NCPA - National Center for Policy Analysis

How Not to Cure Chronic Diseases

May 16, 2012

At a press conference in February, U.S. Senator Barbara Mikulski (D-Md.) and several bipartisan colleagues unveiled the Spending Reductions through Innovations in Therapies (SPRINT) Act.  This legislation is intended to spur innovation in pharmaceutical research and development for chronic and costly health conditions such as Alzheimer's disease, cancer, diabetes and heart disease, says Henry I. Miller, the Robert Wesson Fellow in Scientific Philosophy and Public Policy at the Hoover Institution.

This legislation, though admirable in its intent, attempts to treat problems that don't exist while failing to correct the true ills of the experimental medicines sector.

  • The bill would seek to increase government support for efforts to create drugs that can treat prevalent chronic illnesses.
  • However, drug companies currently spend more than $65 billion on pharmaceutical research and development (R&D), suggesting that increased financial support is not needed.
  • Moreover, big drug companies know better than anyone that the big payoffs will be for treatments for the kinds of prevalent chronic diseases targeted by the legislation, again suggesting that they require no further incentive.

While the proposed bill focuses on these issues that are not the cause of the clogging of drug innovation, it fails to address the real problem: overregulation that stymies new drugs.

  • Bringing a new drug to market now takes 12 to 15 years and costs more than $1.4 billion.
  • The number of drugs approved by the U.S. Food and Drug Administration each year is trending downward despite significant annual increases in the agency's budget.
  • Drug manufacturers recoup their R&D costs for only one in five approved drugs -- a decline from the one in four figure of about a decade ago.

A recent survey of the intentions of venture capital firms revealed that the firms have started to avoid funding early-stage pharmaceutical and device companies in the United States, and both the dollars and the R&D are increasingly moving abroad.

  • Thirty-six percent of respondents said they plan to increase investments in life science companies in Europe, while only 13 percent plan to increase investment in U.S. companies.
  • Thirty-one percent said they plan to decrease investment in life science companies in the United States, compared to 7 percent that plan to decrease investment in Europe.
  • Perhaps most importantly, 61 percent of the investors cited regulatory challenges as the primary reason.

Source: Henry I. Miller, "How Not to Cure Chronic Diseases," Hoover Institution, May 11, 2012.

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