From screening chemical compounds to optimizing clinical trials to improving post-market surveillance of drugs, the increased use of data and better analytical tools such as artificial intelligence (AI) hold the potential to transform drug development, leading to new treatments, improved patient outcomes, and lower costs. However, achieving the full promise of data-driven drug development will require the U.S. federal government to address a number of obstacles. This should be a priority for policymakers for two main reasons. First, enabling data-driven drug development will accelerate access to more effective and affordable treatments. Second, the competitiveness of the U.S. biopharmaceutical industry is at risk so long as these obstacles exist. As other nations, particularly China, pursue data-driven innovation, especially greater use of AI, foreign life sciences firms could become more competitive at drug development.