Few health policy issues have drawn as much attention from the public and elected officials in recent years as the rising cost of prescription drugs. American families, who increasingly have to choose between lifesaving care and their financial well-being, ultimately bear the burden of these costs. Under mounting pressure to take action, Congress has recently put forward a variety of solutions aimed at holding down drug prices, but there is one idea that policymakers haven’t discussed: the potential role of nonprofit pharmaceutical companies in addressing high drug costs.

Nonprofit pharmaceutical companies are the focus of a new white paper released today by Waxman Strategies, Nonprofit Pharmaceutical Companies: Background, Challenges, and Policy Options. A growing group of nonprofit organizations in the U.S. are prioritizing drug access and affordability as core components of their missions. Free from the need to maximize profits for shareholders, nonprofit pharmaceutical companies are able to pursue research and development in areas that traditional for-profit companies cannot or will not enter. These organizations represent an alternative to the existing system and a potential avenue for reducing costs and ensuring drugs are accessible for those who need them.

Despite their promise, in the current policy environment, nonprofit pharmaceutical companies face real barriers in their ability to sustainably develop and market needed drugs in the U.S. Based on the input of experts and nonprofit leaders, our white paper describes challenges in five areas:

• The absence of a suitable tax-exempt status for nonprofit pharmaceutical companies poses a fundamental challenge to their mission to provide low-cost drugs.
• Nonprofit pharmaceutical companies lack traditional investment avenues to raise the capital necessary to finance drug research and development.
• U.S. Food and Drug Administration (FDA) policies and practices – particularly the imposition of user fees – hinder the sustainable operation of nonprofit pharmaceutical companies.
• Nonprofit pharmaceutical companies lack access to traditional pharmaceutical supply chains and distribution channels.
• For some nonprofit companies, federal health program reimbursement policies counter the efforts of nonprofit companies seeking to offer lower cost drugs in select or across markets.

The white paper also provides a set of policy options for policymakers to consider which could improve the sustainability of the nonprofit model and help to reduce the burden of high prescription drug prices.

Commenting on this work, longtime Congressman and former House Energy and Commerce Chairman Henry Waxman shared the following statement today:

“The public is reacting strongly that we’ve got to do something about the high price of drugs. But what neither house of Congress has looked at is the potential for nonprofit pharmaceutical companies—which of course are not interested in making a profit but making drugs that are affordable and accessible for those who need it. 

 I think this is going to be the start of exploring what Congress can do to encourage the manufacturing of drugs on a nonprofit basis and presents an opportunity to learn about a new way—new potential—to hold down the price of drugs.”

Led by Chairman Waxman, Waxman Strategies is committed to expanding on his legacy of improving access to affordable drugs for patients. This white paper is a part of our broader effort to identify the causes of, and propose solutions to, the high price of prescription drugs. As the debate continues in Congress over how to address this issue, we encourage policymakers to consider the role that nonprofit pharmaceutical companies could play.

Read the white paper here.