PhRMA Board Announces New Criteria for Membership

May 10, 2017

In an effort to validate its commitment to representing research-based biopharmaceutical companies, the board of directors for the Pharmaceutical Research and Manufacturers of America (PhRMA) announced its approval of new criteria for membership. Eligibility to join PhRMA for biopharmaceutical companies will now meet new research and development (R&D) requirements.

In the last three months, PhRMA board of directors reviewed its membership criteria to ensure the association represents companies that are dedicated to researching and developing new, cutting-edge therapies for patients. The review caused the board to eliminate the “associate” category of membership and require companies to meet the following requirements for edibility to join the association, which go into effect immediately:

  • A three-year average global R&D to global sales ratio of 10 percent or greater; and

  • A three-year average global R&D spending of at least $200 million per year.

With the elimination of the “associate” category, the 15 companies that maintained that membership are no longer members; however, they can apply for full membership, if they meet the above criteria. Additionally, there are seven companies that no longer meet the above requirements and are no longer members. As companies meet the new criteria, they are welcome to reapply.

On average, PhRMA members invest 20 percent of their revenue in R&D, with the biopharmaceutical sector accounting for 17 percent of all domestic R&D funds by businesses in the U.S., and most PhRMA member companies invest more than is required by the new criteria.

The R&D process is complex, long, and costly for advancement in biopharmaceutical science, and takes, on average, more than a decade and $2 billion to research and develop a new medicine. Even with that, nine out of ten medicines that enter clinical trials do not make it to patients.