Whenever critics complain about the high cost of prescription drugs, the pharmaceutical industry’s standard defense is that companies have to plow so much money into researching innovative new medicines. But a recently released report from the Government Accountability Office casts doubt on that rationale. Yes the industry is spending heavily on R&D, the GAO found, but it turns out big pharma isn’t actually generating such a good return on their investments.
The congressional watchdog agency’s 48-page study came up with disturbing numbers. From 1993-2004, spending by U.S. drug companies on research and development jumped 147%, from $16 billion to nearly $40 billion annually. But the number of applications the pharmaceutical firms submitted to the Food and Drug Administration for potentially groundbreaking new drugs during that 10-year period increased only a meager 7%. And since 1995, the applications for these innovative drugs have been dropping each year. “The productivity of research and development investments has declined,” the GAO concluded.
This is essentially what the American Medical Student Association has been saying all along.