The High Cost of Innovation Is Killing People

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  • 02/10/2012
Matt Herper has a great piece on  how expensive it is to develop new drugs...

I like how Herper compared the cost of developing small molecule meds to biologics.  What's more, he neatly shows that no matter how you slice it or estimate costs they are too high to be sustainable and to sustain the advances in health and life expectancy people have enjoyed over the past 50 years or so.   Herper writes:

"AstraZeneca has spent $12 billion in research money for every new drug approved, as much as the top-selling medicine ever generated in annual sales; Amgen spent just $3.7 billion. At $12 billion per drug, inventing medicines is a pretty unsustainable business. At $3.7 billion, you might just be able to make money (a new medicine can probably keep generating revenue for ten years; invent one a year at that rate and you’ll do well). There are lots of expenses here. A single clinical trial can cost $100 million at the high end, and the combined cost of manufacturing and clinical testing for some drugs has added up to $1 billion. But the main expense is failure. "

Read  How to improve R&D productivity: the pharmaceutical industry's grand challenge by Steven M. Paul, Daniel S. Mytelka, Christopher T. Dunwiddie, Charles C. Persinger, Bernard H. Munos, Stacy R. Lindborg & Aaron L. SchachtNature Reviews Drug Discovery 9, 203-214 (March 2010)doi:10.1038/nrd3078

 Sir Michael Rawlins was warning about the crisis in R&D back in 2003:

"I don't think it has dawned on everybody what is happening," he told the meeting at the Royal Institute of International Affairs, at Chatham House, London. "There is a kind of timebomb."

Sir Michael called for reforms: regulators were too frightened to make mistakes and too reluctant to admit that safety had a price, excessive secrecy over drug regulation in Britain was "outrageous", doctors and academics had neglected to do enough to find out what patients wanted from new treatments, and regulatory authorities had neglected "value for money". A new European clinical trials directive was "a complete disaster" that would "do more damage to clinical trials in Europe than anything I can think of".

The directives were developed to make the regulation of clinical research more...FDA-like.


"The current regulation of clinical trials in Europe is causing unnecessary delays and complexity which is stifling medical advances, without additional benefits to patient safety.

"We must make changes to clarify the scope of the current European Directive and stop a ‘one size fits all’ approach to trial regulation."

Professor Peter Johnson, Cancer Research UK’s chief clinician, added: "The huge expansion of paperwork has not helped to make research better or safer, just slower and more expensive.

"It’s essential that European institutions and governments take action against over-regulation of clinical trials, to ensure that patients and the public can continue to reap the benefits from the world-class research taking place throughout the UK and Europe."

Sir Michael chaired the task force that came up with recommendations for clawing back a lot of the EU regs and red tape.

CMPI has been fighting the battle to speed up and reduce the cost new medical techologies for nearly a decade by demonstrating the value of innovation, articulating pathways for accelerating innovation and bringing together stakeholders to discuss ways to increase adoption of individualized or stratified approaches to care..  We have made some progress in sounding the alarm about the crisis Sir Michael and Mark McClellan identified  as paramount to our future well-being.   And we thank the organizations and firms who have supported and stood with us to avoid what Sir Michael has described as a 'complete disaster'  that is 'killing the supply of new devices and drugs.' 

Much is at stake.  Nobel Prize winning economist Gary Becker observed:


At a New Year's Eve party, I asked our guests to name the major development of the 20th century. They had several excellent candidates, including the rise and fall of communism, the growth of democracy, and the advent of computers. But I believe none benefited the ordinary person more than the extending of life expectancy."


However, at present rates of innovation the 100 years of uninterrupted growth in life expectancy will cease.  The health improvements that increase our capacity to live free of disability will erode.  Since medical innovation will be the source of most of the technological progress and economic growth in the future, failing to meet this crisis means that America will fail to prosper as it once did and as it should.

We need to do more and need more allies.  

To paraphrase Winston CHurchill: Without victory there is no survival.  


It could very well be that, as Jefferson Smith observed in the movie Mr. Smith Goes To Washington" that you fight for lost causes harder than any other.   It often seems like our work is  underappreciated and   I prefer



Center for Medicine in the Public Interest is a nonprofit, non-partisan organization promoting innovative solutions that advance medical progress, reduce health disparities, extend life and make health care more affordable, preventive and patient-centered. CMPI also provides the public, policymakers and the media a reliable source of independent scientific analysis on issues ranging from personalized medicine, food and drug safety, health care reform and comparative effectiveness.

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