Fred D. Ledley

Shows that, in the six quarters after passage of the IRA, there was increased R&D spending, biotech investment, and M&A suggesting a robust industry commitment to innovation–contrary to concerns of critics of the drug pricing provisions of the Inflation Reduction Act (IRA), who argued lowering drug prices could reduce investment in innovation.

Characterizes the public sector investment in drugs selected for price negotiation in year 1 of the Inflation Reduction Act and shows that, at current prices, Medicare spending on these drugs creates net negative residual health value (surplus) for patients.

Examines how the Inflation Reduction Act of 2022 impacts investment in biotechnology. Finds that despite industry concerns that reduced revenues could harm innovation by discouraging investment, biotechnology equity financing and valuation are more closely tied to overall equity market conditions than to drug price indices. Suggests that changes in drug prices under the IRA are unlikely to negatively affect investment in emerging biotech companies or hinder pharmaceutical innovation.

Examines FDA approvals of drugs from 2010 to 2019 to determine if they aligned with global or US disease burdens. Findings show that while many approved drugs targeted conditions with high US burden, fewer targeted conditions with high global burden. Additionally, expedited review programs did not show alignment with either US or global disease burdens, potentially discouraging development for global health needs.

Examines the National Institutes of Health (NIH) funding for phased clinical development of drugs approved by the US FDA from 2010 to 2019 compared to industry investment. Findings show that NIH contributed $8.1 billion, representing 3.3% of total NIH funding for basic and applied research related to these drugs. Suggests that NIH funding focuses on early-phase trials and underscores the need for efficient allocation of government resources in advancing pharmaceutical innovation.

Compares the investment in pharmaceutical innovation between the National Institutes of Health (NIH) and the pharmaceutical industry for drugs approved by the US FDA from 2010 to 2019. Findings show that NIH investment per drug approval, including basic and applied research costs and accounting for failed clinical candidates, is comparable to or greater than industry investment. 

Compares the economic terms of biotechnology licenses from academic institutions to biotechnology companies with comparable licenses between commercial firms. Demonstrates that the royalties and payments to academic (public) institutions were significantly less than those of comparable licenses between commercial firms. Suggests that while some differences can be explained by intrinsic factors of the agreements, there remains a systematic disparity in economic returns, highlighting implications for how government investments in biomedical research translate into commercial outcomes.

Examines the National Institutes of Health's (NIH) contribution to the discovery and development of new medicines from 2010 to 2019. Shows that NIH-funded research was pivotal in enabling drug development milestones, such as first-in-class designations and expedited approvals. Highlights the need for sustained public funding and innovative policy approaches in pharmaceutical innovation.

Demonstrates that large pharmaceutical companies are significantly more profitable than other companies in the S&P 500. Findings underscore the importance of understanding pharmaceutical profitability in shaping policies aimed at balancing drug affordability with industry innovation.