The US carries out 46% of global research and development (R&D) in the life sciences, making it the world leader in medical research.
Federal expenditure on biomedical research Life sciences accounted for 51% of federal research expenditure in 2011.
The National Institutes of Health (NIH) are considered the government's flagship biomedical research funding organization. Between 2004 and 2014, NIH funding remained relatively flat and was not increased to keep pace with inflation. The NIH budget peaked at circa $35 billion per year from 2003 to 2005 and was around $30 billion in 2015.
Government efforts to increase allocations to research between 2013 and 2016 were often thwarted by the congressional austerity drive, with Congress withholding approval of the federal government's budget several times. Over this period, the executive's priorities were taken forward largely thanks to collaboration between the government, industry and the non-profit sector. This was particularly true for the health sector which, like climate change, was a priority for the Obama administration.
Towards more targeted therapies A key policy objective of the Obama administration was to develop more targeted therapies while reducing the time and cost of drug development. Developing a new drug takes well over a decade and has a failure rate of more than 95%. The most expensive failures happen in late phase clinical trials. It is thus vital to pinpoint the right biological targets (genes, proteins and other molecules) early in the process, so as to design more rational drugs and better tailored therapies.
The 21st Century Cures Act was signed into law on 13 December 2016, a year after the release of the UNESCO Science Report. The report had predicted that:were the bill to pass into law, it would alter the way in which clinical trials are conducted by allowing new and adaptive trial designs that factor in personalized parameters, such as biomarkers and genetics. This provision has proven controversial, with doctors cautioning that overreliance on biomarkers as a measure of efficacy can be misleading, as they may not always reflect improved patient outcomes.Another government scheme hopes to increase the number of new diagnostics and therapies for patients, while reducing the time and cost of developing these. At the launch of the Accelerating Medicines Partnership in February 2014, NIH director Francis S. Collins stated that "Currently, we are investing too much money and time in avenues that don't pan out, while patients and their families wait." Over the five years to 2019, this public−private partnership is developing up to five pilot projects for three common but difficult-to-treat diseases: Alzheimer's disease, type 2 (adult onset) diabetes and the autoimmune disorders of rheumatoid arthritis and lupus.
The partnership involves the National Institutes of Health (NIH) and the Food and Drug Administration (FDA), as well as 10 major biopharmaceutical companies and several non-profit organizations like the Alzheimer's Association. The industrial partners are Abbvie (US), Biogen (US), Bristol Myers Squibb (US), GlaxoSmithKline (UK), Johnson & Johnson (US), Lilly (US), Merck (US), Pfizer (US), Sanofi (France) and Takeda (Japan).
Laboratories share samples, such as blood or brain tissue from deceased patients, to identify biomarkers. They also participate in NIH clinical trials. One critical component is that industry partners have agreed to make the data and analyses arising from the partnership accessible to the broad biomedical community. They will not use any discoveries to develop their own drug until these findings have been made public.
In April 2013, the government announced another public−private partnership, this time to implement its Brain Research through Advancing Innovative Neurotechnologies (BRAIN) Initiative. The goal of this project is to leverage genetic, optical and imaging technologies to map individual neurons and complex circuits in the brain, eventually leading to a more complete understanding of this organ's structure and function. By 2015, the BRAIN Initiative had "obtained commitments of over US$ 300 million in resources from federal agencies (National Institutes of Health, Food and Drug Administration, National Science Foundation, etc.), industry (National Photonics Initiative, General Electric, Google, GlaxoSmithKline, etc.) and philanthropy (foundations and universities)".
The Precision Medicine Initiative has been another government priority. Defined as delivering the right treatment to the right patient at the right time, precision medicine tailors treatments to patients based on their unique physiology, biochemistry and genetics. In his 2016 budget request, the president asked for US$215 million to be shared by the NIH, National Cancer Institute and FDA to fund the Precision Medicine Initiative.
Research spending by biopharmaceutical companies
In 2013, US pharmaceutical companies spent $40 billion on R&D inside the US and nearly another $11 billion on R&D abroad.
Between 2005 and 2010, pharmaceutical and biopharmaceutical companies increased their investment in precision medicine by roughly 75% and a further increase of 53% is projected by 2015. Between 12% and 50% of the products in their drug development pipelines are related to personalized medicine.
The federal government and most of the 50 states that make up the United States offer R&D tax credits to particular industries and companies. Congress usually renews a tax credit every few years. According to a survey by the Wall Street Journal in 2012, companies do not factor in these credits when making décisions about investing in R&D, since they cannot rely on these credits being renewed.
In 2014, six US biopharmaceutical companies figured in the global Top 50 for the volume of expenditure on R&D. The following have figured in the Top 20 for at least ten years: Intel, Microsoft, Johnson & Johnson, Pfizer and IBM. Google was included for the first time in 2013 and Amazon in 2014, which is why the online store does not figure in the Top 50 for 2014.
Global top 50 companies by R&D volume and intensity, 2014
Rank in 2014 Company Country Field R&D(€ millions) Change in rank for R&D, 2004–2014 R&D intensity*1VolkswagenGermanyAutomobiles & parts11 743+76.02Samsung ElectronicsRep. KoreaElectronics10 155+316.53MicrosoftUSComputer hardware and software8 253+1013.14IntelUSSemiconductors7 694+1020.15NovartisSwitzerlandPharmaceuticals7 174+1517.16RocheSwitzerlandPharmaceuticals7 076+1218.67Toyota MotorsJapanAutomobiles & parts6 270-23.58Johnson & JohnsonUSMedical equipment, pharmaceuticals, consumer goods5 934+ 411.59GoogleUSInternet-related products and services5 736+ 17313.210DaimlerGermanyAutomobiles & parts5 379-74.611General MotorsUSAutomobiles & parts5 221-54.612Merck USAUSPharmaceuticals5 165+1716.213BMWGermanyAutomobiles & parts4 792+156.314Sanofi-AventisFrancePharmaceuticals4 757+814.415PfizerUSPharmaceuticals4 750-1312.716Robert BoschGermanyEngineering and electronics4 653+1010.117Ford MotorsUSAutomobiles & parts4 641-164.418Cisco SystemsUSNetworking equipment4 564+1313.419SiemensGermanyElectronics & electrical equipment4 556-156.020Honda MotorsJapanAutomobiles & parts4 367- 45.421GlaxosmithklineUKPharmaceuticals & biotechnology4 154-1013.122IBMUSComputer hardware, middleware & software4 089-135.723Eli LillyUSPharmaceuticals4 011+1823.924OracleUSComputer hardware & software3 735+4713.525QualcommUSSemiconductors, telecommunications equipment3 602+11220.026HuaweiChinaTelecommunications equipment and services3 589up > 20025.627AirbusNetherlands**Aeronautics3 581+86.028EricssonSwedenTelecommunications equipment3 485-1113.629NokiaFinlandTechnology hardware & equipment3 456- 914.730Nissan MotorsJapanAutomobiles & parts3 447+44.831General ElectricUSEngineering, electronics & electrical equipment3 444+63.332FiatItalyAutomobiles & parts3 362+123.933PanasonicJapanElectronics & electrical equipment3 297-266.234BayerGermanyPharmaceuticals & biotechnology3 259-28.135AppleUSComputer hardware & software3 245+1202.636SonyJapanElectronics & electrical equipment3 209-2121.337AstrazenecaUKPharmaceuticals & biotechnology3 203-1217.238AmgenUSPharmaceuticals & biotechnology2 961+1821.939Boehringer IngelheimGermanyPharmaceuticals & biotechnology2 743+2319.540Bristol–Myers SquibbUSPharmaceuticals & biotechnology2 705+222.841DensoJapanAutomobile parts2 539+129.042HitachiJapanTechnology hardware & equipment2 420-183.743Alcatel–LucentFranceTechnology hardware & equipment2 374+416.444EMCUSComputer software2 355+4814.045Takeda PharmaceuticalsJapanPharmaceuticals & biotechnology2 352+2820.246SAPGermanySoftware & computer services2 282+2313.647Hewlett–PackardUSTechnology hardware & equipment2 273-242.848ToshibaJapanComputer hardware2 269-185.149LG ElectronicsKorea, Rep.Electronics2 209+615.550VolvoSwedenAutomobiles & parts2 131+276.9
* R&D intensity is defined as R&D expenditure divided by net sales.
** Although incorporated in the Netherlands, Airbus's principal manufacturing facilities are located in France, Germany, Spain and the UK.
Source: UNESCO Science Report: towards 2030 (2015), Table 9.3, based on Hernández et al. (2014) EU R&D Scoreboard: the 2014 EU Industrial R&D Investment Scoreboard. European Commission: Brussels, Table 2.2.
Trends in venture capital investment The National Venture Capital Association has reported that, in 2014, venture capital investment in the life sciences was at its highest level since 2008: in biotechnology, $6.0 billion was invested in 470 deals and, in life sciences overall, $8.6 billion in 789 deals (including biotechnology and medical devices). Two-thirds (68%) of the investment in biotechnology went to first-time/early-stage development deals and the remainder to the expansion stage of development (14%), seed-stage companies (11%) and late-stage companies (7%).
However, it was the software industry which invested in the greatest number of deals overall: 1799, for an investment of $19.8 billion. Second came internet-specific companies, garnering US$11.9 billion in investment through 1 005 deals. Many of these companies are based in the State of California, which alone concentrates 28% of US research.
Total investment in venture capital amounted to US$48.3 billion in 2014, for 4 356 deals. This represented "an increase of 61% in dollars and a 4% increase in deals over the prior year," reported the National Venture Capital Association.
The Organisation for Economic Cooperation and Development estimates that venture capital investment in the United States had fully recovered by 2014.
In recent years, a number of pharmaceutical companies have made strategic mergers to relocate their headquarters overseas to gain a tax advantage, including Medtronic and Endo International. Pfizer's own attempt to take over the British pharmaceutical company AstraZeneca aborted in 2014 after Pfizer admitted plans to cut research spending in the combined company.
Trends in prescription drug prices One policy concern for the Obama administration has been the steep rise in the price of prescription drugs, in a country where these prices are largely unregulated. From January 2008 to December 2014, the price of commonly used branded drugs increased by a little over 127%, even as the price of commonly prescribed generic drugs decreased by almost 63%.