GAO re­port tracks the growth of an $89B drug R&D sec­tor as bio­phar­ma sales soared

Just how much does phar­ma re­al­ly pay for drug re­search and de­vel­op­ment, how does that ac­tu­al­ly stack up as a per­cent­age of sales and who cov­ers the bill for ba­sic drug re­search?

The US Gov­ern­ment Ac­count­abil­i­ty Of­fice (GAO) took that task on and came up with some in­trigu­ing num­bers that say a lot about the size of the R&D in­dus­try and some key un­der­ly­ing trends be­hind the spend. One fig­ure demon­strat­ing how per­son­al health­care spend­ing grew from 7% in the ’90s to 12%, al­most dou­bling in the process, al­so un­der­scores why drug pric­ing has be­come a hot po­lit­i­cal is­sue that shows no sign of wan­ing.

While check­ing a va­ri­ety of sources, the GAO re­searchers ze­roed in heav­i­ly on the num­ber crunch­ing done by the Na­tion­al Sci­ence Foun­da­tion on the R&D spend­ing re­port­ed by US phar­ma com­pa­nies and the US-based R&D done by over­seas com­pa­nies. Be­tween 2008 and 2014, when it had a full set of num­bers to look at, the hard dol­lars spent jumped from $82 bil­lion to $89 bil­lion, a hike of 8.5%.

This all was oc­cur­ring while com­bined phar­ma and biotech sales soared from $534 bil­lion in 2006 to $775 bil­lion in 2016 — a 45% in­crease. But it’s al­so im­por­tant to note that the biotech R&D num­bers col­lect­ed by the GAO gy­rat­ed rad­i­cal­ly from one year to the next, un­der­scor­ing just how hard it is to track the spend by a wide range of small­er, of­ten pri­vate, com­pa­nies.

So how does the R&D spend re­late to ad­ver­tis­ing and pro­mo­tion, a sub­ject that phar­ma crit­ics in par­tic­u­lar like to use to vex ex­ecs with? The re­port cites an es­ti­mate rang­ing from 11.5% to 14.2% for an av­er­age of 13% as the per­cent­age of sales re­served for R&D cost. Those fig­ures eas­i­ly dwarf the 7.6% spent on ad­ver­tis­ing tracked by Quin­tiles­IMS (now IQVIA), though the GAO notes that there are a va­ri­ety of fig­ures be­ing bat­ted around there.

There’s no ques­tion, says the GAO, that the NIH cov­ers the bulk of the tab for ba­sic re­search, with phar­ma clear­ly more in­ter­est­ed in de­vel­op­ment than pre­clin­i­cal work.

Bio­med­ical re­search took a def­i­nite hit in the pe­ri­od that the GAO cov­ered, with NIH fund­ing drop­ping 3.8%. The $26 bil­lion in re­al dol­lars spent in 2014 was a steep drop from the $32 bil­lion shelled out in 2010, un­der­scor­ing the rel­a­tive pauci­ty of fed­er­al cash that has stirred wide­spread calls to do bet­ter.

The NIH al­lo­cat­ed $13.6 bil­lion for ba­sic re­search in 2014, more than twice the $6.3 bil­lion re­port­ed by phar­ma com­pa­nies.

And as we’ve been track­ing, out­sourc­ing con­tin­ues to gain a grow­ing share of the R&D dol­lar. The gov­ern­ment re­port notes that while 25% of re­search was farmed out by phar­ma in 2008, that fig­ure grew to 35% in 2014.

A fa­vorite in Alex­ion’s C-suite is leav­ing, and some mighty sur­prised an­a­lysts aren’t the least bit hap­py about it

Analysts hate to lose a biotech CFO they’ve come to trust and admire — especially if they’re being blindsided by a surprise exit.

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David Grainger [file photo]

'Dis­con­nect the bas­tard­s' — one biotech's plan to break can­cer cell­s' uni­fied de­fens­es

Chemotherapy and radiotherapy are the current gladiators of cancer treatment, but they come with well-known limitations and side-effects. The emergence of immunotherapy — a ferocious new titan in oncologist’s toolbox — takes the brakes off the immune system to kill cancer cells with remarkable success in some cases, but the approach is not always effective. What makes certain forms of cancer so resilient? Scientists may have finally pieced together a tantalizing piece of the puzzle, and a new biotech is banking on a new approach to fill the gap.

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While No­var­tis ban­ish­es Zol­gens­ma scan­dal scars — Bio­gen goes on a Spin­raza 'of­fen­sive'

While Novartis painstakingly works to mop up the stench of the data manipulation scandal associated with its expensive gene therapy for spinal muscular atrophy (SMA) Zolgensma— rival Biogen is attempting to expand the use of its SMA therapy, Spinraza. 

The US drugmaker $BIIB secured US approval for Spinraza for use in the often fatal genetic disease in 2016. The approval covered a broad range of patients with infantile-onset (most likely to develop Type 1) SMA. 

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Eye­ing big ther­a­peu­tic push, Gink­go bags $290M to build a cell pro­gram­ming em­pire

Ginkgo Bioworks is on a roll. Days after publicizing a plan to nurture new startups via partnerships with accelerators Y Combinator and Petri, the Boston biotech says it has raised another $290 million for its cell programming platform to reach further and wider.

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UP­DAT­ED: Speak­er Nan­cy Pelosi to un­veil bill for fed­er­al­ly ne­go­ti­at­ed drug prices

After months of buzz from both sides of the aisle, Speaker Nancy Pelosi will today introduce her plan to allow the federal government to negotiate prices for 250 prescription drugs, setting up a showdown with a pharmaceutical industry working overtime to prevent it.

The need to limit drug prices is a rare point of agreement between President Trump and Democrats, although the president has yet to comment on the proposal and will likely face pressure to back a more conservative option or no bill at all. Republican Senator Chuck Grassley is reportedly lobbying his fellow party members on a more modest proposal he negotiated with Democratic Senator Ron Wyden in July.

Jeff Kindler's Cen­trex­ion re­news bid to make pub­lic de­but

Jeffrey Kindler’s plan to take his biotech — which is developing a slate of non-opioid painkillers — public, is back on.

The Boston based company, led by former Pfizer $PFE chief Kindler, originally contemplated a $70 million to $80 million IPO last year— but eventually postponed that strategy. On Wednesday, the company revived its bid to make a public debut in a filing with the SEC — although no pricing details were disclosed.

Zachary Hornby. Boundless

'A fourth rev­o­lu­tion in can­cer ther­a­pies': ARCH-backed Bound­less Bio flash­es big check, makes big­ger promis­es in de­but

It was the cellular equivalent of opening your car door and finding an active, roaring engine in the driver seat.

Scientists learned strands of DNA could occasionally appear outside of its traditional home in the nucleus in the 1970s, when they appeared as little, innocuous circles on microscopes; inexplicable but apparently innate. But not until UC San Diego’s Paul Mischel published his first study in Science in 2014 did researchers realize these circles were not only active but potentially overactive and driving some cancer tumors’ superhuman growth.

It’s fi­nal­ly over: Bio­gen, Ei­sai scrap big Alzheimer’s PhI­I­Is af­ter a pre­dictable BACE cat­a­stro­phe rais­es safe­ty fears

Months after analysts and investors called on Biogen and Eisai to scrap their BACE drug for Alzheimer’s and move on in the wake of a string of late-stage failures and rising safety fears, the partners have called it quits. And they said they were dropping the drug — elenbecestat — after the independent monitoring board raised concerns about…safety.

We don’t know exactly what researchers found in this latest catastrophe, but the companies noted in their release that investigators had determined that the drug was flunking the risk/benefit analysis.

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Mer­ck helps bankroll new part­ner Themis' game plan to fin­ish the chikun­gun­ya race and be­gin on­colyt­ic virus quest

As Themis gears up for a Phase III trial of its chikungunya vaccine, the Vienna-based biotech has closed out €40 million ($44 million) to foot the clinical and manufacturing bills.

Its heavyweight partners at Merck — which signed a pact around a mysterious “blockbuster indication” last month — jumped into the Series D, led by new investors Farallon Capital and Hadean Ventures. Adjuvant Capital also joined, as did current investors Global Health Investment Fund, aws Gruenderfonds, Omnes Capital, Ventech and Wellington Partners Life Sciences.