Public Sector Has Significant Role in Drug Development

In addition, other discussions in the policy realm toss around the idea that the government should get a return on the sale of drugs that were developed with federal funds in the face of high drug costs and medical care.

This debate surrounding the public sectors role in downstream drug development has come largely about from the passage of the Bayh-Dole Act in 1980. This law allowed institutions such as academia, teaching hospitals, not-for-profit organizations, and research institutes to own intellectual property (IP)resulting from federally-funded research and to control licensing of this IP.

This month, two articles published in separate journals by different groups with different objectives address the role of the public sector in the development of pharmaceuticals. Both articles found that the public sector does have impact in this area especially for innovative drugs and biologics.

In the New England Journal of Medicine (NEJM), Stevens, et al., aims “to quantitate the contribution of the public-sector research to the applied-research phase of drug discovery.” Their data sources include the FDA’s Orange Book which houses information on patents for drugs under new drug applications (NDAs), academic resources containing patent and licensing accounts, the Patent and Trademark Office, and the FDA’s databases for drug and biologic approvals. Combing through these various sources, the group identifies 153 FDA-approved pharmaceuticals with about 67% of these being new molecular entities that in whole or in part were developed by the public sector during the last 40 years. (1)

The article concludes that the public sector claims a higher proportion (approx. 9-21%) of the contribution to overall drug discovery than found by other researchers. Also, they have an even greater and important effect on public health and clinical outcomes based on the disproportionate contribution to innovative drug development. The vast majority of vaccines approved in the last 25 years were created by the public sector. Another interesting statistic is that 19% of the FDA NDAs that received priority review originated from public-sector research. (1) In the sister article published in the journal Health Affairs, the authors noted that “experts such as Michie Hunt have argued that priority-review drugs represent higher levels of innovativeness than other drugs.” (2)

Sampat and Lictenberg from Columbia University take a similar approach to Stevens, et al., and mine data sources of the FDA and other federal agencies, but with the objective of looking at direct and indirect impacts of the public sector in drug development. They also review sales data from the 2006 Prescribed Medicines File of the Medical Expenditure Panel Survey (MEPS). Their finding of the public sector’s much larger role in drugs that had priority-reviewed applications is an identical finding to the NEJM article. Results from the analysis of drug sales show that drugs with public-sector patents accounted for $3 billion in drug sales and drugs with applications referencing public-sector patents accounted for $36 billion in drug sales out of $137 billion in overall sales. When the authors consider specific conditions such as HIV/AIDS, public-sector patents accounted for a third of all drugs. Based on their findings, the authors conclude that government support has a definite impact indirectly and more limited but definite impact directly on pharmaceutical innovation. (2)

Both articles highlight and provide evidentiary support for the government’s contribution to the discovery of innovative pharmaceuticals that have had significant impact on public health. In cutting budgets for scientific and medical research, the U.S. Government risks a decrease in the introduction of innovative discoveries in medicine. Funding for research and development for tuberculosis has increased but is far from the funding levels required to advance drug candidates from upstream to downstream and eventually into the clinic where patients can access them. Recognition of the importance of the public sector in these efforts is the first step in mobilizing resources to accomplish the goal of cost-effective and shortened treatment regimens for tuberculosis.


1. Stevens AJ, Jensen JJ, Wyller K, Kilgore PC, Chatterjee S, Rohrbaugh ML. The role of public-sector research in the discovery of drugs and vaccines. N Engl J Med. 2011 Feb 10;364(6):535-41.

2. Sampat BN, Lichtenberg FR. What are the respective roles of the public and private sectors in pharmaceutical innovation? Health Aff (Millwood). 2011 Feb;30(2):332-9.

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