Why Drugs Cost A Lot

In my pharmaceutical career, I have worked with many talented scientists and managers. We have all been trying to discover, develop or sell innovative new drugs to address real medical needs. This is a very long process - often upwards of ten years between research discovery of a "lead compound" and launch of the marketed drug. Finding a new blockbuster is highly unlikely.  Many pharmaceutical scientists go through brilliant careers, and add greatly to the world's scientific knowledge, without discovering anything that makes it to the market. I certainly managed that last clause.

But failure in drug R&D is not (usually) due to ineptitude.  To a first approximation, all drug candidates fail - often very expensively in late-stage clinical trials or, even more disastrously, after launch (eg Vioxx). Even if the drug candidate works well against its biochemical target in an in vitro ("test tube") setting, it will most likely be inactive in vivo (real life) and will often be downright toxic. When I worked in antibiotics research, I personally discovered several, chemically-interesting, new ways to kill bugs.  The problem was that my wonderdrugs always killed cultured mammalian cells just as effectively as they killed bacteria or fungi.  Since I consider myself a cultured mammal, I wasn't going to try the Jekyll-and-Hyde route to further testing.

New drugs have to be safe, especially if they treat non-life-threatening conditions.  They are tested until such time as we can think of no more feasible precautions to take.  Only then will drug regulators allow them to be sold.  Pharmaceutical R&D is therefore a high and inhospitable plateau of expensive and sustained failure, with very occasional peaks of scientific triumph. 

All of the this adds up.  Scientists and their equipment are not cheap.  Clinical trials can cost ten thousand dollars per enrolled patient. These are fixed costs - payable whether the drug is a new blockbuster or a very expensive addition to the universe of known placebos.  The tiny number of successes have to repay the costs of all the failures and the "opportunity costs" of not doing something more productive with the investors' money.  That's why, on average, the true development cost of a new drug is probably close to a billion dollars.

That's also why innovative new drugs have to command relatively high prices. Is the pharmaceutical industry as efficient as it could be at R&D? Does it spend too much on selling and promotion? Do branded drug prices need to be quite so high?  Those are separate questions.

Groundhog Days for Pharma

A little late in February (Groundhog Day is 2 Feb) I am struck by the applicability of the "life repeats itself" idea to the pharmaceutical industry.  We are currently in the early phase of the movie, where Bill Murray is depressed and trapped by being forced to wake up and relive the same day every day.

Every few months we hear that one bloated and inefficient company is merging with another one.  Each time, an almost identical press release is issued promising "significant economies of scale" and "research synergies" due to the "complementary pipelines" of the combined behemoth. 

The merged company is still inefficient, but the numbers are a bit bigger now. Support functions are merged and streamlined, sales reps are culled, R&D projects terminated, manufacturing sites mothballed. This generates fake numbers that make it look like the merged company is addressing the real issues, but underneath it is still the same animal. It soon has to look for another company to swallow to keep generating the momentum its investors demand.

Until we move to the "late phase" of the movie, and start adapting to the healthcare situation in the 21st century, pharma's Groundhog Day is destined to repeat itself.  There are huge opportunities to do good things, explore new business models and break the cycle, but we have to start thinking differently.

If we are ever to develop economic healthcare for all, from cradle to grave, Utah to Uganda, it will involve more than just finding a few blockbusters.  It will need more than just drugs. The "drug industry" needs to start providing a genuine service to its customers, and to focus on keeping them in good health, not just medicalising and treating any deviations from optimum well being.  Pharma must engage with patients much more directly, and learn to love health as much as illness, if it is to have relevance in the next hundred years.

Will JUPITER Change Pharma's View of the World?

On Monday, the U.S. Food and Drug Administration approved Astrazeneca's  cholesterol-lowering medication Crestor (rosuvastatin) for some patients who are at increased risk of heart disease but have not been diagnosed with it. The decision was based on results from the JUPITER study, which compared over 15,000 patients - half of whom received Crestor for two years and half received placebo.  
The study looked at men over 50 and women over 60 who had an elevated amount of high sensitivity C-reactive protein (a known risk factor for inflammation and atherosclerosis) and at least one additional factor such as smoking, high blood pressure, a family history of premature heart disease, or low amounts of HDL ("good") cholesterol.

Crestor is a statin in the same class as drugs made by Pfizer, Merck and others, but the first to be licensed for such widescale "primary" (ie  before disease onset) preventative use. We can expect the sales of statins generally to increase on the back of this data, and it will be a big boost to AZ in particular.

Some will be critical of the trend to mass medication of the apparently healthy, but if there is solid evidence of benefit then I don't see the objection.  The challenge will be "adherence", the industry term for persuading people to keep taking the medication long-term. When the patient feels healthy and all they see is the drug cost, there is a temptation to stop medication, or to skip doses to make it last longer. 

This is where other patient support and testing services come in.  On a wider level, the move to large-scale primary prevention may mark another step in the integration of the drug industry with life-long healthcare services - what I have previously called "Healthcare as Total Service", or HaTS. It's not always possible (eg cancer) but, as a commercial model, keeping people healthy makes a whole lot more sense than only treating them when they get sick.

Dementia and Cancer Funding

Further to my last post, there is an interesting BBC report on Alzheimer's disease funding, based on a study called Dementia 2010.  The study finds that Alzheimers costs much more to manage but attracts much less research funding than cancer, stroke or heart disease.

Cancer, though a very tricky research area, is a great example of the "treatment over prevention" preference of today's healthcare agenda. The cheapest way to cut the rate of cancers would be to persuade people to lose weight, eat more fibre (especially green vegetables), stop smoking and drink less alcohol.  Governments don't do this very aggressively, especially in the case of diet. Why not tax saturated fat like tobacco, for example?

Cancer has a ubiquity, emotive urgency and immediate devastating impact that makes it relatively easy to attract funding to the area, and I don't minimise the personal impact on those affected, but there is another, practical, reason why the drug industry has neglected dementia.  Oncology clinical trials are over in a short period of time, usually.  Results are measured in the weeks or months of extra life gained. Drugs can be tested and marketed within "reasonable" timeframes and budgets.

Dementia takes years to develop and progress, so clinical trials of new drugs also need to be long.  Worse than that, the effects of the disease and the treatments are subtle so the trials need to involve a lot of people if they are to show benefits with any statistical confidence. The costs are therefore huge for treatment studies and almost prohibitive for prevention studies.

As our society ages, the number of dementia sufferers in the UK may pass 1 million in the next fifteen years. Each of these patients requires expensive, long-term care which will be an expensive drain on state finances.  The situation is the same in all developed countries and will eventually be replicated globally as average lifespan improves.

Notwithstanding the difficulty and cost of the research, it will prove a good social investment to rebalance funding priorities and to work harder to prevent and cure dementia. In the drug industry, ROI is king (French speakers please pardon my pun). This one case where we need to find a better way of giving the drug industry that return-on-investment and bringing the risks down to acceptable and investable levels.

"HaTS" - Healthcare as Total Service (c)

"The blockbuster is dead" according to the current industry mantra. Big pharma is gearing up for the new reality by laying off many of the expensive sales reps they formerly used to saturate primary care markets with their now-ageing cash cow drugs.

GSK and others have stated that they are now going for growth in developing countries and pulling back from their traditional, high-priced-but-stagnant, Western markets.  This may bring higher growth opportunities but will also expose them to dangers.  These include commercial threats from local competition and corporate liability from the brand knock-off products which are rife in developing markets.  Furthermore, developing countries cannot support US prices, so the industry acknowedges that business models will shift from reliance on lucrative but limited markets in developed countries to a global, lower-priced model.  The price trend, at least for drugs which treat conditions where several brands are available, will (in my view) inevitably lead towards commoditisation.

It occurs to me that the pharmaceutical industry could pre-empt this process and take price reduction one step further.  Why not supply the drugs themselves for a nominal fee, and realign the pharma industry to a service model.  Health management, including prevention, diagnosis, and treatment, could be provided and charged on a life assurance business model, with the state assisting those who can't pay. The current imbalanced medical industry, which encourages cure over prevention by prioritising the development and prescription of drugs, could be altered to a more sensible model where health is managed, disease is avoided where possible, diagnosed early, and treated when needed. 

The idea is admittedly a bit simplistic but it doesn't have to be an unattainable vision of Utopia.  The drug industry becomes the healthcare services industry and still makes money and profits for shareholders - it just doesn't put all its eggs in the drug sales basket. Some companies are inching towards this scenario by developing diagnostics businesses, but I think there is a much more disruptive business model in there for anyone brave enough to go for it.  Maybe the current woes will push the industry to innovate commercially as well as scientifically.

The HaTS acronym is available for licence. My first idea, Pharmaceutical Research as Total Service, PRaTS, didn't work so well.

Drugs Companies Face Deeper Cuts in Research

More bad news for "big pharma" staff.
Drugs companies face deeper cuts in research - Times Online

I have to declare an interest here - I am an ex-GSK employee from the SmithKline Beecham part of the many-headed hydra. The dash for growth that has added headcount to big pharma in recent years is reversing and big layoffs are all around us. Most of the big companies are cutting thousands. It is a difficult time for those affected and will have ripples across the whole industry.

However, one of the long term trends mentioned by the article is that GSK is planning a move to branded remedies for curable disease in developing markets, and away from new drugs for tricky diseases that are only affordable in developed countries. This is laudable at one level, although only a profit-driven pragmatic necessity. It will, however, have the effect of exposing GSK to the full brand-eroding effects of counterfeiters and their knock-offs - which are rife in most developing markets. GSK will need to be on its toes to avoid revenue leakage and potential liability issues from other people using its brand equity but not its quality standards.

Fat Profits For Counterfeit Victoza?

The newly approved Novo Nordisk product, Victoza(R) is set to be a blockbuster. Indicated for type II diabetes, in conjunction with exercise and diet control, it addresses a huge and growing global market. As we collectively get fatter and the prevalence of type II diabetes goes up, there will be a rising demand for products like Victoza(R) and this looks like a good step forward in treatment.

However, the internet buzz about Victoza(R) giving more effective weight loss than existing therapies such as GSK's Alli(R) will also drive demand for "off-label" use - by people who don't have type II diabetes but want a more effective diet pill. Since physicians are not supposed to prescribe Victoza(R) for weght loss alone, there is a danger that people will look for it in unofficial channels such as internet pharmacies. 

New "lifestyle drugs" always attract counterfeiters into the market, eager to exploit the embarrassed and the unwary. Don't get Victoza(R) from anyone except your regular physician. If you need it, you'll get it, but if she won't prescribe it, that's for good medical reasons. Don't risk your health by looking elsewhere.

If this were a drug would you develop it?

Try Googling "live longer" and you will get so many hits that you'd need a very long life just to view them all.  Clearly there is a lot of interest in health and longevity and all sorts of people, from the well-meaning to quacks and charlatans, are lining up to take advantage of it. Diet, lifestyle, exercise, faith, alternative medicine - all are staking a claim to help us live a better and longer life.  But do any of these things stack up?  What if I were leading a pharmaceutical industry research team, and we examined the evidence for each claim as if it were a drug candidate? Would I recommend any of these approaches to the CEO for further investment?

For another project, I am doing some research into nutrition and alternative medicines.  I'll check out the claims for anything that one can swallow and digest, basically.  I'll be looking to see what, if any, scientific basis these claims may have, based on scientific literature evidence.   I'm leaving out psychological, exercise and faith-based life extension, to keep the project manageable. 

I won't be doing any amateur clinical trials on human guinea pigs because (a) it is generally frowned upon by most of the worlds regulatory and judicial systems and (b) lifespan research takes a long time (the clue is in the name) and you and I have short attention spans.

Personally, I am a fan of walnuts after meeting an academic who raved about their positive nutritional benefits. I have them every day on my breakfast cereal. I will either live forever or die choking with an ironic expression on my face and milk on my trousers. If you have any personal favourites (with or without evidence of efficacy) please pass them on and I'll take a look.

Picture: steffenz