Pharmacoeconomics and Pharmaceutical Economics Commons^™

Comments Re: Medicare Drug Price Negotiation Program And Medicare Prescription Drug Benefit Program, Fred D. Ledley M.D., Edward Zhou Pharm. D.

CISI Publication

Thank you for the opportunity to provide written comments in response to the Medicare Drug Price Negotiation Program proposed rule published on June 16, 2026 in the Federal Register. [1] We are answering as academic researchers with experience in medicine, pharmacy, biomedical research, and the biopharmaceutical industry. Our perspective is informed by extensive, published research on the economics and finance of pharmaceutical innovation, the value created by new medicines, and the impacts of the Inflation Reduction Act (IRA).

We applaud the accomplishment of the IRA in establishing the precedent for the government to negotiate “fair market prices” for drugs on …

Comments Re: Commonsense Policy Options To Lower Drug Prices For Patients, Fred D. Ledley M.D., Edward Zhou Pharm. D.

CISI Publication

Thank you for the opportunity to provide written comment in response to the Senate Finance Committee Minority Staff’s “Request for Information: Commonsense Policy Options to Lower Drug Prices for Patients.” We are answering as academic researchers with experience in medicine and the biopharmaceutical industry. This comment will focus on sections I and III of the RFI.

We applaud the accomplishment of the Inflation Reduction Act (IRA) in establishing the precedent for the government to negotiate “fair market” prices for drugs on terms that address both patients’ needs for affordability and industry’s need for a reasonable return on investment. Our analysis …

Mergers And Acquisitions (M&As) In Pharmaceutical Markets: Associations With Market Concentration, Prices, Drug Quantity Sold, And Shortages, J. Daniel Mcgeeney M.S., Aylin Sertkaya Ph.D., Leah Ross M.A., Fred Ledley M.D., Cody Hyman Ph.D.

CISI Publication

In recent decades, the pharmaceutical industry has become increasingly concentrated in the United States, in part due to mergers and acquisitions (M&As) between drug manufacturers. This consolidation from M&As has been cited as a key factor affecting drug prices and drug shortages (U.S. Federal Trade Commission, 2022). In this study, we assessed trends in pharmaceutical M&As during 2010–2023 and evaluated the characteristics of drugs and companies involved in those M&As. We considered the effects of M&As on market concentration, drug prices, drug quantity sold, and drug shortages. We also considered how these associations vary by drug characteristics, including brand drugs …

Comments Re: Draft Nih Intramural Research Program Policy: Promoting Equity Through Access Planning, Fred Ledley M.D., Edward Zhou Pharmd., Paula Chaves Da Silva Ph.D.

CISI Publication

We commend the NIH initiative to require that licensees of technologies that enable discovery or development of FDA-approved products arising from the NIH intramural program to include an Access Plan to promote “product affordability, availability, acceptability, and sustainability” and recognition that such protections are essential to ensuring a “return on taxpayers' investment in biomedical research.” Recognizing the complexity of anticipating appropriate terms for products that are in pre-clinical or early clinical development at the time of licensing, we also support the proposal that the Access Plan be submitted in late-stage clinical development, though we argue that …

Medicare Drug Price Negotiation Program Draft Guidance, Fred Ledley M.D., Edward Zhou Pharmd, Paula Chaves Da Silva Ph.D.

CISI Publication

This comment focuses on Section 50.1, provisions 1 & 3 of the draft guidance regarding the negotiation of a “maximum fair price” under the Inflation Reduction Act (IRA), research and development (R&D) costs of the primary manufacturer, and prior federal financial support for novel therapeutic discovery and development. Specifically, we argue that a negotiated, “maximum fair price” must consider both public sector (federal) and private sector (manufacturer) investments and provide returns to both commensurate with the scale and risk of their investments. This comment addresses three issues and makes specific recommendations regarding each:

1. In negotiating a “maximum fair price,” both …

Considering Returns On Federal Investment In The Negotiated “Maximum Fair Price” Of Drugs Under The Inflation Reduction Act: An Analysis, Edward W. Zhou, Paula G. Chaves Da Silva, Debbie Quijada, Fred D. Ledley

Natural & Applied Sciences Faculty Publications

The Inflation Reduction Act (IRA) of 2022 contained landmark provisions authorizing government to negotiate a “maximum fair price” for selected Medicare Part D drugs considering the manufacturer’s research and development costs, federal support for discovery and development, the extent to which the drugs address unmet medical needs, and other factors. This working paper describes federal investment in the discovery and development of the ten drugs selected for price negotiation in the first year of the IRA as well as the health value created through Medicare Part D spending on these drugs. We identified $11.7 billion in NIH funding for basic …

Comments Re: Workshop On Transforming Discoveries Into Products: Maximizing Nih’S Levers To Catalyze Technology Transfer, Fred D. Ledley M.D., Edward Zhou Pharm. D, Paula Chaves Da Silva, Ph. D.

CISI Publication

We are pleased to offer written comments to this workshop focused on “… making federally funded inventions more accessible to the public… .” These comments are informed by recent research from the Center for Integration of Science and Industry at Bentley University that has:

• Quantified the scope of NIH funding for basic or applied research, clinical development, or patents associated with drugs approved by the FDA 2010-2019. This work identified $187 billion in NIH-funded research directly related to these drugs (applied research – 17%) or their biological targets (basic research – 83%), representing a (discounted) investment comparable to reported levels …

Spending On Phased Clinical Development Of Approved Drugs By The Us National Institutes Of Health Compared With Industry, Edward W. Zhou, Matthew J. Jackson, Fred D. Ledley

Natural & Applied Sciences Faculty Publications

The launch of the Advanced Research Projects Agency for Health to advance new cures and address public concern regarding drug prices has raised questions about the roles of government and industry in drug development.

This cross-sectional study examined NIH funding for published research reporting the results of phased clinical trials of drugs approved between 2010 and 2019 and compared the findings with reported industry spending estimates. Data analysis was performed between May 2021 and August 2022 using PubMed data from January 1999 through October 2021 and NIH Research Portfolio Online Reporting Tools Expenditures and Results data from January 1999 through …

Will Reducing Drug Prices Slow Innovation?, Gregory Vaughan, Fred Ledley

Mathematical Sciences Faculty Publications

The pharmaceutical industry has long argued that high drug prices reflect the high cost of innovation and that reducing drug prices would necessarily slow the pipeline of new drugs. These arguments have been bolstered by studies of large pharmaceutical companies showing statistical associations between the projected market size or revenue for pharmaceutical products and research & development (R&D) activity. Our analysis recognizes the increasingly important role of small biopharmaceuticals in drug development , companies that typically have little revenue and negative earnings, but are now responsible for more than 40% of new drug approvals. We examine the relationship between changes …

Will Reducing Drug Prices Slow Innovation?, Gregory Vaughan, Fred Ledley

Natural & Applied Sciences Faculty Publications

The pharmaceutical industry has long argued that high drug prices reflect the high cost of innovation and that reducing drug prices would necessarily slow the pipeline of new drugs. These arguments have been bolstered by studies of large pharmaceutical companies showing statistical associations between the projected market size or revenue for pharmaceutical products and research & development (R&D) activity. Our analysis recognizes the increasingly important role of small biopharmaceuticals in drug development , companies that typically have little revenue and negative earnings, but are now responsible for more than 40% of new drug approvals. We examine the relationship between changes …

Government As The First Investor In Biopharmaceutical Innovation: Evidence From New Drug Approvals 2010–2019, Ekaterina Galkina Cleary, Matthew J. Jackson, Fred D. Ledley

Natural & Applied Sciences Faculty Publications

The discovery and development of new medicines classically involves a linear process of basic biomedical research to uncover potential targets for drug action, followed by applied, or translational, research to identify candidate products and establish their effectiveness and safety.

This Working Paper describes the public sector contribution to that process by tracing funding from the National Institutes of Health (NIH) related to published research on each of the 356 new drugs approved by the U.S. Food and Drug Administration from 2010-2019 as well as research on their 218 biological targets.

Comparing Long-Term Value Creation After Biotech And Non-Biotech Ipos, 1997–2016, Ekaterina Galkina Cleary, Laura M. Mcnamee, Skyler De Boer, Jeremy Holden, Liam Fitzgerald, Fred D. Ledley

Natural & Applied Sciences Faculty Publications

We compared the financial performance of 319 BIOTECH companies focused on developing therapeutics with IPOs from 1997–2016, to that of paired, non-biotech CONTROL companies with concurrent IPO dates. BIOTECH companies had a distinctly different financial structure with high R&D expense, little revenue, and negative profits (losses), but a similar duration of listing on public markets and frequency of acquisitions. Through 2016, BIOTECH and CONTROL companies had equivalent growth in market cap and shareholder value (> $100 billion), but BIOTECH companies had lower net value creation ($93 billion vs $411 billion). Both cohorts exhibited a high-risk/high reward pattern of return, with …

Late-Stage Product Development And Approvals By Biotechnology Companies After Initial Public Offering, 1997-2016, Laura M. M. Mcnamee, Ekaterina Galkina Cleary, Sunyi Zhang, Usama Salim, Fred D. Ledley

Natural & Applied Sciences Faculty Publications

Purpose: This work describes the late-stage product portfolios of the biotechnology companies that completed initial public offerings (IPOs) from 1997 to 2016. We asked whether these emerging companies continue to develop innovative, biologic products and produce the innovation promised by the early biotechnology industry.

Methods: We identified therapeutic products that reached Phase III development from 1997 to 2016, the characteristics of the products, the dates of the initiation of Phase III and product approval, proxy indicators of the innovativeness of each product, and the contribution of each biotechnology company. Companies were characterized by IPO window and clinical status of the …

Profitability Of Large Pharmaceutical Companies Compared With Other Large Public Companies, Fred D. Ledley, Sarah Shonka Mccoy, Gregory Vaughan, Ekaterina Galkina Cleary

Natural & Applied Sciences Faculty Publications

Understanding the profitability of pharmaceutical companies is essential to formulating evidence-based policies to reduce drug costs while maintaining the industry’s ability to innovate and provide essential medicines.