COVID-19 forced governments to fund late-stage clinical trials, shifting risks from pharma to taxpayers

09 Nov 2021 | News byte


Business enterprise expenditure on pharmaceutical R&D and government budgets for health-related R&D, 2018 (or nearest year)

While no official data are yet available, a preliminary OECD analysis shows the COVID-19 pandemic has forced governments to invest tens of billions across the entire discovery and development chain, including late‑stage clinical trials for drugs and vaccines, moving beyond their traditional role in supporting early-stage research.

A report published by the OECD today, shows the extent to which governments signing up to large advance purchase commitments for COVID‑19 vaccines before clinical trial data were available, shifted much of the financial risk of R&D from private companies to taxpayers.

By July 2021, the World Health Organisation’s COVID‑19 accelerator had raised $12 billion in funding for vaccines from various governments, including $1.7 billion in direct R&D support for projects selected by the Coalition for Epidemic Preparedness Innovations.

By late 2020, the US government had allocated $12 billion to late‑stage vaccine development and supply commitments. Preliminary OECD analyses of financial statements suggest that industry R&D expenditure also continued to grow, but not across the board, as some companies reported a decline in R&D spending, the report says.

Before COVID‑19, governments mainly supported basic and early-stage research through budget allocations, research grants and public ownership of research and higher education institutions. The pharmaceutical industry spends most of its R&D money in the later stages of research, including clinical trials.

In 2018, governments in 33 OECD countries allocated about $67 billion for health-related R&D, excluding  tax incentives and funding for higher education and publicly owned enterprises. In the same year, the pharmaceutical industry in those countries spent a total of $114 billion on R&D.

Nearly two‑thirds of spending in OECD countries occurred in the US, where the industry spent about $75 billion, while government budgets for health-related R&D were at $44 billion. Most of the remainder was spent in Europe and Japan. Private R&D expenditure as a share of GDP was highest in smaller countries with relatively large pharmaceutical sectors, such as Switzerland, Belgium, and Slovenia.

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