In 2018, the US National Institutes of Health (NIH) spent $34 billion of taxpayer money to support research. NIH was directly or indirectly associated with all 210 new molecular entities (NMEs) approved by the FDA from 2010 to 2018. NIH’s mission is to benefit the public health, but also to provide a financial return on public investment. Some of the most expensive drugs approved to date originated, via technology transfer agreements, from NIH’s sponsored research. We discuss the adequacy of return on public investment into drug research and development (R&D).

NIH’s royalties from technologies licensed to the industry average at around $100 million yearly. The yearly sales of each these products exceed $2 billion - orders of magnitude more than annual NIH’s return on investment. NIH is not allowed to control the prices of these drugs because of the antitrust law and other government agencies cannot negotiate drug prices either. The existing march-in rights of the government to waive licenses to drugs that are deemed too expensive have not been exercised. Therefore, the public who funds the NIH via taxes bears the often-high costs of the drugs via insurance premiums or out-of-pocket payments. In contrast, in countries with single, publicly-funded health payer, the governments step in to negotiate prices of drugs, especially in cases when those have been developed using public funds.

NIH and other US government institutions are banned from controlling or negotiating prices of drugs and the march-in provisions of the technology transfer law have never been exercised. Instead, the current US policy attempts to incentivize the US industry to reduce drug prices, e.g. by pressurizing foreign countries to increase the prices of US drugs overseas, via bilateral trade negotiations.