Do Americans pay twice for drugs?

That is the subtitle from an article in F1000 from Rena Conti (2020). Some individuals claim that because the federal government–often through the National Institutes of Health (NIH)–fund basic research that can inform drug development and then consumers have to pay for those drugs once again after they are approved, this means that Americans are ‘paying twice’. This critique was voiced by U.S. Representative Alexandria Ocasio-Cortez of New York:

“the public is acting as early investor, putting tons of money into the development of drugs that then become privatized, and then they receive no return on the investment that they have made”

Conti does note that public support has played some role in most of the most clinically impactful drugs in recent years. However, Conti wisely rejects the “pay twice” claim in her paper.

…in a large majority of cases, the public sector’s contribution to new drugs has been in the form of early scientific findings, unrelated to current or potential applications….although NIH funding supported at least one publication related to each of the 210 new medicines approved by the Food and Drug Administration (FDA) from 2010 to 2016, over 90 percent of those papers were related to the underlying drug target, not the actual therapy itself .

…while publicly funded science often characterizes important pathologic processes and identifies potential drug targets, the private sector is the main inventor of most new therapies…for only 25 percent of drugs approved from 2008 to 2017 was there any documented contribution, of any magnitude, to a drug’s initial discovery, synthesis, or key intellectual property by a public sector research institution or academic “spin-off” company.

Consider another definition where discovery is based on intellectual property generated. Under this definition, only 15% of new medicines are covered by even 1 patent directly issued to a public entity.

Conti concludes by stating:

Government funding makes enormous contributions to medicine by generating novel insights into biology and disease. But accumulated evidence demonstrates that in the majority of cases, it is the private sector, not academia, which translates those insights into new therapeutics

An analogy would be the tech sector. Didn’t the government create the internet? Isn’t Google, Facebook and Amazon benefiting directly form this basic research (clearly yes)? Then should the government get a ‘royalty’ from these company for innovation (I would argue ‘no’ beyond what they receive through the tax system). The benefit the public receives from these tech companies is broad societal benefits including better products, increased employment, and increased tax revenue.

A similar logic should be used for life science innovation. In fact, Conti critiques the ‘pay twice’ argument saying that:

this strictly transactional assessment ignores the health and wealth benefits that accrue to taxpayers from publicly funded science… In fact, the main return on investment American taxpayers expect from supporting biomedical research is in the form of direct benefits to morbidity and mortality – which have largely been realized

Conti concludes with words of wisdom:

Proposals to control a therapy’s price based on the degree to which public funds contributed to its development are not just unfeasible to implement, but also a distraction from more far-reaching efforts to improve the affordability of all medicines. Attention should instead be focused on developing practical solutions that ensure that clinically valuable new drugs continue to be developed and are accessible by all patients in need.

Wise words indeed.