Freedom Line Blog

Maligning pharmaceutical enterprises is a curious perennial dance, one that becomes even more active during presidential campaign seasons.  That always struck me as odd, since it seems a sign of societal advance that we can complain about the price of something that saves lives and improves living conditions rather than lamenting its nonexistence.

Regardless, the U.S. Chamber of Commerce’s Global Intellectual Property Center (GIPC) offers an instructive corrective entitled “4 Charts Explain the Economics of Drug Development.”  It is worth the brief examination and passing on to others, because it helps rebut many of the politicized myths that threaten the goose that lays the golden eggs:

“It’s not just the science that goes in to developing medicines that’s complicated.  The economics that drive the industry, allowing resources to be available so people can have access to beneficial new medicines is complicated, too.”

Each chart is worth 1,000 words, but the four broad takeaways are:  (1)  It takes ten years and $2.6 billion to bring a single drug to market;  (2)  In 2014, pharmaceutical companies spent $51.2 billion on research & development;  (3)  Only a few drugs, however, become commercial successes;  and (4)  The end result is that pharmaceuticals’ enormous investments result in people living longer and better lives.

Something to keep in mind as sometimes silly presidential campaigns get even sillier, at least in terms of maligning the innovative pharmaceutical industry.

This week, the U.S. Chamber of Commerce Global Intellectual Property Center released its third annual GIPC International IP Index, and it provides some welcome good news.

Namely, the U.S. retains its top global ranking in a survey that expanded this year to include 30 nations, “comprising nearly 80% of the global gross domestic product (GDP).”  The Index provides critical “empirical literature showing a robust relationship between strengthening levels of IP protection and an increase in economic benefits such as foreign direct investment, job creation, technology transfer, and economic development.”

We at CFIF often note the way in which strong IP protection is the causal factor explaining why the U.S. stands as the most innovative and prosperous nation in human history – by far.  With the release of this year’s Index, the Chamber and GIPC provide the latest empirical support for that critical causal connection.