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How NIH Defunding Could Reshape Clinical Trials for UK Medtech Startups

How NIH Defunding Could Reshape Clinical Trials for UK Medtech Startups

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The US National Institutes of Health (NIH) has long been a pillar of global medical research and lead agency of the United States government for biomedical and public health research. It has been instrumental in advancing medical knowledge and improving health outcomes through its extensive support of clinical trials. This support extended beyond funding and included regulatory guidance, access to infrastructure and resources as well as a network of specialist institutions.

On January 22, 2025, an executive order was signed that abbreviated the annual grant approval process of the NIH, impacting approximately 50,000 grants nationwide. According to the Science & Community Impacts Mapping Project, created by academic researchers from the University of Maryland, University of Pennsylvania, University of Utah, University of Oregon and Georgia Institute of Technology using data from NIH grants in 2024, this defunding could lead to a staggering $16 billion in economic losses and 68,000 job cuts across the country. The budget cuts particularly target indirect costs associated with research grants, pulling funding for essential operational expenses such as equipment, maintenance, utilities and support staff.

The states expected to be hardest hit by these changes are California, New York, Massachusetts, Pennsylvania and Texas, with an estimated total impact of $7.5 billion in funding cuts and 32,315 job losses. President Donald Trump’s proposed federal budget for 2026 reduces NIH funding by $17.97 billion, nearly a 40% reduction from the previous year. The 2026 proposal also includes consolidating the NIH, which consisted of 27 centres and institutes at the beginning of this year, into just five entities.

The proposed significant NIH defunding could impact the viability of hosting clinical trials in the US, especially for international collaborators like UK Small and Medium-sized Enterprises (SMEs) in the MedTech and life science sectors.

Prolonged Timelines and Increased Competition: The New Reality for UK Medtech Startups

Cuts to NIH funding could trigger a shift in the landscape of clinical research, impacting the availability and accessibility to US clinical trials. A diminished pool of public funding may translate to a sharp decline in the number of NIH-sponsored clinical trials, creating intense competition between research organisations and making it increasingly difficult for UK SMEs to secure trial slots without significant private financial backing. Navigating this complex and more competitive landscape would impose significant administrative burdens, forcing companies to expend considerable resources to navigate this system. Additionally, with fewer available funded trials, administrative delays would inevitably lengthen the commencement of trials, severely impeding research and development timelines and potentially hindering the progress of groundbreaking innovations.

Emergence of Private Clinical Trial Opportunities

In contrast, potentially faced with financial constraints stemming from reduced NIH grants, US research hospitals are likely to become increasingly receptive to hosting privately funded clinical trials. This shift presents an opportunity for UK SMEs but also introduces new challenges. UK SMEs may be able to leverage their pool of private capital to finance clinical trials in the US, at potentially preferential terms as the administrative burden of length grant applications would be removed for the research organisation. While the cost to the UK SME will undoubtedly be greater, due to the lack of grant funding, it could be anticipated that the overall costs of the trial would be lower as research organizations seek to attract these trials and plug the financial hole left by the reduction in NIH grants.

In this evolving landscape, building robust strategic partnerships with US hospitals, Contract Research Organizations (CROs) and other key stakeholders would become paramount. These partnerships would be critical for navigating the complexities of privately funded trials and ensuring the successful advancement of innovative medical technologies.

Building Strategies and Relationships

In the current medical research environment, UK SMEs must adopt a proactive and strategic approach to ensure continued access to US clinical trials. Reducing their dependence on public funding and diversifying funding sources into venture capital, private equity and strategic alliances with clinical stakeholders will be essential.

Cultivating these strong relationships with US hospitals, research institutions and regulatory bodies will become crucial for accessing resources, navigating regulatory compliance and understanding the complexities of the US healthcare system.

With the reliance on private funding, designing efficient and cost-effective clinical trials is paramount to maximize the return on investment and minimize financial risks. Additionally, deepening understanding of the FDA regulatory framework and adapting to potential changes is vital for ensuring compliance and streamlining the trial process.

Conclusion

The defunding of the NIH represents a significant challenge for UK MedTech startups seeking to conduct clinical trials in the US. However, by adopting a strategic approach, diversifying funding sources and building strong partnerships, these startups can navigate the new landscape and continue to innovate. Embracing private funding opportunities and optimizing trial designs will be crucial for overcoming financial constraints and ensuring the successful development of groundbreaking medical technologies. Despite the challenges, the resilience and adaptability of UK SMEs will be key to their continued success in the evolving world of clinical research.

Frazier & Deeter is committed to supporting the world’s most innovative companies gain access to the US Healthcare market. Utilising our in-house expertise and strategic partnerships across the US healthcare ecosystem, we can help you navigate this complex landscape, ensuring your medical technologies reach their full potential. Contact us today to learn how Frazier & Deeter can support your journey.

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Contributors

Thomas Wells, Director of Commercial Growth

Chris Green, Partner, Frazier & Deeter Advisory, LLC

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