For many years, the United States has led the global biotechnology sector, driven by policies that encourage scientific and entrepreneurial innovation. However, recent legal decisions and government actions are creating challenges for maintaining this leadership.
Developing new medicines is a high-risk process, often taking over ten years and significant financial investment. The majority of drug candidates do not receive approval from the Food and Drug Administration (FDA), with more than 90% failing during development. As research becomes more complex and expensive, companies rely on the potential success of a few products to fund future projects and attract investors.
Currently, the likelihood of successfully bringing a drug to market appears to be declining further. Recent court rulings have created uncertainty about whether certain innovations, especially in medical diagnostics and artificial intelligence, can be patented. This ambiguity may discourage investment in these areas unless Congress passes legislation such as the Patent Eligibility Restoration Act to address these issues.
There are also concerns about proposals from officials like Commerce Secretary Howard Lutnick, who suggested that the federal government should claim a larger share of revenue from university patents developed with federal funding. University technology transfer offices play an important role in moving discoveries from academic labs into commercial products. Reducing their revenue could limit their ability to facilitate partnerships between universities and biotech startups.
The article states: "If we want to preserve America’s leadership in biotech, the government should fund discovery and protect intellectual property, then let the private sector do what it does best: take the risk of development and deliver results at scale."
On drug pricing policy, Congress enacted price controls on more drugs through the Inflation Reduction Act (IRA). Since its passage in 2022, dozens of research programs have been halted—especially those involving small-molecule drugs that have less time before being subject to price negotiations compared to biologic drugs. The bipartisan EPIC Act aims to equalize this period for both types of drugs.
Despite some efforts to address these concerns, recent proposals from the Trump administration would expand price controls by linking Medicare drug prices to those paid in other countries where strict price limits exist. Two new payment models proposed by the Centers for Medicare & Medicaid Services—GLOBE and GUARD—would restructure how Medicare reimburses for drugs under Parts B and D based on foreign prices.
A related report highlights that some countries benefit from U.S.-driven innovation without paying proportionally for new medicines. For example, No Patient Left Behind argues that value assessments used in Canada and Germany significantly undervalue innovative treatments and mislead U.S. policymakers about domestic drug costs (https://www.biospace.com/article/low-price-drug-nations-catching-free-ride-on-us-innovation-report-says/).
The article acknowledges: "It’s true that many of our peer nations effectively freeload off of our innovation." It notes a recent agreement with the United Kingdom where it will increase its spending on medicines as a share of GDP as an example of how sharing research costs among wealthy nations could support continued innovation.
The conclusion warns against undermining incentives for investment in biotechnology: "American patients and workers cannot afford for policymakers to undermine the investment incentives that have catalyzed decades of drug discovery. Preserving our status as the world’s innovation leader requires a policy environment that rewards risk-taking."
