The U.S. Congressional Budget Office has issued a stark warning that President Trump's proposed 2026 federal budget cuts could significantly impair the nation's drug development pipeline. The analysis, requested by Democratic lawmakers, examines the potential consequences of slashing National Institutes of Health funding by $18 billion—a staggering 40% reduction from the current $46.4 billion to $27.5 billion.
Impact on Drug Development Pipeline
According to the CBO analysis, even a modest 10% decrease in NIH preclinical research funding would have cascading effects on pharmaceutical innovation. The reduction would shrink the pipeline of phase 1 drug candidates by one in the first decade, nine in the second decade, and approximately twenty in the third decade. Once fully implemented over 30 years, this would ultimately reduce new drug approvals by 4.5%, equating to around two fewer drugs reaching patients annually.
The CBO emphasized that preclinical research represents the earliest phase of drug discovery, meaning the full effects of NIH funding cuts would emerge gradually over decades. The agency noted that while it did not quantify the impact of trimming clinical-trial budgets, such cuts would accelerate the decline in new drug approvals.
Current Funding Landscape
The impact of budget constraints is already becoming apparent. According to a June report from Grant Watch, a volunteer project tracking scientific funding, the NIH has rescinded more than $3.2 billion in research funding in 2025, terminating 2,548 grants nationwide.
Democrats requested the CBO to model the outcomes of even deeper NIH cuts—between 35% and 38%—but the agency indicated that historical data was insufficient for reliable estimates of such dramatic reductions. The CBO is currently updating its drug development model to analyze these larger budget scenarios.
FDA Review Delays Add Additional Concerns
The proposed budget cuts extend beyond the NIH to the Food and Drug Administration. Following mass layoffs that removed 3,500 employees, though some positions have since been restored, the Trump administration has proposed reducing the FDA's 2026 budget to $6.8 billion—a 5.5% decrease from current levels.
The CBO found that extending FDA review times for new drug applications by nine months would result in three fewer drugs approved in the first decade, and ten fewer in both the second and third decades. These delays would not only postpone market entry but also raise development costs, reducing drug approvals by an additional 2% annually. The agency noted that delays could have ramifications beyond its current analysis.
Long-term Implications for Innovation
The CBO's report underscores the potential long-term consequences of significant NIH and FDA funding reductions on American pharmaceutical innovation and public health. The analysis demonstrates how budget decisions made today will have compounding effects on drug availability for decades to come, as the pharmaceutical development process typically spans 10-15 years from initial research to market approval.
The warning comes at a time when the pharmaceutical industry faces increasing pressure to develop treatments for complex diseases and address unmet medical needs. The potential reduction in the drug development pipeline could have far-reaching implications for patients awaiting new therapeutic options.
