The Era of Big Pharma and Its
Funding Are Coming To An End
After a decade of remarkable growth, total annual funding for biomedical
research in the U.S. has decelerated and may have even fallen when
adjusted for inflation. That is the conclusion of a study published
in the Journal of the American Medical Association.
The era of rapid expansion in biomedical research funding
that began in the 1990s has ended, said Ray Dorsey,
M.D., a neurologist at the University of Rochester Medical Center
and lead author of the study. Looking back at this period,
one of the striking observations is that while research funding
increased, the number of novel treatments entering the market
remained steady. If research funding levels are to return to a
phase of growth, we should examine funding priorities, particularly
in health services research, and barriers to the development of
new therapies.
The authors compiled data from government sources, trade organizations,
and industry financial reports to create a profile of biomedical
research funding from 2003 to 2007. Over the five year period,
annual research funding increased from $75.5 to $101.1 billion.
Adjusted for inflation, funding grew by an average annual rate
of 3.4% over the period. Using incomplete data, the authors estimated
research funding from the National Institutes of Health (NIH)
and industry for 2008 at $88.8 billion which, when adjusted for
inflation, represents a decrease in funding.
The study is a follow-up to a similar analysis published in 2005
by the same authors that showed that biomedical research funding
from all sources had tripled in nominal value and doubled when
adjusted for inflation between 1994 and 2003. The annual growth
rate in funding over the period was more than twice as fast at
7.8%.
This deceleration in funding, if unchanged, has a significant
potential impact for the biotechnology and pharmaceutical industries
and academic research institutions that rely on government and
private funding. As has been noted in other reports, the flat-lining
of federal funding for biomedical research in particular has a
cascading effect on the national academic research enterprise,
leading to scientists spending more of their time chasing funding,
influencing career choices of new graduates, discouraging higher
risk research, and curtailing the establishment of new scientific
programs and construction of new research facilities.
The growth in research funding that began in the 1990s fueled
a significant expansion in academic research and many universities
became engines for economic growth in their communities. Consequently,
the deceleration in research funding could have a profound effect
on communities where academic research, health care, and biotechnology
have become major economic players.
Approval of New Drugs and Devices Stagnant
While funding has generally increased over the period examined,
this growth has not been accompanied by an increase in the number
of new drug and device approvals by the U.S. Food and Drug Administration
(FDA). For example, the number of new molecular entities, essentially
drugs that have not been marketed in the U.S. previously, approved
by the FDA in 2003 was 21 and in 2008 was 17. Similar trends were
observed for new biologics, as measured by biologic license applications,
and devices, as measured by device premarket application approvals.
The relative lack of new therapeutic advances has been
a decade-long problem that continues to persist despite previous
large investments in research funding, said Dorsey. The
current model is not working well if the desire is to approve
new novel therapies to improve health. We need to modify incentives
to reward risk and increase support for companies pursuing early
stage and innovative research.
Increasingly, the model for drug development has the pharmaceutical
industry devoting a large portion of its spending for late-stage
clinical trials as opposed to drug discovery research. The large
pharmaceutical companies have largely abdicated the role of early
stage research and development to smaller companies that often
serve as the bridge between academic research and the market.
These smaller companies, in turn, then develop relationships (either
through partnerships or acquisitions) with larger companies once
they have proven they have a viable product. However, these smaller
firms, with limited resources and capital, face considerable risk
and increasing pressures to generate promising results in short
time frames from impatient markets. The model currently creates
little incentive for investors to put capital into companies who
are engaged in research that may be innovative, but has a higher
risk of failure.
Biomedical vs. Health Services Research
The analysis also reveals that health services research represents
a fraction of the nations $2 trillion in annual health care
spending. This research which is funded by foundations
and federal agencies such as the Agency for Healthcare Research
and Quality, the Centers for Disease Control and Prevention, NIH,
and the Center for Medicare and Medicaid Services is intended
to improve health care quality and access and control costs by
examining the impact of financial, social, technological, and
organizational factors on public health.
The studys authors contend that, in the context of the
ongoing national debate over how to control growth in health expenditures,
which now exceed $2.3 trillion in the U.S., and impending legislation
in Congress that will dramatically increase the number of people
with health insurance, spending on health services research, which
was $2.2 billion in 2008, is inadequate.
We spend almost $5 for every $100 in national health expenditures
on biomedical research, but we spend less than a dime on ensuring
those treatments, reach the right people and the right time,
said Dorsey. Given the massive changes in health care that
may occur in the very near future, we need to dedicate more resources
to understand the most effective and efficient ways of delivering
care.
Industry Funding Up, NIH Funding Shrinks
Industry pharmaceutical, biotechnology, and medical device
firms supplies the largest proportion of total research
spending at 58%, followed by the federal government at 33%. Industry
research and development funding increased by 25% between 2003
and 2007 with growth in research activity by medical device (59%)
and biotechnology companies (41%) significantly outpacing pharmaceutical
companies (14%).
The study found that funding from the National Institutes of
Health which is by far the single largest supporter of
biomedical research decreased by 12% between 2003 and 2008
when adjusted for inflation. Total federal funding for biomedical
research increased by 0.7% over the period, that is in contrast
to the period between 1994 and 2003 when federal research funding
increased by 100%.
January 15, 2010
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