1 Boring Old Man

Pharmaceutical research and development: what do we get for all that money?
^{Data indicate that the widely touted “innovation crisis” in pharmaceuticals is a myth…
by Donald W. Light and Joel R. Lexchin}
British Medical Journal. Published online Aug 7, 2012.

^{Since the early 2000s, industry leaders, observers, and policy makers have been declaring that there is an innovation crisis in pharmaceutical research. A 2002 front page investigation by the Wall Street Journal reported, “In laboratories around the world, scientists on the hunt for new drugs are coming up dry… The $400 billion a year drug industry is suddenly in serious trouble.” Four years later, a US Government Accounting Office assessment of new drug development reported that “over the past several years it has become widely recognized throughout the industry that the productivity of its research and development expenditures has been declining.” In 2010, Morgan Stanley reported that top executives felt they could not “beat the innovation crisis” and proposed that the best way to deal with “a decade of dismal R&D returns” was for the major companies to stop trying to discover new drugs and buy into discoveries by others. Such reports continue and raise the spectre that the pipeline for new drugs will soon run dry and we will be left to the mercies of whatever ills befall us.
The “innovation crisis” myth
The constant production of reports and articles about the so called innovation crisis rests on the decline in new molecular entities since a spike in 1996 that resulted from the clearance of a backlog of applications after large user fees from companies were introduced. This decline ended in 2006, when approvals of new molecular entities returned to their long term mean of between 15 and 25 a year. Even in 2005, an analysis of the data by a team at Pfizer concluded that the innovation crisis was a myth “which bears no relationship to the true innovation rates of the pharmaceutical industry.”… Meanwhile, telling “innovation crisis” stories to politicians and the press serves as a ploy, a strategy to attract a range of government protections from free market, generic competition
The real innovation crisis
More relevant than the absolute number of new drugs brought to the market is the number that represent a therapeutic advance. Although the pharmaceutical industry and its analysts measure innovation in terms of new molecular entities as a stand-in for therapeutically superior new medicines, most have provided only minor clinical advantages over existing treatments… Since the mid-1990s, independent reviews have also concluded that about 85-90% of all new drugs provide few or no clinical advantages for patients… This is the real innovation crisis: pharmaceutical research and development turns out mostly minor variations on existing drugs, and most new drugs are not superior on clinical measures. Although a steady stream of significantly superior new drugs enlarges the medicine chest from which millions benefit, medicines have also produced an epidemic of serious adverse reactions that have added to national healthcare costs.}

^{How much does research and development cost?
Although the pharmaceutical industry emphasises how much money it devotes to discovering new drugs, little of that money actually goes into basic research. Data from companies, the United States National Science Foundation, and government reports indicate that companies have been spending only 1.3% of revenues on basic research to discover new molecules, net of taxpayer subsidies. More than four fifths of all funds for basic research to discover new drugs and vaccines come from public sources. Moreover, despite the industry’s frequent claims that the cost of new drug discovery is now $1.3bn (£834m; €1bn), this figure, which comes from the industry supported Tufts Center, has been heavily criticised… The Tufts study authors report that their estimate was done on the most costly fifth of new drugs (those developed in-house), which the authors reported were 3.44 times more costly than the average, reducing the estimate to $90m. The median costs were a third less than the average, or $60m. Deconstructing other inflators would lower the estimate of costs even further.
Hidden business model
How have we reached a situation where so much appears to be spent on research and development, yet only about 1 in 10 newly approved medicines substantially benefits patients? The low bars of being better than placebo, using surrogate endpoints instead of hard clinical outcomes, or being non-inferior to a comparator, allow approval of medicines that may even be less effective or less safe than existing ones… marketing has become “the enemy of [real] innovation.” This perspective explains why companies think it is worthwhile paying not only for testing new drugs but also for thousands of trials of existing drugs in order to gain approval for new indications and expand the market. This corporate strategy works because marketing departments and large networks of sponsored clinical leaders succeed in persuading doctors to prescribe the new products…
Myth of unsustainable research and development
Complementing the stream of articles about the innovation crisis are those about the costs of research and development being “unsustainable” for the small number of new drugs approved. Both claims serve to justify greater government support and protections from generic competition, such as longer data exclusivity and more taxpayer subsidies. However, although reported research and development costs rose substantially between 1995 and 2010, by $34.2bn, revenues increased six times faster, by $200.4bn. Companies exaggerate costs of development by focusing on their self reported increase in costs and by not mentioning this extraordinary revenue return… The 1.3% of revenues devoted to discovering new molecules compares with the 25% that an independent analysis estimates is spent on promotion, and gives a ratio of basic research to marketing of 1:19.
Towards more cost effective, safer medicines
What can be done to change the business model of the pharmaceutical industry to focus on more cost effective, safer medicines? The first step should be to stop approving so many new drugs of little therapeutic value…}

What’s happening now is something very like what happened with the sub-prime mortages and the credit-default-swaps in our economy – the inevitable collapse of a grossly inflated market – the bursting of an economic bubble after a prolonged period of irrational exhuberance. There has been an irrational exhuberance about psychiatry’s descriptive diagnostic systems – the DSM-III, DSM-IIIR, DSM-IV, and DSM-5. There has been irrational exhuberance in the often-tauted "recent advances in neuroscience." There has been an irrational exhuberance extraordinaire about the efficacy and safety of the psychopharmaceutical agents that have poured as blockbusters from the mythic pipeline between the drug companies and the market for the last twenty-five years. And an embarassingly large segment of the academic and organized psychiatric community has fostered and been caught up in this swirl of irrational exhuberance.