Two recent articles reviewed here give quite different versions of the cost of drug development. The relevant clips from both articles are reproduced below with their divergent estimates. One or both might be grossly distorted, but they can’t both be right. It matters because one of the estimates is being used by the Director of the National Institute of Mental Health to set a wide ranging policy for research spending. Somebody is blowing smoke here – both can’t be true [a figure similar to the one below is also posted on the National Center for Advancing Translational Sciences web site]:
In previous posts I have described the crisis of medication development for mental disorders. Medications developed over the past five decades have been prescribed widely but have not been sufficient for reducing the morbidity and mortality of mental disorders. Yet there is diminishing activity in research and development for new medications within either the biotech or pharmaceutical industries… the absence of a robust development pipeline for more effective medications would be worrisome in any area of medicine and should be a grave concern to the mental health community… the most recent data suggest that creating small molecule medications across disease areas is, on average, a 15 year endeavor that costs over $2 B and fails more than 95% of the time. No wonder that industry has reduced their investments. Can NIMH afford to invest its public funds in medication development? Can we afford not to?
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.
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. Half that total comes from estimating how much profit would have been made if the money had been invested in an index fund of pharmaceutical companies that increased in value 11% a year, compounded over 15 years. While used by finance committees to estimate whether a new venture is worth investing in, these presumed profits [far greater than the rise in the value of pharmaceutical stocks] should not be counted as research and development costs on which profits are to be made. Half of the remaining $0.65bn is paid by taxpayers through company deductions and credits, bringing the estimate down to one quarter of $1.3bn or $0.33bn. 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…
In the first place, these estimates start at different places – $2 B [Insel] vs $1.3 B [BMJ]. But further, In deconstructing this estimate, Light and Lexchin tell a very different story. They say that the estimate comes from some business model in a computer that says that the estimateis based on what the pharmaceutical company would have made had they made some wildly successful investment [compounded at 11% over 15 years] and leaves out the taxpayer’s large contributions. In other words, the estimate is inflated by a factor of over twenty [$1.3 B ÷ $60 M = 21.7]. Further, they quote a more direct figure –
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.
– which is a very loud indicator that the reason the pharmaceutical companies are pulling out of the CNS market is not the high cost of drug development.
Speaking of recently reviewed articles, Dr. Fibiger’s reflections offer an alternative take on the current state of play in the halls of PHARMA:
Psychiatry, The Pharmaceutical Industry, and The Road to Better Therapeutics
by H. Christian Fibiger
Schizophrenia Bulletin. 2012 38(4):649–650.
Psychopharmacology is in crisis. The data are in, and it is clear that a massive experiment has failed: despite decades of research and billions of dollars invested, not a single mechanistically novel drug has reached the psychiatric market in more than 30 years. Indeed, despite enormous effort, the field has not been able to escape the “me too/me [questionably] better” straightjacket. In recent years, the appreciation of this reality has had profound consequences for innovation in psychopharmacology because nearly every major pharmaceutical company has either reduced greatly or abandoned research and development of mechanistically novel psychiatric drugs. This decision is understandable because pharmaceutical and biotechnology executives see less risky opportunities in other therapeutic areas, cancer and immunology being the current pipeline favorites. Indeed, in retrospect, one can wonder why it took so long for industry to abandon psychiatry therapeutics…What the field lacks is sufficient basic knowledge about normal brain function and how its disturbance underlies the pathophysiology of psychiatric disease. Because of this, as the record now clearly shows, it remains too early to attempt rational drug design for psychiatric diseases as currently conceived. The most obvious solution here is expanded investment in neuroscience. By necessity, this will be driven primarily by the efforts of clinical and basic scientists in academic settings because industry no longer has the appetite or the resources to engage in such activities. It is worth emphasizing that industry is in the business of making drugs, knowledge sometimes being a fortuitous byproduct. Academia is in the business of generating knowledge, and knowledge is what is needed at present…
My apologies for reposting already covered literature. I don’t think that these particular pieces are gospel, but they have helped me clarify my own thinking, so I thought it would be easier to have the operative paragraphs close at hand. First, the facts:
-
After twenty five years of a steady flow of new CNS Drugs, the pipeline has gone dry.
-
The Pharmaceutical Industry is pulling out of CNS Drug Development.
-
During that twenty five years, the drugs were primarily clones of the originals from the 1950s.
-
The efficacy of these CNS drugs has been dramatically inflated and their toxicity minimized.
Why has industry pulled out of CNS Drug development? We’ve been told a lot of reasons. Dr. Steven Stahl blames it on the pharmascolds, people who have criticized psychopharmacology for one reason or another [myopia – uncorrected…]. That’s an unlikely explanation, though it may be a contributing factor. Some pharmascolds are opposed to medications altogether. But most pharmascolds have been focused on the fraudulent claims of efficacy and safety, the resultant over-prescription, and the stealth advertizing corrupting our scientific literature. If the latter is what he’s talking about, three cheers for the pharmascolds! Others have suggested it is the large penalties industry has paid for their marketing misbehavior. Again, it may be a factor, but this is a spurious argument as the major force. As we often read, it’s just the "cost of doing business." Dr. Insel above is taking a more sympathetic position – the cost of new drug development is prohibitive and there are too many regulatory obstacles to overcome. The industry itself is glad to add a "hear, hear!" to that argument, but Light and Lexchin do a pretty good job of debunking that as a central cause. Dr. Fibiger notes that "industry no longer has the appetite," but that’s simply another way of saying that they don’t see anything to eat that looks good. He’s not talking about an acute case of Anorexia Nervosa, Industrialis. He’s saying they don’t see any avenues to go down to find another city of gold. In the metaphor of reality crime television, it’s a cold case with no new leads. And he tells us why:
What the field lacks is sufficient basic knowledge about normal brain function and how its disturbance underlies the pathophysiology of psychiatric disease. Because of this, as the record now clearly shows, it remains too early to attempt rational drug design for psychiatric diseases as currently conceived.
I expect that Dr. Fibiger’s explanation might reflect the view of the R&D segment of the pharmaceutical industry, and other explanations more address the marketing and financial departments – but it’s the scientific side that matters here. If you’ve got nothing to sell, that’s the bottom line – no product to market and none on the horizon. PHARMA’s pulling out of CNS Drug development because:
… industry is in the business of making drugs, knowledge sometimes being a fortuitous byproduct. Academia is in the business of generating knowledge, and knowledge is what is needed at present.
I buy it. The pipeline really is empty…
Quoting NIMH Director Thomas Insel: “Can NIMH afford to invest its public funds in medication development? Can we afford not to?” Well, Insel already tried doing that, and the results are in. Over 5 years from 2003-2008 Insel’s NIMH plowed over $5 million into the now infamous Emory-GlaxoSmithKline-Mount Sinai School of Medicine-NIMH Collaborative Mood Disorders Initiative (5U19MH069056). Charles Nemeroff was the Principal Investigator. Launched with fanfare and superlatives and forward looking statements about translational neuroscience, drug discovery and benefits to patients, the project was an abject failure. The scientific output was pitiful. Yet NIMH kept renewing the funding year after year despite clear evidence of disorganization, mismanagement, and lack of productivity.
I think we need a new NIMH Director.
When all of this background analysis is translated into to a paradigm of care — that has made billions by creating suffering; making patients chronically ill and disabled– one has to suggest that the NEXT order of business for NIMH is, “how do we rectify the damages we’ve caused* ?
I think delusion here is rampant. The mere idea that there is some NEW course to be charted to revive biomedical psychiatry is simply denying that the hay day pioneers have nothing for which they need be held accountable. This level of denial and avoidance of reality very clearly defines the practice of psychiatry that is promoted and perpetrated by Insel’s own special brand of pathology. He is totally disconnected from concepts that describe the practice of medicine and the purpose of a federal agency. Both require acknowledgement of responsibility— to ‘the people’ who trust you and pay dearly for your expertise.
Memo to NIMH:
No more toys and trinkets until you clean up the mess you’ve made— icksnay on the funds for R&D until you take full stock of how you’ve spent what you have stolen — and think in terms of restitution!
Very interesting summary of the range of excuses as to why no new significant efficacy has resulted in 30 years. The elephant in the room is surely the fact that it has proved scientifically too hard. The rewards of success would outweigh the development costs (especially the true ones) and any regulatory burden if they could make meaningful efficacy strides. This is pattern is now being replicated in other therapeutic areas. Our view is that issue is one of research and drug discovery approach but a new discipline offers fresh hope in the form of network pharmacology.
Hopefully the public will become better educated about the business end of PHARMA. We have to look at how this industry has become so wealthy and powerful and what it has done with it’s power. Two key issues are coming into focus across the spectrum of networks ranging from consumer protection to patient advocacy and even transparency of the PHARMA connection to academic medicine.
1) Patent rights for drug compounds can and should be revoked.
2) Full disclosure of the clinical data from all RCTs conducted for any and every drug that is currently on the market.
#1 explains how PHARMA obtained the buying power to secure its market, corrupting both the medical profession and our regulatory agencies, and #2 clearly shows that science has not been the foundation of R&D in this industry, while criminal practices (fraud) are its M.O. in the business world.
A new discipline that punishes PHARMA execs with jail time and fines that are dispersed as restitution for damages to human beings is the great hope those networking for ‘the people’.