Comparison of research spending on new drug approvals by the US National Institutes of Health versus industry, 2010-2019.

Key PointsQuestion How does National Institutes of Health (NIH) investment in pharmaceutical innovation compare with investment by the pharmaceutical industry?Findings In this cross-sectional study of 356 drugs approved by the US Food and Drug Administration from 2010 to 2019, the NIH spent $1.44 billion per approval on basic or applied research for products with novel targets or $599 million per approval considering applications of basic research to multiple products. Spending from the NIH was not less than industry spending, with full costs of these investments calculated with comparable accounting.Meaning The results of this cross-sectional study suggest that the relative scale of NIH and industry investment in new drugs may provide a basis for calibrating the balance of social and private returns from these products.AbstractImportance Government and the pharmaceutical industry make substantive contributions to pharmaceutical innovation. This study compared the investments by the National Institutes of Health (NIH) and industry and estimated the cost basis for assessing the balance of social and private returns.Objectives To compare NIH and industry investments in recent drug approvals.Design, Setting, and Participants This cross-sectional study of NIH funding associated with drugs approved by the FDA from 2010 to 2019 was conducted from May 2020 to July 2022 and accounted for basic and applied research, failed clinical candidates, and discount rates for government spending compared with analogous estimates of industry investment.Main Outcomes and Measures Costs from the NIH for research associated with drug approvals.Results Funding from the NIH was contributed to 354 of 356 drugs (99.4%) approved from 2010 to 2019 totaling $187 billion, with a mean (SD) $1344.6 ($1433.1) million per target for basic research on drug targets and $51.8 ($96.8) million per drug for applied research on products. Including costs for failed clinical candidates, mean (SD) NIH costs were $1441.5 ($1372.0) million per approval or $1730.3 ($1657.6) million per approval, estimated with a 3% discount rate. The mean (SD) NIH spending was $2956.0 ($3106.3) million per approval with a 10.5% cost of capital, which estimates the cost savings to industry from NIH spending. Spending and approval by NIH for 81 first-to-target drugs was greater than reported industry spending on 63 drugs approved from 2010 to 2019 (difference, −$1998.4 million; 95% CI, −$3302.1 million to −$694.6 million; P = .003). Spending from the NIH was not less than industry spending considering clinical failures, a 3% discount rate for NIH spending, and a 10.5% cost of capital for the industry (difference, −$1435.3 million; 95% CI, −$3114.6 million to $244.0 million; P = .09) or when industry spending included prehuman research (difference, −$1394.8 million; 95% CI, −$3774.8 million to $985.2 million; P = .25). Accounting for spillovers of NIH-funded basic research on drug targets to multiple products, NIH costs were $711.3 million with a 3% discount rate, which was less than the range of reported industry costs with 10.5% cost of capital.Conclusions and Relevance The results of this cross-sectional study found that NIH investment in drugs approved from 2010 to 2019 was not less than investment by the pharmaceutical industry, with comparable accounting for basic and applied research, failed clinical trials, and cost of capital or discount rates. The relative scale of NIH and industry investment may provide a cost basis for calibrating the balance of social and private returns from investments in pharmaceutical innovation.