Skyrocketing health care costs, including high prescription drug prices, have prompted patient advocates, academics, legal scholars—and increasingly, public officials—to push for creative, new ways to address not just drug costs, but consolidation and waning innovation in the pharmaceutical sector. A new proposal released today from Vanderbilt Policy Accelerator senior fellow Dana Brown suggests the creation of a public option for pharmaceutical R&D. Brown shows that despite billions in taxpayer funds going to pharmaceutical R&D, private sector actors like pharma companies get the intellectual property for these publicly-funded innovations and reap all the upside—often leaving the public with neither a return on investment nor widely available and affordable drugs. Brown argues for establishing a National Pharmaceutical Institute (NPI), a federal, public pharmaceutical R&D laboratory with a mission to deliver new, accessible medications at scale. This approach would maximize the public’s return on taxpayer investments, ensure that the medications the public most needs are affordable, and provide meaningful market discipline on large pharmaceutical companies.
“The U.S. invests billions of dollars in pharmaceutical development every year, and Big Pharma reaps the rewards. The pharmaceutical industry is long overdue for disruption in a way that addresses high costs, a lack of competition, and a lack of broad public benefits,” said Brown. “Public R&D is sorely needed to fill private sector gaps and bring much-needed competition to the pharmaceutical sector—which would improve public health and bring down costs.”
The U.S. funnels billions of tax dollars towards the pharmaceutical industry, but with decades of declining innovation, less than a quarter of recognized human diseases have any treatment on the market. Public frustration has grown towards Big Pharma for high prescription drug costs, but no legislation or regulatory action taken to date has addressed the underlying mismatch between public health needs and private sector incentives that has created the current situation.
A National Pharmaceutical Institute would redirect public funds towards a public lab with the mission to deliver new treatments in areas of high-need and neglected areas of pharmaceutical development, like antibiotics and vaccines, as well as areas of high market concentration, such as cancer immunotherapies. Importantly, these therapies would be developed on a non-profit basis and thus could be sold at or below cost to meet public health needs. By operating in a fully transparent manner and publishing all research data, the NPI would also help speed up the innovation process. The NPI would also inject needed competition into the market for medicines by creating an alternative to Big Pharma.
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The Vanderbilt Policy Accelerator for Political Economy and Regulation (VPA) focuses on cutting-edge topics in political economy and regulation to swiftly bring research, education, and policy proposals from infancy to maturity. To learn more about our work, visit vu.edu/vpa.