Drug development and the expectation of financial return: Developing better insights to inform biopharmaceutical policy and regulation

The Information Technology and Innovation Foundation (ITIF), based in Washington, DC, will offer grants for new research that will help understand the relationship between the expectation of financial reward for an approved new drug or indication in the United States and the ( 1) investments in research and development for new and existing drugs and/or (2) the approval of new drugs and new indications.

The purpose of this funding opportunity is to address the lack of sufficiently credible and timely evidence to influence policy changes affecting biopharmaceutical drug development. Funded research will contribute to a better understanding of how the expectation of a financial return from investment in clinical biopharmaceutical development affects the level of investment in all phases of clinical development and for different types of potential drugs, such as rare diseases, oncology or Vaccines.

ITIF will award three grants of $50,000 each for research to be completed in 18 months or less, with a preferred research duration of one year. Research should focus on either the U.S. market or on analogues of sufficient size that could shed light on how changes in U.S. policy will affect drug development worldwide. The expected outcome of each fellowship is a paper that may be submitted to a special issue of Health Scientist on this topic, follow their policies and be subject to their review process.

Favorite topics for these proposals include:

Post-market development impact: Policies that impact the financial return of a drug or vaccine later in the life cycle, such as the Medicare Drug Price Negotiation Program in the Inflation Reduction Act, are expected to influence investment in and conduct of post-market studies. Much of the existing evidence examines the influence of market size on new drug development while neglecting post-market development. Research is of interest that improves the understanding of incentives for investing in and/or conducting post-market development studies, for example for new indications, new formulations or for special populations such as children or those with comorbidities.

Updated R&D costs and complexity: Current estimates of the relationship between expected financial returns and R&D investments are based on older estimates of the costs and time required to develop a new drug or indication. Drug development has evolved significantly over time, with increasingly specialized drugs and more complex development protocols, impacting both development risks and costs. Peak sales for approved drugs and prices have also evolved. Updated data and models that better reflect the current complexity of developing new indications and new drugs would provide more relevant insights. This could include how changes in trial enrollment rates, population size of drugs being studied, trial complexity, diversity requirements, or innovative trial designs such as adaptive or remote trials may affect the relationship between investment in drug development and expected financial returns.

Different effects on certain disease states: Drug development has changed significantly, with oncology, targeted therapeutics, biologically-based therapies and other new modalities now accounting for a much larger share of R&D investments than they did two decades ago. Existing studies have not examined the impact of market size or financial benefit on investment in clinical trials for new modalities such as cell and gene therapies and RNA vaccines. Research interests should examine the investment risks and opportunities in different therapeutic areas, particularly in the treatment of rare diseases or diseases for which there has previously been no standard of care, and consider how the magnitude of the association may vary across different disease states.

Variable risk tolerance when investing: The organizations involved in drug development vary along the drug development lifecycle, and there is little understanding of how decisions to invest or not invest at different stages are made, who makes the decisions, and their risk tolerance. Such insights should better reflect capital mobility and different investment strategies throughout the drug development lifecycle. More comprehensive data, including insights from public and industrial investments – such as quantitative corporate data and qualitative research to better understand the risk profiles of different stakeholders, combined with modeling methods that take into account the heterogeneity between companies and investors – would help capture risk fluctuations such as tolerance, investment behavior and decision making, and can provide a more realistic representation of industry dynamics.

Effect on competing drugs: Pricing or other policies may reduce revenues from competing drugs in the same therapeutic area, resulting in lower prices, lower reward expectations and altering clinical development within that therapeutic area. This effect, similar to the dynamics of generic drug entry, remains uncertain and requires further investigation.

Competitive market for generics and biosimilars: Updated evidence is needed to assess the impact of government pricing of branded drugs on entry incentives and pricing of generics and biosimilars.

Call for proposals:

The call for proposals will be published on November 1, 2024. Responses to the call for proposals must be submitted to ITIF by December 15, 2024, and award winners will be announced by January 31, 2025. Applications for the call must include the following:

Research team: Full name and affiliation of the principal investigator receiving the funding, as well as the research team and its affiliated institutions. Short biographies of principal investigators and research teams, no longer than 150 words each (may include links to CVs).

Abstract: Brief overview (maximum 200 words) of the proposed study, including rationale, aim, methods and implications for research or policy.

Study approach: The description of the research, methods, and time frame must not exceed 800 words and may include up to three graphs or tables not included in the word count. Grantees are required to submit an interim progress report midway through the project and may recommend a timing for the interim report and then provide a target date for submission of the final report Health Affairs Scholar.

Declaration of willingness to comply with the Health Affairs Scholar format: Include a statement that the lead researcher and team are willing to agree to the submission guidelines Health Scientist. If the team prefers another outlet, instead of making this statement, they may describe that outlet and explain their reasons for publishing this outlet and the manner in which the content will be accessible.

Proposals will be evaluated by Sandra Barbosu ITIF, Stephen Ezell ITIF and Kirsten Axelsen DLA Piper and possibly other experts depending on the topic of the proposal. All proposal materials will be kept confidential and will not be shared with anyone not involved in the review process. They will be assessed on: the ability of the research to fill an important gap in the evidence, the clarity and robustness of the methodology described and the novelty of the approach. Applicants for the scholarship may be asked to provide additional information or answer questions about their submission before a final decision is made.