Issue Area

Profitability over Public Health and Innovation

A review of R&D investment and sources of revenue growth suggest that industry sometimes prioritizes profitability over public health goals or innovation

The discovery and development of new drugs are undeniably risky and expensive. Yet as the industry aimed to improve its R&D productivity and efficiency, data show strong investment in clinical trials aimed at boosting growth of already marketed products and an outsize focus on existing medicines targeting "orphan" designation and away from certain large primary care segments. Upon evaluating drug innovation, only a fraction of total FDA approvals were for novel drugs. In addition, racial representation in clinical trials lags disease burden in the total population, further supporting the view that companies value profits over public health and innovation.

What is at stake?

On average, over two-thirds of 2020 U.S. sales come from products that have been marketed for longer than 7 years.

Dependence on aging blockbuster franchises

Many of the largest pharmaceutical companies derive an outsize share of their revenues from a single product. In several cases, this is a direct result of successful efforts to delay generic competition, as discussed in Abuses of Government Programs and Regulations. In other situations, companies are directing R&D dollars toward expanding indications or creating new formulations of existing products, which is inherently lower risk than developing new drugs and has the benefit of layering additional periods of exclusivity on prized franchises.

In recent years, this practice has been particularly common in oncology and immunology. Revlimid, for example, is a minor improvement over its predecessor Thalomid, but has managed to have 15 years of market exclusivity.1 For biologics, several of these franchises have just starting facing biosimilar competition. Roche’s Avastin and Rituxan make up over 20% of their manufacturer’s sales, and Tecfidera makes up over 40% of Biogen’s sales in 2020.


Avastin and Rituxan make up over 20% of Roche's revenue.


Tecfidera makes up over 40% of Biogen's sales revenue

Graph 1
Revenue Contribution from Largest Products

We evaluated the percentage of U.S. product sales in 2020 from drugs that have been on the market greater than 4 years or 7 years. Our findings reveal a glimpse of companies’ reliance on aging franchises against new products.

  • On average, over two-thirds of sales come from products that have been marketed for longer than 7 years. This is notable, since the exclusivity period for small molecule drugs is 7 years. In fact, the weighted average age of top drugs is 9.1 years.
  • Only 9% of these companies’ products have been on the market for 4 years or less.

Graph 1
Average Age of Portfolio

Increasing reliance on orphan drugs

FDA approvals of drugs with an “orphan” designation have increased in the last five years2, yet drugs receiving this designation have already been on the market years prior. This increase coupled with the drug’s pre-existence suggests manufacturers are targeting US patient populations of <200,000 in order to gain quicker market entry, capture federal tax breaks, obtain a 7-year market exclusivity period. Many of these drugs have entered the market at historically high prices, and with no generic or biosimilar competition, industry is prioritizing profitability over public health and innovation.

There is no disputing that novel drugs for rare diseases have had an invaluable benefit in numerous disease categories, with spinal muscular atrophy being a recent example. However, as the economics have favored the development of medicines for rare diseases, we’ve seen major companies shift away from broad therapeutic areas such as diabetes, cardiovascular medicine, and women’s health. Although 58% of FDA drug approvals in 2018 were for orphan drugs, these products would target diseases that collectively affect less than 7 million Americans (and that is assuming the maximum market size of 200,000 patients in order to qualify for orphan drug status).

Graph 1
Novel Drugs Receiving Orphan Designation by Year of Approval

In 2020, 58% of all FDA "novel" drug approvals were for orphan drugs

True innovation represents a fraction of total FDA approvals

The industry’s emphasis on innovation would suggest, at the very least, that there are more “innovative” drugs being approved than not. A review of drugs approved by the FDA since 2015 show that less than half were either first-in-class or “novel”, with less than 20% of approvals each year designated as first-in-class.

Graph 1
Novel Drug Approvals as % of Total FDA Approvals

Racial representation in clinical trials lags disease burden in population

The unjust murders of George Floyd, Breonna Taylor, and so many others, and the global protests surrounding racial injustices in 2020 has led to greater awareness of the ways that racial equity and inclusion in healthcare need to be improved.  One area that the biopharma industry continues to address is the persistent underrepresentation of minorities in clinical trials compared with the disease burden in the United States.

In an analysis of FDA’s Drug Trials Snapshots from 2015-2019, Green et al (in press) concluded that Black patients are inadequately represented in the clinical trials relative to the population burden for drugs approved over this period, with a median of 1/3 the enrollment that would be required to achieve parity. Diverse clinical trial participation in proportion with the burden of disease (expressed as the “representation ratio”) is vital to ensuring the safety and effectiveness of medicines for all patients and is clearly in the benefit of public health.

Graph 1
Average Representation Ratio by Company


Sagonowsky E. Bristol Myers Squibb can grow through Revlimid generics, execs insist, pointing to key launches. Fierce Pharma. Feb 2021.


FDA. Innovation in New Drug Approvals of 2019 Advances Patient Care Across a Broad Range of Diseases. 2019.

Research & Insights

We conduct non-partisan, independent research, and make our work accessible and informative to policymakers and the general audience alike. Browse our featured research or explore our work by article type.

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