The 1990s saw a doubling of overall investments in funding for pharmaceutical research leading to the development of new drugs, but those investments began to slow in 2003 as government support for drug development has leveled off. Mega mergers within the industry may also be having a negative effect on investments.
In a Journal of the American Medical Association (JAMA) study published in January 2010, the largest study to date to attempt to quantify U.S. funding of biomedical research by industry, government and private sources, researchers estimate that U.S. biomedical research currently stands at about $100 billion annually.
Industry was the largest source of funding in 2007, representing 58 percent of the total, followed by the federal government, representing 33 percent, according to the JAMA study. Foundations, advocacy organizations and individual donors were responsible the remaining investments.
"After a decade of doubling, the rate of increase in biomedical research funding slowed from 2003 to 2007, and after adjustment for inflation, the absolute level of funding from the NIH and industry appears to have decreased by 2 percent in 2008," wrote study authors E. Ray Dorsey, Jason de Roulet, Joel P. Thompson, et al.
A commentary in the New England Journal of Medicine, "Biomedical Research and Health Advances," published in February 2011, suggests that industry's share of the total investment in U.S. biomedical research has continued to grow, with industry supporting about 65 percent of investment, government (primarily NIH) responsible for 30 percent of the funds, and charities, foundations and individual donors contributing 5 percent.
Basic research that supports drug discovery received a one-time boost through the American Recovery and Reinvestment Act (ARRA), the health care reform law, which became law in February 2009. About $310 million of the $10.4 billion allocated to the National Institutes of Health (NIH) was dedicated to advancing scientific discovery. Aside from that investment meant to spur the economy during a recession, the financial crisis almost guarantees that government support for drug research will remain flat for some time.
Private Industry Investment in Pharmaceutical R&D
According to a March 2011 report issued by the industry trade group Pharmaceutical Research and Manufacturers of America (PhRMA) and Burrill & Company, biopharmaceutical research companies invested $67.4 billion in research and development of new vaccines and medicines in 2010.
The PhRMA report claims that the investment, an increase of $1.5 billion over 2009, is an industry record.
A 2009 assessment of U.S. biomedical research across therapeutic areas by Dorsey et al, published in PLoS One, found the pharmaceutical industry led investments in neuroscience, cardiovascular, endocrine, gastrointestinal, respiratory and genitourinary research, while the NIH funded the majority of support for HIV/AIDS, infectious disease and oncology research.
The increases in funding have not translated to an increase of new drug approvals by the US Food and Drug Administration (FDA), according to the PLos One report. Financial investment alone cannot guarantee scientific progress. Other needed factors are a skilled workforce, geographic access between companies and research institutions, and a social environment that encourages collaboration among people and institutions.
The authors noted, "Funding from the major U.S. research funders across therapeutic areas in medicine has increased over the last decade, is aligned with disease burden in high income countries, but is not linked to the development of new medical therapies." They suggested that because it has become more difficult to turn investments into new therapies, funders will be challenged with finding ways to either decrease the cost of research or increasing the output of new therapies.
A former R&D executive with a big pharma company believes industry consolidation has had a "devastating" effect on pharmaceutical research projects because of the capital required to finance mergers and acquisitions. John L. LaMattina, former president of Pfizer Global Research and Development, wrote in an August 2011 Nature Reviews commentary, "In major mergers today, not only are R&D cuts made, but entire research sites are eliminated."