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Michelle Hoffman, editorial director of Pharmaceutical Technology.
Can previous trends of Democratic and Republican administrations predict industry's future?
As readers of this column know, Pharmaceutical Technology has been trying for months to get the attention of the presidential candidates to learn their plans for the agencies that will affect the pharmaceutical industry in the coming years. I'm sorry to report that, in spite of my incessant queries (some may call it nagging), I've heard nothing from either campaign. But the project got me thinking about how—or even whether—the political stripe of the president affects the institutions that have an impact on the pharmaceutical industry. So, I took a look backward for any related trends, making a few assumptions along the way. So caveat emptor, what follows is a very unscientific survey.
One assumption stems from an observation I've made that there's a difference in the expectations and political preferences between the business interests and the scientific/research interests within industry. Executives seem to be concerned that a Democratic administration would impose price controls, which could drive down profits. Researchers, on the other hand, think Democrats would increase budgets for research grants, from which they and academic collaborators would benefit. Price controls are a new issue for the drug industry, so we can only wait and see what happens.
We can, however, look at how the budget for the National Institutes of Health (NIH) has fared since 1980 (see Figure 1). Note that the data set is limited in that there's been only one Democratic administration in that time. Also, correlation does not equal causation, and past performance is no predictor of the future. In an attempt to eliminate the effects of inflation, I expressed the budget as a percentage of the gross domestic product (GDP).
It seems the data both support and refute the common wisdom. NIH's budget remains essentially flat through the Republican administrations of Ronald Reagan and George H. W. Bush. It starts to rise during the first half of the Democratic Clinton administration, but doesn't really take off until the latter half of that administration and into—and this surprised me—the first half of the Republican administration of George W. Bush. During the second half of the G.W. Bush administration, the budget drops precipitately, seeming to reverse all the gains of the first half of that administration. Current levels are estimated to drop to 2001 funding levels.
How does NIH funding relate to the pharma industry? Here, I made a huge conceptual leap and thought that more research dollars should, in theory, translate into a greater number of FDA approvals for new molecular entities (NMEs). The average number of NMEs during the Reagan/Bush years was 22 per year; during the Clinton years, 32; and during the G.W. Bush years, 23. It would seem, based on these very unscientific calculations, that the pharma industry fares slightly better during Democratic than Republican administrations. But we have to consider the fate of the US Food and Drug Administration. Again, I expressed the government's appropriations for FDA (not including user fees) as a percentage of GDP (see Figure 2).
The budget remained essentially flat during the Reagan/Bush years, experienced a slight rise during the Clinton administration, and just this past year, experienced something of a spike. However, when you consider how miniscule the range is, one has to conclude the FDA budget remains flat no matter who's occupying the White House. Maybe the candidates already know this and that's why they aren't responding to our requests for their policies. Still, Senator McCain, Senator Obama, if you want to tell us directly, we're listening.
Michelle Hoffman is editor-in-chief of Pharmaceutical Technology, email@example.com