Throughout this same period, though, only $1.4 trillion was spent on R&D; meanwhile, $2.2 trillion was allocated toward selling, administrative, and general activities.
Many of these companies also spent more money purchasing their own stocks– also known as “buybacks”– as opposed to investing in R&D. According to the authors, this raises significant questions about the companies’ commitments to providing biopharmaceutical research that benefits public health.
The team also argued that the companies’ justification of high drug prices to pay for R&D ignores already large public investments in the discovery and development of drugs. In other words, people are paying twice for emerging drugs– first via research that is publicly subsidized and second via high market drug prices.
Additionally, the authors explained how most emerging drugs added little or no clinical value over older treatment options.
For reference, approximately 1 in 6– or 16%– of new drugs approved by the FDA in the 1970s and 1980s were considered to offer important therapeutic gains.
But, during the 2010s, analyses of drug evaluation reports conducted by health tech assessment bodies in Germany and France suggested that the majority of newer drugs are not offering significant clinical value. Instead, just a fraction was deemed to offer major or important therapeutic improvements.
The team did acknowledge how, between 1997 and 2016, most drugs under development targeted novel action mechanisms. But, the authors also indicated that there had been a shift in focus.
Rather than biopharmaceutical companies focusing on blockbuster drugs, which usually target chronic diseases and are sold in high global volumes, companies are developing “nichebuster drugs”– or drugs that target rare diseases and allow for a higher price point.
“Given the amount spent on non-research and development activities and that most new drugs add little or no therapeutic value, in theory, the biopharmaceutical industry could generate more medically valuable innovation with its existing resources,” the authors said.
However, they believe this is unlikely to happen unless there are regulations or government intervention throughout the lifecycle of new drugs.
In turn, the team argued that policymakers, health technology assessment bodies, drug regulators, and consumers must re-think what incentives will lead to valuable biopharmaceutical drug innovations.