From 1990 to 2015, life expectancy at birth in the U.S. increased by 3.3 years. Biopharmaceutical drugs have accounted for at least an estimated 35 percent of the increase in U.S. life expectancy. Policymakers must take action to ensure the U.S. provides the most globally competitive environment to support cutting-edge innovation.
A 2023 report from the Information Technology and Innovation Foundation (ITIF), the leading bipartisan think tank on the innovation economy, detailed how policies and market forces can be better aligned to foster scientific innovation. Johnson & Johnson supported a scientific symposium of leading academics, which culminated in the release of actionable findings presented to policymakers during a public meeting led by ITIF in the U.S. Senate. The research found that biopharmaceutical innovations collectively result in immense benefits for society as a whole, while illustrating multiple opportunities for innovation policy to further optimize these benefits.
The report, titled “The Economics of Biopharmaceutical Innovation,” compiles evidence on the direct contributions of biopharmaceutical innovation to society, using life expectancy as its key indicator.
At the same time, less than half of every dollar spent on drugs in the U.S. today goes to the companies innovating or manufacturing them. From 2013 to 2020, the share of drug revenue retained by manufacturers decreased steadily, while other stakeholders – such as pharmacy benefit managers (PBMs), insurers, 340B covered entities and wholesalers – have increasingly captured a larger share. The report notes that brand manufacturers retained just 37 percent of the total spending on medicines in the U.S. in 2020.
Stakeholders agreed that without intervention, these trends could threaten the future of life-changing medical advancements. As fewer resources become available to innovators, evidence suggests that research and development (R&D) progress will be at risk. The report details why R&D should be understood as an investment in future health rather than a cost.
The research suggests that policymakers can create a balanced portfolio of “push” and “pull” incentives that reward innovation. “Push” includes direct research funding and grants, while “pull” encompasses support for robust patents and market exclusivity.
To boost access to novel biopharmaceutical innovation today and in the future, policymakers should:
- Optimize existing innovation policies by aligning incentives and rewards for firms to be able to pursue breakthroughs with potentially higher therapeutic value
- Investigate the value provided by supply chain middlemen and ensure that captured drug spending resources are either redirected toward improved patient access or innovators’ R&D for the discovery of new cures
- Consider indirect innovation policies to ensure incentives for innovation are not skewed away from disease areas where study and review times are long, by augmenting current accelerated reviews, or providing an enhanced patent term restoration mechanism that more accurately reflects patent term loss
- Improve the quality of, and access to, health information so government institutions can make more informed funding decisions
At Johnson & Johnson, we believe that a policy framework rooted in evidence and focused on promoting innovation is essential to drive future breakthroughs that benefit society.
With the right innovation policies in place, patients of today and those of the future can continue to benefit from a system that produces novel treatments as well as access, affordability, competition and overall medical progress.
Transparency: J&J IM is an annual sponsor of ITIF, an independent 501(c)(3) nonprofit, nonpartisan think tank. ITIF maintains full independent control over its research programs, engagements with experts and published reports.
Ezell S, Zhao K. The Economics of BioPharmaceutical Innovation: Symposium Report. Information Technology & Innovation Foundation. March 2023. https://www2.itif.org/2023-biopharma-economics.pdf. Accessed July 2025.