Who Funds Biomedical Research?
Bioedical Research is Essential For New Cures, But It's Costly
The 1990s saw a doubling of overall investments in funding for pharmaceutical research leading to the development of new drugs, but those investments began to slow in 2003 as government support for drug development leveled off.
In a Journal of the American Medical Association (JAMA) study published in January 2010, the largest study to date to attempt to quantify U.S. funding of biomedical research by the pharmaceutical industry, government, and private sources, researchers estimate that U.S. biomedical research currently stands at about over $100 billion annually.
The pharmaceutical industry is the largest contributor towards funding research, funding over 60 percent. The government contributes to about a third of the costs, with foundations, advocacy organizations and individual donors responsible for the remaining investments.
Basic research that supports drug discovery received a one-time boost through the American Recovery and Reinvestment Act (ARRA), the health care reform law, which became law in February 2009. About $310 million of the $10.4 billion allocated to the National Institutes of Health (NIH) was dedicated to advancing scientific discovery. Aside from that investment meant to spur the economy during a recession, the financial crisis almost guarantees that government support for drug research will remain flat for some time.
Private Industry Investment in Pharmaceutical R&D
According to a March 2011 report issued by the industry trade group Pharmaceutical Research and Manufacturers of America (PhRMA) and Burrill & Company, biopharmaceutical research companies invested $67.4 billion in research and development of new vaccines and medicines in 2010.
The PhRMA report claims that the investment, an increase of $1.5 billion over 2009, is an industry record.
A 2009 assessment of U.S. biomedical research across therapeutic areas, published in PLoS One, found the pharmaceutical industry led investments in neuroscience, cardiovascular, endocrine, gastrointestinal, respiratory and genitourinary research, while the NIH funded the majority of support for HIV/AIDS, infectious disease and oncology research.
The increases in funding have not translated to an increase of new drug approvals by the US Food and Drug Administration (FDA), according to the PLos One report. Financial investment alone cannot guarantee scientific progress. Other needed factors are a skilled workforce, geographic access between companies and research institutions, and a social environment that encourages collaboration among people and institutions.
A former R&D executive with a big pharma company believes industry consolidation has had a "devastating" effect on pharmaceutical research projects because of the capital required to finance mergers and acquisitions. John L. LaMattina, former president of Pfizer Global Research and Development, wrote in an August 2011 Nature Reviews commentary, "In major mergers today, not only are R&D cuts made, but entire research sites are eliminated."
The pharmaceutical industry continues to evolve to cope with a changing environment. New laws and restrictions have made bringing a drug through development to approval more costly and more difficult, without a guarantee of return. In addition, mergers between major companies have shrunken the industry, lessening competition between companies to produce new and novel medications and technologies.
As demand continues to grow for innovation and new drugs to treat serious diseases, pharmaceutical companies will need to change their business strategy to meet the growing needs in the new economy.