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Opinion | Michael Rosenblatt

Biopharmaceutical companies aren’t free-riding on government research


The FDA recently approved a treatment for osteoporosis, a targeted therapy for advanced bladder cancer, and a pill that can cure smallpox. For each medicine, the agency’s stamp of approval culminates years — if not decades — of expensive research.

The research that made the new osteoporosis treatment possible, for example, began in 1964 and included 19 clinical studies involving more than 14,000 patients. The medicine offers hope to the 10 million Americans living with osteoporosis by harnessing a molecular pathway that builds bone.

Such long histories are typical for drug invention. Yet some members of Congress ignore the reality of the process. These lawmakers prefer to believe that federally funded scientists develop medicines on their own — and that private-sector firms simply take advantage of this work to manufacture the medicines, earning billions as a result.


Nothing could be further from the truth. The government funds important, basic research that expands scientific knowledge and helps lay the foundation for targeted or applied research. This early work is essential, but it’s only the beginning of a long, arduous, and highly risky process that is the domain of private-sector companies.

Here’s how drug invention typically works.

Each year, the National Institutes of Health funds research in its own labs and awards grants to scientists at universities and nonprofit research institutes. The vast majority of these researchers aren’t actually designing and developing drugs; rather, they’re exploring scientific questions fundamental to medicine, like how the body’s organs, cells, and systems work and the ways in which “normal” changes to “disease.” They hope that some of their findings and insights will point the way toward drug invention.

If a promising biological target is identified, a life-sciences company — either a small start-up or a pharmaceutical company — will begin exploring how to translate the research into a medically useful invention. Biotech startups typically raise funds from venture capital investors or public markets in order to support this research. Large pharmaceutical companies fund the research out of current revenues (typically about 15 percent).


If early experiments prove to be promising and there is potential to create an actual therapy, the company moves on to animal trials. If the candidate medicine works and testing indicates that it is safe, they move to human trials. Some biotech firms can handle this process on their own, but many others partner with larger companies. In every case, companies are subject to the Food and Drug Administration’s stringent review standards.

Hundreds of new medicines have come out of this process. Just last year, the FDA approved 59 novel drugs that target everything from cancers and pulmonary diseases to migraines. Today, almost 6,700 projects are in clinical development.

The drug-development pipeline didn’t always work so well. Before 1980, the government retained the patent rights to publicly funded research discoveries and rarely licensed these patents to private firms. Consequently, the fruits of most federal research dollars were seldom translated into medicines that would benefit patients. Indeed, of the nearly 30,000 patents that had resulted from federal research funding up until that point, fewer than 5 percent became marketable products.

Frustrated by this, Congress passed the Bayh-Dole Act in 1980 to push discoveries that might benefit human health into the commercial sector. The law explicitly requires research centers that receive federal funding to patent promising findings and seek industry partners. Private firms wishing to invest in discoveries emerging from federally funded research pay licensing rights and/or royalties to the nonprofits that make these discoveries.


The Bayh-Dole Act has worked. Public-private research collaborations with the NIH increased 500 percent after it was instituted, and potentially life-saving discoveries stopped sitting unused in university labs. In 2016 alone, private firms invested $90 billion in research and development — nearly triple the budget of the NIH.

Some lawmakers want to regress to the era before Bayh-Dole. They believe the government should own the patents that result from federally funded research — or, at least set prices on the medicines that are are eventually developed.

That’s not smart. Such a shift would dramatically inhibit the scientific exchange between those who do basic research and those who explore clinical applications. It would be akin to the government exerting a claim on every commercial enterprise that uses the Internet because the Defense Department helped create it. Other unintended consequences might ensue: companies might prefer to collaborate with laboratories in Europe or Asia in order to avoid financial disincentives.

Creating a drug is the longest, riskiest, and most expensive product development process on the planet — creating a new smartphone or self-driving car doesn’t even come close. It takes 10 to 15 years to go from concept to drug, and 9 in 10 experimental drugs fail to receive FDA approval.

Alzheimer’s helps illustrate the enormity of this task. Over the past two decades, more than 150 efforts to develop a novel Alzheimer’s drug have failed. Alzheimer’s also helps illustrate how daunting are America’s health care challenges. Alzheimer’s and other dementias alone cost the nation nearly $300 billion each year. Yet industry investment in Alzheimer’s research year after year has far outweighed that of the government.


It will take new medicines to address these challenges. And only a strong biopharmaceutical industry has the know-how, expertise, resources — and the financial incentives — to move from new knowledge to the medical inventions we so desperately need.

Dr. Michael Rosenblatt is chief medical officer of the venture firm Flagship Pioneering. He previously served as chief medical officer of Merck and as dean of Tufts University School of Medicine.