Alex Philippidis Senior News Editor Genetic Engineering & Biotechnology News

Budget will determine new institute’s ability to fill gaps in early drug development and de-risk projects.

While industry R&D spending reached a record high of $67.4 billion last year, the biggest spenders will likely cut back over the next few years. That raises the very real possibility of at least a short-term decline in R&D funding by industry. As that happens, who will pick up the slack?

NIH says it can shoulder some of the burden through the $700 million National Center for Advancing Transitional Sciences (NCATS), which it plans to open in October. NCATS is meant to accelerate translation of basic research discoveries into new drugs and devices.

“The intent is not to assume a role more appropriate for the private sector; rather, through the marshalling and concentration of expertise, technologies, and resources, to fill gaps in the early developmental phases that biotechnology and pharmaceutical corporations are not equipped to fill, and to de-risk projects for future commercial investment,” NIH wrote in its Congressional Justification for the proposed budget.

NIH is working out funding details and the rest of the FY 2012 budget. It expects to submit those details to Congress later this spring, Kathy L. Hudson, Ph.D., the institutes deputy director for science, outreach, and policy, told GEN.

Allying with Industry

Working with therapeutics developers to overhaul the traditional model of moving their discoveries through reviews and clinical trials to the market, will be key to fulfilling the mission of NCATS, Dr. Hudson noted. NIH officials will talk in April with industry representatives to discuss these details, she said.

“We would want to have strong relationships with pharma and biotech in a couple of directions. We would want to be able to re-engineer this process in an open-access way and hopefully have folks share data, because it’s only by looking at data about how well various steps in the process are working that we’ll be able to understand how to work around the failures.

“Secondly, we will want to be able to work with companies in bringing in compounds that are either being abandoned because they’re not working for their intended use or because there’s not enough investment and move them down the pipeline,” Dr. Hudson added.

She pointed out that making the appropriate deal will be important. “As soon as those compounds are advanced to a point where an outside interest would be willing to pick them up, we would want to do the negotiations and make a deal to get that back out again.”

Programs at NCATS

NCATS is needed because high failure rates and staggering costs have emerged as strong disincentives to increasing R&D spending by biotech and pharma companies, the NIH asserted. Based on research in 2004 and 2008, the institute said that 90% to 95% of all new compounds entering clinical testing fail. The failures have helped the cost of developing a new drug balloon to between $500 million and $2 billion, it continued.

NIH also noted that the number of FDA-approved NMEs excluding new biologic approvals has tumbled in recent years from an average of 37 per year between 1995 and 1999, to an average of 21 per year between 2000 and 2010.

NIH has already detailed the programs that will be moved from existing centers into NCATS. They include: the Molecular Libraries Program, the Chemical Genomics Center, the Therapeutics for Rare and Neglected Diseases program, the Rapid Access to Interventional Development (RAID) program, the NIH-FDA partnership announced last year, the Clinical and Translational Science Awards program, and the Cures Acceleration Network (CAN), created to advance development of high-need cures through the reduction of barriers between research discovery and clinical trials.

NCATS funding will include $100 million originally intended for CAN, created last year by the Patient Protection and Affordable Care Act. The translational center will also use at least part of the $485 million now spent on the National Center for Research Resources (NCRR), which is expected to be abolished.

NCATS is at the top of NIH’s list of priorities for FY 2012. The rest of that list includes research into Alzheimer disease, autism, cancer, type 1 diabetes, and HIV/AIDS; administrative cost reductions; sustainability; and even reducing the cost of sequencing a human genome to $15,000.

“Where our new initiatives are being focused are around translational science and therapeutics development and specifically how we can partner with biotech and pharma and nonprofits and patient advocacy groups around trying to make the therapeutic development process work more smoothly,” Dr. Hudson explained.

Garnering Financial Support

A key barrier to NCATS and the rest of NIH’s priorities, Dr. Hudson acknowledged, is continuing uncertainty over federal budgets this fiscal year and next. During FY 2009 and ’10, NIH benefited from the $814 billion American Recovery & Reinvestment Act. It was given $10.4 billion over two years as part of the stimulus measure.

In the era of trillion-dollar federal budget deficits—partly caused by the stimulus bill—adding to NIH funding will be easier said than done. Furthermore, given that the House of Representatives is now controlled by Republicans, many elected on pledges to tame Washington’s fiscal appetite once and for all, the institute may have to fight to get a bigger budget.

Back in January President Obama proposed an increase of roughly 2.4%, or $745 million, in NIH’s budget for FY ’12 to $31.987 billion from the $31.242 billion budget last approved for the agency in 2010. Obama’s increase was smaller than that of lame-duck House Democratic leaders, who a month earlier approved an FY ’11 spending plan with a 3.2% hike in NIH funding.

The House reversed that last month by approving HR1, a bill that sliced $1.6 billion from NIH for the rest of the 2011 fiscal year. The measure reduced the agency’s budget to $29.6 billion, the same as in FY 2008. The Democratic-controlled Senate voted down HR1 56–44, entirely along party lines. But the Senate also turned down 58–42 a budget amendment by Sen. Daniel Inouye (D-HI) that would have kept NIH funding flat.

“There’s not much appetite for increasing funds in FY 2011,” Jon Retzlaff, managing director of science policy and government affairs for the American Association for Cancer Research, told GEN. “What we’re trying to head off is any cut and to try to convince policy makers that for the health of our country, for the health of our economy, we should at least stay at level funding.” Even flat funding would effectively cut NIH’s spending power given annual inflation, he noted.

Congress has yet to approve any agency budgets for what remains of FY ’11 but has approved six continuing resolutions maintaining spending at FY ’10 levels. The last continuation expires April 8. “It remains to be seen whether they can come to an agreement this week,” Jennifer Zeitzer, director of legislative relations for the Federation of American Societies for Experimental Biology (FASEB), told GEN.

FASEB has disagreed with NIH on details of NCATS. The federation argues that NCRR and its programs not being shifted to the translational center should both be spared from cuts. FASEB also suggests folding NCRR’s Division of Comparative Medicine, which oversees management of animal models, into NCATS since it aligns with the RAID program.

The Casualty of Decreased Funding

Despite that disagreement, FASEB continues to press for increased NIH funding and has criticized the House’s proposed budget cut to the agency. One argument FASEB makes is how much the agency’s ability to fund basic research has eroded in recent years.

NIH funded 9,408 competing grant awards for new and renewed funding in FY ’10, totaling more than $3.9 billion, compared with 10,411 totaling $3.5 billion in FY 2003. So far in FY ’11, 8,734 competing grants have been awarded totaling $3.7 billion. Fewer grants are likely to be approved than a year ago, since there’s no longer any stimulus funding available, Retzlaff stated.

 Absent a resolution of the FY 2011 budget, no action will even begin on the FY 2012 budget for any agency, let alone NIH. This leaves the fate of NCATS and basic research funding up in the air.

“This is investment in the future, this is about innovation, this is about turning our economy around, so that we will have a stronger tax base to offset those potential deficits,” Retzlaff concluded.

Alex Philippidis is senior news editor at Mary Ann Liebert, Inc., and Genetic Engineering & Biotechnology News.

Previous articleScreening for Minority HIV-1 Resistance Mechanisms Found to Predict Treatment Failure
Next articleBioTime and XenneX Establish LifeMap to Generate Database of Stem Cell Lineages