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Begin New Search Topic Innovation Author Fred D. Ledley

1. Implications of the Inflation Reduction Act for the Biotechnology Industry

Author:
Cody Hyman, Henry Dao, Gregory Vaughan, and Fred D. Ledley
Publication Date:
07-2024
Content Type:
Working Paper
Institution:
Institute for New Economic Thinking (INET)
Abstract:
The Inflation Reduction Act of 2022 contains landmark provisions authorizing the government to negotiate the price of selected drugs covered by Medicare Part D. The biopharmaceutical industry has criticized these provisions as a threat to innovation arguing that reducing future revenues could disincentivize equity investment in biotechnology. This research examines the sensitivity of private and public equity investment in the biotechnology industry to drug price indices and market conditions from 2000-2022. The analysis shows that equity financing and valuation in the biotechnology industry were strongly associated with equity market conditions but not indices of either producer or consumer drug prices. These results do not support claims of an association between changing drug prices and the availability of equity capital to emerging biotechnology companies, which currently sponsor the majority of all clinical trials. These results add to evidence that the IRA may not have a negative impact on pharmaceutical innovation.
Topic:
Economics, Health, Inflation, Innovation, Biotechnology, Public Investment, and Inflation Reduction Act
Political Geography:
North America and United States of America

2. 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