5 ms·

A stupid accusation. The current situation is by 2017, a successful new drug costs 1.5B $ and 14 years in average, at the same time, more than 95% drug resear

A stupid accusation. The current situation is by 2017, a successful new drug costs 1.5B $ and 14 years in average, at the same time, more than 95% drug researches fail at different stages. In addition, the patent period counts far before the clinical trials ( begin from the molecular compound finding), usually the patent will only protect its drug less than 10 years. The drugmakers have to earn enough money in less than 10 years to cover all the cost spending on its own research and other failed researchs. Yes, they can make enough profit. Without that, what else can support them to continue research new drugs? by you?

kiba 8y ago
Seems like we're running into incrementally diminishing return with the current approach in drug research.
snarfy 8y ago
I'm not sure where that $1.5B figure came from but the caveat I've always heard that came along with it is that drug companies pay less than 10% of the actual research costs. The rest is made up from government grants and university research. They mention the total costs to make themselves sound like victims.
- aaavl2821 8y ago
  That is simply not true. The $1.5B is cost spent to get a single drug approved and includes cost of failure, i.e. Spend on drugs that end up not getting approved. The data that supports this comes from a sampling of pharma company r&d spend The NIH funds about $30B in research each year, NSF about $7B. The top 15 pharma companies spend ~$70B on r&d a year. VCs invest $10-15B / year as of the last few years. Globally all pharma companies spend over $200B on r&d
arountheworld 8y ago
Is it known why that costs so much and that the cost isn't artificially inflated to justify the patents or other reasons?
- deleted 8y ago
  [deleted]
- User23 8y ago
  Clinical trials up to FDA standards are expensive.
- aaavl2821 8y ago
  This is the seminal and oft-cited source of those estimates for cost of drug development. The data comes from internal financial records at pharma companies. This is a 2010 paper and costs have since increased: https://www.nature.com/articles/nrd3078 https://www.nature.com/articles/nrd3078 Bottom line is that it is expensive to develop drugs because most of them fail. You need to spend millions of dollars on dozens of drugs that don't work in order to get one drug approved. The single biggest cost driver is cost of Phase 2 failure. Basically when a drug that works in animals doesn't work in people. It costs $40-50M+ and takes 5-7 years to get through phase 2 and over 60% of phase 2 studies fail This is because biology is hard. So the fundamental reason drugs are expensive is because biology is hard You can also look at high level financial metrics compared to new drug approvals to get an orthogonal way of assessing r&d productivity. The top 15 pharma companies spend a combined $70B on r&d per year. In 2017 only 49 new drugs were approved and only like 40% of those were developed by big pharma (the rest were developed by startups that were acquired by big pharma, or developed by mid size pharma). Even if all 49 of those drugs go on to make $1B a year, that will still not return a profit to even just the top 15 pharma companies Also most of those drugs are developed for cancer or rare disease bc the economics of developing drugs for those conditions actually work. For things like cardiovascular disease, stroke, or psychiatric disease, where the economics don't work out, you see very few new drugs despite massive need for better treatments. This has nothing to do with patents and everything to do with the cost of r&d. If pharma companies could develop a new heart drug for cheap and get some lame patent protection to give them a monopoly they would do it
  - arountheworld 8y ago
    The linked article is behind the paywall. From you comment I still can't take out _why_ this costs so much. It sounds like development cost X because phase of development cost Y. I find it strange that you can say that something called "phase 2" costs precisely $40-50M+. What does it involve that it cannot cost $1M or $100k? What's so hard about biology that makes it expensive? What I am seeing is just words but no substance or maybe I don't understand something? I would love get more insight.
vuln 8y ago
They'll spend more than $1.5B on advertising for that wonder drug.
- shadowtree 8y ago
  you 4-6 years to recoup a couple billion in cost and have to make a profit. how do you do that without any marketing and sales?
- Fuckyourself 8y ago
  R&D isn't advertising. This is public information because many biotech companies are publicly listed. https://en.wikipedia.org/wiki/Cost_of_drug_development https://en.wikipedia.org/wiki/Cost_of_drug_development https://cen.acs.org/articles/92/web/2014/11/Tufts-Study-Finds-Big-Rise.html https://cen.acs.org/articles/92/web/2014/11/Tufts-Study-Find... All you have to do is google "average drug development cost" how hard is that?
marcosdumay 8y ago
I would love to see a break-down of those 1.5B. How can one company even organize the spending of that kind of money?
- aaavl2821 8y ago
  You can go to the SEC EDGAR website and search for 10-K filings for large pharma companies -- Roche, Novartis, Pfizer, Merck etc. they summarize their financials including r&d spend. Most big pharma companies spend $5-12B / year on r&d and it can take 10 years to get approval
jkbyc 8y ago
The related trend is called the Eroom's law: https://en.wikipedia.org/wiki/Eroom%27s_law https://en.wikipedia.org/wiki/Eroom%27s_law https://pbs.twimg.com/media/CUGxcfOUEAAuseO.png:large https://pbs.twimg.com/media/CUGxcfOUEAAuseO.png:large (graph, "Overall trend in R&D efficiency" from https://www.nature.com/articles/nrd3681 https://www.nature.com/articles/nrd3681 ) or https://www.google.com/search?q=eroom%27s+law&source=lnms&tbm=isch https://www.google.com/search?q=eroom%27s+law&source=lnms&tb...

kiba 8y ago

Seems like we're running into incrementally diminishing return with the current approach in drug research.

snarfy 8y ago

I'm not sure where that $1.5B figure came from but the caveat I've always heard that came along with it is that drug companies pay less than 10% of the actual research costs. The rest is made up from government grants and university research. They mention the total costs to make themselves sound like victims.

aaavl2821 8y ago
That is simply not true. The $1.5B is cost spent to get a single drug approved and includes cost of failure, i.e. Spend on drugs that end up not getting approved. The data that supports this comes from a sampling of pharma company r&d spend The NIH funds about $30B in research each year, NSF about $7B. The top 15 pharma companies spend ~$70B on r&d a year. VCs invest $10-15B / year as of the last few years. Globally all pharma companies spend over $200B on r&d

arountheworld 8y ago

Is it known why that costs so much and that the cost isn't artificially inflated to justify the patents or other reasons?

deleted 8y ago
[deleted]
User23 8y ago
Clinical trials up to FDA standards are expensive.
aaavl2821 8y ago
This is the seminal and oft-cited source of those estimates for cost of drug development. The data comes from internal financial records at pharma companies. This is a 2010 paper and costs have since increased: https://www.nature.com/articles/nrd3078 https://www.nature.com/articles/nrd3078 Bottom line is that it is expensive to develop drugs because most of them fail. You need to spend millions of dollars on dozens of drugs that don't work in order to get one drug approved. The single biggest cost driver is cost of Phase 2 failure. Basically when a drug that works in animals doesn't work in people. It costs $40-50M+ and takes 5-7 years to get through phase 2 and over 60% of phase 2 studies fail This is because biology is hard. So the fundamental reason drugs are expensive is because biology is hard You can also look at high level financial metrics compared to new drug approvals to get an orthogonal way of assessing r&d productivity. The top 15 pharma companies spend a combined $70B on r&d per year. In 2017 only 49 new drugs were approved and only like 40% of those were developed by big pharma (the rest were developed by startups that were acquired by big pharma, or developed by mid size pharma). Even if all 49 of those drugs go on to make $1B a year, that will still not return a profit to even just the top 15 pharma companies Also most of those drugs are developed for cancer or rare disease bc the economics of developing drugs for those conditions actually work. For things like cardiovascular disease, stroke, or psychiatric disease, where the economics don't work out, you see very few new drugs despite massive need for better treatments. This has nothing to do with patents and everything to do with the cost of r&d. If pharma companies could develop a new heart drug for cheap and get some lame patent protection to give them a monopoly they would do it
- arountheworld 8y ago
  The linked article is behind the paywall. From you comment I still can't take out _why_ this costs so much. It sounds like development cost X because phase of development cost Y. I find it strange that you can say that something called "phase 2" costs precisely $40-50M+. What does it involve that it cannot cost $1M or $100k? What's so hard about biology that makes it expensive? What I am seeing is just words but no substance or maybe I don't understand something? I would love get more insight.

vuln 8y ago

They'll spend more than $1.5B on advertising for that wonder drug.

shadowtree 8y ago
you 4-6 years to recoup a couple billion in cost and have to make a profit. how do you do that without any marketing and sales?
Fuckyourself 8y ago
R&D isn't advertising. This is public information because many biotech companies are publicly listed. https://en.wikipedia.org/wiki/Cost_of_drug_development https://en.wikipedia.org/wiki/Cost_of_drug_development https://cen.acs.org/articles/92/web/2014/11/Tufts-Study-Finds-Big-Rise.html https://cen.acs.org/articles/92/web/2014/11/Tufts-Study-Find... All you have to do is google "average drug development cost" how hard is that?

marcosdumay 8y ago

I would love to see a break-down of those 1.5B. How can one company even organize the spending of that kind of money?

aaavl2821 8y ago
You can go to the SEC EDGAR website and search for 10-K filings for large pharma companies -- Roche, Novartis, Pfizer, Merck etc. they summarize their financials including r&d spend. Most big pharma companies spend $5-12B / year on r&d and it can take 10 years to get approval

jkbyc 8y ago

The related trend is called the Eroom's law: https://en.wikipedia.org/wiki/Eroom%27s_law https://en.wikipedia.org/wiki/Eroom%27s_law https://pbs.twimg.com/media/CUGxcfOUEAAuseO.png:large https://pbs.twimg.com/media/CUGxcfOUEAAuseO.png:large (graph, "Overall trend in R&D efficiency" from https://www.nature.com/articles/nrd3681 https://www.nature.com/articles/nrd3681 ) or https://www.google.com/search?q=eroom%27s+law&source=lnms&tbm=isch https://www.google.com/search?q=eroom%27s+law&source=lnms&tb...