![]() ![]() And it is worth remembering that Big Pharma spends its revenues on many less productive activities than clinical trials and regulatory approvals, including lobbying and political contributions ( more than $800 million in the 2016 to 2020 period) and marketing (tens of billions of dollars annually). But they are no longer the dominant source of true innovation, and maintaining their enormous profits at current levels - which, at 15% to 20% of revenues, well exceed market standards - is no longer an efficient way to promote biomedical innovation. ![]() To be sure, large pharmaceutical companies play a critical role in the end stage of drug development, funding and running essential clinical trials and navigating regulatory approvals. The mRNA technology underlying the Moderna and Pfizer-BioNTech vaccines came out of NIH labs, the University of Pennsylvania, and MIT. Truly innovative therapies - like the mRNA vaccines for Covid-19 that are saving untold number of American lives - now originate in small companies that are spinoffs of university research efforts mostly funded by the NIH and philanthropies. In 2018, such small firms accounted for nearly two-thirds of the brand new drugs patented in the United States and nearly three-quarters of drugs in the late stage of the development pipeline. Historically, many breakthrough products did originate with large pharmaceutical companies, but the innovation process in biomedicine has changed fundamentally. Currently, the majority of new patents filed by large pharmaceutical companies are modifications of drugs already on the market. ![]() When Medicare Part D dramatically increased the pharmaceutical industry’s revenues 18 years ago, major drug companies directed their drug-development efforts primarily at drug classes where there were already five or more products on the market. Many would be modified versions of existing drugs, created merely to extend patent protections and thus monopolies over existing therapeutics. ![]() Predictions 20 to 30 years out are necessarily imprecise, but in any case, many of those projected new therapies would likely be neither novel nor more valuable than existing drugs. The Congressional Budget Office estimated that reducing the pharmaceutical industry’s revenues would result in two fewer drugs in the next decade, 23 fewer in the following decade, and 34 fewer drugs in the third decade. Furthermore, smart policy changes can sustain and increase the pace of life-changing breakthroughs in biomedicine through increased funding of the National Institutes of Health (NIH), cutting the costs and accelerating the speed of clinical trials, and reforming patent law to stop innovation-blocking abuses used by Big Pharma to prevent new drugs from entering the market. The reason: Large pharmaceutical companies are nowhere near as important to real drug innovation as they purport to be. We need not trade the certainty of saved lives now for the possibility of saved lives in the future. The pharmaceutical industry, however, has done a masterful job of arguing that these Americans must suffer in the short term since lower prices would gut long-term innovation in drug development. Legislation giving Medicare the ability to negotiate drug prices in the United States would make their life-saving potential immediately available to millions of Americans who cannot now afford them, thus extending lives and alleviating suffering. ![]()
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