This week’s edition of InnovationRx covers the latest updates on Trump’s efforts to reduce research funding, the ongoing financial challenges faced by rural hospitals, a significant measles outbreak, and more. To receive it directly in your inbox, subscribe here.
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Two federal judges have issued temporary restraining orders blocking the Trump Administration’s drastic cuts to National Institutes of Health research payments to universities and medical centers. These rulings came in response to lawsuits filed by 22 states and private universities and hospitals. The restraining orders are currently in effect nationwide.
The Administration’s attempt to reduce costs stemmed from a plan to cap “indirect costs” – the funds allocated for the institution’s administrative and facility costs related to research – at 15%. The judges’ orders maintain the current rates, which have been mutually agreed upon between institutions and the government, until further notice.
The NIH plays a crucial role in American scientific research, dedicating the majority of its $47 billion budget to medical research. These funds are essential for researchers studying diseases such as cancer, Alzheimer’s disease, and diabetes.
The 22 states, led by Massachusetts, that filed suit in the U.S. District Court for the District of Massachusetts argued that the NIH’s sudden decision to impose a 15% cap on indirect costs – significantly lower than the typical 27% to 60-70% range – would have an “immediate and devastating” impact. They contended that the Trump administration’s actions were arbitrary and violated a 2018 law governing NIH spending.
The recent move by the Trump Administration, announced last Friday, is part of its broader efforts to reduce funding for various U.S. government agencies, including USAID and the Consumer Financial Protection Bureau. Billionaire Trump donor Elon Musk (worth $388 billion), leading much of the cost-cutting through the group DOGE, expressed his dissatisfaction with the spending on X, stating, “What a ripoff!”
These cuts prompted immediate backlash from medical researchers, scientists, and academics, warning of severe consequences for biomedical research. According to health publication Stat, top universities and medical centers like Stanford, Vanderbilt University Medical Center, and Weill Cornell Medicine could lose $100 million or more annually if the policy were implemented, based on public financial records and internal communications.
While states like California and New York receive the most NIH indirect funding, Texas, the largest red state, received nearly $505 million in indirect costs, as reported by Newsweek on the cuts’ impact on red states. Massachusetts Attorney General Andrea Campbell emphasized in a press conference that “This NIH funding affects everyone regardless of political affiliation.”
Key Republican senators have also opposed these proposed cuts. Senator Bill Cassidy, R-La., who heads a committee overseeing the NIH, told Stat that “one thing I’ve heard loud and clear from my people in Louisiana is that Louisiana will suffer from these cuts.” Senator Katie Britt, R-Ala., told local news agency Al.com that “a smart, targeted approach is needed in order to not hinder life-saving, groundbreaking research at high-achieving institutions like those in Alabama.”
Study Finds Travel Time For Surgery Has Increased For Rural Patients
Rural hospitals are closing maternity wards and obstetrics services.
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More than 150 hospitals have closed down in rural areas of the United States since 2010. This has resulted in reduced care for patients in these regions, according to a recent study published today in the Journal of the American Medical Association. Researchers discovered that 44% of rural Medicare recipients had to travel over an hour for a surgical procedure, up from 37% in 2010. For high-risk procedures, this percentage rose to 59%, up from 54% in 2010. In comparison, urban and suburban patients had significantly lower percentages.
“These findings indicate a persistent and increasing disparity in travel for rural patients undergoing surgical procedures,” wrote the study’s authors from the University of Michigan, Texas Tech, and the University of South Carolina. “Factors contributing to this likely include ongoing rural hospital closures, workforce shortages, and rural patients seeking care outside their local facilities.”
This study follows another recently published one by healthcare advisory firm Chartis, which revealed that 46% of rural hospitals are operating at a financial loss, with an estimated 432 at risk of closure. The study highlighted that rural hospitals in states that have not expanded Medicaid under the Affordable Care Act are facing the most severe financial challenges, with a median operating margin of -1.5%.
In addition to the lack of Medicaid expansion, the increasing number of patients on Medicare Advantage plans has also contributed to operational losses, according to the study. This has resulted in “lower reimbursements than what they are used to” and an increase in administrative challenges and claim denials, the authors noted.
Even in cases where rural hospitals remain operational, the Chartis study found that many have had to reduce their services due to difficulties in recruiting and retaining healthcare professionals in rural areas. Nearly 300 rural hospitals have discontinued their obstetrics programs since 2011, and over 400 no longer offer chemotherapy, according to the study.
BIOTECH AND PHARMA
The FDA has approved mirdametinib, a new drug for patients aged two and older with neurofibromatosis, a rare genetic disorder that causes non-cancerous tumors to form on nerves. The drug, marketed by Springworks Therapeutics as Gomekli, is used to treat the neurological disease, which can lead to heart conditions, vision loss, pain, and other complications. Clinical studies have shown that mirdametinib can reduce tumor sizes by over 40% and provide sustained improvements in pain and quality of life measures for patients.
DIGITAL HEALTH AND AI
Australian startup Harrison.ai, known for its AI tools that aid doctors in interpreting medical images like X-rays and CT scans, secured a $112 million series C round at an undisclosed valuation. The company intends to utilize the funding to expand its operations to the United States and accelerate product development. Horizons Ventures, a Hong Kong venture firm backed by billionaire Li Ka-shing, co-led the round. The firm has previously made investments in AI, including early bets on DeepMind and Siri, and has been supporting Harrison since its series A round in 2019.
MEDTECH
Two Californian women are suing Procter and Gamble, alleging that its “Menopause Stage Indicator” (sold under the ClearBlue label) is deceptive. The test uses urine to measure levels of follicle-stimulating hormone, which increase as women age. While this information may be valuable for women in perimenopause, the complaint argues that “FSH levels cannot indicate a menopause stage as Clearblue claims,” and that the company leveraged the trust built with its reliable pregnancy tests to deceive women approaching menopause into purchasing this product.
Although FSH levels tend to rise gradually during the transition from perimenopause to menopause, medical professionals typically do not rely on FSH levels for monitoring, as levels can fluctuate significantly, making single-point tests unreliable. P&G did not respond to Forbes’ requests for comment and has yet to formally respond to the lawsuit in court.
PUBLIC HEALTH AND HOSPITALS
An alarming measles outbreak in a small West Texas county has raised concerns. Twenty-four measles cases, most of them school-age children, were reported in Gaines County, which has one of the highest rates of vaccine exemptions in the state. The outbreak has spread to neighboring Lea County, New Mexico, with one confirmed new case and multiple potential exposures. Measles cases have been on the rise over the past year, with outbreaks in Chicago, metro Atlanta, and other areas, as declining vaccination rates leave communities vulnerable. All individuals affected in Texas are believed to be unvaccinated, as stated by Zach Holbrooks, executive director of the South Plains Public Health District. Nine of the infected children have been hospitalized.
DEAL OF THE WEEK
Novartis has agreed to acquire Blackstone’s Anthos Therapeutics in a
