Spending on Phased Clinical Development of Approved Drugs by the US National Institutes of Health Compared With Industry

Authors

Edward W. Zhou, PharmD; Matthew J. Jackson, PhD; Fred D. Ledley, MD

Publication

JAMA Health Forum. Published July 14, 2023.

Read the study

Objective

As policies are implemented that expand the role of government in price-setting for drugs, stakeholders have sought to understand the role of public and private investment in drug development. This study seeks to compare the funding contributed by the US government and the biopharmaceutical industry in the development of prescription drugs approved between 2010 - 2019.

Methodology

Researchers identified research funding for the 387 drugs approved by the FDA from 2010-2019, comparing the findings with reported industry spending estimates. The study evaluated NIH’s spending across basic and applied research, as well as spending on phased clinical development, the studies necessary to bring new therapies to patients.

Findings

• Of the 387 drugs approved by the FDA during the study period, NIH spending on phased clinical development was between 9.8 – 10.7% of the funds spent by industry. 

• Only 3.3% of NIH spending related to the approved drugs was related to the phased clinical development necessary to bring treatments into clinical settings.   

Key Takeaways

• The investment made by the NIH to develop new prescription drugs is dwarfed by the investment made by the biopharmaceutical manufacturers. 
  • For every dollar spent by the NIH, the private sector spends $10 on the research necessary to turn scientific advances into innovative treatments for patients.
  • Clinical development accounts for about 70% of the total costs required to bring a new drug to patients.1

• The NIH’s deep investment in basic and applied research with minimal, targeted investment in phased clinical development aligns with the NIH’s overall mission in “…cultivating world-class scientists and catalyzing new scientific fields, tools, and resources…”2 and enabling “…biomedical innovation and drug development through developing scientific knowledge and other indirect support, rather than through direct contributions to specific drugs”3

• These results substantiate prior work that consistently demonstrates that NIH funding is complementary to private pharmaceutical R&D investments:4
  • Over 90% of NIH funding for pharmaceuticals is basic research on biological targets for drug action rather than the drugs themselves.5
  • Of 248 new FDA-approved drugs from 2008 to 2017, only 19% had origins in publicly supported research and development.6

• 1DiMasi JA, Grabowski HG, Hansen RW. Innovation in the pharmaceutical industry: New estimates of R&D costs. J Health Econ. 2016 May;47:20-33. doi: 10.1016/j.jhealeco.2016.01.012. Epub 2016 Feb 12. PMID: 26928437.
• 2NIH. Impact of NIH Research. https://www.nih.gov/about-nih/what-we-do/impact-nih-research. Accessed 22 June 2023. 
• 3GAO, National Institutes of Health: Better Data Will Improve Understanding of Federal Contributions to Drug Development, GAO-23-105656 (Washington, D.C.: Apr. 4, 2023). https://www.gao.gov/assets/gao-23-105656.pdf 
• 4Toole, Andrew. (2007). Does Public Scientific Research Complement Private Investment in Research and Development in the Pharmaceutical Industry?. Journal of Law and Economics. 50. 81-104. 10.1086/508314.
• 5Cleary EG, Beierlein JM, Khanuja NS, McNamee LM, Ledley FD. Contribution of NIH funding to new drug approvals 2010-2016. Proc Natl Acad Sci U S A. 2018 Mar 6;115(10):2329-2334. doi: 10.1073/pnas.1715368115. Epub 2018 Feb 12. PMID: 29440428; PMCID: PMC5878010.
• 6Nayak RK, Avorn J, Kesselheim AS. Public sector financial support for late stage discovery of new drugs in the United States: cohort study. BMJ. 2019 Oct 23;367:l5766. doi: 10.1136/bmj.l5766. PMID: 31645328; PMCID: PMC6812612.