An Increase in Drug Approvals – But at What Cost?
The BMJ Open journal has reports that the number of new drugs introduced into the UK over the last thirty years has been rising, not falling. The bigger picture however, shows the rising costs of drug development and the steady decline of the R&D talent pool are still proving problematic.
Report author Dr. Derek Ward states that “this is obviously a good thing for patients, if more new medicines are becoming available.” However, as eyeforpharma explores in this article, this is only half of the story, as pharma deals with rising costs and a lack of efficiency in developing new drugs.
In 2011 the Office of Health Economics, a UK consultancy, found that pharma R&D costs have risen from £125m per new medicine in the 1970s, to a staggering £1.2b in the 2000s. Pharma companies spend by far the most out of any UK industry on R&D, making up 29% of total UK R&D spending. Forbes reports similar skyrocketing expenditure in the U.S, with some drugs costing up to $4bn, and late-stage clinical trials alone sometimes costing up to $100m each. The amount of money being pumped into drug development efforts in the UK has gone up tenfold, yet in recent years the number of new drugs being produced every year has only gone up by 0.16 per cent, which means efficiency has actually been falling. Dr. Phil L’Huillier, from Cancer Research Technology (part of Cancer Research UK) admitted that “the cost of developing drugs is accelerating, meaning that the number of drugs per pound invested in research is decreasing.”
Part of the problem is that fewer than 1 in 10 medicines that make it to the clinical trials stage become a success – meaning that every drug that does get approved has to carry the cost of all the failures that went before it. The European Federation of Pharmaceutical Industries and Associations (EFPIA) says that on average, only one or two of every 10,000 substances synthesized in European laboratories will reach the market – and even then, sales aren’t guaranteed. Does this mean that pharma’s model for innovation is broken, and if so, what can be done about it?
The OHE report gives several factors have contributed to making drug discovery an increasingly difficult endeavour. Firstly, most of the low-hanging fruit has already been picked; companies are now going after more difficult targets such as Alzheimer’s, arthritis and cancer, which has mean that success rate at the clinical trials stage has gone from 1 in 5 to 1 in 10. Secondly, the amount of time and research needed to satisfy regulators has risen from 6 years in the 1970s to around 13.5 years in the 2000s as drugs become more complex. Lastly, the cost of acquiring capital has risen significantly.
Dr. Garret FitzGerald, dean for translational research at the University of Pennsylvania’s Perlman School of Medicine gives another reason: “we have a real problem with human capital. We have a lot of new technology, [but] we really need people that are familiar with preclinical science, contemporary technologies, and the investigation of drug action in humans. Those types of people have become like snowflakes in summer.” The lack of R&D talent and its effect on drug discovery has come to the fore recently, as eyeforpharma reported this month that 51% of top pharma execs had experienced difficulties hiring talented R&D staff, with only 28% feeling confident that they could meet their staffing needs in this area.
Ironically, these staffing worries have arisen as a product of the changing R&D landscape which represents pharma’s answer to decades of decreasing productivity. As FitzGerland explains, pharma is looking towards a future where R&D is not “dominated by large, vertically integrated companies” but instead where “different parts of the process from discovery of a target all the way up to an approved drug are going to happen in […] different sectors – academia, big pharma, biotech.” Partnerships, alliances, and even open-source approaches (where a firm throws open its libraries of molecules to outside expertise) are being tentatively embraced by pharmacos, who are willing to let smaller, more nimble players sort through their compounds, stepping in to fund trials once promising leads have been found. The industry’s willingness in recent years to farm out some of the early stages of drug development means that being able to develop and manage outside partnerships has become the most sought-after skill for pharma R&D staff.
A 2012 report by analysts at Deloitte and Thompson Reuters found a ‘mixed bag’of positive and negative aspects to pharma R&D efficiency, with some encouraging signs of a future reversal in productivity losses. Although pharma’s internal rate of return, measuring how much pharma got back from a year’s worth of R&D spending, fell from 7.7% in 2010/2011 to 7.2% in 2011/2012, this is predicted to stabilize in coming years as pharma have improved their movement of compounds into late-stage pipelines. The number of compounds entering the late stage pipeline, and the value of these compounds, doubled between 2010/2011 and 2011/2012. John Cole, solutions director, business practice at Thompson Reuters, found the replenishment of pharma’s late stage pipeline to be “promising”, remarking that “A variety of factors – including an increased acceptance of novel innovation models, sharing of precompetitive data and assets, and the expanding scientific knowledge base to determine new patient populations and disease indications for drug development – is starting to pay dividends.”
Less encouragingly, the report found a continuing decline in the commercial value of each late stage product, which Cole blames on “constraining market access conditions, pricing pressures and payor concerns.” Developed countries suffering from recession, and developing countries seeking to provide universal low-cost healthcare, are increasingly discriminating against ‘me-too’ medications and any drug that cannot demonstrate solid added benefit in its class. The solution Cole suggests is to pursue a “niche-buster” strategy, targeting “smaller, well-defined patient populations,” meaning that the use of biomarkers in clinical trials and an overall industry shift towards developing personalised treatments will benefit not just patients but also pharmacos looking to get the most out of their R&D.
There will always be the pessimists and the optimists among industry analysts, and with such a wealth of data, it is easy to prove either the view that pharma’s R&D model is “broken,” or that it is robust and capable of delivering results. I would be interested to hear more about which side our readers come down on; for my part, the evolving attitude of companies towards collaboration and “open innovation” suggest those in pharma feel it is time for a change.