Federal support empowers a public-private partnership that helps ensure U.S. leadership in drug development—and the relationship should not be changed by calls for arbitrary price fixing, Dr. Hans Sauer of the Biotechnology Innovation Organization (BIO) told a National Institutes of Health (NIH) workshop on July 31.
At the NIH “Workshop on Transforming Discoveries into Products: Maximizing NIH’s Levers to Catalyze Technology Transfer,” Sauer, BIO’s Vice President for IP and Deputy General Counsel, gave written comments on federal support for biotech.
As Sauer explained, the NIH funds valuable scientific research that the private biotech sector can use in its own specific research into developing potential drugs. He said the relationship is clearly working well, as the United States leads the world in drug development, originating 60% of new drugs approved by the Food and Drug Administration (FDA).
“This collaboration between the public and private sectors forms the foundation for U.S. leadership in this field. In evaluating our tech transfer system, BIO urges NIH to examine what has made this partnership so successful so that we can build on that success,” Sauer wrote.
Who funds what
U.S. investment in basic and applied biomedical R&D in 2020 totaled approximately $245 billion, including $61.5 billion (25% of the total) attributable to the federal government, $161.8 billion (66% of the total) from the private sector, $16.8 billion from academic and research institutions, and $3 billion from foundations, philanthropies, and professional societies, according to figures cited by Sauer.
Some NIH funding is used specifically to support drug development, according to Sauer, as the U.S. public sector “contributed directly to the invention of about 10-15% of new drugs over the past several decades.”
But for the most part, NIH support goes to “funding basic research and generating new insights into biology and disease,” said Dr. Sauer.
“The lion’s share of public research funding does not go towards new product development, but towards advancing science and enriching the public domain with new knowledge, thus creating opportunity, and stimulating commercial risk-taking and vast amounts of private follow-on investment,” he explained. “Seen this way, most public research funding is properly viewed as an infrastructure investment where the resulting body of scientific knowledge becomes available to anyone, anywhere—it is non-excludable—and where one entity’s use of that knowledge does not diminish another entity’s ability to use it too.”
Implications for pricing
Some say NIH support should be repaid by forcing drug developers to arbitrarily reduce drug prices, but this idea comes from a misunderstanding of the system, according to Sauer.
For one thing, the private sector spends far more on research. Furthermore, “the public and the private sectors, for the most part, fund research that is different but complementary,” Sauer said.
In addition, he added that the private sector must pay for development of drugs, whether or not they succeed.
“The private sector assumes basically the entire risk that an experimental product will fail on the path of drug development,” explained Dr. Sauer. Trying to exact a price when drugs succeed “would only put brakes on the pace of biomedical innovation.”