VIEWPOINT: Del. Science and Innovation: The pride of the world
In July, more than 40 foreign ambassadors traveled from their embassy posts in Washington, D.C., to spend the day in Delaware.
This was a remarkable, historic thing for our small state. These were the senior diplomatic representatives of their countries, who came to learn about the state’s economy and higher education, with a particular focus on science and technology.
We were fortunate to participate in the occasion, sharing the Delaware Bio story with leaders from every corner of the world: South Korea, Iraq, Suriname, Panama, Laos, Sierra Leone, Albania and more.
Each diplomat was deeply interested in and impressed with what they heard: Delaware’s life science sector is thriving, at the epicenter of one of the hottest regions for biomedical innovation in the world.
I came away struck by the reality that any single one of these countries – beautiful, important nations like Portugal, Montenegro, Iceland and Panama – would love to have even a sliver of the bioscientific engine we have here, 11,000 great jobs of every kind generating billions in economic output.
The ambassadors asked me about Delaware’s success and opportunities to collaborate with researchers in their countries. How did we grow such a robust life science landscape?
It is a question well put to the investment community that funds the arduous, expensive research that takes years to (hopefully) result in innovative therapies and technologies benefiting human health. These investors will tell you the significant risk they take on in funding early-stage companies and long-shot drug development is worth it with the prospect of appropriate returns for their capital.
That’s a concept that isn’t often discussed nor well understood but the model has made the United States – and states like Delaware – the unrivaled global leader in biomedical research and patient care. And biotech investors emphasized that message with Congress as drug price controls were considered over the last month, urging House and Senate leadership to think twice about the unintended consequences (fewer innovative new medicines) that could come with a complex new price-setting paradigm that will now be imposed on all new medicines as the result of a party-line vote.
The fact is no industry invests as much in R&D while doing as much good: U.S. biopharma companies plunge more than $100 billion a year into the development of new medicines, investments that the Congressional Budget Office says resulted in a 60% increase in new drug approvals between 2010 and 2019 versus the previous 10 years.
Entrepreneurial, research-based American companies responsible for this productivity – and a fair, predictable intellectual property (IP) framework – have made the American bioscience industry the pride of the world, a key strategic national security asset and more practically the recipient of foreign investment. From 2009 to 2019, $420 billion in investment poured into the industry from outside our borders. That dwarfs the next nearest competitor, Switzerland, which saw a relatively paltry $34 billion in inward capital flows.
Not so coincidentally, this trend is accelerating as price controls in Europe and Japan have significantly diminished the historic strength of the sector in those regions.
Price controls disincentivize long-term investment and the biopharmaceutical industry is fundamentally a long-term enterprise. According to a new Moody’s report, “the drug pricing provisions tucked into the [Inflation Reduction Act] could eventually have a credit-lowering effect on the industry at large … creating a long-term challenge for the pharmaceutical industry.”
Take two leading Delaware companies as an example: Incyte launched its first medicine a full nine years after establishing their company here – meaning they had no product revenue for nearly a decade during which they became one of our most important employers (a product, incidentally (Jakafi) for which continued post-approval research has led to multiple additional indications for serious medical conditions).
Prelude Therapeutics reported a $27 million loss in the last quarter – not unusual for a pre-revenue biotech – with $21 million going into research advancing multiple new medicines for complex, deadly cancers.
For every Incyte and Prelude progressing and commercializing a pipeline of new cutting-edge medicines there are 10 companies you never heard of that shut their doors after several years and millions in investment.
And for every successful biopharmaceutical company there are many other businesses supporting their needs for special technologies, manufacturing and other services.
It is our hope that the new measure passed by Congress will be improved by changes that protect and incentivize American investment in innovative research and development, and meaningful, comprehensive changes to our drug pricing and reimbursement system that prioritize patient access. Meanwhile, we will continue to engage our elected representatives to ensure they understand the immense sacrifice, spirit and costs involved in bringing life-changing therapies and vaccines to America and the world.
Michael Fleming is the president of the Delaware BioScience Association.
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