Competitors Challenging US Lead in Life Sciences, New Report Finds; Leading Think Tank Proposes Robust Federal Response

March 26, 2018

WASHINGTON—America’s life-sciences sector has been a major contributor to U.S. economic competitiveness and has created millions of high-wage jobs. But according to a new report released today by the Information Technology and Innovation Foundation (ITIF), the world’s leading think tank for science and technology policy, the sector is at risk of losing its global leadership position in the face of aggressive foreign competitors who employ both fair and unfair practices to gain an edge.

“The U.S. life sciences have long been a step ahead of international competitors. But, once lost, that competitive advantage is extremely difficult to regain,” said ITIF Senior Fellow Joe Kennedy, author of the report. “If the United States wants to remain the world’s leader in life sciences, it needs to improve support for research, investment, training, and government regulatory approval processes, and it needs to aggressively counter unfair trade practices abroad, including pushing back against foreign price controls.”

The report finds that the U.S. life sciences industry has lost ground over the past decade largely due to aggressive competition from foreign nations. Many international competitors rely on the government as a purchaser of drugs and devices to limit the prices U.S. firms receive for their exports, artificially inflating the U.S. trade deficit in the sector. As a result of these foreign pricing policies, other nations also free ride on the U.S. life-science innovation system, receiving the benefits of better treatments without paying their fair share to support expensive research and development, thereby limiting global drug and device innovation.

According the report, the U.S. can protect and bolster its life sciences industry by:

  • Implementing stronger tax incentives for innovation.
  • Restoring prior funding levels for federally supported life sciences research.
  • Taking more forceful action to address unfair trade practices, including IP theft and price controls, by other nations.
  • Expanding and improving workforce training in STEM subjects.
  • Passing health care reforms that restore long-term stability and provide adequate reimbursement.
  • Continuing to value the role robust IP rights play in underpinning life-sciences innovation.

“Losing the competitive advantage in the life sciences would mean declines in jobs and incomes for many Americans and a larger trade deficit,” said Kennedy. “Policymakers need to optimize policies affecting the life sciences sector so that the United States is in the best position to increase its global market share and competitiveness.”

Read the report.