Intended for healthcare professionals


Accounting for US public funding in drug development: how can we better balance access, affordability, and innovation?

BMJ 2020; 371 doi: (Published 08 October 2020) Cite this as: BMJ 2020;371:m3841
  1. Ameet Sarpatwari, assistant professor of medicine,
  2. Jerry Avorn, professor of medicine,
  3. Aaron S Kesselheim, professor of medicine
  1. Program on Regulation, Therapeutics, and Law (PORTAL), Division of Pharmacoepidemiology and Pharmacoeconomics, Department of Medicine, Brigham and Women’s Hospital/Harvard Medical School, Boston, MA 02120, USA
  1. Correspondence to: A Sarpatwari asarpatwari{at}

With the price of prescription drugs increasing rapidly, Ameet Sarpatwari, Jerry Avorn, and Aaron Kesselheim explore the ways US public funding supports drug development and identify policy reforms to help ensure that patients can affordably access therapies arising from such support

US drug prices are the highest in the world and are continuing to rise, with an increasing number of patients unable to afford taking their medications as prescribed. Many of the most transformative new drugs have their origins in academic research institutions or government laboratories supported by US public funding, with for-profit pharmaceutical manufacturers often becoming involved later in the course of development, investing large sums in conducting clinical trials, and creating commercial production and distribution systems. Reforms to ensure that such support is reflected in drug pricing could help to ensure that medicines are affordable without jeopardising clinically meaningful innovation.

Problem of high US drug prices

High and rising US drug prices have taken a heavy toll on payers and patients. Between 2007 and 2018, net (post-rebate) US spending on brand name prescription drugs increased by 60%.1 By 2018, the average annual cost of a new cancer drug had reached over $175 000 (£135 000; €150 000), over threefold higher than in 2000.2 Payers and insurers have increasingly passed on these costs through rising deductibles, co-insurance percentages, and co-payments, making it harder for patients to afford their prescribed medications.34

Many drug manufacturers have argued that high prices are necessary to sustain innovation. In support of this claim, the Pharmaceutical Research and Manufacturers of America—a trade group for brand name drug manufacturers—often cites an industry funded study reporting that it costs over $2.6bn to develop a new drug,5 though others have disputed the accuracy of this estimate.67 In 2017, the industry group launched a lobbying campaign promoting the industry’s …

View Full Text

Log in

Log in through your institution


* For online subscription