Pharmaceutical and biotech companies fund the majority of clinical trials. Among the most-cited trials published between 2019 and 2022, 68% had industry funding, and just over half were exclusively industry-funded. The rest comes from a mix of government agencies, nonprofit organizations, academic institutions, and increasingly, partnerships that blend several of these sources together.
Pharmaceutical and Biotech Companies
Private industry is the dominant funder of clinical trials worldwide, and its share has grown substantially over the past decade. In cancer research, industry-sponsored trial enrollment was about five times greater than federally sponsored enrollment during 2008 to 2012. By 2018 to 2022, that ratio had nearly doubled: industry enrollment in adult cancer trials was 9.6 times greater than federal enrollment. The pattern holds across most therapeutic areas, though pediatric trials remain closer to balance, with an industry-to-federal ratio of about 2.3 to 1.
The reason is straightforward. Late-stage trials are enormously expensive, and companies have a direct financial incentive to fund them. Phase III trials, the large studies needed before a drug can reach the market, are the primary drivers of research and development costs. Median estimates for a single Phase III trial range from $19 million to $200 million, depending on the source and methodology. Cardiovascular trials tend to be the most expensive, averaging around $157 million, while trials for smaller disease categories can run under $10 million.
Companies fund trials to generate the safety and efficacy data the FDA requires for drug approval. This means industry-funded trials tend to focus on conditions with large potential markets: cancer, diabetes, cardiovascular disease, autoimmune disorders. Conditions affecting smaller populations or offering less commercial return often receive less industry attention, which is where other funders step in.
The National Institutes of Health
The NIH is the largest public funder of biomedical research in the world, investing nearly $48 billion annually. About 82% of that budget goes to extramural research, supporting almost 50,000 competitive grants across more than 2,500 universities, medical schools, and research institutions. Another 11% funds research conducted by roughly 6,000 scientists in the NIH’s own laboratories, mostly on its campus in Bethesda, Maryland.
Not all of that money goes to clinical trials. A large portion supports basic science, laboratory research, and early-stage studies that lay the groundwork for future trials. But NIH-funded clinical trials play a critical role in areas where industry has less incentive to invest: comparative effectiveness studies that test one approved treatment against another, prevention research, behavioral interventions, and trials in underserved populations. NIH-funded research also tends to ask different questions than industry trials. Rather than testing a new drug against a placebo to win FDA approval, publicly funded trials often compare existing treatments head to head, giving doctors better information about which option works best.
Nonprofit and Patient Advocacy Organizations
Foundations and patient advocacy groups have become significant funders of clinical research, particularly for rare and underfunded diseases. Their contributions range from small seed grants to nine-figure investments that reshape entire fields.
The Cystic Fibrosis Foundation invested $150 million in drug development from 1998 to 2005, including a $40 million partnership with Vertex Pharmaceuticals that led to the discovery and approval of ivacaftor, a breakthrough treatment for cystic fibrosis. The Melanoma Research Alliance has invested over $150 million in translational research, catalyzing an additional $500 million in follow-on funding. Investigators it supported played a role in developing 17 FDA-approved treatments.
Smaller organizations operate on tighter budgets but fill gaps that larger funders miss. The STXBP1 Foundation awarded $25,000 to a lab at the University of Richmond for a drug repurposing study targeting a rare form of epilepsy. The Fibromuscular Dysplasia Society of America granted $50,000 to the University of Michigan for a patient registry. The Pediatric Brain Tumor Foundation has funded Phase I trials combining treatments for children with recurrent brain tumors. Some organizations even run their own trials: the House Institute Foundation, which focuses on hearing disorders, is currently conducting a trial testing whether an existing allergy medication can treat Meniere’s disease.
Many of these groups focus on rare diseases where the patient population is too small to attract industry investment. They fund patient registries, biobanks, and natural history studies that create the infrastructure needed for future clinical trials. Organizations like the Oxalosis and Hyperoxaluria Foundation, the Pachyonychia Congenita Fund, and the Mowat-Wilson Syndrome Foundation maintain registries that would not exist without philanthropic support.
Academic Medical Centers
Universities and teaching hospitals fund early-stage and investigator-initiated trials through internal grants, institutional seed funding, and translational science programs. These are typically small studies designed to test a new idea before seeking larger funding from the NIH or industry. Clinical and Translational Science Institutes, funded in part by the NIH, exist at major research universities across the country and provide direct funding, infrastructure, and connections to external grant opportunities for researchers at all career stages.
Academic centers also serve as the sites where many industry and NIH-funded trials are conducted. In that role, they contribute staff time, patient recruitment resources, and institutional support that represent a significant but often uncounted financial investment in the trial process.
Government Incentives for Rare Diseases
The Orphan Drug Act, passed by Congress in 1983, created financial incentives specifically designed to encourage trials for rare diseases, defined as conditions affecting fewer than 200,000 people in the United States. The FDA’s Office of Orphan Product Development administers several grant programs under this law, including the Clinical Trials Grants Program, which has funded trials evaluating safety and efficacy of products for rare conditions since the act’s passage. A separate Natural History Studies Grants Program, launched in 2016, funds studies that fill knowledge gaps and build the foundation for future clinical trials. In 2022, the ACT for ALS Act added a Rare Neurodegenerative Disease Grants Program targeting ALS and similar conditions in adults and children.
These programs exist because rare disease trials face a unique economic problem. With small patient populations and limited commercial potential, the usual market incentives don’t generate enough investment on their own. Government grants, combined with nonprofit funding and the tax credits and market exclusivity provisions of the Orphan Drug Act, help close that gap.
Public-Private Partnerships
Some trials are funded through formal agreements between government agencies, pharmaceutical companies, academic institutions, and nonprofits. These public-private partnerships are especially common for diseases that affect populations in low-income countries, where commercial returns are minimal but public health needs are urgent. For neglected tropical diseases, public-sector and NGO-led partnerships are the most common model, bringing together industrial drug development capabilities with public health priorities and government regulatory support.
The COVID-19 pandemic provided the most visible recent example of this model at scale, with government agencies providing billions in funding to pharmaceutical companies to accelerate vaccine development and manufacturing. But similar collaborations have been operating for decades in areas like HIV, tuberculosis, and malaria research.
How Funding Sources Are Disclosed
Federal regulations require transparency about who pays for clinical research. Under FDA rules (21 CFR Part 54), any company submitting a drug or device for approval must disclose the financial relationships between the study’s sponsor and every clinical investigator involved. This includes equity interests, consulting fees, and other financial arrangements that could create conflicts of interest. Investigators participating in trials under FDA oversight are required to provide sponsors with accurate financial information to make these disclosures possible.
On the trial registration side, ClinicalTrials.gov requires sponsors to identify themselves and their funding sources when registering a study. Published trial results in medical journals also typically include funding disclosures and conflict-of-interest statements. These layers of transparency let patients, doctors, and the public assess whether a trial’s design or conclusions might have been influenced by who paid for it.