A recent report issued by the Pharmaceutical Research and Manufacturers of America (PhRMA) outlines two potential growth trajectories for the U.S. biopharmaceutical sector and the top policy factors that enable the industry to innovate and, in turn, contribute to the U.S. economy.
According to the report developed by the Battelle Technology Partnership Practice, coverage and payment policies, a well-functioning, science-based regulatory system and strong intellectual property (IP) protections drive U.S. leadership in biopharmaceutical innovation. Logically enough, if negative trends in these critical policy areas continue, employment supported by the industry’s growth would decrease over the next decade. However, the report maintains that if reasonable pro-innovation policies are pursued, the U.S. biopharmaceutical sector stands to retain and add more than 300,000 jobs to the U.S. economy by 2021.
There’s a lot at stake. According to Bioplan Associates’ Tenth Annual “Report and Survey of Biopharmaceutical Manufacturing Capacity and Production” published April last year, there are estimated to be well over 10,000 therapeutics in R&D, both drugs (chemical substance pharmaceuticals) and biopharmaceuticals (biotechnology-derived pharmaceuticals, with nearly 40,000 ongoing (or recently reported) clinical trials. Of these, 40% are biopharmaceutical. The study notes that the market for biopharmaceuticals is growing, currently greater than $165 billion with a 15% annual growth rate expected to continue for the near future.
“This report is a stark reminder to policymakers that innovation is deeply affected by public policies and we must decide as a nation how much we value the contributions of the biopharmaceutical industry to the U.S. economy, as well as our nation’s role as the world leader in innovative R&D and manufacturing,” said John J. Castellani, president and CEO of PhRMA. “The message is clear: the continued success of the biopharmaceutical industry – both in delivering life-saving and life-enhancing medicines to patients and in contributing to U.S. economic growth – is dependent on thoughtful, forward-looking policies that prioritize innovation.”
Battelle notes that the ability to innovate is increasingly becoming the most important determinant of a nation’s future potential for economic growth and global competitiveness. “Today,” says Battelle, “the U.S. biopharmaceutical industry supports a total of 3.4 million jobs across the U.S. economy, including over 810,000 direct jobs, contributes $789 billion in economic output, and is responsible for about one in five dollars spent on R&D by U.S. businesses.” To put into greater context, says the rport’s authors, biopharmaceutical companies invested more than nine times the amount of R&D per employee than manufacturing industries overall from 2000 to 2010.
Combining quantitative data with input from industry leaders, the report offers a more complete picture of the industry’s dynamics, says Battelle, and the potential growth trajectories dependent on well-reasoned policy on the part of political and regulatory entities. “This report vividly illustrates the inextricable link between a healthy biopharmaceutical R&D system and the health care policy environment,” said Robert J. Hugin, Celgene Corporation Chairman and Chief Executive Officer. “All too often the payment policies for medicines are not recognized as fundamentally connected to the discovery and development of medical breakthroughs. Sustainable market-based access and reimbursement for innovative medicines today is essential to incentivize the long-term, high-risk investment needed for new medical innovations in the future.”
PhRMA says member companies invested an estimated $51.1 billion in R&D in 2013, representing the majority of all biopharmaceutical R&D spending in the U.S., but the cutting edge medicines developed by the industry play a key role in helping control other health care costs.
In fact, the Congressional Budget Office (CBO) recently adopted an historic scoring change that credits Medicare policies that increase use of medicines with savings on other Medicare costs. Similarly, Harvard researchers report savings on hospital and skilled nursing facility costs of about $1,200 per newly insured Part D beneficiary in 2007. This equals overall Medicare savings of $13.4 billion, more than one quarter of Part D’s total cost during the program’s first full year.