R&D spending at record high

Research-based pharmaceutical manufacturers are reinvesting nearly one in every five sales dollars in the discovery and development of new medicines, according to the Washington-based Pharmaceutical Research and Manufacturers of America.

In its annual survey, PhRMA found that pharmaceutical companies expect to invest a total of $20.6 billion in research and development in 1998 - almost 11% more than the record $18.6 billion invested last year.

Twelve years ago, PhRMA reported that companies were investing $4.1 billion in research and development, or about 15% of U.S sales and exports. That percentage rose only minimally throughout the 1980s but jumped to 17.9% in 1992, when the FDA first enacted the industry-friendly Prescription Drug User Fee Act.

The additional $327 million generated in user fees allowed the agency to hire more drug application reviewers and sped the approval process for prescription medicines. This, in turn, made the prospect of discovering new medicines a more lucrative pursuit for pharmaceutical companies. (The Prescription Drug User Fee Act was renewed by Congress as part of the FDA Modernization Act last year.)

Research and development spending rose to 19.9% in 1993 and topped 20% for the first time in 1994. It has wavered only 0.5% since then.

Supporting the dizzying spending heights is the vigorous health of the industry overall. PhRMA reported that sales have more than quadrupled since 1985, when they were $31.6 billion. Projected sales for the year ahead are $124.6 billion, companies reported.

At approximately 20%, the amount pharmaceutical companies invest in research and development is noticeably generous when compared to the amount invested by companies in other industries. The electronics industry, for example, invests 6.4% in research and development, PhRMA's report pointed out, and the aerospace and defense industry invests 3.9%. PR