Budwig worked as a senior expert on fats and pharmaceuticals at the German Federal Health Office (Bundesanstalt für Arzneimittel und Medizinprodukte), contributing to the understanding of lipid metabolism. During this time, she developed methods for paper chromatography to analyze fats.

Through her research, Budwig discovered the importance of essential fatty acids and their interaction with sulfur-containing proteins. This led to the development of her core therapeutic approach, the 'Budwig Protocol,' centered on a mixture of flaxseed oil and quark (or cottage cheese).

Budwig's unconventional views on cancer treatment and her promotion of the flaxseed oil-quark mixture led to conflicts with the established medical community and the BfArM. While details are unclear, she eventually left her position, possibly due to these disagreements.