In early September 2022, a study was published regarding The Relative Contributions of NIH and Private Sector Funding to the Approval of New Biopharmaceuticals. The study reviewed the “significance of each party’s level of funding for obtaining Food and Drug Administration (FDA) authorization,” with the question of whether private funding is statistically significant to the probability of a given therapy’s FDA approval acting as a core focus of the research.
To conduct the study, authors reviewed research projects linked to 23,230 National Institute of Health (NIH) grants awarded in the year 2000 and audited it to account for patents where the project led to a product in clinical development and potentially FDA approval. A total of 8,126 patents led to the identification of 41 therapies with registered clinical trials and 18 of the therapies received FDA approval.
NIH funding for the 18 FDA-approved therapies totaled $670 million whereas private sector funding (excluding post-approval funding) totaled $44.3 billion.
The study found that for the 41 therapies with registered clinical trials, NIH funding totaled $2415 billion while pre-FDA approval private sector funding totaled $50,671 billion. When post-PFDA approval funding is included, the total of private funding rises to $91,256 billion.
Of the 23 therapies that did not receive FDA approval, the total private contribution toward those assets was four times that of the NIH, cementing the fact that a large financial commitment is necessary from the private sector to determine market potential of new therapies, even if the product ultimately fails to get FDA approval.
Ultimately, the study findings show there is no statistically significant relationship between the level of NIH funding and the probability that a therapy in clinical development will receive FDA approval, but instead there may even be a negative relationship between the two. Compare that to the relationship between private sector funding and the probability of FDA approval, a statistically significant p ≤ 0.0004.
Additional Research
The study also referenced other research, including a 2019 report by Research America that indicated that in 2016, the private sector funded 67% of total U.S. medical and health research and development while the federal government supported 22%. That same report also found that in 2018, the biopharmaceutical industry invested $102 billion in R&D, whereas the entire NIH budget for that year was $35.4 billion.
The study also referred to another 2019 study which found that 75% of all FDA-approved drugs – excluding new vaccines, biologics, and gene therapies – from January 2008 to December 2017 were fully funded and researched by private companies.
Conclusion
The study found that when NIH-funded research is linked to patented discoveries, additional public funding may have a significant negative impact on the probability of FDA approval. The authors therefore think that the estimated relationships between public and private funding and the probability of FDA approval may reflect a difference in the objective goals of each source of funding. Private funding is predicated on an expected return on investment, whereas public funding may be predicated instead on establishing only the viability of a therapy, with limited cost-benefit analysis.
The study concluded that the “development of basic discoveries requires substantial additional investments, partnerships, and the shouldering of financial risk by the private sector if therapies are to materialize as FDA-approved medicine.” The authors also noted that the “finding of a potentially negative relationship between public funding and the likelihood that a therapy receives FDA approval requires additional study.”