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11. Trade and Transport Margins in Pharmaceuticals and other R&D-Intensive Industries

Author:
Tom Martin
Publication Date:
07-2020
Content Type:
Working Paper
Institution:
Oxford Economics
Abstract:
Spending for prescription and over-the-counter pharmaceutical products totaled $413 billion in 2012 according to the Bureau of Economic Analysis’ (BEA) trade and transports margin data. Just over half of this spending (52%) accrued to the pharmaceutical companies that produced the medicines, while the remainder was divided between transport and wholesale margins (21%) and retail margins (26%). Compared to other research and development (R&D)-intensive manufacturing industries with significant consumer sales, the pharmaceutical and medicines manufacturing industry ranks second in terms of R&D intensity behind communications equipment, and receives the second lowest producers’ share of total spending after other miscellaneous manufacturing. Thus, the pharmaceutical industry is unique among manufacturing industries in that it devotes a large share of its revenue to R&D, despite receiving a considerably smaller share of total spending.
Topic:
Science and Technology, Trade, Transportation, Medicine, and Pharmaceuticals
Political Geography:
Global Focus

12. Productivity and Adaptability: Why COVID-19 Has Not Overrun American Hospitals

Author:
Hanns Kuttner
Publication Date:
11-2020
Content Type:
Working Paper
Institution:
Hudson Institute
Abstract:
Early in the COVID-19 epidemic, many gloomy images emerged of what might be ahead. In one, hospitals would be overrun by more COVID-19 patients than they could treat. Models developed at the Institute for Health Metrics and Evaluation (IHME) provided numbers that supported the image. For the most part, overrun hospitals did not happen. Things turned out better because America’s hospitals did better than the IHME model thought they could. Hospital productivity has proved to be greater than anticipated in the IHME model. Productivity determines how many patients hospitals can serve. Productivity reflects how many beds a hospital has and how many days each patient stays in a bed. The most common pattern in hospitals, patients who are discharged alive and do not require time in an intensive care unit (ICU), provide an example. Length of stay for that group has been a third shorter than assumed in the IHME model. The data required to tell the adaptability story in detail is not yet available. Only a qualitative assessment is possible at this point. Hospitals adapted in ways not anticipated in the IHME model. For example, they delayed elective surgical procedures, freeing up beds. The story will become more detailed as data about hospital admissions and the clinical course of COVID-19 patients becomes available.
Topic:
Health, Science and Technology, Health Care Policy, COVID-19, and Pharmaceuticals
Political Geography:
North America and United States of America

13. Solutions for the “Vanishing Drug” Conundrum in Lebanon: A Change in the Subsidy System Coupled with a Digital Prescribing Platform

Author:
Nadim El Jamal, Ulfat Usta, Mona Nasrallah, Elie Al-Chaer, Ghassan Hamadeh, and Hussain Isma'eel
Publication Date:
11-2020
Content Type:
Working Paper
Institution:
Arab Reform Initiative (ARI)
Abstract:
The shortage of foreign currency caused by the multiple crises in Lebanon threatens the availability of pharmaceutical products, with patients experiencing shortages of many drugs despite an importation subsidy system for pharmaceuticals financed by the Central Bank’s foreign reserves. This paper describes Lebanon’s pharmaceutical supply chain and the Central Bank’s subsidy system and proposes recommendations to ensure the continuous availability of medication on pharmacy shelves.
Topic:
Health, Drugs, Medicine, and Pharmaceuticals
Political Geography:
Middle East and Lebanon

14. Government as the First Investor in Biopharmaceutical Innovation: Evidence From New Drug Approvals 2010–2019

Author:
Ekaterina Cleary, Matthew J. Jackson, and Fred D. Ledley
Publication Date:
04-2020
Content Type:
Working Paper
Institution:
Institute for New Economic Thinking (INET)
Abstract:
The discovery and development of new medicines classically involves a linear process of basic biomedical research to uncover potential targets for drug action, followed by applied, or translational, research to identify candidate products and establish their effectiveness and safety. This Working Paper describes the public sector contribution to that process by tracing funding from the National Institutes of Health (NIH) related to published research on each of the 356 new drugs approved by the U.S. Food and Drug Administration from 2010-2019 as well as research on their 218 biological targets. Specifically, we describe the timelines of clinical development for these products and proxy measures of their importance, including designations as first-inclass or expedited approvals. We model the maturation of basic research on the biological targets for drugs to determine the initiation and established points of this research, and demonstrate that none of the 232 products modelled were approved before this enabling research passed the established point. This body of essential research comprised 2 million publications, of which 409 thousand were supported by 317 thousand Funding Years of NIH Project support totaling $156 billion. Research on the 356 drugs comprised 229 thousand publications, of which 36 thousand were supported by 42 thousand Funding Years of NIH Project support totaling $31 billion. Overall, NIH funding contributed to research associated with every new drug approved from 2010-2019, totaling $187 billion. This funding supported investigator-initiated Research Projects, Cooperative Agreements for government-led research on topics of particular importance, as well as Research Program Projects and Centers and training to support the research infrastructure. This NIH funding also produced 22 thousand patents, which provided marketing exclusivity for 27 (8.6%) of the drugs approved 2010-2019. These data demonstrate the essential role of public sector-funded basic research in drug discovery and development, as well as the scale and character of this funding. It also demonstrates the limited mechanisms available for recognizing the value created by these early investments and ensuring appropriate public returns. This analysis demonstrates the importance of sustained public investment in basic biomedical science as well as the need for policy innovations that fully realize the value of public sector investments in pharmaceutical innovation that ensure that these investments yield meaningful improvements in health.
Topic:
Science and Technology, Research, Public Policy, Innovation, State Funding, Pharmaceuticals, and Funding
Political Geography:
North America, Global Focus, and United States of America

15. Blueprint for a Market-Driven Value-Based Advance Commitment for Tuberculosis

Author:
Kalipso Chalkidou, Martina Garau, Rachel Silverman, and Adrian Towse
Publication Date:
02-2020
Content Type:
Special Report
Institution:
Center for Global Development (CGD)
Abstract:
Innovation—delivering new drugs, diagnostics, and devices—is a critical tool in the global fight against disease and premature death. Yet despite the potential for innovation to improve health around the world, the pharmaceutical industry’s investments in research and development (R&D) generally neglect diseases of the poor in favour of more lucrative high-income markets. Responding to this R&D gap, donor “push” investments have helped advance an innovation agenda to serve low- and middle-income countries. Though these investments have helped accelerate market entry of several important innovations, other donor-push products have fizzled upon market entry due to unaffordable or non-cost-effective pricing, disappointing efficacy, lack of political will, or lower-than-anticipated country demand. And with many large middle-income countries (MICs) poised to soon transition from donor aid, the sustainability of the current donor-led model is in question. Tuberculosis (TB), an infectious disease primarily affecting the poor and vulnerable, ranks among the top 10 global causes of death. Current TB treatment cycles are long and toxic, causing some patients to discontinue treatment, develop acquired drug resistance, and risk spreading a drug-resistant pathogen to others. Drug-resistant strains are more difficult to treat, traditionally requiring long-duration toxic regimens and high-cost hospitalization (though recent innovations offer a shorter, more tolerable, and more affordable treatment). Despite years of global investment in TB control, modelling suggests that global goals for TB cannot be achieved without major technological breakthroughs. One particularly desirable innovation would be a short-course universal drug regimen (UDR)—equally capable of treating drug-sensitive and drug-resistant strains, with a two-month or shorter treatment duration. Donors, particularly the Bill & Melinda Gates Foundation (BMGF), have funded substantial early-stage R&D to source new treatment compounds that could contribute to a UDR, but substantial additional investments in late-stage trials would be required to bring such a UDR to market.
Topic:
Health Care Policy, Drugs, Medicine, and Pharmaceuticals
Political Geography:
Global Focus