US 'foots the bill' for global biopharma innovation, says ITIF

By Melissa Fassbender contact

- Last updated on GMT

The US contributes twice the share of global R&D investment in the life sciences, relative to its global economy share, according to recent analysis. (Image: iStock/phongphan5922)
The US contributes twice the share of global R&D investment in the life sciences, relative to its global economy share, according to recent analysis. (Image: iStock/phongphan5922)

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The US ranks first in terms of how its domestic policies contribute to global biopharmaceutical innovation, according to a recent analysis.

The report​, released by the Information Technology and Innovation Foundation (ITIF), a nonprofit, nonpartisan research and educational institute focusing on the intersection of technological innovation and public policy, includes findings that assess 56 countries making up nearly 90% of the world’s economy.

Stephen Ezell, ITIF vice president for global innovation policy, told us that the most surprising finding was that “there is such a strong and direct correlation between the ability of innovative life sciences enterprises’ to earn profits from one generation of biomedical innovation in order to be able to use those returns to finance future generations of biomedical innovation​.”

In other words, he explained, “that there is such a high degree of correlation between sales revenues and R&D expenditures in the biomedical field​.”

Ezell also added that he was surprised by “the extent to which the US truly foots the bill of global life sciences innovation​.”

According to the report, relative to its share of the global economy (22%), the US contributes twice the share (44%) of global R&D investment in the life sciences. Additionally, it also pays closer to “the true cost of medicines developed​,” said Ezell. “It means too many other nations aren’t doing their share to bear the costs of biomedical discovery and innovation​.”

This underinvestment in biomedical research​ is one of the most significant factors slowing the pace of biomedical innovation. “Moreover, there’s a game theory problem here where some nations are incented to free-ride off the investments of others​,” added Ezell.

In order to rectify these issues moving forward, Ezell is calling for both more investment and more international coordination​, especially for rare, orphan, or tropical diseases, so countries can collaboration to co-invest in research. He also explained that companies should invest at least 10% of their government R&D funding toward health advances and/or life sciences research.

Countries must recognize that excessive price controls are actually damaging to long-term biopharmaceutical innovation​,” he said. “Strong intellectual property rights are vital for a robust life sciences innovation ecosystem; with biologic drugs the frontier of biomedical innovation, countries should implement strong IP protections for biologics, including biologics data exclusivity periods of at least 10 years or longer​ (as with the United States’ 12 years).

The report built on previous ITIF research that studied national policies’ impact on the global innovation ecosystem. According to the researchers’ analysis, the US, Switzerland, Taiwan, Singapore, and Sweden have enacted policies that contribute the most to global life-sciences innovation on a per-GDP basis; India, South Africa, Thailand, the Philippines, and Australia have policies contribute the least.

It is on the one hand understandable that policymakers tend to focus first and foremost on the short-term interests of their own citizens, but too many ignore the fact that this comes at the expense of less innovation of new drugs​,” said Robert D. Atkinson, ITIF president. “The bottom line is that all nations need to do their part to support robust global biopharma innovation​.”

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