New analysis incorporates real world insights from industry leaders

Print 17 April 2014
The Pharmaceutical Research and Manufacturers of America (PhRMA)

Washington, D.C. (April 10, 2014) – Today the Pharmaceutical Research and Manufacturers of America (PhRMA) released a report that outlines two potential growth trajectories for the U.S. biopharmaceutical sector and the top policy factors that enable the industry to innovate and, in turn, contribute to the U.S. economy.

Developed by the Battelle Technology Partnership Practice, the report finds that coverage and payment policies, a well-functioning, science-based regulatory system and strong intellectual property (IP) protections drive U.S. leadership in biopharmaceutical innovation, and if negative trends in these key policy areas continue, jobs supported by the industry would decrease over the next decade. However, if reasonable pro-innovation policies are pursued, the U.S. biopharmaceutical sector stands to retain and add well over 300,000 jobs to the U.S. economy by 2021.

“This report is a stark reminder to policymakers that innovation is deeply affected by public policies and we must decide as a nation how much we value the contributions of the biopharmaceutical industry to the U.S. economy, as well as our nation’s role as the world leader in innovative R&D and manufacturing,” said John J. Castellani, president and CEO of PhRMA. “The message is clear: the continued success of the biopharmaceutical industry – both in delivering life-saving and life-enhancing medicines to patients and in contributing to U.S. economic growth – is dependent on thoughtful, forward-looking policies that prioritize innovation.”

The report uniquely combines quantitative data with input from industry leaders, resulting in a more complete picture of the potential growth trajectories facing the industry.

“This report vividly illustrates the inextricable link between a healthy biopharmaceutical R&D system and the health care policy environment,” said Robert J. Hugin, Celgene Corporation Chairman and Chief Executive Officer. “All too often the payment policies for medicines are not recognized as fundamentally connected to the discovery and development of medical breakthroughs. Sustainable market-based access and reimbursement for innovative medicines today is essential to incentivize the long-term, high-risk investment needed for new medical innovations in the future.”

As the ability to innovate is increasingly becoming the most important determinant of a nation’s future potential for economic growth and global competitiveness, the biopharmaceutical industry stands out among innovative advanced manufacturing industries as a driver for future economic growth. Today, the U.S. biopharmaceutical industry supports a total of 3.4 million jobs across the U.S. economy, including over 810,000 direct jobs, contributes $789 billion in economic output, and is responsible for about one in five dollars spent on R&D by U.S. businesses. To put into greater context,  biopharmaceutical companies invested more than nine times the amount of R&D per employee than manufacturing industries overall from 2000 to 2010.

Not only have PhRMA member companies invested an estimated $51.1 billion in R&D in 2013, representing the majority of all biopharmaceutical R&D spending in the U.S., but the cutting edge medicines developed by the industry play a key role in helping control other health care costs.

In fact, the Congressional Budget Office (CBO) recently adopted an historic scoring change that credits Medicare policies that increase use of medicines with savings on other Medicare costs. Similarly, Harvard researchers report savings on hospital and skilled nursing facility costs of about $1,200 per newly insured Part D beneficiary in 2007. This equals overall Medicare savings of $13.4 billion, more than one quarter of Part D’s total cost during the program’s first full year.

More information about the report can be found here.

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About Battelle

Battelle is the world’s largest nonprofit independent research and development organization, providing innovative solutions to the world’s most pressing needs through its four global businesses: Laboratory Management, National Security, Energy, Environment and Material Sciences, and Health and Life Sciences. It advances scientific discovery and application by conducting approximately $5 billion in global R&D annually through contract research, laboratory management and technology commercialization. Battelle’s Technology Partnership Practice (TPP) assists local, state, and regional organizations, universities, nonprofit technology organizations, and others in designing, implementing, and assessing technology-based economic development programs.

About PhRMA

The Pharmaceutical Research and Manufacturers of America (PhRMA) represents the country’s leading innovative biopharmaceutical research and biotechnology companies, which are devoted to discovering and developing medicines that enable patients to live longer, healthier, and more productive lives. Since 2000, PhRMA member companies have invested more than $550 billion in the search for new treatments and cures, including an estimated $51.1 billion in 2013 alone. 

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