A recent Tufts Centre report estimates the cost of developing and launching a new prescription medicine to be $2.56 billion. It was not so long ago (20 months to be precise) that Andrew Witty was telling us that the $1b per drug price tag was ‘a myth’. This new report will fuel the debate on cost of drug development and the associated price of drugs once launched (and inevitably, affordability). If we accept the latest $2.6b cost estimate (the ‘clickbait’ take home figure that was hitting most blogs and wires at the time) then the logical, and partly justifiable, plea to authorities and providers goes something like this… cut us some slack on prices as this new treatment costs an absolute packet to produce!
But as Witty pointed out this is not really an accurate ‘launched product’ cost as it takes into account the cost of all the candidate compounds in R&D which do not make it to market. The principle investigator in the Tufts analysis makes the same point …“Because the R&D process is marked by substantial technical risks, with expenditures incurred for many development projects that fail to result in a marketed product, our estimate links the costs of unsuccessful projects to those that are successful in obtaining marketing approval from regulatory authorities.”
Our industry has acknowledged for some time that the old R&D model – chasing blockbusters and making the most of ‘me-toos’ and niche busters that also spin out of the labs – needs to change. However there is precious little evidence that such change has been made – witness the spate of new (and expensive) direct acting antivirals in launched Hep C and the rise and rise of the biologics in auto-immune disease (the 3 top selling drugs in the world and Humira still heading north of the $10b p.a. mark). As long as there is evidence that the old model still (occasionally) hits multi- billion dollar pay-dirt then it is perhaps understandable that boards and internal vested interests are going to protect it (formally or culturally). The issue now therefore is, if it costs $2.6b to get any and all new drugs to market then launched brands will have high prices (or at least some must), in order to feed the ravenous R&D beast. But can healthcare payers and providers afford all of these NCEs? Not if the recent debate over oncology treatments in the UK is anything to go by (Is Cancer Drug Fund a waste of cash?) or as this quote from Leigh Purvis, Director, Health Services Research, AARP Public Policy Institute in 2015 predictions on BioPharma Dive states:
“The health care system cannot continue simply absorbing the costs associated with expensive medications. As more and more of them hit the market, we’re going to hear increasing calls to start finding ways to ensure that we’re using these products—and all health care—more effectively.”
Our industry and all interested parties now need to move the somewhat sterile debate over costs and prices of new drugs onto a new level. I believe we need to re-set this discussion to address innovation and efficiency in development coupled with value and affordability in the market. Slow progress to date (on both sides of this equation) should not be a barrier to making an attempt to find new solutions and creative approaches. The industry is trying hard to turn the blockbuster super-tanker but in truth a whole new transport system is what is really needed.
STOP PRESS: Hats off to one of Witty’s teams – GSK Vaccines have condensed the R&D pipeline for a new Ebola vaccine to 10 months!… where there’s a will…[read more]