New GAO Report Reveals Underreported Taxpayer Contributions to Pharma Research

Senators Stabenow and Smith Team Up with House Oversight Committee Ranking Member Raskin to Introduce New Bill to Increase Transparency and Lower Drug Costs

Tuesday, May 09, 2023

WASHINGTON—The U.S. Government Accountability Office released a new report today that found the amount of taxpayer contributions to pharmaceutical research and development has frequently been underreported in patent filings, while pharmaceutical companies continue to cite R&D expenditures as justification for raising drug prices. In response to the report, which was requested by Senators Debbie Stabenow (D-MI) and Tina Smith (D-MN) and House Oversight Committee Ranking Member Jamie Raskin (MD-08), the lawmakers today introduced a bill, the Pharmaceutical Research Transparency Act, to increase transparency and make drug companies disclose their research and development expenses.


The GAO report found that of more than 19,000 patents filed between 2012-2021 that relied on research funded by the National Institutes of Health, nearly 15% failed to properly disclose and explain the support received from federally funded research.


“Critical drugs exist because of taxpayer dollars from American families, yet Americans are forced to pay the highest drug prices in the world. This new report provides further evidence that drug companies are misleading the public on who bears the cost of the development of new drugs, and our bill will push them to be more transparent,” said Senator Stabenow.


“Americans deserve to know why they pay more for their prescription drugs than any country in the world,” said Senator Smith. “This bill would require drug companies to disclose how much they’re spending on research and development so Americans can finally understand the real costs of their medication. I will keep pushing to make sure this commonsense legislation gets across the finish line.”


 “Oversight Committee Democrats’ years-long investigation found that some pharmaceutical companies use taxpayer funded research to develop lifesaving prescription medications but then charge Americans sky-high prices for those medications by claiming the prices are justified by the high costs of research and development.  This new GAO report shows that pharma’s claims have been badly misleading and demonstrates why Congress must support reforms that provide more transparency into how much drug companies are actually spending on research and development,” said Ranking Member Raskin.


“Exposing the true costs of pharmaceutical R&D would allow consumers and purchasers of prescription drugs to better interrogate industry claims as they engage in drug price negotiations and help inform U.S. policy to support innovation, including through alternatives to the monopoly-driven business model. Public Citizen thanks Sen. Stabenow and Rep. Raskin and their cosponsors for introducing the Pharmaceutical Research Transparency Act to shine sunlight on the black box of prescription drug R&D costs,” said Steven Knievel, Access to Medicines Advocate, Public Citizen.


"Increasingly, our patients tell us they are unable to take the medicines we prescribe because they can't afford them. Despite their taxpayer contribution to the development of every single drug approved by the FDA including for clinical trials, the pharmaceutical industry continues to set higher and higher prices. The Pharmaceutical Research Transparency Act will finally open the books behind drug development and point to necessary action that will ensure our patients and the American public equitable access to the fruits of their investment,” said Reshma Ramachandran, Assistant Professor, Yale School of Medicine and Chair of the FDA Task Force for Doctors for America.


Doctors Without Borders, Public Citizen, Doctors for America, ACA Consumer Advocacy, Consumer Action, Generation Patient, and the American Medical Student Association endorse the Pharmaceutical Research Transparency Act.


Senator Stabenow and the House Oversight Committee have worked together on a long-term effort to increase transparency around the drug development process, the true costs of research, and the extent of government contributions to drug discovery. Senator Stabenow and then-Chairwoman Maloney introduced a bill last Congress, the Pharmaceutical Research Transparency Act, that would increase transparency around who is paying what to develop new drugs and force drug companies to provide accurate accounting of what they are spending on actual science.


Over the course of this investigative effort, the lawmakers have also worked with GAO to conduct a number of reviews related to these issues. Their first request was related to how NIH protects and licenses its intellectual property and the second request was for GAO to attempt to account for the contributions of government-funded research and development to the development of Gilead’s Remdesivir, a drug used to treat COVID-19.