In the 1970s, 56 percent of all new drugs globally came out of Germany, Switzerland, the U.K. and France, whereas the U.S. only accounted for 35 percent of the world’s share of new drugs, said Ross DeVol, Milken Institute’s chief research officer, in a recent interview with MedCity News.
By the 2000s, the roles were reversed.
The reason for the surge of the U.S. was simple: strong policy emerging out of the federal government, according to DeVol. No price controls and an appropriate intellectual property infrastructure, both of which were important ways that distinguished America from Europe.
Now of course that leadership is being threatened as foreign nations are investing heavily in basic science and research, finding ways to support entrepreneurs and adopting policies to strengthen commercialization of products.
Meanwhile, America is dealing with a slow regulatory environment where the U.S. Food and Drug Administration does not have the resources or the expertise to review increasingly complex products. Add to that funding cuts at the National Institutes of Health and a high, noncompetitive corporate tax rate.
DeVol believes that it is time to bring about strong policies like the ones instituted in the 1980s that cemented the lead U.S. has in the biomedical industry.
He has a few suggestions about how to do this.
Increase R&D tax credits and make them permanent
Although increasing the credit would be the right thing to do, given the current impasse in Congress, DeVol doesn’t believe there is much hope for that. However, making the research and development tax credit permanent does have bipartisan appeal. Right now, the credit expires annually and then is extended retroactively.
Cut corporate tax rates to match average rate of Organization of Economic Cooperation and Development nations
DeVol thinks that no matter who is elected this November, America will see corporate tax rate reform in 2013. He predicts that if presumptive Republican nominee Mitt Romney is elected, there will be a reduction in the corporate tax rate by 10 percentage points. If President Barack Obama is re-elected, it will be cut to about 7 percentage points.
Promote and expand the role of universities in tech transfer and commercialization
A cornerstone of American global supremacy in the biomedical industry was the Bayh-Dole Act of 1980, DeVol believes. For the first time, the legislation allowed universities and businesses with federal research contracts to have exclusive control and rights to the intellectual property they produced while developing a product further and in bringing it to market.
That led to biotech clusters that formed around university hubs around the country, but especially in Boston, San Diego and Raleigh-Durham among other places. But DeVol believes that tech transfer is not as robust as it used to be and is hampered by growing obstacles to such public-private sector collaboration. That trend needs to be reversed.
Making these changes will secure an important source of private-sector jobs.
In 2009, the industry (comprising biopharmaceuticals, medical devices and equipment as well as research, testing and medical labs), employed 1.2 million who commanded wages of $95.9 billion while producing goods worth $213.2 billion, according to an analysis of data from Bureau of Labor Statistics, Moody’s Analytics and Milken Institute.