President Joe Biden was spot on when he told Congress last week that continued investment in research and development is essential to our country’s global leadership and economic security.
Fortunately, the American bioscience sector is a shining exemplar of our nation’s unparalleled ability to nurture and produce engines of innovation that both benefit humankind and drive extraordinary economic opportunity at home through just that kind of sustained investment.
The dramatic impact of this biomedical renaissance couldn’t be clearer: vaccines and therapeutics developed and produced in record time and at an unprecedented scale are leading the world out of the deadly clutches of a catastrophic pandemic.
Yet, despite this historic success story, a proposal is being considered in Congress that would jeopardize this leadership by applying foreign pricing models to breakthrough medicines.
This legislation, which would mandate use of a “foreign reference price,” fails to recognize that these policies in Europe and elsewhere have stifled innovation and limited patient access to cutting-edge therapies.
The fact is, no industry invests as much in R&D while doing as much good: U.S. biopharma companies plunged more than $100 billion into the development of new medicines in 2018, accounting on average for 17% of revenue, with many firms investing 25% or more.
A just-released analysis by the Congressional Budget Office (CBO) shows that biopharmaceutical R&D spending has increased tenfold over the last three decades – even when adjusted for inflation. And new drug approvals grew by 60% between 2010 and 2019 versus the previous 10 years.
Notably, a secret to the sector’s success is size: the American bioscience economy is overwhelmingly characterized by hundreds and hundreds of small firms, making up 95% of all companies developing new drugs. In fact, that new CBO report says these small companies are responsible for nearly 70% of the nearly 3,000 drugs in Phase III clinical trials (the final and largest studies before a drug can be approved).
Most of these businesses are privately held and pre-revenue, but 87% of all public biopharmaceutical firms have yet to make any money.
These agile, focused and fast-moving companies – and a fair, predictable intellectual property (IP) framework – have made the American bioscience industry the pride of the world. Global investors certainly see it that way: from 2009 to 2019, $420 billion in investment poured into the U.S. bioscience industry from outside our borders. That dwarfs the next nearest competitor, Switzerland, which saw a relatively paltry $34 billion in inward capital flows.
Our thriving bioscience community here in Delaware reflects this national picture. We have a few larger firms such as AstraZeneca and Incyte, public but pre-revenue companies like Prelude Therapeutics, and dozens of small, privately funded enterprises striving 24-7 to produce innovation and grow their businesses.
The work of all these biomedical research companies – producing novel products addressing serious unmet needs – is expensive (CBO pegs the cost of bringing a drug to market at $1 billion to $2 billion) and risky. Developing cutting-edge therapies and gaining regulatory approval takes years and failure rates are extremely high (for example, between 1998 and 2017 there were 146 unsuccessful attempts to develop medicines to treat and potentially prevent Alzheimer’s disease, with only four products approved).
This approach has delivered an unprecedented pipeline of cost-effective medicines and even curative therapies for cancer, HIV, debilitating chronic conditions like rheumatoid arthritis, and many rare diseases that were previously a death sentence – saving and extending countless lives while creating great jobs in research, manufacturing and more.
There is plenty of room for improvement in our health care system, including overdue insurance and copayment reforms and striking the right balance between pricing innovative new technologies and treatments fairly while providing sufficient incentives for scientists and investors to take the significant risks necessary to develop them.
Yet looking to Europe and other countries to enhance our world-leading model would be a terrible mistake with dire consequences for patients and the economy.
A new study estimates that had this legislation been in place from 2009-2019, the 68 new therapies developed by emerging biotech companies during that period would have been reduced to just seven.
Nationally, that translates into potential industry job losses of 191,000, with nearly a million lost jobs in total. Here in Delaware, given the strength of our life science sector, that study suggests foreign pricing would have a disproportionately negative impact, jeopardizing an estimated 3,000 jobs and hundreds of millions in lost economic output each year.
Fortunately, our congressional delegation has long supported bioscience innovation – as governor, Sen. Tom Carper recruited the newly merged AstraZeneca to the state, Sen. Chris Coons is a leader on IP issues and was instrumental in securing federal funding for the establishment of a national institute for biopharmaceutical manufacturing at the University of Delaware, and Rep. Lisa Blunt Rochester has consistently backed legislation to ensure patients have access to cutting-edge therapies and diagnostics.
These efforts have helped make Delaware a leader among leaders when it comes to biomedical innovation. Let’s ensure that continues by saying no to foreign price controls.
Michael Fleming is the president of the Delaware Bioscience Association.
