12 ms·

Cost of developing new drugs may be lower than industry claims: trial

275 points by swores 3y ago

faeriechangling 3y ago
[flagged]
czl 3y ago
Say I run 10 trials that cost 10m each but only one of these finds a drug that works. How much did the trial cost to discover that drug? How much did it cost to discover that drug? 10m? 10*10m?
- valiant55 3y ago
  10M. Failure is still useful information so the other 9 trials cost 10M each but didn't produce a viable product, but that doesn't mean nothing of value was gained.
  - oneshtein 3y ago
    With just 10M in bank, you will fail and learn a lot.
    - okasaki 3y ago
      So like any business. Just because 90% of restaurants fail doesn't mean the cost of running a restaurant is 10x of what it actually takes to run a successful one.
      - FredPret 3y ago
        Of course it is. Investors have to pony up for 100% of the restaurants, so society as a whole has to pay one way or another for each economic experiment EDIT I should clarify - since investors know they have to pay for 100% of restaurants, of which 90% will fail, they price this in when they decide to invest in a restaurant. Drug companies have to pay for all ten trials, not just the one that works out. Restaurants are a bad example because people invest in it on an emotional basis. Drug trials are probably decided on more the same basis as bond issues or insurance. If the risk of failure is high, investors have to demand a high premium or go broke.
      - spywaregorilla 3y ago
        Restaurants also price their food considering the risk taken by the entrepreneur launching the restaurant; which is substantially lower as its a high cash flow business with immediate feedback for a low capital investment
      - tmnvdb 3y ago
        Restaurants fail very differently from drug trials. They run at some % loss for a while until money or investor patience runs out. A drug trial that fails can be a 10 year process of shoveling money in a pit, none of it to be ever seen again. It's a businesses famous for its low succes rates, which can be from start to end less than 1 in 100. Drug companies need to offer those who provide the capital to run these experimental projects at huge losses for years a way to recoup their losses - otherwise nobody would be willing to fund the effort. The way to do that is patent and charge absurdly high prices for those few succesfull drugs that are developed for as long as you can.
        ipaddr 3y ago
        Sounds like a losing strategy for most customers and businesses Why not pool costs and split profits. Everyone gets less.. less risk, less losses, less profits.
        loeg 3y ago
        Fewer drugs developed.
        lazide 3y ago
        Why have only a single winner get the proceeds of getting a winning lottery ticket, when everyone could band together, buy all the tickets, and split the proceeds?
        heavyset_go 3y ago
        You're describing mining pools and they're incredibly popular for their profitability compared to trying to find a winning lottery ticket on your own.
        lazide 3y ago
        Crypto != the lottery or drug development.
        3y ago
- pfdietz 3y ago
  It's worse than that. Say 100 companies run trials on their drugs, and only one succeeds, and you buy that company. You have to look not just at the company that ends up with the drug that works, but the whole ecosystem of small companies that are doing the exploration, hoping to hit it big and cash in by being bought.
hi-v-rocknroll 3y ago
Semaglutide retails for $17k USD/year in the US but costs only $60 to make. Perhaps it could be argued that the autoinjectors are "expensive", but not $17k/year and oral forms are coming online to make this item moot. In limited circumstances, excessive profits cross into the realm of price gouging and shouldn't be allowed by regulatory enforcement.
- pfdietz 3y ago
  The cost of manufacturing the drug is only relevant if the drug can be discovered and proved effective by the Magic Drug Fairy. Here in the real world, that manufacturing cost is largely irrelevant.
  - narrator 3y ago
    This reminds me of P=NP. It's hard to find a sha256 with a given number of leading zeros, but it's super easy to verify. It's hard to make Microsoft Office, or a Pharmaceutical Drug, but easy to see that they work. The confusion is at the root of most economic fallacies.
  - willcipriano 3y ago
    > the Magic Drug Fairy. Thats the government funded universities.
    - pfdietz 3y ago
      They do not, in fact, do the hard work of drug development.
    - philipkglass 3y ago
      The universities find compounds that work in cell cultures or mice. They don't currently optimize candidate compounds for use in humans or perform actual human clinical trials. In theory, there's no reason that a government couldn't fund all phases of drug development through final approval and then manufacture new drugs without seeking a profit. But most compounds that work in mice fail in clinical trials, and human testing is a lot more expensive than mouse testing. There would need to be consistent support for such a drug development program even though most attempts will fail and "breakthrough" drugs will arrive irregularly, separated by many years. It is politically difficult to maintain that sort of long term support in a system where voters and representatives are swayed by short-term arguments to cut programs that don't show results.
holoduke 3y ago
Sometimes I think that this attitude will cause the western world to become a second tier world. How can you build a sustainable world where this level of greed is accepted and even lobbied into political levels.
- pfdietz 3y ago
  [flagged]
- MostlyStable 3y ago
  "It is not from the benevolence of the butcher, the brewer, or the baker, that we expect our dinner, but from their regard to their own interest. "
- Aerbil313 3y ago
  The dead sibling comment really exposes how a good fraction of people in the western world think. But truly greed was the real primary motivator of technological progress for the past centuries. Not the desire to benefit humanity. They say greed kills the greedy person.
- aantix 3y ago
  A pharmaceutical company can capitalize on current successes and have enough to hire 1,000 research scientists for future developments. Or they could take "just enough", hire 10 research scientists, and potentially not make the next breakthrough. Or the company just dies.
FredPret 3y ago
Drugs may be overpriced. There is probably some bloat in drug development. But then again, maybe not. I'm not an expert. What I do know is that drugs have gotten dramatically better in the short amount of time I've been alive. The other thing we all know is that the source of this article, The Guardian and their friends, have a shitlist of industries and institutions it loves to hate. Ask yourself: will they ever write a positive article about a defense contractor, a bank, big pharma, a US billionaire, or a landlord, even if said entity walks on water and then saves a million babies and the penguins and the world?
- pfdietz 3y ago
  People who don't like prices of new drugs are free to not use those drugs. They want to have the benefits of the existence of drugs without paying the cost of discovering the drugs and bringing them to market. It's pernicious entitlement, made more outrageous by complaining about the greed of those actually providing the new drugs.
  - Jotra7 3y ago
    [dead]
  - AlexandrB 3y ago
    Ah yes exciting new drugs like insulin[1] and epinephrine[2]. I'm also certain that someone going into anaphylactic shock is extremely well positioned to make a considered decision on whether they like the prices of new drugs like epinephrine or not. [1] https://www.rand.org/pubs/articles/2021/the-astronomical-price-of-insulin-hurts-american-families.html https://www.rand.org/pubs/articles/2021/the-astronomical-pri... [2] https://www.vox.com/policy/23658275/epipen-cost-price-how-much https://www.vox.com/policy/23658275/epipen-cost-price-how-mu...
    - FredPret 3y ago
      I am of course talking about new drugs. There are lots of really great new ones. That doesn't mean there aren't shitheads taking advantage of things like insulin etc. But just because they're also being assholes with regards to insulin et al, doesn't mean that developing new drugs isn't genuinely very expensive, and that those drugs aren't genuinely very good.
pfisherman 3y ago
Without comment on the broader subject of drug pricing - especially in the US - this article leaves out enough relevant information that I would consider it to be intellectually dishonest. Where did they run the trials? Across how many sites? Do they plan to apply for marketing approval in the US or EU? Are they the manufacturer? Did they beat the cost of setting up the supply chain and manufacturing facilities prior to the phase 2/3 trials? The answers to those first three questions will have a huge impact on the price tag.
- deleted 3y ago
  [deleted]
- PinkSheep 3y ago
  > US or EU? I'm a bystander, but the gist I got from the official lists and trials is that each EU country needs it's own approval with the gov agency. It may be that "being EU" has equalized requirements to an extent, but each wants their own. (bureaucracy kills?) One example I read about was a yet experimental drug made by a Swiss company, but the trials only run in and for the US for financial and market reasons.
  - pfisherman 3y ago
    USD has the FDA and EU has the EMA. I am not sure how EMA interacts with each individual country. While regulatory agencies may consider data generated from trials in other jurisdictions, they may ask questions about whether those data and conclusions and relevant and generalizable to their patient populations and health care systems. There are also ethics to consider. Sure it may be cheaper to run trials in developing countries. But at what point does it become exploitative? Keep in mind that we are talking about human experiments, which is very serious business.
  - frodo8sam 3y ago
    No the EU has the EMA which approves drugs for all European countries in collaboration with national drug agencies. And the EMA FDA and japanese agency are pretty well aligned. So approval by one will typically mean you also meet the requirements for the others. Notable exceptions are the recent Alzheimer drugs.
TehCorwiz 3y ago
If the cost of developing the drug were relevant then every country would pay roughly the same for the same drug from the same company. They don't.
- deleted 3y ago
  [deleted]
- acover 3y ago
  Why? A monopoly would want to charge more to richer customers.
  - willcipriano 3y ago
    The poorest customers would just resell what they buy to the richest ones in a functioning market.
- foota 3y ago
  This doesn't make sense. Pricing could very reasonably vary by country in order for a company to try to capture more revenue though price discrimination. This says nothing about whether this is done to cover the costs of development or not. Only an altruistic company wouldn't vary the prices.
MisterDizzy 3y ago
Drug companies are unambiguously out of control. Some of these new molecules don't even need to be invented, they're just legally distinct repackaging of something they can't gouge on anymore. These companies could, if they had an incentive to do so, research effective off-label uses of existing drugs, say. But there's no money in that. There is a ton of money in making legally distinct "new" drugs that do the same thing as newly-generic drugs. It's unacceptable what they get away with. Covid ought to have been the final straw that brought all sides together to do something about drug companies.
- nimbius 3y ago
  that we so rapidly transitioned to --and away from-- a rapid, effective and universal free COVID vaccine for the majority of americans in such a relatively short period of time without any sincere discussion or commentary from news media or public policy officials really spoke volumes to me about the kind of national policy the United States is either pursuing with conscientious determination, or blithe indifference. we could have done covid style vaccines for a litany of other incredibly dangerous yet common causes of death in the US like flu shots and HPV, but we dont. we charge real moneys for these things as though the cost of the development of the drug itself isnt borne almost exclusively by the taxpayer.
  - ericmcer 3y ago
    The government was paying just Pfizer like 50bn a year for Covid vaccines, I’m sure if you add up all the manufacturers they were easily paying 100bn a year from 2021-2023. I don’t have all the math but I am guessing it ended up costing at least $500/yr to vaccinate a person. That is a long ways from free, there is just the bit of abstraction that allows corporations to rob us blind. If we had to go get $500 out of an ATM and hand it to the pharmacy everyone would have been throwing a fit. Bundle it in with the taxes that get silently pulled from your paycheck before you even get it though? No biggie.
    - ceejayoz 3y ago
      Any cite for this? https://www.kff.org/coronavirus-covid-19/issue-brief/how-much-could-covid-19-vaccines-cost-the-u-s-after-commercialization/ https://www.kff.org/coronavirus-covid-19/issue-brief/how-muc... says as of a year ago the total across all manufacturers for multiple years was $30B, at a per-dose cost of $20.69. Given how dismal booster uptake has been and the cessation of free vaccination in the fall, I severely doubt the last year has seen the extra $70B you assert.
streptomycin 3y ago
Its own bill for landmark trials of a four-drug combination treatment for drug-resistant tuberculosis came to €34m (£29m). Okay, how does that compare to what pharma companies spend? The article cites some unrelated numbers, doesn't actually compare. A quick Google search says: The average cost of phase 1, 2, and 3 clinical trials across therapeutic areas is around $4, 13, and 20 million respectively. So... not really that different? What's the big deal here?
- throwaway35777 3y ago
  Don't successful drugs also have to pay for the failed trials?
  - deleted 3y ago
    [deleted]
  - kurthr 3y ago
    And also for failed executive pay, and failed lobbying, which are much more expensive. In some cases (like Aduhelm) the marketing started before it was shown to have efficacy... so you have to pay for that very expensive failure too. https://www.washingtonpost.com/business/2024/03/08/eli-lilly-alzheimers-donanemab-fda/ https://www.washingtonpost.com/business/2024/03/08/eli-lilly...
  - jrsdav 3y ago
    This is essentially true. Pharma is incredibly expensive (for lots of different reasons), with R&D taking up a huge portion of those costs. So yes, it's safe to assume that part of the accounting around those published costs in the billions are all of the failed candidates that never even made it to trials (the failure rate varies depending on the area of biology and the type of drug, but it's generally around 9 out of every 10 candidates [1]. By the time you get to trials, that ratio gets even more abysmal). Disclaimer -- I work for Recursion, a company built around this very problem. - [1]: https://www.sciencedirect.com/science/article/pii/S2211383522000521 https://www.sciencedirect.com/science/article/pii/S221138352... - [2]: https://www.recursion.com https://www.recursion.com
squigz 3y ago
For those in favor of drug companies charging exorbitant amounts of money for life-saving medication in order to recoup their R&D costs (and we'll be generous and believe their reasoning and numbers)... it follows that, once they've recouped their costs, they should lower the price, right?
- ryandrake 3y ago
  Yea, just like road and bridge tolls go away once the project that the toll was supposed to pay for completes... Fat chance!
  - squigz 3y ago
    This might be shocking to some, but yes, that should indeed be how it works.
- tmnvdb 3y ago
  Unfortunately not, It follows that we set the length of drug patents at a high enough level that, on average, drug companies can continue their work of inventing drugs. In other words, they will sometimes make a unseemly profit on a monopoly position, but at least the existence of that possibility creates the incentive for development of drugs. The alternative is to kill the whole industry. Sorry - the world is not ideal.
- aantix 3y ago
  No. Because there are infinite hypotheses for drug improvement, disease management, and cure. And for the company to pursue that research, they need to capitalize on current successes. The company needs to be able to survive in downturns. Just like any company.
fifteen1506 3y ago
Maybe if pharmaceuticals were also insurance companies prices would drop to pay less income tax? Or a variant thereof.
ano-ther 3y ago
I'd be eager to learn more, but it seems that they have only published the topline figures [1] and some of their methodology [2]. Details will follow in a journal. Perhaps worth noting that development cost account for more than the phase 2-3 studies and that cost are lower for combinations of known drugs. But yes, 34 million is a lot less than 3 billion. [1] https://msfaccess.org/precedent-setting-move-towards-drug-development-cost-transparency-msf-reveals-cost-its-landmark-tb https://msfaccess.org/precedent-setting-move-towards-drug-de... > *Total costs were €33.9 million. While the topline results were presented at the WHO PPRI conference, the full detailed costs of the clinical trial have been submitted for a peer-review publication to a journal. In the full publication, the costs are broken down into 27 cost categories, by year, and by trial site, in order to offer a high level of transparency. [2] https://msfaccess.org/transparency-core-clinical-trial-cost-reporting-toolkit https://msfaccess.org/transparency-core-clinical-trial-cost-...
- lotsofpulp 3y ago
  If the authors were correct, they would have investors throwing money at them, and they would be competing with the existing drug companies, no? They are the second or third most profitable businesses in the world. Who would write a research paper instead of founding drug companies if they had the secret sauce to cutting expenses that drastically.
- javiramos 3y ago
  I would love to know the shortcut to developing a commercially viable drug for $34M.
  - s1artibartfast 3y ago
    If I understand the trial[1] correctly, the "shortcut" is running a trial with small molecule drugs that were invented 90-20 years ago, commercially developed by someone else, and are now off or going off patent. Shameless propaganda from the guardian to put this in contrast with new biologic molecules. https://endtb.org/endtb-clinical-trial-results https://endtb.org/endtb-clinical-trial-results https://en.wikipedia.org/wiki/Bedaquiline https://en.wikipedia.org/wiki/Bedaquiline https://en.wikipedia.org/wiki/Delamanid https://en.wikipedia.org/wiki/Delamanid https://en.wikipedia.org/wiki/Clofazimine https://en.wikipedia.org/wiki/Clofazimine https://en.wikipedia.org/wiki/Linezolid https://en.wikipedia.org/wiki/Linezolid https://en.wikipedia.org/wiki/Quinolone_antibiotic https://en.wikipedia.org/wiki/Quinolone_antibiotic https://en.wikipedia.org/wiki/Pyrazinamide#History https://en.wikipedia.org/wiki/Pyrazinamide#History
cde-v 3y ago
Corporations lying to inflate prices and profits? Impossible! Our perfect markets wouldn't allow for this.
lr4444lr 3y ago
I'm not clear from the article whether this also accounts for recouping the cost of _failed_ drugs.
- Lendal 3y ago
  Good point. Yep it sure would be nice if every drug worked out, every project was wildly successful, every new hire was a wonder-kid, every investment only went up and to the right. That would make all the math so much easier wouldn't it?
- darby_eight 3y ago
  ...or the industry refusing to research a drug because of expense estimates!
- deleted 3y ago
  [deleted]
- ProjectArcturis 3y ago
  It's clear that it does NOT.
- pama 3y ago
  Also the cost of drug discovery, which in this case amounted to some doctor suggesting let’s mix those previously approved drugs and see what happens, compared to 5–10 years of research, failures, and systematic work by chemists and biologists before any doctor is even involved.
tompccs 3y ago
You can't compare running a clinical trial for a drug targeting a communicable disease in the developing world to trials for treatments of complex diseases in rich countries where you need serology, histopathology and radiological endpoints. Worth noting as well that J&J have shut down their entire division in communicable diseases because it was so unprofitable for them. (Source: I work in this industry)
- thomassmith65 3y ago
  Was it 'unprofitable' as in 'losing money', or 'unprofitable' as in 'not worth the time'? If it's the latter, I don't have enough information about the rest of J&J to draw any conclusions.
  - s1artibartfast 3y ago
    Financially, they are the same. If you can make more money by not doing X, than doing X, it doesnt matter.
    - interstice 3y ago
      That rules out just about any non regulated altruism. Eg open source
      - s1artibartfast 3y ago
        Charitable donations and altruism are outside the scope of financial analysis. You can donate time or money even if you are running a loss in real, nominal, or opportunity costs.
      - lend000 3y ago
        Individuals can and do make non-financially motivated decisions. But in larger groups, especially a large corporation like J&J, you can apply the law of large numbers and determine that decisions are a result of incentives (primarily money).
    - 3y ago
darby_eight 3y ago
Wow this is absolutely shocking
aga98mtl 3y ago
If their claim is true, should they not do it themselves and make a lot of money? It would help their mission greatly to have a few extra billion dollars.
RcouF1uZ4gsC 3y ago
From the page: >I hope you appreciated this article. Before you move on, I wanted to ask if you would consider supporting the Guardian’s journalism as we enter one of the most consequential news cycles of our lifetimes in 2024. I have research that shows that the costs of journalism is a lot lower than the Guardian claims. I was able to type up a bunch of words (at my typing speed of 50 words per minute it took me around 1 hour to type 3000 words) into an article, and put them up on a website hosted on a $5/month VPS. Anyone can come read my article for free.
kazinator 3y ago
The cost of developing drugs is high because of all the drugs that fail, after requiring lots of money to develop. You can't just look at the successful drug and say that's the cost. There are drugs that don't get to the trial stage, so also you can't just look at trials, even if you include failed ones. The researchers cited in this article seem to be promulgating the fallacy that we need only look at the cost of a successful drug trial, and that's the cost. The drugs magically appeared out of nowhere, for free, and equally magically, they are working drugs, so we already know our trial will succeed. It's just a charade we have to go pay for to get the government's rubber stamp, and then it's all good!
- redserk 3y ago
  What about the public funding that led to research and presumably went towards some of the failed attempts? It sounds like there’s simply not enough information to gauge if pharmaceutical companies are being honest about their claims of R&D costs.
  - lotsofpulp 3y ago
    There is nothing stopping governments around the world from spending money to do their own R&D and conduct their clinical trials.
    - rysertio 3y ago
      They do. But then the patents gets leeched by big pharma companies investing a fraction of the development costs.
      - lotsofpulp 3y ago
        Why does the government allow big pharma companies to “leech” the patent? What does that even mean? Can you describe the steps by which big pharma obtains the patent?
  - kazinator 3y ago
bloppe 3y ago
This does not even talk about pre-clinical research, which I thought was a pretty big component of "development".
skirge 3y ago
State needs to control drug supply and has business in keeping them "expensive" so we can't directly buy them. Friends were collecting money for their child which have SMA and drug price changed in EU because of additional approval costs here. Drug was already approved and used in US (they planned to go to US to take the medication).
deleted 3y ago
[deleted]
LorenPechtel 3y ago
Given the various comments in this thread bashing US drug prices there's another factor I feel needs to be pointed out: Many countries basically dictate to the drug companies what they can charge. So long as what they dictate is above the *marginal* cost of selling the drug in that country. The drug companies have to recoup their development from the places that don't dictate prices. If the US were to also dictate prices (and I think they should, but indirectly: require them to sell to the US at the lowest price they sell to any other developed nation) you would see drug prices in the US drop--but drug prices in other countries would rise. We see the same problem in the US with government-dictated doctor rates. More and more doctors are saying "NO" to Medicare and Medicaid because the rates are often below the marginal cost. The doctors have to make their money on private insurance patients. (Which is also why simply doing Medicare-for-all would be an abysmal failure.)

275 points by swores 3y ago

[flagged]

czl 3y ago

Say I run 10 trials that cost 10m each but only one of these finds a drug that works. How much did the trial cost to discover that drug? How much did it cost to discover that drug? 10m? 10*10m?

valiant55 3y ago
10M. Failure is still useful information so the other 9 trials cost 10M each but didn't produce a viable product, but that doesn't mean nothing of value was gained.
- oneshtein 3y ago
  With just 10M in bank, you will fail and learn a lot.
  - okasaki 3y ago
    So like any business. Just because 90% of restaurants fail doesn't mean the cost of running a restaurant is 10x of what it actually takes to run a successful one.
    - FredPret 3y ago
      Of course it is. Investors have to pony up for 100% of the restaurants, so society as a whole has to pay one way or another for each economic experiment EDIT I should clarify - since investors know they have to pay for 100% of restaurants, of which 90% will fail, they price this in when they decide to invest in a restaurant. Drug companies have to pay for all ten trials, not just the one that works out. Restaurants are a bad example because people invest in it on an emotional basis. Drug trials are probably decided on more the same basis as bond issues or insurance. If the risk of failure is high, investors have to demand a high premium or go broke.
    - spywaregorilla 3y ago
      Restaurants also price their food considering the risk taken by the entrepreneur launching the restaurant; which is substantially lower as its a high cash flow business with immediate feedback for a low capital investment
    - tmnvdb 3y ago
      Restaurants fail very differently from drug trials. They run at some % loss for a while until money or investor patience runs out. A drug trial that fails can be a 10 year process of shoveling money in a pit, none of it to be ever seen again. It's a businesses famous for its low succes rates, which can be from start to end less than 1 in 100. Drug companies need to offer those who provide the capital to run these experimental projects at huge losses for years a way to recoup their losses - otherwise nobody would be willing to fund the effort. The way to do that is patent and charge absurdly high prices for those few succesfull drugs that are developed for as long as you can.
      - ipaddr 3y ago
        Sounds like a losing strategy for most customers and businesses Why not pool costs and split profits. Everyone gets less.. less risk, less losses, less profits.
        loeg 3y ago
        Fewer drugs developed.
        lazide 3y ago
        Why have only a single winner get the proceeds of getting a winning lottery ticket, when everyone could band together, buy all the tickets, and split the proceeds?
        heavyset_go 3y ago
        You're describing mining pools and they're incredibly popular for their profitability compared to trying to find a winning lottery ticket on your own.
        lazide 3y ago
        Crypto != the lottery or drug development.
        3y ago
pfdietz 3y ago
It's worse than that. Say 100 companies run trials on their drugs, and only one succeeds, and you buy that company. You have to look not just at the company that ends up with the drug that works, but the whole ecosystem of small companies that are doing the exploration, hoping to hit it big and cash in by being bought.

hi-v-rocknroll 3y ago

Semaglutide retails for $17k USD/year in the US but costs only $60 to make. Perhaps it could be argued that the autoinjectors are "expensive", but not $17k/year and oral forms are coming online to make this item moot. In limited circumstances, excessive profits cross into the realm of price gouging and shouldn't be allowed by regulatory enforcement.

pfdietz 3y ago
The cost of manufacturing the drug is only relevant if the drug can be discovered and proved effective by the Magic Drug Fairy. Here in the real world, that manufacturing cost is largely irrelevant.
- narrator 3y ago
  This reminds me of P=NP. It's hard to find a sha256 with a given number of leading zeros, but it's super easy to verify. It's hard to make Microsoft Office, or a Pharmaceutical Drug, but easy to see that they work. The confusion is at the root of most economic fallacies.
- willcipriano 3y ago
  > the Magic Drug Fairy. Thats the government funded universities.
  - pfdietz 3y ago
    They do not, in fact, do the hard work of drug development.
  - philipkglass 3y ago
    The universities find compounds that work in cell cultures or mice. They don't currently optimize candidate compounds for use in humans or perform actual human clinical trials. In theory, there's no reason that a government couldn't fund all phases of drug development through final approval and then manufacture new drugs without seeking a profit. But most compounds that work in mice fail in clinical trials, and human testing is a lot more expensive than mouse testing. There would need to be consistent support for such a drug development program even though most attempts will fail and "breakthrough" drugs will arrive irregularly, separated by many years. It is politically difficult to maintain that sort of long term support in a system where voters and representatives are swayed by short-term arguments to cut programs that don't show results.

holoduke 3y ago

Sometimes I think that this attitude will cause the western world to become a second tier world. How can you build a sustainable world where this level of greed is accepted and even lobbied into political levels.

pfdietz 3y ago
[flagged]
MostlyStable 3y ago
"It is not from the benevolence of the butcher, the brewer, or the baker, that we expect our dinner, but from their regard to their own interest. "
Aerbil313 3y ago
The dead sibling comment really exposes how a good fraction of people in the western world think. But truly greed was the real primary motivator of technological progress for the past centuries. Not the desire to benefit humanity. They say greed kills the greedy person.
aantix 3y ago
A pharmaceutical company can capitalize on current successes and have enough to hire 1,000 research scientists for future developments. Or they could take "just enough", hire 10 research scientists, and potentially not make the next breakthrough. Or the company just dies.

FredPret 3y ago

Drugs may be overpriced. There is probably some bloat in drug development. But then again, maybe not. I'm not an expert. What I do know is that drugs have gotten dramatically better in the short amount of time I've been alive. The other thing we all know is that the source of this article, The Guardian and their friends, have a shitlist of industries and institutions it loves to hate. Ask yourself: will they ever write a positive article about a defense contractor, a bank, big pharma, a US billionaire, or a landlord, even if said entity walks on water and then saves a million babies and the penguins and the world?

pfdietz 3y ago
People who don't like prices of new drugs are free to not use those drugs. They want to have the benefits of the existence of drugs without paying the cost of discovering the drugs and bringing them to market. It's pernicious entitlement, made more outrageous by complaining about the greed of those actually providing the new drugs.
- Jotra7 3y ago
  [dead]
- AlexandrB 3y ago
  Ah yes exciting new drugs like insulin[1] and epinephrine[2]. I'm also certain that someone going into anaphylactic shock is extremely well positioned to make a considered decision on whether they like the prices of new drugs like epinephrine or not. [1] https://www.rand.org/pubs/articles/2021/the-astronomical-price-of-insulin-hurts-american-families.html https://www.rand.org/pubs/articles/2021/the-astronomical-pri... [2] https://www.vox.com/policy/23658275/epipen-cost-price-how-much https://www.vox.com/policy/23658275/epipen-cost-price-how-mu...
  - FredPret 3y ago
    I am of course talking about new drugs. There are lots of really great new ones. That doesn't mean there aren't shitheads taking advantage of things like insulin etc. But just because they're also being assholes with regards to insulin et al, doesn't mean that developing new drugs isn't genuinely very expensive, and that those drugs aren't genuinely very good.

pfisherman 3y ago

Without comment on the broader subject of drug pricing - especially in the US - this article leaves out enough relevant information that I would consider it to be intellectually dishonest. Where did they run the trials? Across how many sites? Do they plan to apply for marketing approval in the US or EU? Are they the manufacturer? Did they beat the cost of setting up the supply chain and manufacturing facilities prior to the phase 2/3 trials? The answers to those first three questions will have a huge impact on the price tag.

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PinkSheep 3y ago
> US or EU? I'm a bystander, but the gist I got from the official lists and trials is that each EU country needs it's own approval with the gov agency. It may be that "being EU" has equalized requirements to an extent, but each wants their own. (bureaucracy kills?) One example I read about was a yet experimental drug made by a Swiss company, but the trials only run in and for the US for financial and market reasons.
- pfisherman 3y ago
  USD has the FDA and EU has the EMA. I am not sure how EMA interacts with each individual country. While regulatory agencies may consider data generated from trials in other jurisdictions, they may ask questions about whether those data and conclusions and relevant and generalizable to their patient populations and health care systems. There are also ethics to consider. Sure it may be cheaper to run trials in developing countries. But at what point does it become exploitative? Keep in mind that we are talking about human experiments, which is very serious business.
- frodo8sam 3y ago
  No the EU has the EMA which approves drugs for all European countries in collaboration with national drug agencies. And the EMA FDA and japanese agency are pretty well aligned. So approval by one will typically mean you also meet the requirements for the others. Notable exceptions are the recent Alzheimer drugs.

TehCorwiz 3y ago

If the cost of developing the drug were relevant then every country would pay roughly the same for the same drug from the same company. They don't.

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acover 3y ago
Why? A monopoly would want to charge more to richer customers.
- willcipriano 3y ago
  The poorest customers would just resell what they buy to the richest ones in a functioning market.
foota 3y ago
This doesn't make sense. Pricing could very reasonably vary by country in order for a company to try to capture more revenue though price discrimination. This says nothing about whether this is done to cover the costs of development or not. Only an altruistic company wouldn't vary the prices.

MisterDizzy 3y ago

Drug companies are unambiguously out of control. Some of these new molecules don't even need to be invented, they're just legally distinct repackaging of something they can't gouge on anymore. These companies could, if they had an incentive to do so, research effective off-label uses of existing drugs, say. But there's no money in that. There is a ton of money in making legally distinct "new" drugs that do the same thing as newly-generic drugs. It's unacceptable what they get away with. Covid ought to have been the final straw that brought all sides together to do something about drug companies.

nimbius 3y ago
that we so rapidly transitioned to --and away from-- a rapid, effective and universal free COVID vaccine for the majority of americans in such a relatively short period of time without any sincere discussion or commentary from news media or public policy officials really spoke volumes to me about the kind of national policy the United States is either pursuing with conscientious determination, or blithe indifference. we could have done covid style vaccines for a litany of other incredibly dangerous yet common causes of death in the US like flu shots and HPV, but we dont. we charge real moneys for these things as though the cost of the development of the drug itself isnt borne almost exclusively by the taxpayer.
- ericmcer 3y ago
  The government was paying just Pfizer like 50bn a year for Covid vaccines, I’m sure if you add up all the manufacturers they were easily paying 100bn a year from 2021-2023. I don’t have all the math but I am guessing it ended up costing at least $500/yr to vaccinate a person. That is a long ways from free, there is just the bit of abstraction that allows corporations to rob us blind. If we had to go get $500 out of an ATM and hand it to the pharmacy everyone would have been throwing a fit. Bundle it in with the taxes that get silently pulled from your paycheck before you even get it though? No biggie.
  - ceejayoz 3y ago
    Any cite for this? https://www.kff.org/coronavirus-covid-19/issue-brief/how-much-could-covid-19-vaccines-cost-the-u-s-after-commercialization/ https://www.kff.org/coronavirus-covid-19/issue-brief/how-muc... says as of a year ago the total across all manufacturers for multiple years was $30B, at a per-dose cost of $20.69. Given how dismal booster uptake has been and the cessation of free vaccination in the fall, I severely doubt the last year has seen the extra $70B you assert.

streptomycin 3y ago

Its own bill for landmark trials of a four-drug combination treatment for drug-resistant tuberculosis came to €34m (£29m). Okay, how does that compare to what pharma companies spend? The article cites some unrelated numbers, doesn't actually compare. A quick Google search says: The average cost of phase 1, 2, and 3 clinical trials across therapeutic areas is around $4, 13, and 20 million respectively. So... not really that different? What's the big deal here?

throwaway35777 3y ago
Don't successful drugs also have to pay for the failed trials?
- deleted 3y ago
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- kurthr 3y ago
  And also for failed executive pay, and failed lobbying, which are much more expensive. In some cases (like Aduhelm) the marketing started before it was shown to have efficacy... so you have to pay for that very expensive failure too. https://www.washingtonpost.com/business/2024/03/08/eli-lilly-alzheimers-donanemab-fda/ https://www.washingtonpost.com/business/2024/03/08/eli-lilly...
- jrsdav 3y ago
  This is essentially true. Pharma is incredibly expensive (for lots of different reasons), with R&D taking up a huge portion of those costs. So yes, it's safe to assume that part of the accounting around those published costs in the billions are all of the failed candidates that never even made it to trials (the failure rate varies depending on the area of biology and the type of drug, but it's generally around 9 out of every 10 candidates [1]. By the time you get to trials, that ratio gets even more abysmal). Disclaimer -- I work for Recursion, a company built around this very problem. - [1]: https://www.sciencedirect.com/science/article/pii/S2211383522000521 https://www.sciencedirect.com/science/article/pii/S221138352... - [2]: https://www.recursion.com https://www.recursion.com

squigz 3y ago

For those in favor of drug companies charging exorbitant amounts of money for life-saving medication in order to recoup their R&D costs (and we'll be generous and believe their reasoning and numbers)... it follows that, once they've recouped their costs, they should lower the price, right?

ryandrake 3y ago
Yea, just like road and bridge tolls go away once the project that the toll was supposed to pay for completes... Fat chance!
- squigz 3y ago
  This might be shocking to some, but yes, that should indeed be how it works.
tmnvdb 3y ago
Unfortunately not, It follows that we set the length of drug patents at a high enough level that, on average, drug companies can continue their work of inventing drugs. In other words, they will sometimes make a unseemly profit on a monopoly position, but at least the existence of that possibility creates the incentive for development of drugs. The alternative is to kill the whole industry. Sorry - the world is not ideal.
aantix 3y ago
No. Because there are infinite hypotheses for drug improvement, disease management, and cure. And for the company to pursue that research, they need to capitalize on current successes. The company needs to be able to survive in downturns. Just like any company.

fifteen1506 3y ago

Maybe if pharmaceuticals were also insurance companies prices would drop to pay less income tax? Or a variant thereof.

ano-ther 3y ago

I'd be eager to learn more, but it seems that they have only published the topline figures [1] and some of their methodology [2]. Details will follow in a journal. Perhaps worth noting that development cost account for more than the phase 2-3 studies and that cost are lower for combinations of known drugs. But yes, 34 million is a lot less than 3 billion. [1] https://msfaccess.org/precedent-setting-move-towards-drug-development-cost-transparency-msf-reveals-cost-its-landmark-tb https://msfaccess.org/precedent-setting-move-towards-drug-de... > *Total costs were €33.9 million. While the topline results were presented at the WHO PPRI conference, the full detailed costs of the clinical trial have been submitted for a peer-review publication to a journal. In the full publication, the costs are broken down into 27 cost categories, by year, and by trial site, in order to offer a high level of transparency. [2] https://msfaccess.org/transparency-core-clinical-trial-cost-reporting-toolkit https://msfaccess.org/transparency-core-clinical-trial-cost-...

lotsofpulp 3y ago
If the authors were correct, they would have investors throwing money at them, and they would be competing with the existing drug companies, no? They are the second or third most profitable businesses in the world. Who would write a research paper instead of founding drug companies if they had the secret sauce to cutting expenses that drastically.
javiramos 3y ago
I would love to know the shortcut to developing a commercially viable drug for $34M.
- s1artibartfast 3y ago
  If I understand the trial[1] correctly, the "shortcut" is running a trial with small molecule drugs that were invented 90-20 years ago, commercially developed by someone else, and are now off or going off patent. Shameless propaganda from the guardian to put this in contrast with new biologic molecules. https://endtb.org/endtb-clinical-trial-results https://endtb.org/endtb-clinical-trial-results https://en.wikipedia.org/wiki/Bedaquiline https://en.wikipedia.org/wiki/Bedaquiline https://en.wikipedia.org/wiki/Delamanid https://en.wikipedia.org/wiki/Delamanid https://en.wikipedia.org/wiki/Clofazimine https://en.wikipedia.org/wiki/Clofazimine https://en.wikipedia.org/wiki/Linezolid https://en.wikipedia.org/wiki/Linezolid https://en.wikipedia.org/wiki/Quinolone_antibiotic https://en.wikipedia.org/wiki/Quinolone_antibiotic https://en.wikipedia.org/wiki/Pyrazinamide#History https://en.wikipedia.org/wiki/Pyrazinamide#History

cde-v 3y ago

Corporations lying to inflate prices and profits? Impossible! Our perfect markets wouldn't allow for this.

lr4444lr 3y ago

I'm not clear from the article whether this also accounts for recouping the cost of _failed_ drugs.

Lendal 3y ago
Good point. Yep it sure would be nice if every drug worked out, every project was wildly successful, every new hire was a wonder-kid, every investment only went up and to the right. That would make all the math so much easier wouldn't it?
darby_eight 3y ago
...or the industry refusing to research a drug because of expense estimates!
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ProjectArcturis 3y ago
It's clear that it does NOT.
pama 3y ago
Also the cost of drug discovery, which in this case amounted to some doctor suggesting let’s mix those previously approved drugs and see what happens, compared to 5–10 years of research, failures, and systematic work by chemists and biologists before any doctor is even involved.

tompccs 3y ago

You can't compare running a clinical trial for a drug targeting a communicable disease in the developing world to trials for treatments of complex diseases in rich countries where you need serology, histopathology and radiological endpoints. Worth noting as well that J&J have shut down their entire division in communicable diseases because it was so unprofitable for them. (Source: I work in this industry)

thomassmith65 3y ago
Was it 'unprofitable' as in 'losing money', or 'unprofitable' as in 'not worth the time'? If it's the latter, I don't have enough information about the rest of J&J to draw any conclusions.
- s1artibartfast 3y ago
  Financially, they are the same. If you can make more money by not doing X, than doing X, it doesnt matter.
  - interstice 3y ago
    That rules out just about any non regulated altruism. Eg open source
    - s1artibartfast 3y ago
      Charitable donations and altruism are outside the scope of financial analysis. You can donate time or money even if you are running a loss in real, nominal, or opportunity costs.
    - lend000 3y ago
      Individuals can and do make non-financially motivated decisions. But in larger groups, especially a large corporation like J&J, you can apply the law of large numbers and determine that decisions are a result of incentives (primarily money).
  - 3y ago

darby_eight 3y ago

Wow this is absolutely shocking

aga98mtl 3y ago

If their claim is true, should they not do it themselves and make a lot of money? It would help their mission greatly to have a few extra billion dollars.

RcouF1uZ4gsC 3y ago

From the page: >I hope you appreciated this article. Before you move on, I wanted to ask if you would consider supporting the Guardian’s journalism as we enter one of the most consequential news cycles of our lifetimes in 2024. I have research that shows that the costs of journalism is a lot lower than the Guardian claims. I was able to type up a bunch of words (at my typing speed of 50 words per minute it took me around 1 hour to type 3000 words) into an article, and put them up on a website hosted on a $5/month VPS. Anyone can come read my article for free.

kazinator 3y ago

The cost of developing drugs is high because of all the drugs that fail, after requiring lots of money to develop. You can't just look at the successful drug and say that's the cost. There are drugs that don't get to the trial stage, so also you can't just look at trials, even if you include failed ones. The researchers cited in this article seem to be promulgating the fallacy that we need only look at the cost of a successful drug trial, and that's the cost. The drugs magically appeared out of nowhere, for free, and equally magically, they are working drugs, so we already know our trial will succeed. It's just a charade we have to go pay for to get the government's rubber stamp, and then it's all good!

redserk 3y ago
What about the public funding that led to research and presumably went towards some of the failed attempts? It sounds like there’s simply not enough information to gauge if pharmaceutical companies are being honest about their claims of R&D costs.
- lotsofpulp 3y ago
  There is nothing stopping governments around the world from spending money to do their own R&D and conduct their clinical trials.
  - rysertio 3y ago
    They do. But then the patents gets leeched by big pharma companies investing a fraction of the development costs.
    - lotsofpulp 3y ago
      Why does the government allow big pharma companies to “leech” the patent? What does that even mean? Can you describe the steps by which big pharma obtains the patent?
- kazinator 3y ago

bloppe 3y ago

This does not even talk about pre-clinical research, which I thought was a pretty big component of "development".

skirge 3y ago

State needs to control drug supply and has business in keeping them "expensive" so we can't directly buy them. Friends were collecting money for their child which have SMA and drug price changed in EU because of additional approval costs here. Drug was already approved and used in US (they planned to go to US to take the medication).

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LorenPechtel 3y ago

Given the various comments in this thread bashing US drug prices there's another factor I feel needs to be pointed out: Many countries basically dictate to the drug companies what they can charge. So long as what they dictate is above the *marginal* cost of selling the drug in that country. The drug companies have to recoup their development from the places that don't dictate prices. If the US were to also dictate prices (and I think they should, but indirectly: require them to sell to the US at the lowest price they sell to any other developed nation) you would see drug prices in the US drop--but drug prices in other countries would rise. We see the same problem in the US with government-dictated doctor rates. More and more doctors are saying "NO" to Medicare and Medicaid because the rates are often below the marginal cost. The doctors have to make their money on private insurance patients. (Which is also why simply doing Medicare-for-all would be an abysmal failure.)