FEDERAL GOVERNMENT PRESCRIPTION DRUG RESEARCH SPENDING

You asked how much the National Institutes of Health spends on research related to prescription drugs.

In the late 1990s, The National Institutes of Health (NIH) annually spent between $ 13 and $ 16 billion (the numbers vary depending on the source) on basic research that is available to support further pharmaceutical industry efforts. It budget has grown since then. NIH supports basic research, typically through grants to universities and nonprofit institutions; it does not directly fund pharmaceutical company research, whose specific goal is developing drugs. This functional differentiation makes it difficult to make a direct connection between NIH-funded research and the development of specific drugs.

A July 2002 report on federal support for the pharmaceutical industry stated that NIH was responsible for about $ 16 billion of the $ 56. 5 billion (28%) spent nationally on health research in 1999. The report was prepared for the Kaiser Family Foundation by Michael Gluck of the Georgetown University Institute for Health Care Research and Policy.

Gluck noted that NIH appropriations have increased since 1999, reaching $ 23. 6 billion in 2002. Over 90% of NIH’s appropriation is spent on research. The report is available at Federal Policies and New Pharmaceuticals.

Gluck identifies several ways in which NIH spending benefits drug companies. Most significantly, it supports basic research conducted at universities or other non-profit research institutions. In FY 2001, NIH devoted $ 11. 7 billion (58 % of its budget) to such projects and grants.

Second, NIH staff conducts research in their own laboratories. A 2001 NIH report to Congress on its role in the drug discovery process found that four of the 47 FDA-approved drugs with sales of at least $ 500 million per year, including Taxol and Procrit, were developed in part with technologies created in its labs (see NIH report).

Finally, it supports the training for many of the scientists who eventually work in the pharmaceutical industry and produce the intellectual property that is its most valued asset and the scientists who create it. In FY 2000, NIH provided research service awards to 16,164 pre-doctoral and post-doctoral trainees at a cost of $ 592 million. NIH research grants to professors also support biomedical students who work as research assistants on these projects.

A Pfizer website confirms NIH’s role in the drug development process, although it stresses the secondary nature of that role. Pfizer states that in 1997, the pharmaceutical industry spent $ 18. 9 billion on research, while NIH spent $ 12. 7 billion. But, “While the NIH and the academic community engage in basic research, the pharmaceutical industry is by far the leading source of R&D for new medicines. Over 90 percent of new medicines in the United States are discovered, tested and developed by the research pharmaceutical industry. ”

It is difficult to directly link NIH-funded research to drug development. As NIH stated in its 2001 report, “while its federally funded research has contributed in a substantial, dramatic, yet general, way to advances in medicine and biology, the direct contributions to a final therapeutic product is limited and difficult to determine. ” Several factors account for this difficulty.

1. Much of the research NIH supports is “basic” in nature, that is it seeks to gain better understanding of fundamental disease processes or other topics without specific applications in mind.

2. Some NIH-funded work may lead to biological materials or laboratory processes that make it possible to pursue R&D directly relevant to new pharmaceuticals, but these technologies are “nascent” and require extensive further development.

3. NIH has no on-going system to track which of the research it supported has resulted in a drug product or associated patents. And most of the institutions that license the results of their NIH-funded research to drug manufacturers are unaware when licensing milestones are reached (development and production of an approved drug takes, on average, eight to 12 years) unless they have a very active monitoring program or until they receive royalty payments.

4. The likelihood that a compound will reach the market is very low. For one drug to be approved by the Food and Drug Administration, a company typically screens between 5,000 and 10,000 compounds. Of these, an average of 250 survive pre-clinical testing, only five are approved for clinical testing, and only one succeeds in obtaining approval.


October 27, 2004		2004-R-0844
FEDERAL GOVERNMENT PRESCRIPTION DRUG RESEARCH SPENDING

By: Saul Spigel, Chief Analyst