[Editor’s Note: this post was co-authored by Justin Chakma, Dr. Reshma Jagsi, and Stephen M. Sammut.]
Since 1950, U.S. government funding has supported research underlying 84 percent of Nobel Prizes awarded in Medicine & Physiology. These scientific breakthroughs have resulted in new medicines and created significant economic value. For example, the discovery of gene silencing, which won the 2006 Nobel Prize, led to more than 25 new therapies in development, and created two companies valued at over $8 billion in market capitalization. U.S. government funding has contributed to the development of almost half of all FDA-approved medicines.
This marriage between federal research and industry helped establish our global preeminence in biomedical research for the last 50 years. But short-sighted cuts to federal research funding and the lack of a long-term industrial strategy have placed the U.S. biomedical research enterprise at the brink of a potentially irreversible decline. The purchasing power of grants from the National Institutes of Health declined by more than 20 percent from 2003 to 2013, and is poised to decline even further despite the recent budget accord.
In a study published in the January 2nd issue of The New England Journal of Medicine, we analyzed global biomedical R&D expenditure from 2007 to 2012. We found that overall inflation-adjusted U.S. biomedical research expenditure declined by $12 billion, while U.S. market share of global biomedical R&D expenditure declined to below 45 percent, down from its historic heights of 70 percent to 80 percent.
Surprisingly, this decline was driven by industry as pharmaceutical companies shut down R&D sites in the U.S., and moved operations to Asia in the face of poor R&D productivity – $4 billion is now the average R&D cost for every FDA approval. Public-sector spending only kept pace with inflation because of the 2009 federal stimulus package, but with cuts persisting into 2014 and beyond, NIH funding next year will likely decline an additional 7 percent in inflation-adjusted dollars, from 2012 levels.
Reducing federal funding threatens the progress of biomedical research globally because the U.S. accounted for 51 percent of global public-sector R&D spending in 2012. The U.S. has the most to lose from slowing progress in understanding disease because industry will continue to shift R&D to Asia to compensate for the higher rates of clinical trial failures, while simultaneously cutting unproductive internal R&D spending and depending even more on government funded research.
Already, U.S. share of industry biomedical research expenditure has declined from 50 percent to 42 percent over the last 5 years. Over the long run, the diminished attraction of a biomedical research career may result in our brightest talent shunning one of the few disciplines where we still retain global dominance, and departing for more welcoming shores, especially if countries like China continue to increase biomedical R&D spending–China is up 313 percent since 2007.
There are already signs of this brain drain. Less than two months ago, the FDA approved a new cancer drug, ibrutinib, which may extend the survival of certain leukemia patients by a median of 5 years according to some Wall Street analysts. Most cancer drugs extend life by months. The discoverer of ibrutinib, Dr. Zhengying Pan, trained at Columbia and Stanford before joining Celera in California, where he synthesized the drug in 2007. By 2009, Dr. Pan was on the faculty at Peking University in China, attracted by research funding and lab space made available by the Chinese government.
Governments in Asia are investing billions of dollars to recruit top scientists like Dr. Pan, constructing world-class laboratory infrastructure, and winning industry R&D dollars with tax subsidies and grants. These initiatives in biomedical research parallel prior efforts in the clean energy, where China has outspent the U.S. by almost 2-to-1 in absolute terms, and established itself as the leading market globally. In its most recent Five Year Plan, the Chinese government committed $308 billion across seven scientific areas, including biotechnology.
Congress needs to increase funding of the NIH, if not for the advancement of medicine, then for economic self-preservation. Specifically, NIH funding needs to be directed towards translational research to reduce the number of clinical failures by improving our fundamental understanding of disease origin and progression, by supporting industrywide initiatives such as identifying better markers of disease progression, and by co-sponsoring early “proof of concept” trials with industry, as well as conducting the longitudinal studies required in diseases such as Alzheimer’s, where so many drugs have failed.
These funding plans need to be long term, at least five years in length. The long development times of both new medicines and new scientists have made the U.S. complacent about changes that will not be apparent for another five to 10 years, but will be difficult to reverse.
The decline in both academic and industry research investment in the United States is especially discouraging because other mature economies such as Japan and Europe have maintained their investment in biomedical R&D. Simply put, the US has abdicated its global leadership in biomedical research, and must respond now if it wants to reverse the course.
Justin Chakma is an investor at Thomas, McNerney & Partners. Dr. Reshma Jagsi is a physician-scientist at the University of Michigan, Ann Arbor. Stephen M. Sammut is a senior fellow at the Wharton School at the University of Pennsylvania.
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