This week, the U.S. House of Representatives will vote on H.R. 6, the “21st Century Cures Act.” The bill has the following features:
Streamlines the medical innovation process. H.R. 6 puts forward regulatory reforms to the FDA and other agencies, and is designed to make it easier for new treatments and drugs to come online. Deregulation and cutting red tape should help accelerate good outcomes here.
It does not raise taxes. Therefore, the Taxpayer Protection Pledge is not at issue. The only real fiscal issue for conservatives, then, is whether H.R. 6 increases government spending and makes government bigger. In ATR’s judgment, H.R. 6 does not.
It creates a new stream of funding to NIH. The bill creates a mandatory spending stream to NIH for five years. A total of $9.2 billion is spent during this period. The spending is mandatory, meaning that it occurs outside the discretionary spending caps set by the Budget Control Act.
This new stream of NIH spending is more than paid for with mandatory spending cuts. In order to pay for this five-year infusion of money to NIH, H.R. 6 advances several mandatory spending cuts that more than pay for it. The largest of these mandatory spending cuts is a one-time sale of oil from the federal government’s strategic petroleum reserve. This asset divestiture represents about three quarters of the pay-for.
The remaining one-quarter of the pay-for is in the form of permanent entitlement spending cuts. These cuts extend beyond the initial ten year CBO scoring window and can be expected to compound and grow over time, no matter the fate of the temporary NIH funding stream.
The clear intent of the Energy and Commerce Committee is to create a temporary funding stream to NIH, not a new baseline of money. In a statement released today, the committee majority made clear that their intent is to create a temporary, sunset stream of funding which, if reauthorized, is offset with even more mandatory spending savings:
“For the past several years, our committee has been at the forefront of efforts to tame the budget through sensible savings. We have dutifully delivered deficit reduction in bill after bill, and we have complied with the cut-go and pay-go principles that ensure added spending in one area is offset with savings in another. When we sat down together to craft the 21st Century Cures Act, we agreed that these same conservative fiscal principles must apply.
“When this bill becomes law, over the next five years the NIH and FDA will continue to receive the bulk of their funding through the regular annual appropriations process, with a temporary add-on to be allocated as mandatory spending by the Appropriations Committee. At the end of those five years, we believe America will have seen tremendous progress on the path to cures; at that time, the Innovation Fund will expire and these agencies will continue to be funded through the regular discretionary spending process.
“If a future Congress determines that additional funding would best serve patients, physicians, researchers, and taxpayers, we believe that temporary, fully offset funding allocated through the appropriations process is the best and most responsible path forward. We are committed to cures. We are committed to innovation. And we are committed to fiscal responsibility. We can and we must achieve these goals together.”
H.R. 6 cuts spending more than it raises it. As a result, CBO projects that H.R. 6 results in a net spending cut of about $500 million over the next decade.