Who’s Going to Pay for Future Drug Development? (Part 1)

3/22/11

(Page 3 of 3)

 the NIH. The National Center for Advancing Translational Sciences’ goal will be to advance molecules from discovery all the way into the clinic. PhRMA, the drug company’s trade organization, has come out in support of the new initiative, whereas BIO, the biotech trade organization, has not yet weighed in with an opinion. The preliminary plan is to move about $700 million of research projects that have already been started at other government labs, such as the NIH, under the umbrella of the new institute. Plans for the new Center are still in flux, but the concept is a bold one, especially coming at a time of tremendous pressure on government spending. It has also elicited concerns in the academic community that this will cannibalize funds available for basic research. This new expenditure is in addition to the government’s pre-existing commitment of funds to the various centers and institutions of the NIH, which support a large number of basic and applied intramural and extramural research projects through various types of grants.

Other government agencies, such as DARPA, also invest in basic research projects in both academia and industry. Over the past 20 years the Pentagon has been the recipient of $3.6 billion in federal spending that it has directed towards breast cancer research. Though a worthwhile undertaking, many question how this relates to the basic mission of national defense. Some $250 million have been budgeted for this in 2011, although financial pressures on the defense budget may result in some or all of this money being cut.

State governments have also joined in to provide financial support for biotechs. This assistance goes beyond incentives that states have traditionally used to attract new companies and/or manufacturing plants. For example, numerous states have invested considerable sums for stem cell research, including California ($300 million/year for 10 years), Massachusetts ($100 million year/10 years), and Connecticut ($10 million/year over 10 years). In Washington state, where I live, $350 million in tobacco settlement money has been pledged towards investments in biomedical research through the Life Sciences Discovery Fund. This investment includes funds directed towards applied academic research as well as a grant to a biotech company that will yield a return on the investment if successful. Due to the fact that a majority of states are dealing with large budgetary gaps due to the economic downturn, funds previously promised by state governments may not actually materialize.

Drug companies and federal and state governments are not the only groups supplying the capital that fuels our country’s biomedical research engine. In the second half of my survey, I will review other organizations that fund the research and development of new drugs. These include venture capital firms, open source initiatives, private companies, disease-focused charities, and even patients themselves. These groups, whether for-profit or non-profit, all perform a valuable service by plugging numerous holes in the drug development-funding dike.

Stewart Lyman is Owner and Manager of Lyman BioPharma Consulting LLC in Seattle. He provides strategic advice to clients on their research programs, collaboration management issues, as well as preclinical data reviews. Follow @

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