Taxpayers — not Big Pharma — have funded the research behind every new drug since 2010

A sweeping study of drug R&D funding shows the public pays for the crucial foundations of medical breakthroughs. So why not let the public have access to them?

Something odd happened when the Trump administration submitted the original version of its latest pro-corporate budget: Big Pharma didn’t like it.

The problem wasn’t a tax hike or new regulations: the problem was that the budget included deep cuts to the budget of the National Institutes of Health.

If those cuts had gone through, they would have exposed one of the biggest lies told about Big Pharma: that the current system of patents and price-gouging is just an unfortunate necessity to cover the cost of all their brave and noble R&D work.


Trump’s original spending proposal for fiscal year 2019, released last month, included major cuts to not just to the NIH, but the National Science Foundation as well. It is those two publicly funded entities — not Big Pharma — that support the bulk of the country’s basic research into diseases and pathways to new treatments.

That’s why the cuts were especially unwelcome in the executive suites of drug and biotech companies. Their business models depend on Washington subsidizing expensive, high-risk basic research, mostly through the vast laboratory network funded by the NIH.

Just how important is our publicly funded research to Big Pharma and Biotech? According to a new study by a small, partly industry-funded think tank called the Center for Integration of Science and Industry (CISI), it is existentially important. No NIH funds, no new drugs, no patents, no profits, no industry.

Big Pharma is making a killing.

Posted by The Other 98% on Thursday, March 1, 2018

The CISI study, underwritten by the National Biomedical Research Foundation, mapped the relationship between NIH-funded research and every new drug approved by the FDA between 2010 and 2016. The authors found that each of the 210 medicines approved for market came out of research supported by the NIH. Of the $100 billion it spent nationally during this period, more than half of it — $64 billion — ended up helping the development of 84 first-in-class drugs.

But the NIH doesn’t get to use the profits from these drugs to fund more research, the way it might under a model based on developing needed drugs and curing the sick, as opposed to serving Wall Street. Instead, publicly funded labs conduct years of basic research to get to a breakthrough, which is then snatched up, tweaked, and patented (privatized) by companies who turn around and reap billions with 1,000-times-cost mark-ups on drugs developed with taxpayer money.

Those companies then spend the profits on executive bonuses and share buybacks, and lavish mass marketing campaigns to increase sales of amphetamines, benzos, opioids, and dick pills.

And with what’s left over, they lobby to keep threats to this massive scam at bay, all while scooping up more NIH-funded breakthroughs and starting the process anew.

This scam is worth a lot of money and is not easily messed with, as sacred as federal research benefiting military contractors. After Trump reversed his proposed research cuts last month, Bloomberg published an investor-soothing excuse article with the title, “The NIH appears Trump-proof.” The reporter, Max Nisen, explained, “NIH funds [are] a backbone of the research ecosystem on which [biotech and drug companies] depend. The better the NIH does, the better they do.”

The new CISI study was actually designed and written to reinforce this status quo: By showing federal research to be crucial to the current drug-pipeline, its authors hoped to provide ballast against Trump’s proposed cuts, which threatened the development of new drugs.

The study stops there, but for those not committed to the current system of patents and profit, its findings provide a leaping-off point to bigger questions. Such as:

If government-funded science is doing such a great job at basic research, why not provide additional funding for the development and testing of drugs?

If private industry isn’t doing basic research, and continues to gut long-flat-lined R&D budgets, what the hell are they spending their money on? (That one has an answer; see graph below)

Why are we allowing drug companies to gain proprietary control over taxpayer-funded research, then turn around and price-gouge those same taxpayers to literal death?

These are the questions driving a growing Drug Access movement that seeks to replace the current monopoly-patent paradigm with open science collaborations, generic license regimes, and a “NASA for drugs” focused on developing critical, life-saving medicines and ensuring they remain affordable.

A pie chart showing the main areas where Big Pharma spends its money. It shows that the vast majority goes to promotional activities. The slice for clinical trials is so small you can barely see it.
You think this looks bad? Imagine if they hadn’t differentiated between types of marketing.

For advocates of this new paradigm, the CISI data amplifies what they’ve been saying for years.

“The CISI study is further evidence of a broken system where taxpayers fund the riskier part of drug development, then once the medicines show promise, they are often privatized under patent monopolies that lock in exorbitant prices for 20 years or longer,” says Bryn Gay, Hepatitis C Project Co-Director at the Treatment Action Group.

As an example, Gay points to new hepatitis C drugs that have become a global rallying cry for an end to drug patent monopolies. After the NIH funded $62.4 million for the basic science behind the breakthrough drug sofosbuvir, it was purchased by the firm Gilead for $11 billion. Gilead then turned around and priced at up to six-figures, even though a 12-week treatment course of costs less than $100 to produce.

“Companies have raked in profits of over $70 billion from hep C medicines, yet companies like Gilead and Janssen have walked away from additional hep C research, such as for a preventative vaccine,” says Gay. “The impact of NIH-funded research again demonstrates that we need to increase government funding for infectious and neglected diseases. We can’t rely on Pharma to set R&D agendas shaped by how much profit can be generated.”

Dean Baker, an economist at the Center for Economic and Policy Research, believes a publicly funded system is possible. A start-to-finish government drug pipeline, he estimates, would result in an 80 percent drop in the $450 billion Americans currently spend on prescription drugs. He estimates that the government could fund the development and testing of new drugs for an additional $50 and $80 billion a year — roughly the amount of money drug corporations have made from the hep C treatment alone.

“The industry wants us to believe the government can fund good basic research, but is incapable of developing and testing new drugs,” says Baker. That is, of course, not true. “[The CISI] analysis shows the enormously important government role in developing new drugs. We should start asking questions about how the government can see the process through so [new drugs] could be sold at generic prices the day they are approved by the FDA.”

Baker also notes a government-run drug pipeline would likely result in safer drugs as well as cheaper drugs, as all clinical tests would be made fully public as a condition of funding.

The lords of the current paradigm fear rigorous and transparent clinical trials almost as much as paying for their own R&D. Last year, when the industry and its political allies drafted the 21st Century Cures Act, everybody cheered its cancer “moonshot” funding, but few noticed the section weakening the rules and regulatory oversight around clinical trials.

In other words, the same people getting rich off your taxes are willing to risk your life and a slap on the regulatory wrist for a slightly faster route from NIH-funded science to the bank.


This piece is part of the Drug Prices are Too High series, sponsored by Social Security Works. If you want to take on Big Pharma and lower drug prices, sign our petition here.

Alexander Zaitchik is a freelance journalist whose writing has appeared in Rolling Stone, New York Times, The Guardian, Vice, and many others. He is the author of Common Nonsense: Glenn Beck and the Triumph of Ignorance; The Gilded Rage: A Wild Ride Through Donald Trump's America; and Out of the Ooze: The Story of Dr. Tom Price.


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