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Faced with a rapidly spreading pandemic, the world desperately needs both near-term treatments and a longer-term solution, such as a vaccine. In all likelihood, they will come first from the American biomedical innovation system. Indeed, dozens of American drug companies and universities are rushing to create COVID-19 therapeutics—and they are better positioned to succeed than their counterparts anywhere else in the world.
Whereas America in the 1970s and 80s was a global also-ran in biomedical innovation, U.S.-headquartered companies by the 2000s had begun introducing more new drugs than companies from the next five nations combined. The transformation of the United States into the world’s life-sciences innovation leader was no accident, but rather the product of intentional policy decisions designed to make America that leader.
In particular, these policies have included tremendous levels of public and private investment in biomedical research and development (R&D), robust intellectual property rights, incentives like the Bayh-Dole Act, which spurs commercialization of university research, and a drug pricing system that allows companies to earn profits they can reinvest to finance future generations of biomedical innovation. This matters given that the risky, expensive, and uncertain process of developing a drug results in only one in several thousand molecular compounds ever making it from the research phase to market, while the cost for those drugs that do become commercialized approaches $2.9 billion.
The success of U.S. life-sciences policies helps explain why, from 2014 to 2018, the United States developed about twice as many new drugs as all of Europe combined, with Americans usually getting access to those innovative drugs first. Moreover, last year, the U.S. Food and Drug Administration approved 48 new medicines, bringing the total for the past three years to 153. This was 25 percent more than for any three-year period since 1938. And that’s not including 22 new biological drugs, approvals of new uses for existing medicines, or a record 1,171 generic drug approvals.
Beyond this, the massive amounts of R&D conducted by U.S. biopharmaceutical companies means there are thousands more molecular compounds that have been researched in the past that hold promise but never completed the full clinical trial process toward addressing a specific malady. One of those drugs, for instance, is Remdesivir, a novel antiviral investigational drug originally developed by California-based Gilead Sciences as a possible treatment for Ebola, though it was never marketed because other agents were found to be more effective at treating that particular disease.
Remdesivir is now getting fresh attention as the U.S. National Institutes of Health on February 25 announced clinical trials to test its safety and efficacy as a treatment for adults with COVID-19. This is because it has previously shown potential as a treatment for Middle East Respiratory Syndrome (MERS) and Severe Acute Respiratory Syndrome (SARS), two illnesses caused by other strains of the coronavirus.
It is too soon to say whether Remdesivir will emerge as an answer to the world’s near-term needs in fighting the COVID-19 pandemic. But it nonetheless serves as a clear example of a basic mistake that many critics make when they assail the U.S. biopharmaceutical innovation system instead of praising it.
Drugs like Remdesivir are far more likely to be developed in the United States, where the prospect of reasonable returns entices capital investment; yet there has been intensifying pressure in some quarters to undo the U.S. biomedical policy formula by importing price controls from other countries. This would have terrible consequences. The Organization for Economic Cooperation and Development has found, although some would deny it, that there is a direct link between pharmaceutical sales revenues and R&D expenditures. Drug price controls would reduce R&D, which would in turn reduce U.S. biomedical innovation.
The policies underpinning the U.S. system—world-leading public and private investments in biomedical innovation, robust intellectual property rights and protections, strong technology development and transfer mechanisms and policies, and pricing policies that allow life-sciences companies to earn sufficient return to reinvest in future generations of biomedical innovation—have made America the global leader in developing new drugs, and a key place where the world is now turning in the search for a treatment or vaccine for COVID-19.