Regulatory Focus™ > News Articles > 2019 > 10 > Public Funds Help Late-Stage Development of About 25% of New Drugs, Study Finds

Public Funds Help Late-Stage Development of About 25% of New Drugs, Study Finds

Posted 23 October 2019 | By Zachary Brennan 

Public Funds Help Late-Stage Development of About 25% of New Drugs, Study Finds

One in four new drugs approved in the US between January 2008 and December 2017 received direct funding from public resources for late stage research or through spin-off companies created from public research institutions, a study published in the BMJ on Wednesday found. 

As the drug pricing debate has accelerated in recent months, the debate over whether public or private entities do the majority of drug development work has continued, with the general assumption that the National Institutes of Health (NIH) funds much of the early-stage research (the Congressional Research Service explained in April how NIH aids basic research that translates into pharmaceutical development) while biopharmaceutical companies most often fund the later clinical stages that lead to the approval and marketing of new drugs.

Researchers at the Program On Regulation, Therapeutics, And Law (PORTAL) at Harvard Medical School investigated 248 novel drugs in the 10-year window and found that 62 (25%) had documented late-stage research contributions from a publicly supported research institution or spin-off company. Most of the drugs were identified as having publicly sponsored research or spin-off contributions through patent data available through the Orange Book.

In addition, 48 of the drugs (19% of all new approvals) had evidence of direct publicly supported research, and all but one received funding related to the drug’s “initial discovery, synthesis or other key intellectual property leading to a patentable invention.” Of these 48 drugs, 38 (80%) had at least one patent held by a publicly supported research institution or spin-off company.

“These publicly sponsored drugs were more likely to receive expedited regulatory designation and be first in class, suggesting high therapeutic importance,” the researchers wrote.

And the other 14 (6%) drugs developed by spin-off companies were based wholly or in part on publicly supported research, according to the study. For a spin-off example, the study discusses Gilead’s hepatitis C treatment Sovaldi (sofosbuvir), which originated at Pharmasset (acquired later by Gilead), but was originally a spin-off company based on federally funded research from Emory University in Atlanta.

“Identification of drugs with late stage, publicly supported research contributions, particularly those for which such institutions hold key patents, could represent a useful policy lever. Such drugs include nusinersen (Spinraza, for spinal muscular atrophy; list price US$750,000 (£610,400; €685,000) in the first year of use), eliglustat (Cerdelga, for Gaucher disease; $310,250/year), and enzalutamide (Xtandi, for prostate cancer; $129,000/year). The prices of these drugs, each of which relied on substantial academic development, have been criticized in the US and all are substantially lower in other countries,” the authors note.

They also explain how using so-called “march-in” rights, which could allow the government to use a patented product for its own purposes and which presidential hopeful Elizabeth Warren has said she would use, could help fight “critical drug shortages or extreme price hikes.”

The authors wrote in the conclusion: “These findings provide additional data for the ongoing debate on support for public sector biomedical research, and the best ways to take these key contributions into account in determining the ownership of and fair prices for new drugs, especially those priced at very high levels."



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