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R&D Spending by Drug Companies – Pharmaceutical Compliance Monitor

By Ilyssa Levins

R&D Spending by Drug Companies

You may have read my February 2016 PCM article that proposed a six-step plan to deflect criticism about pharmaceutical drug costs. I provided hard data to support the value of our industry and will now continue to expand upon our value by addressing the significant role of America’s biopharmaceutical companies in bringing new medicines to patients.

There is a common misperception that innovative and new medicines come from government and university laboratories. However, PhRMA has assembled an impressive set of data which documents that drug companies do conduct the critical R&D needed to bring new medicines to patients, and these companies also bear the associated costs and risks. I’ve been given permission to share their information in this article.

The biopharmaceutical sector spends more on R&D than the entire National Institute of Health’s operating budget with PhRMA member companies investing $51.2 billion in 2014, and over half a trillion dollars since 2000. This amount represents about one in every five dollars spent on domestic R&D by U.S. businesses. The investment not only fosters medicines through the long and complex development process, but also supports a total of about 3.4 million jobs across the country, including approximately 810,000 direct jobs.

According to Chad Clark, President of Precision for Medicine, “The new era of precision medicine is bringing more effective and safer targeted therapeutics to patients faster than any other time in the history of drug development. We have crossed the threshold when a simple lab test or image can help tailor treatment decisions of novel therapeutics to extend life expectancy of cancer patients, reduce the risk of heart disease or delay the onset of Alzheimer’s. This explosion of precision therapies is only possible because of the vast investments in research driven by the private sector.”

Tufts University School of Medicine released a white paper which found that, “Two decades of reliable analyses by academia and government, assessed using a variety of methodological approaches, consistently demonstrated that 67 percent to 97 percent of drug development is conducted by the private sector.” The paper went on to say that, “While the basic science underpinning the key disciplines needed to discover and develop drugs is often initiated in academia, it is primarily the biopharmaceutical industry where the crucial disciplines of medicinal chemistry, process chemistry and formulation, drug metabolism and pharmacokinetics, and safety sciences are practiced at a scale and level of integration necessary in order to bring a new medicine to the patients that need them.”

As a result of past and current investments, the pipeline of new and innovative medicines has never been more promising and patients are reaping the benefits. Today, 7,000 new medicines are being developed around the world and 70 percent of new medicines in development are potential first-in-class therapies, meaning they use a completely new approach to fighting a disease. And as more and more therapies become tailored to individuals, 42 percent of new medicines in the pipeline have the potential to be personalized medicines.

All of these advancements occur even though biopharmaceutical R&D is an extremely complex process and failures are more common than success stories. As we have come to learn through communication activities driven by PhRMA, just 12 percent of drugs entering clinical trials ever make it to patients and thousands won’t even reach past the early discovery and pre-clinical testing stages. To bring one medicine to market alone costs the biopharmaceutical industry on average of $2.6 billion, including failure, and often takes 10-15 years to develop.

Visit www.PhRMA.org/cost for more information.

Precision Medicine Group is an integrated team of experts in fields from advanced lab sciences to translational informatics and regulatory affairs, payer insights to marketing communications. Together, we help our pharmaceutical and life-sciences clients conquer product development and commercialization challenges in a rapidly evolving environment.