Research, Innovation and Technology

Policy and Legal

NAM Stands Up for Biopharmaceutical Innovation Before Senate Hearing

In advance of a Senate hearing on health care costs, the NAM is ensuring that senators understand the importance of biopharmaceutical innovation to patients and the U.S. economy—and the damaging impact of policies that hinder drug development.

What’s happening: The Senate Armed Services Committee will hold a subcommittee hearing today on whether harmful policies like price controls, compulsory licensing and weaker intellectual property protections for new medicines could reduce servicemembers’ health care costs.

NAM pushes back: The NAM is highlighting the extraordinary investment—in both time and capital—that it takes to bring a lifesaving treatment to market. According to the NAM:

  • The average cost of developing a new drug was $2.3 billion as of 2022;
  • Across the industry, biopharmaceutical manufacturers spent $139 billion on R&D in just 2022 alone;
  • It can take 10 to 15 years for a breakthrough scientific discovery to move through early-stage research, clinical trials, Food and Drug Administration approval and manufacturing; and
  • Only 12% of investigational drugs that enter a Phase I clinical trial ultimately receive FDA approval—to say nothing of the hundreds of discoveries that never make it into clinical trials.

Lifesaving impact: In 2023, the FDA approved a record-breaking 71 new medicines that will improve the lives of patients.

  • The biopharmaceutical industry behind these breakthroughs is also stimulating the U.S. economy: Biopharmaceutical manufacturers accounted for $355 billion in value-added output to the U.S. economy in 2021 and directly employed 291,000 workers in the U.S.

Innovation under threat: In recent years, biopharmaceutical manufacturers have been subject to harmful policies that will limit innovation and slow efforts to develop lifesaving medicines.

  • The Medicare Drug Price Negotiation Program subjects life-changing biopharmaceutical innovations to government price controls, while the Biden administration’s “march-in” proposal undermines innovators’ IP rights. These policies make it riskier and more costly for manufacturers to invest in groundbreaking research.
  • What’s more, the prices Americans pay for medicines are influenced heavily by middlemen, such as pharmacy benefit managers rather than biopharma companies. In 2020, more than half of every dollar spent on brand medicines went to PBMs and others in the health care system—not the medicine’s manufacturer.

The final word: “The costs of manufacturing a medicine include potentially decades of research and billions of dollars of investment,” said NAM Vice President of Domestic Policy Charles Crain. “Congress must avoid adopting policies that will stymie this lifesaving innovation.”

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