Both the House and the Senate have passed bills reauthorizing the Prescription Drug User Fee Act (PDUFA). Once lawmakers iron out remaining differences, life sciences firms will be assured of a steady procedure for timely review and approval of new medications. The legislation will be a big boost for Illinois’ biopharmaceutical industry, which is a vital component of our national economy.
Congress’s effort on these bills — with strong support from Illinois Rep. Peter Roskam — couldn’t have come soon enough.
For years, the United States has led the world in biomedical innovation and reaped the economic benefits. But in recent years, according to new research from the Milken Institute, our dominance is no longer assured.
The Milken Institute’s new report, “The Global Biomedical Industry: Preserving U.S. Leadership” documents the American ascent to global predominance in pharmaceutical research. It was no happenstance, but a matter of good policy choices.
Beginning in the 1990s a series of legislative reforms spawned an upsurge in innovation, shifting the global center of drug research and development away from Europe.
One particularly important piece of legislation during that period was PDUFA, created in response to the increasingly long review times for new drugs and treatments at the Food and Drug Administration. By requiring drug companies to pay user fees to the agency, the FDA was able to acquire the resources and manpower needed to review new drug applications expeditiously – at no added cost to taxpayers.
Before PDUFA, final approval of new drugs often took between two and three years. Afterward. product review times declined markedly, from 30.2 months in 1991 to under 13 months in 2007.
These and other reforms gave the United States a distinct competitive advantage. Pharmaceutical makers have relocated to do more research here, and now 12 of the top 20 medical device companies are headquartered in the United States.
The increased output has been remarkable. Researchers found that between 2001 and 2010, U.S. biomedical firms produced 57 percent of new chemical entities worldwide — nearly double our share 30 years prior.
The renaissance in research and development brought new jobs and economic growth to our country as well. The biomedical sector directly and indirectly accounts for 5.3 million U.S. jobs, generating $96 billion in wages and $213.2 billion in economic output.
Those economic benefits have been particularly pronounced for Illinois. The biopharmaceutical sector accounts for more than 167,000 jobs here and $43.9 billion in total economic output.
Illinois residents should be proud of the entire Illinois delegation and specifically Representative Roskam who recently participated in a roundtable discussion on PDUFA and the Milken report. With more bipartisan cooperation like this, we can ensure that our leading industries remain globally competitive.
The competition is getting stiffer by the day. Europe, China and others are working to improve their regulatory infrastructure, slashing tax rates, ramping up research and development investments, and fully supporting the work of their own biopharmaceutical companies and researchers.
The Milken researchers have identified other steps Congress should take. Our corporate tax policies are globally uncompetitive, and our federal and state funding for basic research has flat-lined.
As matters now stand, America’s corporate tax rate is the highest among developed nations. A champion of tax reform since taking office, Representative Roskam has rightly argued that the “tax code… is simply indefensible and continues to create barriers to American job creation.” Aligning our tax rate with our competitors would do wonders to keep companies here in the United States — and entice others from abroad.
In addition, Congress should expand the R&D tax credit and make it permanent, instead of debating it anew and renewing it year by year. Greater certainty will translate directly into more investment.
Even in a highly charged political environment, Democrats and Republicans were able to come together to renew the FDA’s user-fee procedures — a welcome reminder after months of legislative gridlock and partisan paralysis of how Congress should work. The time is right for a broader legislative initiative to backstop our nation’s most innovative companies.
David Miller is President and CEO of the Illinois Biotechnology Industry Organization.