10 ms·

I worked in the drug R&D business for over 8 years. I still follow the industry closely. Some things always get lost in these discussions. First, manufacturing

by JunkDNA 15y ago

I worked in the drug R&D business for over 8 years. I still follow the industry closely. Some things always get lost in these discussions. First, manufacturing an existing drug is absurdly cheap. Modern industrial chemistry ensures this for all small molecule drugs (note that this is not the same case for the "biologics" which are often fiendishly difficult to make). Almost all the cost in a drug is the manufacturer recouping R&D costs. These costs have been spiraling out of control for 10 years. They are astronomical. A recent Forbes analysis pegs the cost of a new drug with failures of drugs in development folded in anywhere from $3 billion to $12 billion depending on the manufacturer (excellent context and discussion here: http://pipeline.corante.com/archives/2012/02/10/the_terrifying_cost_of_a_new_drug.php http://pipeline.corante.com/archives/2012/02/10/the_terrifyi...). You don't need to be an industry expert to grok that those numbers are wildly unsustainable. It is not possible to keep spending the amount companies spend to make new drugs. In the past, companies would inflate the price in the USA to make up for reduced prices elsewhere. But with all the recent healthcare reform in the USA, that strategy is ending. To add insult to injury, the vast majority of the most commonly used drugs will lose patent protection in the next couple of years. In the industry they call this the patent cliff. There will not be enough new drugs to offset all the ones that go generic. This move by India is a symptom of the wider drug industry problems. There will be more of these kinds of moves in the future. The industry has been searching for ways to more effectively make drugs and have it not be so expensive. But so far they have been striking out for 10 years running. The current strategy is to lay off most of their r&d workforce and offshore and outsource this part of the business. Somewhere out there, a business model is waiting to be found. Whoever cracks that nut and becomes the Southwest of the drug industry is going to make a fortune.

deleted 15y ago
[deleted]
Retric 15y ago
There are a finite number of useful small molecules you can use as drugs. If it's costing 3-12 billion to find new ones and even then we are failing we may be at a point where it's time to 'give up' on our existing approach. As an upside we can remove a significant slice of our spiraling healthcare costs. We can also remove a lot of drug related advertizing that has dubious healthcare benefits. Unfortunately, that also means antibiotics are going to become infective in the not to distance future. On the net I don't think this is a good thing, but it should free up a lot of vary intelligent people to work on other lines of research. Hopefully, we may eventual start to develop the tools to build direct DNA specific medicines on the fly by using the fruits of those other lines of research.
- onemoreact 15y ago
  Why the down votes? Diminishing returns is a real issue and randomly testing chemicals until one happens to work for something is hardly the most effective approach possible.
nknight 15y ago
> You don't need to be an industry expert to grok that those numbers are wildly unsustainable. Tell you what. When these companies stop being the most profitable in America, or even just when their EPS starts declining, I'll believe you.
- w1ntermute 15y ago
  I don't think there's an unbreakable bond between profitability and sustainability. To use a tech industry analogy, despite making insane profits off of Windows as it is (and has been for 20 years), Microsoft has realized that we've entered a post-PC world, and modified Windows to run on new form factors, such as the tablet.
  - nknight 15y ago
    I really don't see your point. Microsoft's basic business model hasn't changed, their products are just evolving. Drug companies make new drugs and refine old ones all the time. Other than whining by obviously-biased spokespeople for the drug industry, I have no reason to believe their business model can't be sustained indefinitely under the current regulatory regimes.
    - w1ntermute 15y ago
      Like the GP post says, things are changing for big pharma, just as they are for MS. There's no way to keep up these prices, and the corresponding R&D costs, when (and not if, because it will happen) healthcare gets nationalized and you have one government representative with the monopsonistic power to really drive prices down.
    - betterth 15y ago
      Did you read his post about the patent cliff? The majority of blockbuster drugs are about to go off of patent protection. This is where the majority (if not all) of the profit in the industry comes from, as well as a huge chunk of the rests of their costs. It's an interesting time in the industry but the patent cliff is real and the industry is going to change quite a bit more in the next few years. The model is absolutely unsustainable - there isn't enough blockbusters in the pipeline to replace the current, not by a very long shot. And we know what is in in the pipeline because remember it takes 7-11 years to bring a candidate from preclinical through FDA approval, so we have a very good idea of what's coming out (and what's not).
ekianjo 15y ago
The reason why the cost of R&D is inflating so much is due to relentless addition of new regulations, new requirements, new safety-related trials demanded by the authorities. Add to that that almost every other country has specific requirements that do not fit with what was developed and proven before, and that's just another 2-3 years clinical trial you need to put up with. This is really getting insane and there is science to back all those regulatory differences, some driven by pure ideology. As you mentioned the patent cliff is looming for a number of big pharma actors, and what this is going to result in is less innovation and more strategic moves to other "easier" markets such as generics or OTC drugs. This is just plain bad for everyone in the end.
- lysol 15y ago
  Got any examples? The trial process for new medications isn't perfect, but without citing specific failures in the process it becomes to easy to discount the parts of the process that do work.
  - refurb 15y ago
    Weight loss drugs. Three new products were rejected by the FDA last year. Sure these drugs had risks, but what's the cost of obesity in terms of medical costs? At this point in time the FDA has incredibly high standards of safety for weight loss drugs and not without reason. But what are the costs of the 40% of obese Americans who will get diabetes, cardiovascular disease, etc, etc?
    - intended 15y ago
      Wait - so you want to take the at risk group and give them a drug that failed human safety tests? EDIT: I am trying to say that while obesity is 'bad', giving them a drug that adds to their risk levels is not a solution. If you are still pro your position, bear in mind that you are now throwing dice and hoping that: (people who improve) >= (people who suffer + nothing happens). Are you qualified to play dice with peoples lives?
      - 15y ago
antihero 15y ago
Why has the cost gone up so much, and what can be done to reduce it?
- leonth 15y ago
  It does not go down. The more drugs we know, the harder it is to prove that the new drug you propose is better than current therapy. A proposed molecule that does not have significant advantage compared to the current gold standard will never sell. To put it in another way: all the low-hanging fruits are already taken. Add to the fact that science progresses; we now know more about the human body and generally everything compared to 20 years ago, so more stringent rules and testing are required. Classic example: before thalidomide, nobody cares about how drugs work in pregnant women. Now all drugs have pregnancy category (how safe it is to be used by pregnant women) approved by FDA, and figuring out this pregnancy category comes with a cost.
  - Produce 15y ago
    >The more drugs we know, the harder it is to prove that the new drug you propose is better than current therapy. No it's not. Example: 1980: Drug A is invented to treat illness X, proves to be the most effective 1990: Drug B is invented for illness X, effectiveness is tested against Drug A 2000: Drug C is invented for illness X, effectiveness is tested against Drug B 2010: Drug D is invented for illness X, effectiveness is tested against Drug C In other words, always compare effectiveness to the current few best treatments. Nothing spirals, nothing becomes harder to prove.
    - nikcub 15y ago
      for some reason the placebo effect is getting stronger and more drugs are failing in stage II and III against sugar: http://www.wired.com/medtech/drugs/magazine/17-09/ff_placebo_effect?currentPage=all http://www.wired.com/medtech/drugs/magazine/17-09/ff_placebo...
      - Produce 15y ago
tripzilch 15y ago
But most of those R&D costs are for getting "FDA" approval. I don't see why India (or anyone, really) should pay for lining the pockets of the USA's inefficient and corrupt bureaucratic machinery. Or I could be wrong and those $12B really goes into equipment and lab workers wages, but you won't blame me for finding it real hard to believe until I see at least a rough breakdown of how those costs are summed up. From the article: "Bayer tried to justify its high price by making claims of high R&D costs, but refused to provide any details". That either means they don't know themselves, or it means that the larger part of the budget got "lost" in requesting approval forms paper pushing greasing cogs and lobbying politicians.
- leonth 15y ago
  I am not terribly familiar with the process, but I assure you it includes: early computational simulations of the prospective molecules; testing on lab animals; testing on healthy people; testing on small (a few hundred) number of patients; large scale (a few thousand) multi-centre trials across the whole world (if you want to sell it to the whole world, that is). This process takes quite a number of years. Now imagine how many labs, hospitals, scientists, doctors, statisticians, patients (oh they do get compensation), and auxiliary clerical workers need to be paid for the whole process.
- betterth 15y ago
  The majority of the money goes into Phase III clinical trials. Don't bash the FDA - they're the most evidence based, scientifically minded regulatory body in our government. Preclinical and Phase I - II trials aren't too expensive, in the order of millions of dollars. But also remember, for every ~10,000 candidates that enter preclinical trials, about 1-2 will actually pass FDA approval. The billion number isn't just for one drug, it's also for the 10,000 failures that you had to weed through to find that one drug. Phase I is safety trials in healthy humans (young males generally). Phase II starts using it in the target population (the sick) and begins looking at dosing requirements and preliminary efficacy data. But the big one, Phase III, that's the big group, expensive, efficacy trial. This is the trial that has to prove, beyond a shadow of a doubt scientifically, that the drug does what they say it does. A good Phase III trial can cost in the hundreds of millions of dollars easy. I've heard of $250,000,000 Phase III trials before. If "the most rigorous evidence requirement in the world" is your example of "inefficient and corrupt", than I guess we'll just disagree. But the FDA is the most strict drug regulatory body in the world, and the amount of evidence for efficacy that they require from the industry is truly impressive and truly does warrant the billions price tag.
Duff 15y ago
At this point, isn't the pharmaceutical industry playing games with supply by limiting the production of many medicines? Even a common OTC drug like guaifenesin that has been around since the 50's is difficult to find by itself, except in the newly patented time-release formulation (ie. Mucinex). (Although it is an ingredient in many cold medicines.)
- Judson 15y ago
  Maybe I'm not talking about guaifenesin by itself, but there seems to always be a drug store generic of Mucinex beside it on the shelves.
- refurb 15y ago
  The margins on generic drugs are razor thin. Most of the recent drug shortages are due to a lack of starting materials or manufacturing problems. Both of these can be traced back to the fact that there is very little money to be made in generic drugs. They are basically commodities.
  - Symmetry 15y ago
    Other sources of shortages are due to the fact that the government issues drug companies production quotas for some drugs, which the drug companies aren't allowed to go over even if their competition has problems. My understanding of how this works is that the DEA tells companies A, B, and C that they can each make 20 units of Drug X. Then the FDA tells company C that their Drug X isn't up to snuff and they can't make any more this year. The 40 units that companies A and B make isn't enough to cover demand, but they can't increase their production to 30 units because the DEA has already filed their paperwork.
vannevar 15y ago
Somewhere out there, a business model is waiting to be found. I hope so, because the current one isn't working for consumers. Even with the billions spent on R&D, it turns out that many of the drugs Big Pharma turns out are no better than placebos. It's not hard to see why: a big company spends X amount on each failure and needs a 10X hit to offset the costs. If one doesn't materialize, it's not hard to rig the statistics to show some marginal benefit for a chosen winner, and a big marketing budget and the placebo effect takes care of the rest. Thanks to this model, we've finally conquered the scourges of restless leg syndrome, overactive bladder, and general anxiety disorder.
- roadnottaken 15y ago
  Actually it's almost impossible to rig the statistics. And every drug on the market has shown efficacy compared to placebo in large tests calle phase 3 clinical trials.
  - vannevar 15y ago
    Actually it's almost impossible to rig the statistics. I would argue that it's actually impossible to economically conduct sufficient studies to reliably predict the efficacy and long term safety of drugs in the general population. And you're right, every drug on the market has passed Phase 3 trials because they're cherrypicked. A big drug company knows how many drugs it needs in production to ensure that some percentage of them are statistically likely to get through Phase 3 trials. To believe otherwise is to believe a drug company would bet a multi-billion-dollar enterprise purely on a research gamble. Is it possible for them to lose? Sure, 'statistically likely' isn't a guarantee. But it's much better odds than depending on stumbling into an actual cure.
    - ced 15y ago
      Do you have any evidence for that? I don't have any background in pharma, but my background in stats tells me that the odds of passing a controlled study with a placebo would be so low as to be economically infeasible.
Alex3917 15y ago
>Almost all the cost in a drug is the manufacturer recouping R&D costs. Actually that's not true. Big pharma spends twice as much on advertising as they do on R&D: http://www.sciencedaily.com/releases/2008/01/080105140107.htm http://www.sciencedaily.com/releases/2008/01/080105140107.ht... They also spend a significant amount of money on government fines due to corrupt practices (i.e. killing people). They are now the single most corrupt industry, paying significantly more fines per year than the entire military industrial complex: http://www.citizen.org/hrg1924 http://www.citizen.org/hrg1924
- mjallday 15y ago
  Is paying fines corrupt? I would say that dodging fines would be considerably more corrupt.
  - man1sh 15y ago
    They pay fines for their corrupt behavior. You understood it wrong
    - liber8 15y ago
      Simply because you are forced to pay fines doesn't mean you are "corrupt". The abstract indicates most of the fines come from "illegal off-label drug promotion" and "overcharging state governments". It could be argued that the first shouldn't even be an issue, and the second, depending on how "overcharging" is defined could be outright fraud on the part of big pharma, fraud on the part of state governments, or something in between.
- makmanalp 15y ago
  I'll play devil's advocate: Marijuana users pay fines too, are they also corrupt and immoral? How about drivers who drive at 80km/h on a highway that is 95% 80km/h and 5% 50km/h which was obviously set up to trap people into paying fees? How do you know the fees that big pharma pays are not because of similar over-oppressive laws designed to make the government money? Edit: Well, I'm a moron for talking before reading. Scratch that.
pullo 15y ago
May be the real solution is a combination of tiered pricing and cut of all sales revenues by generics. The cost of this decision for Bayer is yet to be seen. Considering the number of users is only a few hundred at the current price point, Bayer should be ok. But, it will be interesting to see a breakdown of r&d costs of bayer in total. Considering India is one of the most popular destinations for clinical trials by drug firms, I cant shrug off a karma play here. http://www.scidev.net/en/health/clinical-ethics/news/fines-expose-failings-in-policing-of-indian-drug-trials.html http://www.scidev.net/en/health/clinical-ethics/news/fines-e...
malandrew 15y ago
Where does all the R&D money go? Somehow I get the impression that developing a new drug involves way too many people and processes and that disintermediation and automation along the R&D chain could greatly simplify and cheapen the process. First of all, you need the brains to develop the drug. I can't imagine that this involves a team much larger than a pre-series A startup. Does the development process for creating a new drug promote failing fast? Does keeping the entire R&D process in house help or hinder? How far can a team get before it needs to try a drug on humans and how much does it cost to get that far? Are there any startups that just manage a portfolio of patients with symptoms/diseases/disorders and automatically pair those patients with drugs that might benefit them? Should the process allow the patient to "price" his or her own life/health, whereby patients can opt in to Phase 1 trials for a lot more money than Phase 2 for example and name their own price in the process? How much of the money spent is actually (time*wages) for a lot of people for an unnecessarily long process? Is burn rate a consideration when creating a new drug? How long does it take to get a drug to market? Can price be reduced by half by reducing the time it takes by half? Do a lot of people in the process spend their time waiting? Is drug development in the US far more expensive than elsewhere because the entire healthcare system here is more expensive (vicious cost cycle / positive feedback loop) Anyways, just tossing some ideas out there because I get the suspicion that pharma R&D is ridiculously archaic.
- wtvanhest 15y ago
  I don't have exact numbers on this, but it seems like a lot of the early stage research happens in very small teams at universities and biotech companies. Then large companies like Bayer acquire the research and spend millions on getting it through FDA process. I know advancements are being made in automation for various research activities and I'm sure there will continue being a lot of advancements there. (The need for automation is fully recognized at the industry level)
cma 15y ago
Most private research dollars go into patent work-around drugs--drugs that have the same basic function as another, but successfully work around its patent (and get their own patent in the process). E.g. duplicated effort with occasional serendipity leading to something new.
- refurb 15y ago
  This is patently false. Most research dollars go into new therapies with completely new mechanisms of action. Companies are often working in similar areas, that's true. The best example of this is the statins. Lipitor was the 5th statin to hit the market. Was it a me-too drug? I guess, but it was also superior to the other 4 that came out first (less incidence of muscle damage, more efficacious). Did Pfizer say "Gee, let's copy that other statin?" Obviously not since getting a new drug to market takes 10 years and they came out only a few years later.
  - aaronblohowiak 15y ago
    >getting a new drug to market takes 10 years is this intrinsic to drug manufacture? would regulatory/tort reform help?
    - refurb 15y ago
      It's a combination of the scientific challenges in finding a new drug and the safety hurdles that the FDA puts up. Most of that 10 years is taken up by the clinical trials that the FDA requires. I guess you could say it's the price of having access to thoroughly tested drugs that are both safe and efficacious.
tuxguy 15y ago
@JunkDNA, you seem to know Pharma R&D & patents. An excellent read on another case coming up before the Indian Supreme Court, regarding Swiss drug co. Novartis's blockbuster anti-cancer drug Gleevec. http://www.nytimes.com/2012/03/07/business/global/indias-supreme-court-to-hear-long-simmering-dispute-on-drug-patents.html?pagewanted=all http://www.nytimes.com/2012/03/07/business/global/indias-sup... I think that judgement might be more important, as the NYT article points out how the US govt is trying to influence the outcome. http://keionline.org/sites/default/files/tpp-10feb2011-us-text-ipr-chapter.pdf http://keionline.org/sites/default/files/tpp-10feb2011-us-te... What are your thoughts on Gleevec ?
deleted 15y ago
[deleted]

by JunkDNA 15y ago

deleted 15y ago

[deleted]

Retric 15y ago

There are a finite number of useful small molecules you can use as drugs. If it's costing 3-12 billion to find new ones and even then we are failing we may be at a point where it's time to 'give up' on our existing approach. As an upside we can remove a significant slice of our spiraling healthcare costs. We can also remove a lot of drug related advertizing that has dubious healthcare benefits. Unfortunately, that also means antibiotics are going to become infective in the not to distance future. On the net I don't think this is a good thing, but it should free up a lot of vary intelligent people to work on other lines of research. Hopefully, we may eventual start to develop the tools to build direct DNA specific medicines on the fly by using the fruits of those other lines of research.

onemoreact 15y ago
Why the down votes? Diminishing returns is a real issue and randomly testing chemicals until one happens to work for something is hardly the most effective approach possible.

nknight 15y ago

> You don't need to be an industry expert to grok that those numbers are wildly unsustainable. Tell you what. When these companies stop being the most profitable in America, or even just when their EPS starts declining, I'll believe you.

w1ntermute 15y ago
I don't think there's an unbreakable bond between profitability and sustainability. To use a tech industry analogy, despite making insane profits off of Windows as it is (and has been for 20 years), Microsoft has realized that we've entered a post-PC world, and modified Windows to run on new form factors, such as the tablet.
- nknight 15y ago
  I really don't see your point. Microsoft's basic business model hasn't changed, their products are just evolving. Drug companies make new drugs and refine old ones all the time. Other than whining by obviously-biased spokespeople for the drug industry, I have no reason to believe their business model can't be sustained indefinitely under the current regulatory regimes.
  - w1ntermute 15y ago
    Like the GP post says, things are changing for big pharma, just as they are for MS. There's no way to keep up these prices, and the corresponding R&D costs, when (and not if, because it will happen) healthcare gets nationalized and you have one government representative with the monopsonistic power to really drive prices down.
  - betterth 15y ago
    Did you read his post about the patent cliff? The majority of blockbuster drugs are about to go off of patent protection. This is where the majority (if not all) of the profit in the industry comes from, as well as a huge chunk of the rests of their costs. It's an interesting time in the industry but the patent cliff is real and the industry is going to change quite a bit more in the next few years. The model is absolutely unsustainable - there isn't enough blockbusters in the pipeline to replace the current, not by a very long shot. And we know what is in in the pipeline because remember it takes 7-11 years to bring a candidate from preclinical through FDA approval, so we have a very good idea of what's coming out (and what's not).

ekianjo 15y ago

The reason why the cost of R&D is inflating so much is due to relentless addition of new regulations, new requirements, new safety-related trials demanded by the authorities. Add to that that almost every other country has specific requirements that do not fit with what was developed and proven before, and that's just another 2-3 years clinical trial you need to put up with. This is really getting insane and there is science to back all those regulatory differences, some driven by pure ideology. As you mentioned the patent cliff is looming for a number of big pharma actors, and what this is going to result in is less innovation and more strategic moves to other "easier" markets such as generics or OTC drugs. This is just plain bad for everyone in the end.

lysol 15y ago
Got any examples? The trial process for new medications isn't perfect, but without citing specific failures in the process it becomes to easy to discount the parts of the process that do work.
- refurb 15y ago
  Weight loss drugs. Three new products were rejected by the FDA last year. Sure these drugs had risks, but what's the cost of obesity in terms of medical costs? At this point in time the FDA has incredibly high standards of safety for weight loss drugs and not without reason. But what are the costs of the 40% of obese Americans who will get diabetes, cardiovascular disease, etc, etc?
  - intended 15y ago
    Wait - so you want to take the at risk group and give them a drug that failed human safety tests? EDIT: I am trying to say that while obesity is 'bad', giving them a drug that adds to their risk levels is not a solution. If you are still pro your position, bear in mind that you are now throwing dice and hoping that: (people who improve) >= (people who suffer + nothing happens). Are you qualified to play dice with peoples lives?
    - 15y ago

antihero 15y ago

Why has the cost gone up so much, and what can be done to reduce it?

leonth 15y ago
It does not go down. The more drugs we know, the harder it is to prove that the new drug you propose is better than current therapy. A proposed molecule that does not have significant advantage compared to the current gold standard will never sell. To put it in another way: all the low-hanging fruits are already taken. Add to the fact that science progresses; we now know more about the human body and generally everything compared to 20 years ago, so more stringent rules and testing are required. Classic example: before thalidomide, nobody cares about how drugs work in pregnant women. Now all drugs have pregnancy category (how safe it is to be used by pregnant women) approved by FDA, and figuring out this pregnancy category comes with a cost.
- Produce 15y ago
  >The more drugs we know, the harder it is to prove that the new drug you propose is better than current therapy. No it's not. Example: 1980: Drug A is invented to treat illness X, proves to be the most effective 1990: Drug B is invented for illness X, effectiveness is tested against Drug A 2000: Drug C is invented for illness X, effectiveness is tested against Drug B 2010: Drug D is invented for illness X, effectiveness is tested against Drug C In other words, always compare effectiveness to the current few best treatments. Nothing spirals, nothing becomes harder to prove.
  - nikcub 15y ago
    for some reason the placebo effect is getting stronger and more drugs are failing in stage II and III against sugar: http://www.wired.com/medtech/drugs/magazine/17-09/ff_placebo_effect?currentPage=all http://www.wired.com/medtech/drugs/magazine/17-09/ff_placebo...
    - Produce 15y ago

tripzilch 15y ago

But most of those R&D costs are for getting "FDA" approval. I don't see why India (or anyone, really) should pay for lining the pockets of the USA's inefficient and corrupt bureaucratic machinery. Or I could be wrong and those $12B really goes into equipment and lab workers wages, but you won't blame me for finding it real hard to believe until I see at least a rough breakdown of how those costs are summed up. From the article: "Bayer tried to justify its high price by making claims of high R&D costs, but refused to provide any details". That either means they don't know themselves, or it means that the larger part of the budget got "lost" in requesting approval forms paper pushing greasing cogs and lobbying politicians.

leonth 15y ago
I am not terribly familiar with the process, but I assure you it includes: early computational simulations of the prospective molecules; testing on lab animals; testing on healthy people; testing on small (a few hundred) number of patients; large scale (a few thousand) multi-centre trials across the whole world (if you want to sell it to the whole world, that is). This process takes quite a number of years. Now imagine how many labs, hospitals, scientists, doctors, statisticians, patients (oh they do get compensation), and auxiliary clerical workers need to be paid for the whole process.
betterth 15y ago
The majority of the money goes into Phase III clinical trials. Don't bash the FDA - they're the most evidence based, scientifically minded regulatory body in our government. Preclinical and Phase I - II trials aren't too expensive, in the order of millions of dollars. But also remember, for every ~10,000 candidates that enter preclinical trials, about 1-2 will actually pass FDA approval. The billion number isn't just for one drug, it's also for the 10,000 failures that you had to weed through to find that one drug. Phase I is safety trials in healthy humans (young males generally). Phase II starts using it in the target population (the sick) and begins looking at dosing requirements and preliminary efficacy data. But the big one, Phase III, that's the big group, expensive, efficacy trial. This is the trial that has to prove, beyond a shadow of a doubt scientifically, that the drug does what they say it does. A good Phase III trial can cost in the hundreds of millions of dollars easy. I've heard of $250,000,000 Phase III trials before. If "the most rigorous evidence requirement in the world" is your example of "inefficient and corrupt", than I guess we'll just disagree. But the FDA is the most strict drug regulatory body in the world, and the amount of evidence for efficacy that they require from the industry is truly impressive and truly does warrant the billions price tag.

Duff 15y ago

At this point, isn't the pharmaceutical industry playing games with supply by limiting the production of many medicines? Even a common OTC drug like guaifenesin that has been around since the 50's is difficult to find by itself, except in the newly patented time-release formulation (ie. Mucinex). (Although it is an ingredient in many cold medicines.)

Judson 15y ago
Maybe I'm not talking about guaifenesin by itself, but there seems to always be a drug store generic of Mucinex beside it on the shelves.
refurb 15y ago
The margins on generic drugs are razor thin. Most of the recent drug shortages are due to a lack of starting materials or manufacturing problems. Both of these can be traced back to the fact that there is very little money to be made in generic drugs. They are basically commodities.
- Symmetry 15y ago
  Other sources of shortages are due to the fact that the government issues drug companies production quotas for some drugs, which the drug companies aren't allowed to go over even if their competition has problems. My understanding of how this works is that the DEA tells companies A, B, and C that they can each make 20 units of Drug X. Then the FDA tells company C that their Drug X isn't up to snuff and they can't make any more this year. The 40 units that companies A and B make isn't enough to cover demand, but they can't increase their production to 30 units because the DEA has already filed their paperwork.

vannevar 15y ago

Somewhere out there, a business model is waiting to be found. I hope so, because the current one isn't working for consumers. Even with the billions spent on R&D, it turns out that many of the drugs Big Pharma turns out are no better than placebos. It's not hard to see why: a big company spends X amount on each failure and needs a 10X hit to offset the costs. If one doesn't materialize, it's not hard to rig the statistics to show some marginal benefit for a chosen winner, and a big marketing budget and the placebo effect takes care of the rest. Thanks to this model, we've finally conquered the scourges of restless leg syndrome, overactive bladder, and general anxiety disorder.

roadnottaken 15y ago
Actually it's almost impossible to rig the statistics. And every drug on the market has shown efficacy compared to placebo in large tests calle phase 3 clinical trials.
- vannevar 15y ago
  Actually it's almost impossible to rig the statistics. I would argue that it's actually impossible to economically conduct sufficient studies to reliably predict the efficacy and long term safety of drugs in the general population. And you're right, every drug on the market has passed Phase 3 trials because they're cherrypicked. A big drug company knows how many drugs it needs in production to ensure that some percentage of them are statistically likely to get through Phase 3 trials. To believe otherwise is to believe a drug company would bet a multi-billion-dollar enterprise purely on a research gamble. Is it possible for them to lose? Sure, 'statistically likely' isn't a guarantee. But it's much better odds than depending on stumbling into an actual cure.
  - ced 15y ago
    Do you have any evidence for that? I don't have any background in pharma, but my background in stats tells me that the odds of passing a controlled study with a placebo would be so low as to be economically infeasible.

Alex3917 15y ago

>Almost all the cost in a drug is the manufacturer recouping R&D costs. Actually that's not true. Big pharma spends twice as much on advertising as they do on R&D: http://www.sciencedaily.com/releases/2008/01/080105140107.htm http://www.sciencedaily.com/releases/2008/01/080105140107.ht... They also spend a significant amount of money on government fines due to corrupt practices (i.e. killing people). They are now the single most corrupt industry, paying significantly more fines per year than the entire military industrial complex: http://www.citizen.org/hrg1924 http://www.citizen.org/hrg1924

mjallday 15y ago
Is paying fines corrupt? I would say that dodging fines would be considerably more corrupt.
- man1sh 15y ago
  They pay fines for their corrupt behavior. You understood it wrong
  - liber8 15y ago
    Simply because you are forced to pay fines doesn't mean you are "corrupt". The abstract indicates most of the fines come from "illegal off-label drug promotion" and "overcharging state governments". It could be argued that the first shouldn't even be an issue, and the second, depending on how "overcharging" is defined could be outright fraud on the part of big pharma, fraud on the part of state governments, or something in between.
makmanalp 15y ago
I'll play devil's advocate: Marijuana users pay fines too, are they also corrupt and immoral? How about drivers who drive at 80km/h on a highway that is 95% 80km/h and 5% 50km/h which was obviously set up to trap people into paying fees? How do you know the fees that big pharma pays are not because of similar over-oppressive laws designed to make the government money? Edit: Well, I'm a moron for talking before reading. Scratch that.

pullo 15y ago

May be the real solution is a combination of tiered pricing and cut of all sales revenues by generics. The cost of this decision for Bayer is yet to be seen. Considering the number of users is only a few hundred at the current price point, Bayer should be ok. But, it will be interesting to see a breakdown of r&d costs of bayer in total. Considering India is one of the most popular destinations for clinical trials by drug firms, I cant shrug off a karma play here. http://www.scidev.net/en/health/clinical-ethics/news/fines-expose-failings-in-policing-of-indian-drug-trials.html http://www.scidev.net/en/health/clinical-ethics/news/fines-e...

malandrew 15y ago

Where does all the R&D money go? Somehow I get the impression that developing a new drug involves way too many people and processes and that disintermediation and automation along the R&D chain could greatly simplify and cheapen the process. First of all, you need the brains to develop the drug. I can't imagine that this involves a team much larger than a pre-series A startup. Does the development process for creating a new drug promote failing fast? Does keeping the entire R&D process in house help or hinder? How far can a team get before it needs to try a drug on humans and how much does it cost to get that far? Are there any startups that just manage a portfolio of patients with symptoms/diseases/disorders and automatically pair those patients with drugs that might benefit them? Should the process allow the patient to "price" his or her own life/health, whereby patients can opt in to Phase 1 trials for a lot more money than Phase 2 for example and name their own price in the process? How much of the money spent is actually (time*wages) for a lot of people for an unnecessarily long process? Is burn rate a consideration when creating a new drug? How long does it take to get a drug to market? Can price be reduced by half by reducing the time it takes by half? Do a lot of people in the process spend their time waiting? Is drug development in the US far more expensive than elsewhere because the entire healthcare system here is more expensive (vicious cost cycle / positive feedback loop) Anyways, just tossing some ideas out there because I get the suspicion that pharma R&D is ridiculously archaic.

wtvanhest 15y ago
I don't have exact numbers on this, but it seems like a lot of the early stage research happens in very small teams at universities and biotech companies. Then large companies like Bayer acquire the research and spend millions on getting it through FDA process. I know advancements are being made in automation for various research activities and I'm sure there will continue being a lot of advancements there. (The need for automation is fully recognized at the industry level)

cma 15y ago

Most private research dollars go into patent work-around drugs--drugs that have the same basic function as another, but successfully work around its patent (and get their own patent in the process). E.g. duplicated effort with occasional serendipity leading to something new.

refurb 15y ago
This is patently false. Most research dollars go into new therapies with completely new mechanisms of action. Companies are often working in similar areas, that's true. The best example of this is the statins. Lipitor was the 5th statin to hit the market. Was it a me-too drug? I guess, but it was also superior to the other 4 that came out first (less incidence of muscle damage, more efficacious). Did Pfizer say "Gee, let's copy that other statin?" Obviously not since getting a new drug to market takes 10 years and they came out only a few years later.
- aaronblohowiak 15y ago
  >getting a new drug to market takes 10 years is this intrinsic to drug manufacture? would regulatory/tort reform help?
  - refurb 15y ago
    It's a combination of the scientific challenges in finding a new drug and the safety hurdles that the FDA puts up. Most of that 10 years is taken up by the clinical trials that the FDA requires. I guess you could say it's the price of having access to thoroughly tested drugs that are both safe and efficacious.

tuxguy 15y ago

@JunkDNA, you seem to know Pharma R&D & patents. An excellent read on another case coming up before the Indian Supreme Court, regarding Swiss drug co. Novartis's blockbuster anti-cancer drug Gleevec. http://www.nytimes.com/2012/03/07/business/global/indias-supreme-court-to-hear-long-simmering-dispute-on-drug-patents.html?pagewanted=all http://www.nytimes.com/2012/03/07/business/global/indias-sup... I think that judgement might be more important, as the NYT article points out how the US govt is trying to influence the outcome. http://keionline.org/sites/default/files/tpp-10feb2011-us-text-ipr-chapter.pdf http://keionline.org/sites/default/files/tpp-10feb2011-us-te... What are your thoughts on Gleevec ?

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