News item | 22-06-2022 | 18:00
Financial returns are leading for investors and pharmaceutical companies in drug research. The social return plays a much less important role. At the same time, governments and non-profit organizations together account for a quarter of the funding of all drug research worldwide. This is the conclusion of a large-scale international study commissioned by Minister Ernst Kuipers of Health, Welfare and Sport (VWS). The investigation was sent to the House of Representatives today.
With the research, Minister Kuipers wants to create more transparency about how drug research is financed and how financing and the choices of investors influence which drugs are developed. It is the first time such a comprehensive global study of drug development funding has been conducted and made public. The research report shows that the financial risks in individual projects are high because few resources make it to the finish line, but that the system as a whole is very lucrative.
Minister Kuipers: “Thanks to sophisticated investment strategies, the pharmaceutical sector is still one of the most lucrative sectors in the world. The challenge ahead is to connect financial interests with societal interests, with patients first. New medicines should not only have a life-prolonging effect, but should also provide concrete, healthy years of life. I want to commit myself to this on a national and international level. This is necessary to keep healthcare affordable and sustainable in the future. I use the results of this report to start a conversation with my foreign health ministers.”
Risks
The report illustrates the complexity and major risks associated with drug development. Only one in thirty development attempts is successful. Nevertheless, all projects that do not reach the finish line must also be paid for. Drug research is therefore often a collaboration in which various parties contribute their expertise. It is almost impossible for a party to develop a drug itself from start to finish.
Efficiency
Several specialized parties carry out different phases of drug research. And different financiers try to achieve returns in these separate phases. The researchers conclude that the expected financial return is the most important factor that determines whether a drug is developed to the finish line. This not only determines which medicines are developed, but also for which medical indication. The financial return is therefore leading and not the social return or the patient’s interest. Because the expected financial return is influenced by what we as a society are prepared to pay for our medicines, this poses a major social challenge. What signal do we want to send to the industry and its financiers? What are we prepared to pay, but above all: for which medicines?
The research report further shows that governments and non-profit organizations together account for a quarter of the funding of all drug research worldwide. Large biopharma companies finance about two-thirds, venture capital funds invest the remaining ten percent.
Further research
The research was conducted under the guidance of a scientific advisory committee by an international consortium of three research firms: the Netherlands-based SiRM and the London offices of LEK Consulting and RAND Europe.
The research was conducted without policy recommendations and the data found will be made widely available. Minister Kuipers invites researchers to view this report as a basis for further research work. The report brings together a great deal of knowledge in a clear manner, deepening and increasing insight into the financial ecosystem of drug development. The report contains many insights that can be interesting and useful for countries worldwide.