Foreign Threats to Taxpayer Funded Research

Committee on Finance, Foreign Threats to Taxpayer – Funded Research:  Oversight Opportunities and Policy Solutions, June 5, 2019

We will leave the security analysis and proposals to the named witnesses testifying in Executive Session except to say that their proposals will not work. Foreign hackers are too good and their manufacturers too corrupt not to steal any funded technology with a mod and a wink from their governments. This is especially the case if the result is manufactured there. Big PhARMA is as craven as their foreign counterparts. 

The answer is to co-opt China and other nations, giving them a role in helping with the research. Indeed, some diseases originate there, so it is stupid not to include them. They will then have an incentive to go after any rogue manufacturers or hackers (except for their help in running the data). 

In January of this year we submitted comments regarding Drug Pricing in America. We argued in favor of having every drug approval disclose all government supported research used to develop the product, giving the sponsoring agency the right to both share in the profits and have a say in the pricing. This both keeps the research dollars flowing and limits cost. 

A main problem with high cost drugs, especially orphan drugs, is the high development costs and the cost of small batch manufacturing. This could drive the need to raise drug prices for mature drugs in order to subsidize the orphans, although some hikes are undertaken because no one can stop them. The solution for this is for NIH and the FDA to own the rights to orphan drugs and to contract out research and development costs as it does basic research, as well as testing and production. 

PhARMA would still make reasonable profit, but the government would eat the risk and sometimes reap the rewards. NIH/FDA might even break even in the long term, especially if large volume drugs which were developed with government grants must pay back a share of basic research costs and the attached profits, as well as regulatory cost. 

The Government can include the relevant provisions on the government’s owning and licensing the results and granting manufacturing concessions in any agreements with foreign agencies, especially for orphan diseases. Of course, adding all of Asia to the potential market makes it more likely that any investment will yield a profit.