AUGUST 2024
Understanding the U.S.
Biopharmaceutical
Innovation Ecosystem
By Sujai Shivakumar, Tisyaketu Sirkar, and Jerey Depp
Introduction
The biopharmaceutical innovation system—which brings novel, life-improving, and life-saving therapies
from the researcher’s bench to a patient’s bedside—is a major engine powering health improvements,
economic output, and wealth creation in the United States. But while the commercial and national
security competition with China has brought policy attention to securing the semiconductor industry, the
importance of sustaining a world-leading U.S. biopharmaceutical industry remains underappreciated.
In the United States, the pace of biopharmaceutical innovation has enjoyed remarkable growth over the
last decade. New drug approvals by the Food and Drug Administration increased from 209 between
20002008 to 302 between 20092017—a 44.5 percent surge. Furthermore, U.S. rms led nearly 38
percent of global biotechnoloy patents from 20152020, bolstering the U.S. biotech industry’s position
over those of competitors such as China, the European Union, Japan, and the United Kingdom.
Yet, despite its growth and notable recent successes—such as the development of Covid-19 mRNA
vaccines; new treatments for cancer, Alzheimer’s disease, and sickle cell anemia; and medications for
weight loss—the U.S. biopharmaceutical ecosystem is under pressure from a number of directions.
Notably, U.S. policymakers, responding to concerns by some consumer advocates over the high prices
of particular drugs, have sought to lower prices by weakening the patent system. A well-functioning
patent system secures property rights in inventions so that innovators can share and collaborate
safely with others to bring new ideas to the marketplace. Patents also incentivize this eort by allowing
patent holders to gain nancially from their innovation for a limited period. It is this second feature of
patents that is at issue with advocates seeking to lower drug prices. But a broad assault on patents may
