Pension and state funds dominating biomedical R&D investment: fiduciary duty and public health
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RESEARCH
Open Access
Pension and state funds dominating biomedical R&D investment: fiduciary duty and public health Slavek Roller
Abstract Background: Who benefits from the commercial biomedical research and development (R&D)? Patients-consumers and investors-shareholders have traditionally been viewed as two distinct groups with conflicting interests: shareholders seek maximum profits, patients - maximum clinical benefit. However, what happens when patients are the shareholders? With billions of dollars of public risk capital channeled into the drug development industry, analysing the complex financial architecture and the market for corporate control is essential for understanding industry’s characteristics, such as pricing strategies or R&D priorities. Results: Adding investments by governmentally-mandated retirement schemes, central and promotional banks, and sovereign wealth funds to tax-derived governmental financing shows that the majority of biomedical R&D funding is public in origin. Despite this, even in the high-income countries patients can be denied access to effective treatments due to their high cost. Since these costs are set by the drug development firms that are owned in substantial part by the retirement accounts of said patients, the complex financial architecture of biomedical R&D may be inconsistent with the objectives of the ultimate beneficiaries. Conclusions: The divergence in economic and public health performance of the drug development industry is resultant from its financial underwriting by enormously expanded pension schemes, governmentally mandated to represent the interests of “captive” beneficiaries, as well as similar policymaker-designed funding flows, whose standards of transparency, accountability and representation are substantially lower than that of governments themselves. Strengthening those elements of institutional design and thus ensuring active responsible shareholding in the interest of the patients-savers is an under-utilised, but potentially high-impact opportunity for advancing public health. Keywords: Pharmaceuticals, Drug development, Access to medicines, R&D investment, Corporate governance
Background Who benefits from the commercial biomedical research and development (R&D)? On a population level there are two groups of agents standing to benefit from the biomedical R&D: the patients/public who accrue the social value of new medical technologies, and the producers/owners who accrue the economic value from the sales of such technologies. Public health literature has traditionally treated the two as distinct groups with opposing interests. In contrast, in this study I demonstrate Correspondence: [email protected] Goethe University Frankfurt, Theodor-W.-Adorno-Platz 1, 60323 Frankfurt, Germany
with the growth of public and quasi-public investors, such as national and occupational retirement schemes, the majority of biomedical R&D funding is public in origin. Furthermore, how the biomedical R&D’s value is captured by the public in their role as savers
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