The proposed $5.8 billion cut for NIH in FY 2018 in addition to the recently proposed $1.2 billion cut proposed for FY 2017, would be “devastating,” stated DeLauro. These cuts would “turn back the clock on life saving biomedical research.” The ranking member also highlighted other cuts in the FY 2018 budget to health and education programs and requested that Chairman Cole have the Secretary back in May when the Administration is expected to release a complete budget.

Ranking Member of the full Appropriations Committee Nita Lowey (D-NY) noted that the Secretary’s appearance before the subcommittee was “strange” because the skinny budget did not contain many numbers “and the few clear details provided would have catastrophic results for Americans.” Lowey noted that the proposed 18 percent cut to HHS would create “danger” for programs such as “bio-security, medical research, mental health counseling, substance abuse, early childhood development, combating disease and epidemics, and vaccine development.” Price responded that the vision for HHS in the America First Budget Blueprint for 2018 contained only broad strokes for HHS and “specific decisions on programs and account levels are still under consideration.” He highlighted three of the Administration’s priorities for FY 2018: mental health and substance abuse crisis, resources for emergency preparedness and response, and the fight to end childhood obesity. These priorities include suicide prevention, serious mental illness, and children’s mental health.

Rep. Mike Simpson (R-ID) noted that not only was the work done by NIH and CDC very important but “their biomedical research advances…positively contribute to the economy.” Simpson further noted that last year’s $2 billion increase for NIH lead to “27,122 more jobs” and “more than $4 billion in economic activity.” He expressed concern with the Administration’s budget which seeks to reduce indirect costs associated with grants and underscored that “most of the research supported by NIH is done by the extramural research community in universities and hospitals.”

Rep. Lucille Roybal-Allard (D-CA) inquired as to how HHS will operationalize moving the Agency for Healthcare Research and Quality (AHRQ) into NIH, which was proposed in the skinny budget. She asked if the agency would become an institute or a center within NIH or is “this simply a way to eliminate AHRQ?” Without elaborating, Price responded that “this is the first step in the process” and requested Roybal-Allard’s feedback. He stated that “some of the things that are being done at NIH are also being done at AHRQ” and the department “looks forward to the opportunity to fold AHRQ into NIH and gain efficiencies.” Roybal-Allard expressed concern that “AHRQ’s important health services research portfolio would take a backseat to basic science and clinical research within NIH.” She underscored “the long tradition of Congress being hands-off when it comes to directing research within NIH.” She then emphasized AHRQ’s sole mission of looking at health care— “what are the safest and more accessible and affordable ways” to provide health care. Rep. Roybal-Allard also expressed her concern regarding the Administration’s proposal to eliminate $403 million from Title VII and Title VIII health professions and nursing training programs.

Rep. Steve Womack (R-AR) cited the subcommittee’s priority to address the opioid epidemic and inquired how HHS intends to utilize the $500 million provided in the 21st Century Cures Act (P.L. 114-255). Price said the first grants directed at this effort will go out in April.

Rep. Barbara Lee (D-CA) expressed disbelief that the Administration and HHS could “support this kind of a budget.” She inquired about the HIV/AIDS cuts being proposed, specifically the cuts to U.S. President’s Emergency Plan for AIDS Relief (PEPFAR) and the Ryan White through the Minority AIDS Initiative. Price responded that the final numbers will be out in May.

Rep. Mark Pocan (D-WI), a new member of the committee, asked Price if he was supportive of the $1.2 billion cut recently proposed to the NIH FY 2017 budget. Price responded that he supports the priorities of the budget and stated the FY 2017 budget was still a work in progress. Pocan extended an invitation to Price to come to Wisconsin so that he could “see first-hand the amazing stuff happening in Wisconsin.”

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