Quote:
Originally Posted by Trapper John
Well, being intimately involved in drug discovery/development for the last 25 years I have few thoughts on this subject:
1. It is easy to blame pharmaceutical companies, although not blameless, they are not totally responsible either.
2. Government funding is usually at the very early stage (discovery and proof-of concept) and amounts to <1% of the amount required to bring a new drug to market. Most of the government funding goes to University salaries and overhead. Universities retain the patent rights and recover their investment when the technology is sold (usually to a venture capital company).
3. The VC company will bundle the new technology and push it down to one of its portfolio companies to further develop the technology through the pre-IND and on to the IND/clinical phase of development. The cost to this stage is ~$100 million.
4. The pharmaceutical company's sweet spot for acquisition of a new drug candidate is the Phase II clinical trial stage. There is easily $300-$500 million to bring a drug candidate through this stage of development and ready for acquisition by a pharmaceutical company.
5. The acquisition cost will be $1-$2 Billion at least.
6. Now the real costs begin, including Phase 3 clinical studies, formulary costs, pharmacy benefit managers, insurance providers, and various other 'middle-men'. This phase adds a 10x multiple to a new drug's cost before it ever reaches market!
The cost and complexity of taking a new drug to market requires the infrastructure of one of the established pharma companies. They're not the bad guys. It's the cost associated with the process. Frankly, I don't see a point to reform without tisks such as reduction in drug safety/efficacy
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Trapper John,
Your comments (as usual) are correct. Case in point with 1980 dollars:
40+ years ago, I was implementing a manufacturing system in one of the J&J companies. We had worked for about 12 months of an estimated 3 year effort.
They had developed a new product that revolutionized a reproductive health issue, and the Phased testing so far had gone extremely well (SPEND TO DATE Phase 1 +/- $100 Million, Phase 2 +/- $350 MILLION). We had just finished a Phase 2 approval, and the results were so good that the Division VP took the team out for a “celebratory” dinner.
We started Phase 3 with high expectations…so high in fact that J&J Senior Management directed a “pre-build” of inventory so that they could have product in the pipeline when Phase 3 was approved (ADDITIONAL SPENDING +/- 1.2 BILLION).
They had 2 warehouses full with inventory, and were starting to stage in another J&J Divisions facility.
Then the REJECTION came for the Phase 3 clinicals. They had discovered a non-recoverable major occluding issue in late phase testing.
The product was cancelled, the warehouses scrapped the inventory, and the company wrote off over $1.65 BILLION (in 1980 dollars). I have no idea what that amount would be in 2021 money, but I expect it would be north of $5 BILLION. Profit losses over the next 17 years would probably have been in the $2-3 BILLION range annually..
SnT