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Our analysis indicates that industry's contributions to the R&D of innovative drugs go beyond development and marketing and include basic and applied science, discovery technologies, and manufacturing protocols, and that without private investment in the applied sciences there would be no return on public investment in basic science.

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There have been several major problems that have plagued biopharmaceutical development since the end of the 1990s, but two in particular have reached the point where they are impacting the economic viability of the industry: the lack of efficacy of new drugs and increasing competition among therapeutics that broadly attack certain common diseases and disease areas. The US FDA has noted that the era of one-size-fits-all treatment may well be reaching its end days as companies increasingly adopt approaches that involve biomarkers (there are now commercial databases that purport to track over 11,000 of them). Pharmacogenomic biomarkers in particular are used to create diagnostics that help to differentiate or stratify the likely outcomes a patient will experience with a drug, which can now be said to be targeted or tailored to patients with particular traits (i.e., personalized), leading to an era of so-called precision medicine. As more is understood about diseases and the why and how of their effects on people through advances in biomarkers and genomics, personalized medicine is becoming a natural result of biomedical science and a natural trajectory for the innovation-based biopharmaceutical industry. The focus of this article is to examine an apparent divergence in that trajectory engendered by a growing differentiation in the approaches to personalized medicines in terms of their accompanying diagnostics: companion diagnostics are typically linked to a specific drug within its approved label, while complementary diagnostics are associated more broadly, usually not with a specific drug but with a class of drugs, and not confined to specific uses by labeling, with consequent ramifications for economic, regulatory and strategic considerations.

Expanding government purchases of prescription medicines increase the likelihood of public policies constraining prices and/or the formulary choices available to the beneficiaries of government programs. This can be predicted to reduce private sector incentives for the research and development of new and improved medicines. One response to that argument has been the premise that most of the important scientific advances that yield new and improved medicines do not result from private sector research, but instead are the fruits of research efforts financed or conducted by public agencies, the National Institutes of Health foremost among them. This study addresses that argument by examining the development histories of 32 drugs and drug classes deemed important in the scholarly literature along with three additional specific drugs that have figured prominently in the public discussion of the role of the private sector in drug development. We find that for the discovery and/or development of virtually all of the 32 drug classes, the scientific contributions of the private sector were crucial; and the same is true for the three drugs that have received widespread attention. All or almost all of the drugs discussed would not have been developed-or, at best, would have been delayed significantly-in the absence of private sector scientific discoveries. More generally, both National Institutes of Health-sponsored and private sector pharmaceutical research are crucial for the advancement of pharmaceutical science and the development of new and improved medicines.