Reject efforts to undermine America’s R&D ecosystem

America’s biopharmaceutical research companies are central to the research and development (R&D) of innovative medicines in the United States.

Portrait of Andrew Powaleny
Andrew PowalenyJune 15, 2023

Reject efforts to undermine America’s R&D ecosystem.

America’s biopharmaceutical research companies are central to the research and development (R&D) of innovative medicines in the United States. Unfortunately, a new report by Sen. Sanders mischaracterizes the role the National Institutes of Health plays in the research and development (R&D) process and risks stifling the innovative biopharmaceutical ecosystem vital to advancing medicines for patients.

Here are 3 things to know about the R&D of innovative medicines.

1. America’s R&D ecosystem relies on a pro-innovation policy environment. 
With more than 8,000 medicines in clinical development globally — of which nearly 70% have the potential to be first-in-class treatments — the future has never been more promising.

The U.S. is the most innovative economy in the world because, government researchers, academic institutions and biopharmaceutical companies work together for patients. We shouldn’t risk destroying the well-working R&D ecosystem and helping foreign competitors by penalizing companies that partner with the U.S. government.

2. The NIH develops many important ideas, but very few medicines. 
Some critics claim industry’s success is because the National Institutes of Health (NIH) use public funds to discover new therapies which are then handed off to biopharmaceutical companies to be manufactured, packaged and monetized. This is untrue.

The biopharmaceutical industry spends on average three times the amount on R&D each year than the total annual budget of the NIH. And importantly, a 2018 analysis showed that only about 8% of NIH’s budget was focused directly on research related to drug development.i  

Because the NIH does limited research directly related to drug development, without the scientific and industrial expertise of the biopharmaceutical industry, the knowledge resulting from basic science research, would generate many ideas for potential drugs and drug targets — but very few new medicines. Biopharmaceutical drug development is a time and intensive enterprise and less than 12% of all potential medicines will ultimately make it through FDA approval. A Congressional Budget Office report noted, “empirical studies find that public-sector research tends to increase private R&D rather than to decrease it — that is, they are complements, not substitutes.”

3. Robust tech transfer policies are fundamental to the industry’s investments into the 10-15 years and over $2.6 billion on average needed to bring a new medicine to market. 
Congress passed the bipartisan Bayh-Dole Act in 1980 to spur innovation and create a framework in which research institutions receiving federal funds could patent their inventions and license them to private entities to benefit the public. The Act has been an overwhelming success. Prior to 1980, if an invention was created with any level of government support, the government promptly asserted their ownership which resulted in nearly 28,000 patented innovations wasting away for lack of development.

Some policymakers are trying to re-write the rules on public-private licensing partnerships, including adding pricing-related clauses. We’ve been down this road before, and the result was disastrous for taxpayers and patients. The NIH imposed “reasonable pricing” conditions on private sector agreements in 1989 and revoked the policy in 1995 after acknowledging that it significantly chilled collaboration between the public and private sectors.    

Rather than harming the highly successful U.S. biopharmaceutical research ecosystem and the patients who need innovative treatments, policymakers should advance policies that will support patient access and affordability without undermining the development of tomorrow’s life-saving medicines. 

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Analysis Group analysis for PhRMA. NIH grant spending on clinical trials. June 2020.

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