Large pharmaceutical companies oppose legislation being considered by Congress to lower the prices of prescription drugs. Reducing their revenues, they contend, will reduce their investment in drug development and the discovery of new medicines, and thus lead to a decline in drug innovation.

If that argument is credible, there should be evidence to show that the large pharmaceutical companies are responsible for discovering innovative new drugs.

To test that claim, we examined the provenance of the highest-selling prescription medicines of Pfizer and Johnson & Johnson, the two largest pharmaceutical and biotechnology companies in 2018.

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We found that these large pharmaceutical companies did not actually invent most of the drugs they sell. Indeed, it appears they have already reduced their investment in the discovery of new medicines to the point where the threat of additional reductions rings hollow and is no longer a persuasive reason for opposing legislation to lower drug prices.

Pfizer’s and J&J’s annual reports identify the medications that account for most of each company’s sales of prescription drugs. We gathered information on the discovery and early development of these products from peer-reviewed publications, media reports, and company press releases.

We scoured the companies’ 2017 annual reports. A total of 62 products — 44 from Pfizer and 18 from J&J — were listed in them. The discovery and early development work were conducted in house for just 10 of Pfizer’s 44 products (23%), as listed in Table 1. Only two of J&J’s 18 leading products (11%) were discovered in house, as shown in Table 2.

For example, sildenafil, the phosphodiesterase inhibitor that is the active compound in the erectile dysfunction drug Viagra and the pulmonary hypertension drug Revatio, was synthesized at Pfizer in the 1980s, originally as a cardiovascular medicine. Research leading to the development of risperidone (Risperdal), one of several newer-generation atypical antipsychotic drugs, began at J&J in the 1980s.

The majority (81%) of other products were discovered and initially developed by third parties. Some of them came to Pfizer and J&J from the acquisition of other pharmaceutical companies. For example, Pfizer’s highest-selling product, Prevnar 13, a vaccine for pneumococcal disease, was developed at Wyeth, which Pfizer acquired in 2009. Pfizer’s palbociclib (Ibrance), used to treat breast cancer, had its origins at Warner-Lambert and Onyx Pharmaceuticals. J&J’s rivaroxaban (Xarelto), an anticoagulant, originated at Bayer.

Research leading to the discovery and development of other Pfizer and J&J drugs originated in universities and academic centers. J&J’s highest-selling product, infliximab (Remicade), is a monoclonal antibody that was synthesized by researchers at New York University in 1989 in collaboration with the biotechnology company Centocor. The original work showing its efficacy in rheumatoid arthritis was led by Marc Feldmann and Ravinder Maini at Imperial College London.

Etanercept (Enbrel), tofacitinib (Xeljanz), darunavir (Prezista), and daratumumab (Darzalex) are other products for which key discovery or development steps occurred in academic settings.

The 34 Pfizer products discovered by third parties accounted for 86% of the $37.6 billion in revenue that its 44 leading products generated. The 16 J&J products invented elsewhere accounted for 89% of the $31.4 billion that its 18 leading products generated. Clearly, the existence of Pfizer and J&J as profitable pharmaceutical manufacturers is dependent on the acquisition of drugs invented by third parties.

Our finding that few of the top-selling drugs made by Pfizer and J&J had been discovered in-house complements a recent Government Accountability Office report examining where large pharmaceutical companies spend most of their research dollars. It is also consistent with the latest member survey conducted by PhRMA, which indicated that last year only $13 billion was spent on preclinical studies — the basic and translational science that is the foundation for the discovery of innovative drugs.

That is only a fraction of the $39.2 billion taxpayers spent to support the medical research conducted by the National Institutes of Health. More than 80% of the NIH’s funding is awarded through almost 50,000 competitive grants to more than 300,000 researchers at 2,500+ universities, medical schools, and other research institutions in every state and around the world. While it is important to give fair consideration to the cost and risk involved in the development of new drugs, Pfizer and J&J were mostly buying drugs that had already been shown to have efficacy.

The lack of in-house innovation at Pfizer and J&J is relevant to current efforts in the Senate (S. 2543) to limit annual drug price increases to the rate of inflation, and in the House of Representatives (H.R. 3) to cap drug price increases and limit prices based on what is charged for the same drug in other developed countries.

Large pharmaceutical manufacturers have claimed that enactment of this legislation would be an “innovation killer” and trigger a “nuclear winter for the U.S. biopharmaceutical ecosystem.” And President Trump tweeted late last month that the Pelosi drug pricing bill “doesn’t do the trick. FEWER cures! FEWER treatments!”

 

If our findings are representative of the level of innovation at other large pharmaceutical manufacturers, a reduction in pharmaceutical revenues would not have the supposed devastating impact on the level of biopharmaceutical innovation. Rather, a reduction in revenues as a result of lower drug prices may reduce the astronomical acquisition prices now being paid by the large manufacturers to acquire innovations made by others.

But the biopharmaceutical ecosystem will continue to thrive as long as those who actually innovate are provided with the resources to do so while those who play other roles in bringing new drugs to market are fairly compensated for their contributions to those aspects of the development process.

As a recent report from the National Academies of Medicine concluded, “drugs that are not affordable are of little value and drugs that do not exist are of no value.” The problem of affordability will not be solved if Congress continues to succumb to questionable assertions by lobbyists claiming that excessively high drug prices are essential to maintaining biopharmaceutical innovation.

Passage of legislation to curb ridiculously high medication prices and price increases will not only make medicines more accessible to patients but will also reduce government expenditures on drugs by more than $345 billion dollars over 10 years, according to the Congressional Budget Office. That will enable the government to make greater investments in NIH and produce an even more robust biomedical innovation ecosystem than now exists.

Emily H. Jung is a first-year medical student at Emory School of Medicine in Atlanta and a former research assistant at the Program On Regulation, Therapeutics, And Law (PORTAL) in the Division of Pharmacoepidemiology and Pharmacoeconomics at Brigham and Women’s Hospital. Alfred Engelberg, J.D., is a retired pharmaceutical intellectual property attorney and philanthropist. Aaron S. Kesselheim, M.D., is a professor of medicine at Harvard Medical School and director of PORTAL. Funding for this work was provided by the Engelberg Foundation, a charitable foundation that focuses on health policy research. Kesselheim’s work is also supported by the Harvard-MIT Center for Regulatory Science and Arnold Ventures.


Table 1. Origins of drug products manufactured by Pfizer in 2017*

Product 2017 Revenue Key origins
Pneumococcal 13-valent Conjugate Vaccine (Prevnar 13) $5.6 billion Wyeth Pharmaceuticals, acquired by Pfizer in 2009
Pregabalin (Lyrica) $5.1 billion Northwestern University in the 1980s; later entered into a licensing agreement with Warner-Lambert, which was acquired by Pfizer in 2000
Palbociclib (Ibrance) $3.1 billion Warner-Lambert and Onyx Pharmaceuticals in the 1990s; Warner-Lambert was acquired by Pfizer in 2000
Apixaban (Eliquis) $2.5 billion DuPont Pharmaceuticals in 1995; acquired by Bristol-Myers Squibb in 2001; Bristol-Myers Squibb and Pfizer entered into an agreement to jointly develop apixaban in 2007
Etanercept (Enbrel) $2.5 billion Etanercept synthesized at Massachusetts General Hospital in the 1980s, with private funding from Hoechst AG; entered into a licensing agreement with Immunex Corporation in the late 1990s; Immunex entered into a co-promotion agreement with Wyeth-Ayerst Laboratories; Immunex was acquired by Amgen in 2002; Wyeth Pharmaceuticals was acquired by Pfizer in 2009. Since the expiration of the co-promotion agreement in 2013, Pfizer and Amgen have held marketing rights outside of and in the US and Canada, respectively
Atorvastatin (Lipitor) $1.9 billion Warner-Lambert in the 1980s, acquired by Pfizer in 2000
Tofacitinib (Xeljanz) $1.3 billion National Institutes of Health in the 1990s, which later entered into a collaboration with Pfizer
Sildenafil (Viagra) $1.2 billion Sandwich laboratories of Pfizer (U.K.) in the late 1980s; Pfizer scientists originally tested sildenafil as a treatment for angina, but during clinical trials in the 1990s, saw sildenafil’s potential to treat erectile dysfunction; in the late 1990s and early 2000s, discovered evidence demonstrating sildenafil’s potential to treat pulmonary hypertension
Sunitinib (Sutent) $1.1 billion Sugen, a biotechnology company founded by kinase researchers at New York University and the Max Planck Institute for Biochemistry; Sugen was acquired by Pharmacia & Upjohn in 1999; which was acquired by Pfizer in 2003
Varenicline (Chantix) $997 million Pfizer in the 1990s
Conjugated estrogens (Premarin) $977 million Ayerst, McKenna & Harrison and McGill University in the 1920s; Ayerst, McKenna & Harrison was acquired by American Home Products in 1943, which acquired Wyeth in 1931 and changed the company name to Wyeth in 2002; Wyeth was acquired by Pfizer in 2009
Amlodipine (Norvasc) $926 million Pfizer in the 1980s
Celecoxib (Celebrex) $775 million G.D. Searle in the 1990s, the pharmaceutical division of Monsanto Company, acquired by Pharmacia & Upjohn in 2000; Pharmacia was acquired by Pfizer in 2003
Coagulation factor IX recombinant, nonacog alfa (BeneFIX) $604 million British Technology Group and Oxford University, which licensed Factor IX technology to Genetics Institute, a biotechnology company found by molecular biologists at Harvard University; the Genetics Institute was acquired by Wyeth in 1996; Wyeth was acquired by Pfizer in 2009
Crizotinib (Xalkori) $594 million Sugen in 1996, a biotechnology company founded by kinase researchers at New York University and the Max Planck Institute for Biochemistry; Sugen was acquired by Pharmacia & Upjohn in 1999; Pharmacia was acquired by Pfizer in 2003
Enzalutamide (Xtandi) $590 million University of California, Los Angeles, in the early 2000s, which later licensed the drug’s patent to Medivation, which entered into a global agreement with Astellas to jointly commercialize enzalutamide in 2009; Medivation was acquired by Pfizer in 2016
Antihemophilic factor recombinant, moroctocog alfa (Refacto AF/Xyntha) $551 million Dyax Corporation, which licensed phage display technology to Wyeth; Wyeth was acquired by Pfizer in 2009
Somatropin (Genotropin) $532 million Genentech developed the first recombinant version of pituitary growth hormone, which had been used in treatment for many decades based on research at multiple academic centers. This version originated with Pharmacia Corporation, which was acquired by Pfizer in 2003.
Methylprednisolone (Medrol) $483 million million Pharmacia Corporation, which was acquired by Pfizer in 2003.
Sulbactam/cefoperazone (Sulperazon) $471 million Pfizer in the 1970s
Voriconazole (Vfend) $421 million Pfizer in the 1980s
Infliximab (Inflectra/Remsima) $419 million Pfizer manufactures follow-on biologics to Johnson & Johnson’s infliximab (Remicade)
Axitinib (Inlyta) $339 million Pfizer in the 2000s
Latanoprost (Xalatan/Xalacom) $335 million Columbia University in the 1970s, which later entered into a collaboration with Pharmacia, which was acquired by Pfizer in 2003
Dalteparin (Fragmin) $306 million Fresenius Kabi, a pharmaceutical company, in the 1970s, which later entered into a collaboration with Pharmacia, which was acquired by Pfizer in 2003
Desvenlafaxine (Pristiq) $303 million Wyeth, acquired by Pfizer in 2009
Venlafaxine (Effexor) $297 million Wyeth, acquired by Pfizer in 2009
Sertraline (Zoloft) $291 million Pfizer in the 1970s
Epinephrine (EpiPen) $290 million Epinephrine was first marketed in the early 1900s by Parke, Davis & Company, which was acquired by Warner-Lambert in 1970; Warner-Lambert was acquired by Pfizer in 2000. The device was invented in 1970s at Survival Technology, which became Meridian Medical Technologies in 1996; Meridian was acquired by King Pharmaceuticals, which was later acquired by Pfizer in 2010. Pfizer manufactures the EpiPen, which Mylan markets and distributes.
Linezolid (Zyvox) $281 million DuPont in the 1980s, where oxazolidinones were first discovered; Pharmacia (formerly Pharmacia & Upjohn) in the 1990s, which was acquired by Pfizer in 2003
Azithromycin (Zithromax) $270 million Pliva (now a subsidiary of Teva) in the 1970s, a pharmaceutical company, which later entered into a licensing agreement with Pfizer in 1986
Dibotermin alfa (BMP-2) $261 million Genetics Institute, a biotechnology company found by molecular biologists at Harvard; Genetics Institute was acquired by Wyeth in 1996, which was acquired by Pfizer in 2009
Tigecycline (Tygacil) $260 million Lederle Laboratories, the pharmaceutical division of American Cyanamid Company, which was later acquired by American Home Products in 1994, which acquired Wyeth in 1931 and changed the company name to Wyeth in 2002; Wyeth was acquired by Pfizer in 2009
Fesoterodine (Toviaz) $257 million Schwarz BioSciences, a pharmaceutical company, which later licensed fesoterodine to Pfizer in 2006
Pegvisomant (Somavert) $254 million Ohio University in the 1990s, where molecular biologists helped found Sensus Drug Development Corporation and used technology from Genentech; Sensus was acquired by Pharmacia in 2001, which was acquired by Pfizer in 2003
Sildenafil (Revatio) $252 million See Viagra, above
Dexmedetomidine (Precedex) $243 million Orion Pharma in the 1990s, a pharmaceutical manufacturing company which later licensed dexmedetomidine to Hospira, a spin-off of Abbott Laboratories; Hospira was acquired by Pfizer in 2015
Eletriptan (Relpax) $236 million Pfizer
Bosutinib (Bosulif) $233 million Wyeth, which was acquired by Pfizer in 2009
Alprazolam (Xanax) $225 million Hoffman-La Roche in the 1950s, where the first benzodiazepines were discovered; Upjohn in the 1960s, which merged with Pharmacia Corporation in 1995; Pharmacia was acquired by Pfizer in 2003
Piperacillin; tazobactam (Zosyn/Tazocin) $194 million SynPhar Laboratories, a joint venture between a scientist at the University of Alberta (Canada) and Taiho Pharmaceuticals; SynPhar licensed tazobactam/piperacillin to Wyeth, which was acquired by Pfizer in 2009
FSME-IMMUN/TicoVac $134 million Hyland-Immuno in the 1980s, a division of Baxter International; Pfizer acquired Baxter’s portfolio of marketed vaccines in 2014
Crisaborole (Eucrisa)</td $67 million Anacor, a biopharmaceutical company founded by researchers at Stanford University and Penn State University; Anacor was acquired by Pfizer in 2016
Sildenafil $56 million Pfizer manufactures a generic version of Viagra

* Origins listed for each drug based on methods described in article and do not exclude the possibility of contributions from other scientists or organizations.


Table 2. Origins of drug products manufactured by J&J in 2017*

Product 2017 Revenue Key origins
Infliximab (Remicade) $6.3 billion Synthesized at New York University in the 1980s in collaboration with Centocor Ortho Biotech, which was acquired by J&J in 1999
Ustekinumab (Stelara) $4.0 billion Centocor, which licensed Medarex’s UltiMAb technology to generate ustekinumab in 1997; Centocor was acquired by J&J in 1999
Paliperidone (Invega Sustenna/Xeplion/Trinza/Trevicta) $2.6 billion J&J
Abiraterone (Zytiga) $2.5 billion UK Institute of Cancer Research in the 1990s, which later assigned rights for the development of abiraterone to British Technology Group International, which licensed abiraterone to Ortho Biotech Oncology Research & Development, a unit of Cougar Biotechnology, in 2004. Cougar was acquired by J&J in 2009
Rivaroxaban (Xarelto) $2.5 billion Bayer in the 1990s, which later entered into a collaboration with J&J to jointly develop rivaroxaban
Ibrutinib (Imbruvica) $1.9 billion Celera Genomics in 2005, a company founded by a geneticist as a unit of biotechnology company Applera. Pharmacyclis acquired some of Celera’s drug discovery programs, including ibrutinib, and entered into an agreement with J&J to jointly develop and market ibrutinib in 2011
Golimumab (Simponi/Simponi Aria) $1.8 billion Centocor, which licensed Medarex’s UltiMAb technology to develop golimumab; Centocor was acquired by J&J in 1999
Darunavir (Prezista/Prezcobix/Rezolsta/Symtuza) $1.8 billion University of Illinois at Chicago, in collaboration with the National Institutes of Health and Purdue University, which later licensed darunavir to Tibotec, a pharmaceutical company founded by researchers at the Rega Institute for Medical Research, which was acquired by J&J in 2002
Daratumumab (Darzalex) $1.2 billion Genmab, a European spinoff of U.S.-based Medarex, in collaboration with the University Hospital in Utrecht; Genmab licensed daratumumab to J&J in 2012
Bortezomib (Velcade) $1.1 billion ProScript, originally founded as MyoGenics by scientists at Harvard; ProScript later collaborated with the National Cancer Institute to further develop the drug. ProScript merged with LeukoSite, which was acquired by Millennium Pharmaceuticals in 1999. Millennium was acquired by Takeda in 2008, which entered into a co-promotion agreement in J&J in 2010
Canagliflozin (Invokana/Invokamet) $1.1 billion Mitsubishi Tanabe Pharm, which later licensed canagliflozin to J&J
Epoetin alfa (Procrit/Eprex) $972 million Amgen, which later assigned rights for non-dialysis indications in the U.S. and for all indications approved outside the U.S. to J&J
Risperidone (Risperdal Consta) $805 million J&J in the 1980s
Methylphenidate (Concerta) $791 million Ciba-Geigy in the 1940s. ALZA Corporation, which developed an alternative formulation of methylphenidate, was acquired by J&J in 2001
Rilpivirine (Edurant) $714 million Tibotec, which was acquired by J&J in 2002
Macitentan (Opsumit) $573 million Actelion in 2002, which was acquired by J&J in 2017
Bosentan (Tracleer) $403 million Hoffman-La Roche, which later licensed bosentan to Actelion, which was acquired by J&J in 2017
Selexipag (Uptravi) $263 million Nippon Shinyaku, which later entered into an agreement with Actelion to jointly develop selexipag in 2008, Actelion was acquired by J&J in 2017

* Origins listed for each drug based on methods described in article and do not exclude the possibility of contributions from other scientists or organizations.

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  • The pharmaceutical market in Europe demonstrates a steady growth trend for the last seven years, and the forecasts are optimistic as well. This makes the pharma market of the continent quite attractive for investment, especially considering its high standards and strict requirements, acknowledged globally.
    Saying about the last activities we can monitor it such articles like:
    https://www.globaldatabase.com/top-10-pharmaceutical-companies-in-europe-by-sales-in-2018

  • I’d like to see a company with a first-in-class drug and a solid monopoly roll out a single global price and only accept cash payment for it from patients, no games, no rebates. Give the middle finger to all the middle-men. Then take all the admin cost savings and use to subsidize charity treatment. They would become national heroes.

    • About 200 million to 2 billion will back you up. However, vested interests and legally corrupt legislators would not let that happen, at least in our life time.

    • I’d like to be the first CEO to do that, but unlikely to happen in our lifetime…the PBM’s seem to have gotten to Trump and as Girish mentions, lots of others….

  • The companies mentioned have a model to acquire innovation vs build multiple discovery units. This is efficiency There are large companies that do discovery: Roche/Genentech , Amgen for example. Discovery is the sweet spot of the biotech industry and companies discover, develop and get acquired or launch themselves. Biomarin, GBT, Portola are examples Our industry is no different than others. All work this way. As an industry vet in innovation and discovery I agree with calling out aggregious price increases and bogus patent extensions IPi Is a bad idea , however. The solution is to work on the back end : price increases and generic entries But when criticizing price increases know that a huge portion of any price increase goes to the rebate for PBMs not patients So work on that end and provide generics with fair access ( both small and large molecules) once patents expire. That will fix the problem and allow for investment in innovation ( biotech) and a healthy ecosystem that benefits patients and their access to innovative medicines

    • Paul:

      Solutions are there but political influence and capitalize on patients who will die sooner or later rule the landscape. Linked is my perspective http://bit.ly/34RYypH. Legislators, regulators, pharma manufacturers and PBMs would make sure it does not get to see light of the day. If implemented, everyone wins and wins big. However, involved folks do not believe in “Nondestructive Creation”.

      Cheers.

  • “Acquired by” is short form for “transferred money to prior innovators and developers.” Meaning, if you take money out of their pockets, they have less to transfer to prior innovators and developers, and that decline in innovation may happen even given your facts.

    This article is a straw man argument.

    Also, consider how many of these are biologics, which will not face generic competition. Which HR 3 does not address effectively, and is likely to be largest part of the problem soon.

    See Anne’s comment below (or above, depending on how this site sorts), and the link to Bruce Booth’s post on the topic, and for many good ideas about more thoughtful ways to address these problems.

    • That was my take away too. Small biotechs, even one-compound companies, have to raise extensive capital to run trials … and the probability their valuation is zero in a few years is pretty sizable. Therefore the ROI must be quite high to acquire the funds to run trials. Where does that ROI come from? Typically being bought by big Pharma. Most small companies have no desire to manufacture and market drugs.

      Also having worked for big Pharma and tiny biotechs, innovation is better at the biotechs, fewer layers of bureaucracy to impede and be paid for.

      I’m all for getting pricing under control, but a strawman this is.

    • I agree with Matt. The money trail needs to be followed back to the source of the original investments for innovative science that drives marketable discoveries. Because companies like J&J and Pfizer are willing to pay for these new discoveries, private equity and wall street investors are willing to bet seed money on the research. If the windfall from Big Pharma/Biotech is removed, so will the seed money that drives innovation; and in short order the innovation will dry up.

    • No reason for biosimilars to not be generics. I do have a friend with MS who responds only to Rebif, not Betaseron or Avonex and they are all Beta Interferon…we need to figure this out, agree, but there should be a solution. If we can conquer cell therapy and other things we can conquer this.

  • Study seems to show that Big Pharma benefits primarily from Little Pharma. So it’s an open question whether, if 0.5T in overspending on drugs were taken out of the system, would it harm the Little Pharma system that feeds discoveries to Big Pharma.

    CBO seems to think only 8 fewer drugs per 10 year period. That’s not a lot.

    Could that 8 be made up by spending, say $100B more in grant money to university or government research?

  • I can see there are naysayers but this is good. If we look at these and past acquisitions, that tells us that Pharma with high revenues are marketers of others discoveries.

    They have nothing to show for when it comes to innovation. Fact they will disagree with and defend.

    • Large pharmas need money to make acquisitions, and small companies generally want to be acquired to go to market- otherwise they would not sell. Without this potential exit, many small companies would never be funded.

      You comment is like saying “Smaller biotechs do research, but how could they do research without electricity?! Aha! The power company should be getting the credit.”

      The whole pipeline adjusts itself via markets to have similar net present value (NPV). If earlier stages had higher NPV, they would be acquired more. If later stages had higher NPV, investment would dry up in discovery companies and flow to bigger ones. This is a good thing- we generally want the money flowing to where it is most useful.

    • Anne and JFC:

      We are on different pages. Sorry too say but you did not understand my perspective. That is fine. Everyone does not have to understand what is said. That is life. Cheers.

    • @Girish: You wrote “They have nothing to show for when it comes to innovation. Fact they will disagree with and defend.”

      You maintain the absurd and demonstrably false notion that pharma essentially contributes nothing to drug discovery or innovation. I’m not sure what there is to misunderstand.

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