Life Science Compliance Update

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February 15, 2011

NEJM The Private Sector Discoveries Account for 79--90% of Pharmaceutical Products

The discovery and development of new drugs, medicines, and vaccines to solve unmet medical needs is an extremely long and expensive process. Generally, the public-sector research, such as the work done at the National Institutes of Health (NIH), is focused on “upstream, basic research to elucidate the underlying mechanisms and pathways of disease and identify promising points of intervention.”

On the other side of the equation, “corporate researchers have performed the downstream, applied research to discover drugs that can be used to treat diseases and have then carried out the development activities to bring the drugs to market. The intellectual property that protects the investment in developing these drugs is created in the applied-research phase.”

In some cases, research conducted by NIH or other Public-sector research institutions (PSRIs) provide the “foundation for the pharmaceutical industry’s discovery of an entirely new class of drugs.” Nevertheless, pharmaceutical companies and industry still take on the heavy burden of carrying out and paying for the applied research phase.

Consequently, a recent article in the New England Journal of Medicine (NEJM), focused on the impact of PSRIs, while downplaying the crucial role pharmaceutical companies play. While the article, entitled “The Role of Public-Sector Research in the Discovery of Drugs and Vaccines” notes that “PSRIs have contributed to the discovery of 9.3 to 21.2% of all drugs involved in new-drug applications approved during the period from 1990 through 2007,” it fails to acknowledge where the other 80-90% of drugs come from: the pharmaceutical industry.


While PSRIs are certainly important to drug discovery because of basic research, it was not until the mid-1970s that PSRIs were able to use tools of biotechnology, such as recombinant DNA and monoclonal antibodies, to create and patent biologic drug candidates and discover and patent small-molecule drugs. Following these changes, Congress passed the Bayh–Dole Act in 1980, which allowed universities, nonprofit research institutes, and teaching hospitals to own the intellectual property resulting from federally funded research and to license it according to terms of their choosing. Subsequent legislation provided a corresponding authority to federal laboratories.

These new laws allowed inventions and discoveries from PSRIs to be freely converted into intellectual property and transferred through license agreements to the private sector for commercialization and public use.

Study Design

To determine exactly what the contribution of public-sector research is compared to the applied-research phase of drug discovery, the authors collected data and used established criteria from a number of resources and drug databases. The primary source they relied on was the Food and Drug Administration’s (FDA) Orange Book, which contains details of the patent protection underlying drugs that have received approval under new-drug applications but not under biologics license applications.


The study found that for the 18-year period from 1990 through 2007, FDA approved 1541 new-drug applications. Of the 1541 total approvals, only 143 (9.3%) resulted from PSRIs. In addition, of the 1541 new-drug applications, 348 (22.6%) were priority review, and of those in priority review, only 66 (19.0%) resulted from PSRIs.

The authors try to bolster these results by stating that the numbers show how “46.2% of new-drug applications from PSRIs received priority reviews, as compared with 20.0% of applications that were based purely on private-sector research.”

The study also found that 730 of the total new drug application approvals were for new formulations. Of that total, only 53 (7.3%) originated in PSRIs. But of course the authors again try to bolster these numbers by stating that 17 (17.2%) of the new formulations that had sufficient therapeutic importance to receive priority review originated in PSRIs.

Of the total approvals of new-drug applications, 483 (31.3%) were for new molecular entities, of which only 64 (13.6%) originated at PSRIs. Once again, the authors try to point out that out of 209 new molecular entities that received priority review during this period, 44 (21.1%) came from PSRIs.


Ultimately, while the authors identified 153 FDA-approved drugs that were discovered at least in part by PSRIs during the past 40 years, they fail however to mention the number of FDA-approved drugs during that same period discovered by industry, likely because that includes 80-90% of all drugs.

Although the work of PSRIs since the policy changes in the early 1980s have allowed these institutions to play an important role in the downstream, applied phase of drug discovery, the NEJM article totally ignores and underscores the 80-90% of drugs discovered by industry. Most likely, this paper emphasized the impact of PSRIs because the funding from government these entities receive is being threatened by decreases in government funding and spending.

In the end, as the Obama Administration begins implementing the new National Center for Advancing Translational Sciences, which will help in drug discovery, it is clear that private industry remains the dominant force in drug discovery and development.  The future of drug discovery, research, and development will depend on a successful model that includes collaborating with private industry to support the work done in PSRIs. The successes of PSRIs should be applauded and welcomed, but in order to continue this level of success, PSRIs need to work more closely with industry, and institutions need to be more willing to do so.


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