First of all: It’s good to be back
Drug companies are in that industry for a reason: profits. That is fine (I am a convinced capitalist) but I wonder should they be more regulated by goverment? After all they sell a basic product wich is needed by everyone, the problem is that their prices are to high so that poor people (specially in the undeveloped world) can not afford them.
You could then argue that the prices should be kept low by goverments but then, critics say, the industry will not be interested in invesment that is also needed to provide the public with better drugs.
First of all: It’s good to be back
Artificially managing prices is never a good thing. The market is its own best regulator and no outside fiddling is going to do it better.
As to expensive drugs a couple of points:
[li] A drug company can only keep its monopoly on a new drug for several years (7?) after which anyone can produce it. As a result a new wonder drug is going to be expensive so the developer can recoup their investment and make a profit (which on the face of it is fair). After their patent expires anyone can jump in the market and prices will fall dramatically.[/li]
[li] As to poor people affording drugs I’ve never been sure where it all exactly plays out. US citizens pay drastically higher prices for a given drug than do people in most other parts of the world. People who are lucky enough to live near Canada frequently cross the border to get substantially lower prices on medications. AIDS drug cocktails can cost a $1,000/month in the US but can be had for less than $100/month in Africa (although I’ll admit that $100 is still stupendously expensive for many who live in Africa but their governments can buy supplies at lower prices if they are so inclined).[/li][/ul]
I also understand that several of the big drug companies have programs already set up where the poor can get the drugs they need at reduced prices. CBS did a story on it awhile back, and all they have to do is ask their doctors.
Actually, the drug companies are highly regulated by the Government.
To create a new drug is a staggering achievement. To start, Pharmas patent every new compound with potential pharmacokinetic activity they can find or create. These patents previously lasted for 17 years, not 7. Current patent submissions last 20 years.
Next, they test these compounds in mass lots to determine which have interesting activity, and in what therepuetic area. They are tested for toxicity, safety, and effectiveness in animals during the pre-clinical stages. It’s common for up to 5000 comounds to be tested before one is found that looks promising enough to submit for an Investigative New Drug to the FDA, for Clinical Phase I Trials. This will have taken about 6 or 7 years.
Phase I trials last about a year, and test safety and dosage in heathy humans. Assuming there are no show-stoppers in this stage of trials, Phase II Clinical Trials commence.
Phase II Trials will tlast, typically, about 2 years. They test the efficacy in a diseased population of humans, and test for side effects. Thies trials will typically be four to ten times large than Phase I Trials. Again, assuming no showstoppers, Phase III Clinical Trials Commence.
Phase III Trials continue to evaluate and monitor the efficacy of the compound, as well as side effects and long-term effects. These Trials typically are ten times larger than Phase II trials, and last about 3 years. Of all compounds that make it to clinical trials, only one of five will make it to a New Drug Application. the others will be dropped to lack of efficacy, serious Adverse Events, or as being uneconomical (My current client just dropped one for that reason about a year ago, already deep in to Phase III).
At the point of submission to the FDA, the Pharma will have committed from US$100 to US$400 Million dollars. The drug my current client dropped cost about US$300 million, and it was droopped cold because it was no more efficatious than exisiting products on the market. It failed to be an improvement over existing therapies despite the client’s expectations, and they ceased throwing good money after bad, as soon as they knew.
Under the User Fee Law, Pharmas pay the US Gov’t for the priviledge of having a new drug reviewed. That fee is currently in excess of US$300,000. If the Gov’t rejects that submission, it still keeps half the fee. In short, the Pharmas pay for their own reviews, not the taxpayer.
Once the drug is submitted, it undergoes review, which can last from as little as six months, to over two years. At any time, the FDA can issue a “Clinical HJold”, which stops testing and evaluation in it’s tracks. Also, at any time, the FDA can (and does) audit any and all regulated activity of the Pharma, to see if it meets validation and compliance requirements. That means:
- Code for Pharma software: Must be documented and validated, must meet ERES requirements.
- Operating Systems for Dataprocessing, clinical, publishing, and all other areas: Must be validated and approved, must meet ERES requirements.
- Clinical Processes: Must meet accepted research standards, must be documented and auditable.
- Investigators: Must not be debarred, selection must follow guidelines.
- Advertising and information materials: Must be approved by FDA, Meet FDA guidance for claims and accuracy
- Manufacturing: Must meet FDA quality control standards.
- Many others…
The whole process takes from ~12 to 15 years, on average. On occaision, the FDA will “Fast Track” a really promissing drug, cutting a few years off the process, but it still leaves precious little time at the far end for the Pharma to make a return on it’s investment. When you count advertising and awareness campaigns, a typical “Ready to Market” drug can cost US$600 to US$800 million, before the first unit is ever sold.
The Pharma has as little as two, to as many as eight years to recoup that cost.
There are some things a Pharma can do to extend “exclusivity” (Patent control), such as submit the drug for other indications, or investigate to see if the drug is useful for pediatric use, or works on obscure maladys (“Orphan Drug”), but the clock is ticking, and if a drug looks like it’ll die on the market, well, it never sees the light of day.
Meanwhile, the FDA is monitoring the sales activity and materials of the Pharma, and is recieving annual and periodic reports of efficacy and any Adverse Events, and can still pull the drug at any time. At the same time, the Generic Maunfacturers are reverse-engineering the compound and gearing up their production lines for the day Exclusivity ends.
That, folks, is why drugs take so long to come to market, why they’re advertised so aggressively, and why they cost so much.
As for these who are desperate for treatment, there’s the Compassionate Use programs. Not every Pharma has one, and they’re not all equal, but that’s mostly because the Compassionate Use programs are a HUGE gateway towards liablity suits, and so many Pharmas limit their scope, or just chose not to take the risk.
Sorry for the typos in the previous post. I previewed, but some still slipped through.
The few drugs that do make it to market have to pay for all the ones that didn’t make it.
Competition is vicious in the Pharmacueticals Industry, because market position and name recognition are everything. Example: Viagra made it to market six months before a less drastic, and in many ways superior, treatment for male impotence did, but that drug never made it to the popular imagination, and has failed in the marketplace, because Viagra was there first. Another example: IM-Clone was pursuing a fairly radical research methodology with a solid tumor cancer drug, but the FDA statisticians didn’t buy their claims, and rejected the NDA, costing IM-Clone half their user fee, probably six months in market position to their closest competitor in that theraputic area, and breaking-up a US$2 Billion-dollar merger with another Pharma.
The OP, like many people, wants to turn a basic principle of free enterprise on its head. That is, he thinks the government should keep drugs inexpensive because so many people NEED them!
So… the more people need something, the less they should have to pay for it? Is THAT the new philosophy?
Michael Crichton briefly touched on this matter in “Jurassic Park.” In that novel, Hammond spends hundreds of millions of dollars on supercomputers, lab equipment, and the services of the world’s best scientists, all to build a dinosaur theme park. Someone asks Hammond, why couldn’t he have used all that time and all these resources to create something truly useful, like a cure for AIDS or cancer.
Hammond responds, essentially, as follows:
That’s a good question. I’ll tell you precisely why I don’t do that. Suppose, after investing all this money, I announced to the world “I have a wonder drug to cure cancer. Line up, give me a check for $25,000 and I’ll give you a shot of it.” Would people be grateful to me? Would they admire me for finding this great drug? NO! They’d LOATHE me! They’d call me a heartless money-grubber who’s exploiting sick people. Before long, the government would step in and tell me what I could charge for my discovery. Because in this day and age, the more people need something, the more they feel entitled to it, and the less they’re willing to pay. But nobody NEEDS a dinosaur theme park. No one will die if they don’t see it. So, I can charge $25,000… or $50,000… oir $100,000… whatever I like. And people will GLADLY pay me whatever I ask, because it’s a frivolous, luxury item that nobody needs, and that nobody feels entitled to.
Get the idea? SOME regulation is unavoidable, and perhaps even desirable. But there DOES come a point at which pharmaceutical manufacturers say, “Never mind finding a cure for this/that dread disease. The government won’t let us charge enough to make much profit. Let’s put more resources and money into finding treatments for baldness and impotence… people will pay a king’s ransom for that kind of thing without batting an eyelash.”
Sadly, this is already true, to some degree. Every Pharma involved in doing original research has a board that sits to determine what Theraputic Areas they wish to research, and what indications within those TAs they wish to treat, and the possibility of profit, public relations, and Gov’t intervention do come into play in those decisions. All it would take would be one or two really ham-handed Gov’t interventions, and all we’d see would be treatments for obesity and hairloss.
(Well, not that bad, but not too far off, either)
I think there is an argument to be made (although I’m not sure I agree with that argument) that the government would be better at directing pharmaceutical research than the private sector. (All you libertarians can get up off the floor now.) Consider:
–Redundancy. Tranquilis gives a figure of $600-800 million that a Pharma has to spend before it can sell a single pill. What’s worse, though, is that three or four different companies will be spending that sort of money, conducting the same research and the same trials in search of the same drug. In the end, we have three or four nearly identical drugs on the market that all do exactly the same thing.
A capitalist view on this would say that the competition spurred the research. From the standpoint of the race against disease, however, it seems that the money spent to develop four of the five proton pump inhibitors could have been directed toward other goals.
–Priorities. As has also been mentioned before, a drug company bases its research direction not on how many people it can help, or how significantly it can help them, but on how much money they can make. For instance, resources that could be devoted toward new treatments are instead spent on making useless modifications to existing drugs in order to milk more out of the patient. (Case in point–Nexium, the “new purple pill”, considered by many to be a colossal joke on the health care industry.)
Of course, there is also the example of Viagra. Most people would not consider treating impotence as the most noble or generally beneficial of goals in medical research, but few have been more profitable in recent years. (Viagra is not a great example, since it is a remarkably effective drug that adds quality to a lot of lives, and the basic physiologic principle behind its effect was important enough that it earned its discoverers a Nobel Prize. I’m just too lazy to come up with a better example. You get the point.)
–Marketing. I’ve heard varying numbers on how significantly marketing weighs into the cost of a drug, but considering how many times a week drug companies buy me lunch, it can’t be insignificant. This is another layer of inefficiency that more centrally-controlled research would reduce or eliminate.
Like I said, I’m not sure I support this argument, but I can’t really support the idea that private sector pharmaceutical research as we know it is the most efficient way of going about it.
Well actually I’ve read in the latest edition of Le Monde Dyplomatique that the drug companies are not telling the truth when they claim that they invest more or less $500 million dollars for developing and putting in the market each drug. The figuere is sensible smaller ($100 million).
And Astorian even though that quote from Jurassic Park was really great I think that neither you nor the author have think of basics human rights. In this case evryone is entitle to the access of medicine not just a few, everyone. That was my whole point.
Everyone is entitled to medicine?
Where do you draw the line… how about life-saving surgery? There are only a certain number of heart donors; how do you decide who gets a new heart and who dies without one, if everyone is equally entitled to treatment?
How about elective surgery? Is everyone entitled to orthodontia, laser eye correction, breast enlargement, sex changes?
Everyone already has access to these procedures, just like everyone has access to a Ferrari. Anyone who shows up with $100,000 can go home with a new sports car; anyone in need whose insurance or paycheck will cover new medication can have it.
But the fact is that new medicines are expensive, and someone has to pay for them. If the companies can’t sell new drugs at a price that will pay for the cost of development, they simply won’t develop new drugs - basic economics.
I’m still interested in this entitlement, though. Suppose I’m dying and the only medicine that can cure me costs $500,000 - which just happens to be what your house is worth. Can I force you to sell your house to pay for my medication? (No.)
Slightly different: Imagine you have the medicine in a bottle, having bought it for $500,000. Can I force you to give it to me?
Slightly more different: Imagine you have the medicine in a bottle because you just spent $500,000 and ten years of your life inventing it. Am I entitled to it now?
Change “you” to “a pharmaceutical company”, change five hundred grand to five hundred million (or one hundred million), and you have the present situation.
OK, some more discussion:
First, Estilicon, do you have an on-line cite for the Le Monde Dyplomatique source? I’d be very interesteted to read on what those claims are based. You see, I consult to the Pharmceutical Industry, but I’m independant of their closed POV, as I aslo consult to Hospitals, Doctors, Health Care Providers, Contract Research Organizations, and Heath Insurance Providers. This gives me an interesting view of the the whole business, from many POVs.
Drug development can cost as little as US$100 Million, but that’s a rare and low number. It can also cost in excess of US$500 Million, but that’s a rare and high number. Once the drug is developed, then there’s the marketing and awareness campaigns, which can again be quite cheap, or damned expensive, depending on market and competition. I don’t know the precise numbers (and even if I did, I couldn’t ethically reveal them unless they were publicly available) of the amount that went into marketing, say, Viagra®, but I’m pretty sure it was fairly low. Why? Because it was the first really efficatious drug dealling with male impotance, and the news media did half the work for Pfizer, and the late-night comedians did half of what was left. On the other hand, a new and more efficatious therapy for, say, blood cholesterol, will have to defeat the market share and awareness of existing products, like Lipitor®. Now, there is a new product on the way, and it has been demonstrated to the FDA’s satisfaction that it’s more efficatious, but the makers of Lipitor are going to fight like mad to not lose market share. Why? Because there are shareholders looking for a profit, and executives looking for a bonus, and employees looking for a paycheck. So, Pfizer is gonna spend money to reposition their drug, and more money will be spent to keep it in the public eye. Meanwhile, the makers of the new drug are going to spend huge amounts of money to gain awareness and grab the spotlight away from Liptor. It’s a cat-fight for the hearts (litterally, in this case) and minds of the consumers and the prescribing physicians, and it’s expensive. If this particular war costs less than US$500 million between the two sides’ advertsing campaigns when it’s all said and done, I’ll be surprised. The new drug is expected to be a “Super Drug”, with sales in excess of US$1 Billion. That’s what’s at stake.
The US$600 - $800 number I quoted above is for the majority of brand-new, never-been-prescribed-before drugs, and includes drug development, review, labelling, and marketing. There will be exceptions, and any sNDA for a new indication of an existing drug will be less expensive by far.
As for the fratricidal nature of the market, and all the different drugs treating the same indications, well, get this: They’re not all the same. Why are there so many SSRIs, and other anti-depression medicines? Wouldn’t Prozac® be enough? Hell, why didn’t the industry stop with the first generation SSRIs? Well, because the first generation had some serious side effects. Prozac is better. Why not stop there? Because some people don’t respond to Prozac, so they get Zoloft®, or Webutrin®, or some other treatment, until they find one that treats their condition without unacceptable side effects. Sooner or later, someone’s going to come along with a new compound that knocks all the existing compounds into a cocked-hat, but if you apportion the research, say to the Pharmas “You can only research where we tell you”, then “good enough” becomes the enemy of “better”, and we get stuck with drugs that only work so-so.
The new anti-cholesterol drug coming down the pike will save lives, more lives than if we just stuck with Lipitor. Does that mean Lipitor (or any of the other statins, for that mater) should be pulled? Hell No! There are going to be people who don’t need the new drug, or can’t tollerate the side effects of the new drug, and will need some other treatment.
As for Nexium®, well, the industry may laugh, and yes, it was developed off of an existing medicine (at a bargain price, too!), but the FDA agrees that it’s sufficiently more efficatious than the preceeding treatment (Prilosec®) to warrant a new name, a new label, and new prescribing information. Yeah, it’s piggy-backing off of an existing compound, but on the flip side, it’s extremely good cost/profit ratio will help fund the development and release of things like Iressa® and Crestor®. (BTW: I helped get Nexium out the door to the FDA. Only a small part of the team, but it was a Great team!)
Of course, they did pull the statin that needed to be pulled. But then, any company that thought low efficacy and high side effects was the combination to dominate the market wasn’t going to do well to begin with.
Is Crestor the super-statin of which you speak?
Yeah, it’s Crestor®.
I’ve been working on that team off and on for the last year and a half. It’s a rockin’ new treatment, and Pfizer is manuevering like mad to get Lipitor® outta the way. Lipitor is a very good drug, but the trial reports on Crestor are very exciting. More than that, I can’t ethically say at this time.
As for low efficacy and high side effects, well, nothin’ more to say than “See ya”.
Is there a published estimate of when Crestor® will be available?
Crestor® is in FDA review now. It’s in the hands of the agency, and I don’t have any predictions, other than there should be an FDA approvable letter within the year.
I would like to see some examples of drugs which are not brand new but well-established and heavily repied upon, yet inexpensive to manufacture. What does the price tend to be? Has it come down? Has the manufacturer recouped its investment? Where is the money going now? How does the patent scenario tend to play out? Are there any examples of formerly expensive drugs being sold cheaply by post-patent makers who aren’t doing expensive R&D?
In general, I don’t have too much dealing with the generic Pharmas. This isn’t becuse they’re bad folks, but because there aren’t too many in my geographical area.
A generic Pharma will take publicly available data, and will use that, in combination with reverse engineering, to formulate a reasonable facsimily of the target drug. They will then submit an Abbreviated New Drug Application to the FDA, citing the original NDA, and any additional information they have, such as manufacturing, formulation, and any aditional studies. The FDA will review these on a fairly fast pace, as there’s not too much new to cover.
The generic will be marketed in direct competition with the brand name product, and many Health Care Plans will change their formulary to accept (even prefer) the generic.
This does not mean that generic is fully equivalent to brand-name!
Differences in manufacturing, delevery, and quality control can make small but significant differences in the effectivenes and safety of the generic product. In general, these differences are negligable, but on occaision, can have very serious effects. I can recall a case where a birth control product went generic, and it suddenly lsot much of it’s effecacy, due to the source of some of the components. It seems the primary Pharma was deriving estrogen analogues from the urine of pregnant mares. Eeew! What they had set up was a farm where pregnant horses were kept in stalls with floor drains that led to a collecting and processing facility. In this case, the generic Pharma went with chemically derived estrogen analogues, but there was some other pharmicokinetic compound in the urine that contributed to the effecacy of the brand name product, that had hitherto been missed, and lacking it, the generic wasn’t as efficatious.
This is an isolated story, but still illustrative of the things that can happen in the industry.
In general, once a drug goes generic, price plumets, but the brand-name product remains in production, at a lower volume than when it was exclusive. Some doctors continue to prescribe by brand name, even if a perfectly safe generic is available. The big Pharmas try to encourage that, while the Health Plans try to discourage that. It’s a constant tug-of war, and patent protection suits are very common.
Pharmas tend to have sharp, well-excercised, well-fed lawyers.
To get an idea of the activity on the drug market, look here. If it says “NDA” in the “Application #” column, it’s new. If it says “SNDA”, it’s a new indication for an existing drug, and if it says “ANDA”, it’s going generic. The linked application letter will tell you what drug, if any, it’s piggy-backing off of, and who was the original manufacturer.