Important Distinctions

  • by: |
  • 11/01/2007
Headline in today’s edition of the Wall Street Journal reports on a new IMS report that, “Prescription-Drug Sales Growth Is Expected to Slow.”

Here’s a link to the complete WSJ story:

What the headline means is that the sales volume of on-patent drugs will slow, not that the use of pharmaceutical products will decrease. Important distinction.

As the WSJ reports, “IMS forecasts that about two-thirds of prescriptions dispensed in the U.S. next year will be generics, up from 50% in 2003.”

The article also comments on the pipeline and regulatory environment, “Drug companies, meanwhile, aren't churning out enough new medicines to keep dollar sales growing at the same pace. And regulators such as the Food and Drug Administration, burned by several drug-safety scandals, are casting a tougher eye on new products before allowing them on the market.”

First, as to the FDA “casting a tougher eye,” the agency always casts a tough, educated, professional eye on its actions. And new legislation gives the FDA even more authority and funding to do its job better. “Better” not “Tougher” – it’s an important distinction.

As to the fact that drug companies aren’t “churning out” enough new medicines, one thought – new drugs are never “churned out.” That’s a pretty glib statement considering that, despite the increase in R&D spending, the number of new innovative products being submitted to the FDA for approval is decreasing. In fact, output of new products has been dropping since 1997. FDA is now receiving fewer applications for new drugs than in mid-1990’s. The number of new device applications is also decreasing.

And the rate of failure is increasing. Almost 50% of applications are failing in late-stage Phase 3 trials. This costs companies millions of extra dollars and is driving up the cost of successfully bringing a new drug to market. In 2003, researchers at Tufts Center for the Study of Drug Development estimated these costs to be $802 million, and some sources suggest that the total cost is closer to $1.7 billion.

As the late US Senator Everitt Dirksen once said, “A billion here and a billion there, and pretty soon you’re talking about real money.”

The high cost of R&D is forcing many companies to make the short-term business decision to focus product-development on those molecules that have a much higher potential to recoup expenditures. Unfortunately, this trumps attempts to develop potentially risky but breakthrough products for diseases affecting smaller populations, the orphan drugs.

Consider the implications if FDA could help companies to fail faster. Using the lower end of the Tufts drug development number …

* A 10% improvement in predicting failure before clinical trials could save $100 million in development costs.

* Shifting 5% of clinical failures from Phase 3 to Phase 1 reduces out of pocket costs by $15-$20 million

* Shifting ¼ of failures from Phase 2 to Phase 1 would reduce out of pocket costs by $12-$21 million.

Hence the urgency of the FDA’s Critical Path program.

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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