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Facts and myths about drug development

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Title: Facts and myths about drug development


1
Facts and myths about drug development
  • Donald W. Light
  • Fellow, Netherlands Institute for Advanced Study
  • Professor of comparative health care, UMDNJ, USA
  • May 2007

2
The Pharmaceutical Industry provides invaluable
medicines that relieve pain, save lives, and cure
patients
  • Thousands of dedicated and talented employees
  • But executive leaders and their agents mislead
    politicians and the public with mythic accounts
    of innovation and costs

3
Myth A story about who you are, what you stand
for, where you come from, forces of good
evil.Pharmas Myth We are dedicated to
innovation, but costs are huge, so prices must be
high and protections from open competition as
long as possible. Profits are low most drugs
lose money. All new drugs are better so as
many patients should take them as possible. Long,
costly regs keep patients from benefiting.
Mythic Facts Claims without evidence. (like
WMD)
4
Current Incentives Reward Minor-Innovations
11-14 new drugs are significantly better for
patients than existing drugs (Vs 40 given
Priority rating by the FDA)
Variations 65
2 sig better
New Molecular Entities (NME) 35
62 Not sig better
12 sig better
23 Not sig better
5
Myth Approved drugs are basically safe
  • Half of all new drugs cause sufficient serious
    adverse effects to warrant new warnings in
    labels.
  • Companies control changes to labels by
    regulators. Many recommended warnings do not get
    on them.
  • Thus, about 3/4th new drugs pose serious risks.
    Some known before (like Vioxx). Most not rare.
  • Trials designed by companies to minimize evidence
    of risks, naturally.

6
Serious risks often denied or downplayedFor
example, NYTimes 22-5-01Doubts are raised on
safety of two arthritis drugs. Merck
responseMerck confirms favorable safety of
Vioxx.FDA officials simply
incomprehensible. Eric Topol 160,000
cardiovascular events per 10 million users.
If cost 20,000 each 3.2 billion additional
costs.
7
The Safety and Innovation Scorecard
OUT OF EVERY 28 NEW DRUGS, ON AVERAGE, 4 ARE
SUPERIOR AND 1 IS ALSO SAFE
8
RD Costs R is very different from D
  • Extremely variable, fr 1 month to 30 yrs. From
    0.10 to 200 million. Time cost unknown.
  • High risk but cost/risk ratio plummets. By
    trials, risk is 1 in 5 (except for terminations).
    Phase III costs are low risk.
  • Most R funded by NIH other public bodies.
  • - R and D can be done much more cheaply. Many new
    examples in The New Landscape.

9
At least 84 of all funds for innovative research
come from the public
  • Global Basic Research Funds to Discover New
    Drugs, 2001
  • Re-framing the 10/90 Report
    In U.S. 2004 dollars. For
    assumptions, see text.
  • Total RD 1 Basic Research
    Basic
  • Governmental Public Programs 46.6 billion
    41.5 billion 4 78.7
  • Foundation non-profit sources 8.1 billion
    2.0 billion 4 3.8
  • Pharmaceutical Biotech Corporations
  • Gross Reported 2 51.2 billion 9.2
    billion 17.5
  • Taxpayers Subsidies 3 15.9
    billion 2.9 billion 5 5.5
  • Net Corporate Funds 35.3 billion
    6.3 billion 5 12.0
  • Totals 105.9 billion 52.7 billion 84.2
    public
  • 12.0 industry
  • 3.8 found.
  • Notes
  • Based on 2004 Global Health Forum report.,
    Monitoring Financial Flows for Health Research
  • Unverified but 1/3rd believed to be market-based
    activities or general expenses.
  • Based on 31 average for tax deductions and
    credits. Probably low. Estimates range up to 47.
    Tax haven savings may cover most RD costs.

10
Mythic RD Costs based on mythic facts--
Probably much lower than claimed
  • 802 million estimate based self-reported secret
    data
  • Data unverifiable, self-reported to generate high
    estimate
  • Trial sizes 3.6 times larger than FDA figures.
  • Trial costs 4.0 times greater than NIH figures.
  • Applies only to the 22 most costly NMEs that
    cost 3.7 times more than other NMEs
  • Half the total is built-in high profits called
    costs
  • Taxpayers contributions not acknowledged
  • No basis given for costs of basic research and
    discovery estimates
  • Corrected estimate average about 100 million
  • Huge variation with exceptional cases. Median
    costs lower.

11
Net investment in RD smaller than
claimedNational Science Foundation. Research
and Development in Industry. Washington DC
National Science Foundation, 2003 Bindra G,
Sturgess J. Assessment of Current Competitiveness
of Canadian RD in the Pharmaceutical Industry.
Ottawa Industry Canada, 1996
RD 18-19 of revenues
RD 12.4 of revenues
Net Corporate Cost 7.5
Taxpayers Contributions 4.9
PhRMA
NSF
Reality
Myth
12
Todays medicines pay for tomorrows
miracles.(1.3 of revenues, net, for basic
research) National Science Foundation. Research
and Development in Industry. Washington DC
National Science Foundation, 200318 RD basic,
82 applied
Applied Research and Testing, 6.2 of revenues
Basic Research, 1.3 of revenues
Net RD Budget (7.1 of sales)
13
Stronger IP protections foster more innovation
  • Do they? More innovation w/ 20 yr vs 17 yrs vs
    13 yrs?
  • For decades, meds exempted from patents. No
    innovation?
  • Competition has for centuries been the main spur
    to innovate
  • Patents created as a temporary exemption
  • Data exclusivity too. EU granted longest rights
    in world with no evidence they will increase
    innovation, but clear evidence they would raise
    health care costs of member states.

14
  • Original Patent Social Contract
  • - secret innovations only benefit the inventor
  • - share your secrets so we can accelerate
    innovation, and
  • we will give you exclusive market rights for
    several years
  • but then put the spur of competition to your
    ribs to
  • innovate again.
  • - The longer the rights, the more focus on
    perpetuating
  • monopoly and exploiting monopoly rents (hi
    prices)
  • IP protections power to tax buyers above-market
    prices

15
Decoding key terms
16
Free-Rider Campaign Lower-priced affluent
countries are free-riding on US customers
  • Lower drug prices outside USA do not pay for RD
  • Americans have to pick up the tab. This is unfair
    and unsustainable.
  • (HIGH US PRICES ARE EUROPES FAULT)
  • Low prices are slowing the process of drug
    development worldwide (Mark McClellan)
  • (-- THE INNOVATION CRISIS IS EUROPES FAULT!)
  • The US-foreign price gap is widening, and the
    situation is getting worse.

17
WIDENING PRICE GAP DUE TO PHARMA INCREASING U.S.
PRICES,not falling foreign pricesSager A,
Socolar D. Lower U.S. Prescription Drug Prices
Are Vital to Both Patients and Drug Makers - But
instead, U.S. Prices Have Been Rising Rapidly
Relative to Those in Other Wealthy Nations.
Boston Health Reform Program, Boston University
School of Public Health, 2003
18
Deconstructing the Free-rider Myth
  • Assumes silo markets, national regional
    accounts in a global market.
  • Would you close down an innovative Dutch RD
    facility?
  • Based on a false premise that no one challenges!
  • Assumes the fair, right prices are American
    prices, because struck in a free market.
  • Actually, monopoly, secret pricing corporate
    price controls.
  • Vs wholesale, negotiated prices in Europe
  • Assumes no price is too high. Vs reasonable
    profits.

19
There is No Foreign Rip-offDomestic Sales
Alone Cover RD Easily Every YearPharmaceutical
Price Regulation Scheme(UK). Seventh Report to
Parliament. London PPRS, 2003.3. Patented
Medicine Prices Review Board. A Comparison of
Pharmaceutical Research and Development Spending.
Ottawa (CA) PMPRB, 2002
RD
Sales 9 10 Times RD
RD
Sales 6 Times RD
20
The free rider claim underlies Free Trade
Agreements (FTAs) that Bush government imposes.
IP clauses lock in high prices for American
patients, based on the myth that lower foreign
prices cause higher U.S. prices.
  • FTAs prohibit export to USA of lower-priced
    drugs. Block global free trade.
  • They delay generic price competition by 5 years
    or more

21
Free-rider punishment Were taking your RD away
Fact Pharma RD in Europe has grown.
increase in corporate RD, 1990-2002 European
Federation of Pharmaceutical Industries and
Associations, annual reports
614
335
273
227
158
128
92
22
Grabowski myth (Health Affairs 2006) -USA
has eclipsed Europe in discovery of NCEs
23
Grabowskis data
  • European researchers discover proportionately
    more global NCEs to corporate investment than US.
  • EU 38.3 RD investments 54.4 (little
    changed)
  • USA 48.1 RD investments .... 39.3 (3
    increase)
  • European researchers discover proportionately
    more first-in-class NCEs to corporate investment
    than US.
  • EU 38.3 RD investments 43.5 (little
    changed)
  • USA 48.1 RD investments 48.4 (3 increase)

24
Conclusions
  • US drug prices much higher than needed for RD.
  • European prices pay for RD. No free-riding.
  • The major reports claiming that European
    researchers are falling behind the USA need
    re-examination.
  • Key facts based on questionable measures
    calculations.
  • European pharmaceutical research is much better
    than EU policy leaders claim.
  • The main goal is to change incentives to reward
    what we want therapeutically superior meds for
    priority needs and neglected diseases.
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