Johns Hopkins economist Bhaven Sampat has focused his research on the political economy of innovation, including the impact that funding from the National Institutes of Health has on private sector drug development. So, when President Donald Trump last fall proposed a 39.3% cut to NIH funding for FY2026, Sampat and his colleagues were well prepared to jump in with a study to gauge the impact the cut could have on biomedical research in the United States.
“The Congressional Budget Office reported that its data and methods would not permit an estimate. So, we aimed to come up with an approach to estimate quickly — even if imperfectly — the outcome of a large cut of that size,” says Sampat, a research professor at Johns Hopkins Carey Business School. “Essentially, we decided to replay history to ask: If the permanent NIH budget had been 40% smaller, how would that have affected the medicines we enjoy today?”
His team’s results appeared in Science last September.
To create their “alternative history,” Sampat and his three co-authors identified grants that fell into the bottom 40% of the funding priority queue at the NIH from 1980 to 2007, as determined by peer review evaluation. They then used several measures to examine the actual output of these “at-risk” grants to determine what percentage were linked to medical advances in the form of new drugs (those that include a new active ingredient) approved by the U.S. Food and Drug Administration between 2000 and 2023. (The varied timing windows account for long lags between fundamental research and subsequent investment in new drugs.)
Ultimately, they identified a small subset of drugs (14 of a total 557) whose patents were directly linked to an at-risk grant. But they also found that 51% of FDA-approved drugs cited research produced by at-risk grants. “We take this as a rough indicator that the benefits of research funded by NIH grants that are not funded in our alternative-history scenario are widespread and diffuse,” notes Sampat.
Following the citation trail
In researching the link between funding and drug approval, the researchers benefited from reporting requirements of the Bayh-Dole Act of 1980, which requires patent holders who received government funding to include a government interest statement and report their patent back to the agency that funded their work.
But this approach “overlooks the indirect ways that publicly funded research supports innovation,” notes Sampat. “It’s much more common for the NIH to fund a scientist whose subsequent publications go on to inform drug development in the private sector.”
To explore the indirect influence of government funding, the team turned to “citation trails,” identifying drug patents that cite NIH-funded published research.
“We found frequent links between NIH funding and downstream pharmaceutical research,” they note in their paper. Notably, more than half of approved drugs (286 or 51.4%) were linked to at-risk research projects. One leading example is Gleevec, which was approved in 2001 and has transformed treatment for sufferers of acute myeloid leukemia.
Drilling deeper, the team developed a separate threshold for new drugs that were “highly linked” to at-risk research, defined as those for which at least 25% of their citations were linked to such studies. Into this category fell 11.7% of new drugs approved since 2000, including Emtriva. This drug is the backbone of combination antiretroviral therapy as part of Truvada, now widely used to prevent HIV infection.
Measuring value
As part of their analysis, Sampat and his team also examined the types of drugs that would have been affected by funding cuts.
Here, as a proxy for societal value, they used the FDA’s “priority review” as a metric. The designation, established in 1992, accelerates evaluation for drugs that “if approved, would be significant improvements in the safety or effectiveness of the treatment, diagnosis, or prevention of serious conditions when compared to standard applications.” The researchers found that drugs linked to at-risk research were more likely to receive priority review than unlinked ones (60% vs. 41%), and drugs highly linked to at-risk research were slightly higher than unlinked ones (55% vs. 50%).
As a measure of the financial value of new drugs, Sampat and colleagues examined changes in a drug firm’s market value around the time a patent was granted. Their analysis, which involved 329 publicly traded companies, concluded that “drugs linked to at-risk research are more valuable on average than unlinked ones.”
A call for caution
In restricting the focus of their study to small-molecule drugs, Sampat notes that his team excluded a wide range of other NIH-funded medical advances. These include gene and cell therapies, medical technologies and devices, vaccines, and innovations in patient care and surgical techniques. “For that reason, our study is probably underestimating the effects of NIH support for biomedical research,” he says.
Sampat notes that the study has its limits. “We could certainly work on ways to further refine our measures,” he notes. And ultimately, it appears that the proposed 40% cut will not come to fruition in FY26, with Congress instead set to approve a flat budget in January.
But given historical precedent, the economist fully expects the issue of NIH budget cuts to arise again. Placing his team’s results alongside those of other well-designed studies, he says, “provides strong reasons for caution about large and sustained cuts to NIH funding.”
“If changes are made,” says Sampat, “we believe it is prudent to do so carefully, using a scalpel rather than a meat cleaver.”
