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About this Author
DBL%20Hendrix%20small.png College chemistry, 1983

Derek Lowe The 2002 Model

Dbl%20new%20portrait%20B%26W.png After 10 years of blogging. . .

Derek Lowe, an Arkansan by birth, got his BA from Hendrix College and his PhD in organic chemistry from Duke before spending time in Germany on a Humboldt Fellowship on his post-doc. He's worked for several major pharmaceutical companies since 1989 on drug discovery projects against schizophrenia, Alzheimer's, diabetes, osteoporosis and other diseases. To contact Derek email him directly: derekb.lowe@gmail.com Twitter: Dereklowe

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August 15, 2014

Incomprehensible Drug Prices? Think Again.

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Posted by Derek

There's a post by Peter Bach, of the Center for Health Policy and Outcomes, that's been getting a lot of attention the last few days. It's called "Unpronounceable Drugs, Incomprehensible Prices", and you know what it says.

No, really, you do, even if you haven't seen it. Too high, unconscionable, market can't support, what they can get away with, every year, too high. Before I get to the uncomfortable parts of my own take on this, let me stipulate a couple of things up front: (1) I do think that the industry is inviting trouble for itself by the way it it raising prices. It is in drug companies' short term interest to do so, but long term I worry that it's going to bring on some sort of price-control regimen. (2) Some drug prices probably are too high (but see below for what that means). Big breakthroughs can, at least in theory, command high prices, but not everything deserves to be priced at the level it is.

I was about to say "see below" again, but this paragraph is below, so here goes. Let me quote a bit from Bach's article:

Cancer drug prices keep rising. The industry says this reflects the rising costs of drug development and the business risks they must take when testing new drugs. I think they charge what they think they can get away with, which goes up every year. . .Regardless of the estimate, the pricing of new drugs for cancer and now other common diseases has come unglued from the rationale the industry has long espoused. Instead, pricing is explained by a phenomenon of increasing boldness by the industry against a backdrop of regulators and insurers who have no legal authority to dictate or even propose alternative pricing models.

Bach's first assertion is correct: drug companies are charging what they think they can get away with. In that, they are joined by pretty much every other business in the entire country. I did a post once where I imagined car sales transplanted into the world of drug sales- you couldn't just walk in and buy a car, for example. No, you had to go to a car consultant first, licensed by the state, who would examine your situation and determine the sort of car you needed. Once they'd given you a car prescription, you could then go to a dealer.

Well, we don't have that, but what car companies do charge is, well, what they can get away with. The same as steel companies, soft drink companies, cardboard box companies, grocery stores, and people who are selling their houses. You charge what you think the market will bear. Even people selling basic necessities of life like food and shelter charge what they think the market will bear. It's true that health care does feel different from any of those (a point that I went into in that post linked in the last paragraph), and there's the root of many a problem.

And, some will say, a big difference is that none of these other sellers have patents on their side, the legal right to put the screws on. But remember the flip side of the patent system: the legal certainty that you will lose that pricing power on a set date. The pricing of new drugs is completely driven by their expected patent lifetimes, because almost all the money that the developing company is ever going to make off the drug is going to have to be made during that period.

And sometimes that period isn't very long. The patent clock starts ticking a long time before a drug ever gets on the market; there are often only five to ten years left when it's finally approved for sale. There are other factors, too. Everyone is talking about the price of Sovaldi for hepatitis C, but no as many people have thought about the fact that the drug is, in fact, so effective that it has blown two other recently approved Hep C treatments right out of the market, well before their patent lifetimes had even expired. There really is competition in the drug business, and that sector shows it in action.

Now, what there isn't so much of is competition on price, true. And that's what you do see in the other businesses I named above. There are grocery stores that occupy the "Wonderful Prestigious High Quality" part of the market, and others that occupy the "Low Low Prices Every Day" part. (And interestingly, if you Venn-diagram out what's on the shelves of those two, there's still some overlap, allowing you to watch people paying wildly different prices for blueberries that came off the same truck, not to mention even less perishable stuff like aluminum foil). You don't see this in the drug industry, partly because for patented drugs we're never selling the same blueberries. the same gasoline, or the same khaki trousers. Even the biggest "me-too" drugs still differ from each other to some degree.

And that brings up another point. Bach uses (as his example of pricing in the cancer field) two Alk compounds, Xalkori (crizotinib) from Pfizer and Zykadia (ceritinib) from Novartis. Xalkori was first, and Bach makes a lot of the fact that Zykadia is priced higher, even though he says that Pfizer ran bigger clinical trials, had to work out the associated diagnostic test with the FDA, and launch the new mechanism into the oncology market. Novartis, he says, got to piggy-back on all that, and yet their drug is priced higher. There can be no other reason for that pricing decision, Bach says, other than that they can.

Let's go into some details that Bach's article leaves out. Zykadia is indeed second to market. But the time gap between the two drugs means that Novartis was working on it before they knew that Xalkori worked in the clinic. Bach makes an error here made by many others who have not actually done drug discovery work: the time course of these things is longer than it looks. A screen had to be run against Alk, compounds had to be confirmed, a medicinal chemistry team had to optimize them and make lots of new structures, all of which except one fell by the side of the road. The compound had to go through animal tests for efficacy and safety, and it had to be scaled up and formulated. And so on, and so on. Novartis did not sit back, watch Xalkori succeed, and then decide "Hey, we should get us some of that action, too".

Now Zykadia is, as Bach says, a second-line therapy. But it's approved for patients who do not respond to, or have become intolerant to Xalkori. So this "me-too" drug is, in fact, different enough to work on patients for whom Xalkori has failed. In fact, most patients will start to show relapse inside of a year on Xalkori, so it would appear that most non-small-cell lung cancer patients with multiyear survival are probably going to end up taking both compounds. Cancers mutate quickly, and we need all the options we can get - and guess what, some of those options are going to be second to market, because they can't all be first.

Another point to note is that while Zykadia was indeed approved on the basis of a smaller clinical trial set, that's because it received "breakthrough" designation from the FDA for accelerated review and approval. Startlingly, it actually got approved after Phase I trials alone. (Not bad for what Bach characterizes as a simple copycat drug, by the way). Novartis has run the compound in more clinical trials than that, and they continue to do so. It's not like they slipped in with a mere 163 patients and then trotted off to the FDA while brushing the dust off their hands. To find this out, by the way, you'll want to use "LDK378", the internal Novartis designation for the drug, and I'm passing this information on to Bach for free. Clinicaltrials.gov shows 13 trials in the US when you do that, and there are others outside the country as well.

Bach's article, as mentioned, plays down any differences between these two drugs, saying that "they have not been directly compared". But that's not accurate. Let me quote from that link in the paragraph just above:

As described by Shaw and colleagues in the New England Journal of Medicine, ceritinib has striking activity in ALK-rearranged NSCLC, both in treatment-naïve patients and in those who experienced tumor progression on crizotinib. . .The drug has clear pharmacological advantages over crizotinib. Its surprising level of activity in crizotinib-resistant tumors may be explained by its greater potency and its particular ability to inhibit ALK with gatekeeper mutations that confer resistance to crizotinib.

The two drugs have had a very important comparison: people who are going to die on Xalkori are going to survive longer if they switch to Zykadia. "Me-too" drug, my ass.

But rather than end on that note, tempting as that is, let me circle back to pricing once again. The price for these cancer drugs is not borne by individual patients emptying their piggy banks. It is borne by insurance, both private and government. And drug companies do indeed price their drugs at what the think the insurance plans will pay for them. This is not a secret, and should not be a surprise, and I continue to be baffled by people who react to this with horror and disbelief. Prices appear when you find out what the payers will pay. If Pfizer, Novartis, or Gilead priced their drugs at fifty million dollars a dose, no insurance company would reimburse. But the insurance companies are paying the current prices, and if they believe that they will be put out of business by doing so, they need to stop doing that. And they could.

They will, too, if we in the industry keep pushing them towards doing it. That's our big problem in drug development: our productivity has been too low, and we're making up for it by charging more money. But that can't go on forever. There are walls closing in on us from both sides, and we're going to have to scramble out from between them at some point. Pricing power can only take you so far.

Comments (42) + TrackBacks (0) | Category: Cancer | Clinical Trials | Drug Prices | Regulatory Affairs | Why Everyone Loves Us

May 29, 2014

The Price of Sovaldi

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Posted by Derek

John LaMattina has a good post about Gilead, their HCV drug Sovaldi, and the price that the company is charging. Most readers here will be familiar with the situation: Sovaldi has a very high cure rate for hepatitis C, but in the US it costs $84,000 per patient. Insurance companies, in some cases, are pushing back at that price, but LaMattina says to run the numbers, in a question to the head of the insurance trade association:

Sovaldi is a drug that cures hepatitis C. It actually SAVES the healthcare system money in that it will prevent patients from dying from liver cancer, cirrhosis and liver failure. Liver transplants alone can cost $300,000 and then patients must take anti-rejection drugs that cost $40,000 per year for the rest of their lives. The price of Sovaldi, while high now, will drop, first when competitive drugs in late stage development reach the market and then when the drug is generic. Given all of this, what price for Sovaldi would have been acceptable to you – $60,000, $40,000, $10,000? What price are you willing to pay for innovation?

He didn't get an answer to that one, as you can well imagine. But it's a worthwhile question. There are, I'm sure, hepatitis C patients who die of other things before they ever start costing the kinds of money that LaMattina correctly cites for liver transplants. I don't have those figures, but if anyone does, it's the insurance companies, and they may believe that Sovaldi is still not cost-effective. Or (and these are not mutually exclusive explanations) they may be pushing back because that's what they feel they have to do - that otherwise all sorts of companies will push up prices ever more than they do already.

This is just another illustration of the walls that are closing in on the whole drug-discovery business - fewer drugs, higher costs to develop them, higher drug prices, more pushback from the payers. It's been clear for a long time that this can't go on forever, but what might replace it isn't clear (and probably won't be until the situation gets much tighter). I say that because although drug prices are surely going up, the insurance companies are still paying out. They complain, but they pay. We'll know that the real crisis is at hand when a new drug gets flatly rejected for reimbursement by everyone involved. But will that ever happen in quite that way? Keep in mind that drug companies carefully set their own prices according to what they think the market will bear. Gilead surely knew that their price for Sovaldi would be unpopular. But they probably also figured that it would hold.

Pretty much every other industry does this sort of thing, but Health Care Is Different, as always. I had a crack at explaining why I think that is here: in short, we think about health expenses differently than we think about almost any other expense, and I don't think that's ever going to change. But drug prices will continue to test the limits of the insurance companies to write the checks, as long as those checks keep getting written.

Comments (41) + TrackBacks (0) | Category: Drug Prices | Infectious Diseases

May 1, 2014

Another Whack at the Cost of Drugs Issue

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Posted by Derek

I wanted to highlight this post by Wavefunction on drug pricing. He's addressing the peole who want to know how come a drug with $X of ingredients in it can sell for some multiple of that price, and I'm glad he's making the effort. That's a tough crowd to convince (I've taken several swings at the same topic myself). He emphasizes the difference between the cost of manufacturing something versus the cost of discovering it, which is exactly right, but the people arguing about this issue will usually dispute any realistic estimate of those discovery costs as well. But it's a point that has to be made. It's not that there's no way that a drug could ever be priced too high. It's just that they can also be priced too low.

Comments (17) + TrackBacks (0) | Category: Drug Prices

January 3, 2014

Prices Rising - Every Year, Every Drug?

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Posted by Derek

Via AndyBiotech on Twitter, here's a disturbing chart of price trends of drugs in several therapeutics areas. Annualized, these are hikes of 10% or more per year.

Now, it seems clear that one big reason for this is that hey, insurance will pay for it. And no one needs to tell me (or most readers of this site) about the state of drug discovery and the corresponding need to make hay while the sun shines. I also think that companies should be able to charge what they think they can charge for their goods and services, and I would very much dislike handing over those decisions to some sort of review board that decides what the "right" prices should be.

But. . .(and it's a big "but", to use a phrase that sent my kids into floor-pounding hysterics when I used it inadvertently while trying to lecture them) there's another factor at work here. We've had a lot of discussions about drug pricing around here, and one theme I've brought up several times is that unless our business is seen as providing good value for the money, we are inviting the various hammers to come down on us.

Comments (37) + TrackBacks (0) | Category: Drug Prices

December 6, 2013

Outcomes, Expensive Outcomes

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Posted by Derek

Well, to go along with that recent paper on confounding cell assays, here's a column by John LaMattina on the problem of confounding clinical results. For some years now, the regulatory and development trend has been away from surrogate markers and towards outcome studies. You'd think that lowering LDL would be helpful - is it? You'd think that combining two different mechanisms to lower blood pressure would be a good thing - is it? The only way to answer the questions is by looking at a large number of patients in as close to a real-world setting as possible.

And in many cases, we're finding out that some very reasonable-sounding ideas don't, in fact, work out in practice. These aren't just findings with new or experimental drugs, either - as LaMattina shows, we're finding out things about drugs that have been on the market for years. This illustrates several important points: (1) There's a limit to what you can find out in clinical trials. (2) There is a limit to what reasonable medical hypotheses are worth. (3) We do not understand as much as we need to about human biology, in either the healthy or diseased state. (4) A drug, even when it's been approved, even when it's been on the market for years, is always an experimental medication.

LaMattina also points out just how crazily expensive the outcomes trials are that can generate the data that we really need. He's hoping that companies that spend that sort of money will emerge with a compelling enough case to be able to recoup it. I certainly hope that, too - but I'm absolutely 50/50 on whether I think it's true.

Comments (16) + TrackBacks (0) | Category: Clinical Trials | Drug Prices

October 21, 2013

Catalyst Pharmaceuticals And Their Business Plan

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Posted by Derek

The orphan-drug model is a popular one in the biopharma business these days. But like every other style of business, it has something-for-nothing artists waiting around it. Take a look at this article by Adam Feuerstein on Catalyst Pharmaceuticals, and see what category you think they belong in.

They're developing a compound called Firdapse for Lambert-Eaton Myasthenic Syndrome (LEMS), a rare neuromuscular disorder. It's caused by an autoimmune response to one set of voltage-gated calcium channels in the peripheral nervous system. Right now, the treatments for the condition that seem to provide much benefit are intravenous immunoglobin and 3,4-diaminopyridine (DAP). That latter compound is a potassium channel blocker that allows calcium to accumulate intracellularly in neurons and thus counteracts some of the loss of function in the system.

DAP is not an FDA-approved treatment, but it's officially under study at a number of medical centers, and the FDA is allowing it to be given to patients under a compassionate-use protocol. It's supplied, free of charge, by a small company in New Jersey, Jacobus Pharmaceuticals, who got into the area through a request from the Muscular Dystrophy Association. So how well does Firdapse work compared to this existing drug? Pretty much the same, because it's the same damn compound.

Yep, this is another one of those unexpected-regulatory-effects stories, such as happened with colchicine and with hydroxyprogesterone. The FDA has wanted to get as many therapies as possible through the actual regulatory process, and has provided a marked-exclusivity incentive for companies willing to do the trials needed. But if you're going to offer incentives, you need to think carefully about what you're giving people an incentive to do. In this case, the door is open for a company to step in, pick up an existing drug that is being given away to patients for free, a compound that it has spent no money discovering and no money developing, run the fastest trial possible with it, and then jack the price up to whatever the insurance companies might be able to pay. Now, pricing drugs at what the market will pay for them is fine by me. But that's supposed to be a reward for taking on the risk of discovering them and getting them through the approval process. This Catalyst case is another short-circuit in the system, a perverse incentive that some people seem to have no shame about taking advantage of. A similar situation has taken place in the EU with DAP and Biomarin Pharmaceuticals.

The LEMS patient community is not a large one, and they seem to be getting the word out for people to not sign up for Catalyst's clinical trials. Jacobus themselves have realized what's going on, and are running a trial of their own, hoping to file before Catalyst does and pick up the market exclusivity for themselves, so they can continue to supply the compound at the current price: nothing.

It's worth taking a minute to contrast this situation with Biogen's Tecfidera. That's another very small molecule (dimethyl fumarate) being given to patients with a neurological disease. It's also expensive. But in this case, MS patients had not been taking dimethyl fumarate for years (to the best of my knowledge). It was not already in the medical literature as an effective treatment (the way DAP is already there for LEMS). Biogen bought the company with the rights (Fumapharm) and took on the expense of the clinical trials, taking the risk that things might not work out at all. A lot of stuff doesn't. And they're pricing their drug according to what the market will pay, because they also have to fund the many other projects they're working on, most of which can be expected to wipe out at some point.

So how does a situation like Catalyst and DAP affect the drug companies who actually do research? Not too much, you might think, and they apparently think so, too, because I don't recall any statements about any of these cases so far from that end of the industry. They may not want to take any stands that call into question the ability of a company to set the price of its drugs according to what it thinks the market will bear. But since we are not, last I saw, living in some sort of radical libertarian free-for-all, it would be worth remembering that the ability to set such prices is not some sort of inalienable right. It can be restricted or even abrogated entirely by governments all around the world. And one way to get that to happen is for these governments and (in the democratic states, their constituents) to feel as if they're being taken advantage of by a bunch of cynical manipulators.

Comments (19) + TrackBacks (0) | Category: Drug Prices | Regulatory Affairs | The Central Nervous System

September 13, 2013

Value For the Money

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Posted by Derek

BioCentury always does a big issue for the fall, entitled "Back to School". They often use this as a state-of-biopharma platform, going into depth on what they see as the biggest issues that need to be addressed. This year, the September 2 issue, they're telling people (and not for the first time!) to get braced for higher standards for what health insurance is going to pay for:

Drug companies must start creating the case for value differentiation in discovery and then steadily build a body of evidence throughout the product development process.

Some drug developers have figured this out and have reshaped both their pipelines and development practices accordingly. But the number of me-too and purportedly me-better products still in the pipeline — coupled with the fact that drugs are still getting to Phase III and beyond without comparisons to relevant SOC (standard of care) or data on quality of life and other metrics that patients value — shows efforts in this department are still wanting.

For example, BioCentury’s BCIQ online database shows 54 compounds in active development that target VEGF or its receptors, not counting line extensions of approved VEGF and VEGF receptor inhibitors.

Even accounting for different variants of the receptor and its ligand and differences in delivery, formulation and dosing, it is highly unlikely that so many compounds could be differentiated sufficiently that physicians and patients would strongly prefer them to marketed alternatives — or that payers would be willing to reimburse them without restrictions.

. . .Back to School argues bio-industry must abandon efforts to block third-party assessments of value, and instead ramp up nascent efforts to be at the table where technology assessment takes place in the U.S., Europe and the rest of the world. Comparative effectiveness and cost effectiveness assessments will not be stopped. Industry can either contribute its expertise to improve the quality of the results, or stand by while others who may know less about both the drugs and the best ways to study them do the work based on their own priorities. Right now that priority is finding ways to avoid paying for new drugs.

Well put. But doing so is not going to be easy, or cheap. Differentiating new drug candidates in the clinic has often been left for later on in Phase III, and smaller companies often don't do much of it at all, figuring that'll be a job for their bigger partners when the time comes. The FDA "Breakthrough" designations can help here, because they explicitly encourage companies to show, as early as possible, why their compound stands out from the others. But as the Biocentury piece goes on to say, even then companies are going to have to be get ready to collect even more data on real-world outcomes, after the drug is approved, if they want to be able to persuade the various payers out there.

There's another issue here, too. Incremental innovation is just as much a part of the business (and the science) as are sudden leaps forward. There's room to wonder if the frequency of those sudden leaps (and the distance they cover) will go down if we don't get to take as many steps in the run-up to them. This is one of those issues that moves slowly enough to be effectively unprovable on any sort of reasonable financial or political time scale, but there are a lot of very real things out there that don't fit themselves to our calendars.

BioCentury recommends that (1) companies should work with regulatory agencies, insurance (both public and private), and patient groups to define just what constitutes real value for a given disease area, (2) they should immediately get to work with those payers who are already mandated to show improvements in their quality of care, (3) as mentioned above, whenever some government or international agency starts rating health care and medical technology advances, the industry had better be there, and (4) the drug industry had better change some of its traditional attitudes, and fast, because its pricing power is clearly diminishing.

As a drug-discovery guy, I don't spend as much time thinking about these issues as I do scientific ones. But if I'm discovering new things that no one wants, because no one needs them, that no one will then feel like paying for, all my work (and that of my colleagues) will be in vain. None of us can afford to keep our heads down these days.

Comments (20) + TrackBacks (0) | Category: Business and Markets | Drug Prices | Regulatory Affairs

May 16, 2013

The Atlantic on Drug R&D

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Posted by Derek

"Can you respond to this tripe?" asked one of the emails that sent along this article in The Atlantic. I responded that I was planning to, but that things were made more complicated by my being extensively quoted in said tripe. Anyway, here goes.

The article, by Brian Till of the New America Foundation, seems somewhat confused, and is written in a confusing manner. The title is "How Drug Companies Keep Medicine Out of Reach", but the focus is on neglected tropical diseases, not all medicine. Well, the focus is actually on a contested WHO treaty. But the focus is also on the idea of using prizes to fund research, and on the patent system. And the focus is on the general idea of "delinking" R&D from sales in the drug business. Confocal prose not having been perfected yet, this makes the whole piece a difficult read, because no matter which of these ideas you're waiting to hear about, you end up having a long wait while you work your way through the other stuff. There are any number of sentences in this piece that reference "the idea" and its effects, but there is no sentence that begins with "Here's the idea"

I'll summarize: the WHO treaty in question is as yet formless. There is no defined treaty to be debated; one of the article's contentions is that the US has blocked things from even getting that far. But the general idea is that signatory states would commit to spending 0.01% of GDP on neglected diseases each year. Where this money goes is not clear. Grants to academia? Setting up new institutes? Incentives to commercial companies? And how the contributions from various countries are to be managed is not clear, either: should Angola (for example) pool its contributions with other countries (or send them somewhere else outright), or are they interested in setting up their own Angolan Institute of Tropical Disease Research?

The fuzziness continues. You will read and read through the article trying to figure out what happens next. The "delinking" idea comes in as a key part of the proposed treaty negotiations, with the reward for discovery of a tropical disease treatment coming from a prize for its development, rather than patent exclusivity. But where that money comes from (the GDP-linked contributions?) is unclear. Who sets the prize levels, at what point the money is awarded, who it goes to: hard to say.

And the "Who it goes to" question is a real one, because the article says that another part of the treaty would be a push for open-source discovery on these diseases (Matt Todd's malaria efforts at Sydney are cited). This, though, is to a great extent a whole different question than the source-of-funds one, or the how-the-prizes-work one. Collaboration on this scale is not easy to manage (although it might well be desirable) and it can end up replacing the inefficiencies of the marketplace with entirely new inefficiencies all its own. The research-prize idea seems to me to be a poor fit for the open-collaboration model, too: if you're putting up a prize, you're saying that competition between different groups will spur them on, which is why you're offering something of real value to whoever finishes first and/or best. But if it's a huge open-access collaboration, how do you split up the prize, exactly?

At some point, the article's discussion of delinking R&D and the problems with the current patent model spread fuzzily outside the bounds of tropical diseases (where there really is a market failure, I'd say) and start heading off into drug discovery in general. And that's where my quotes start showing up. The author did interview me by phone, and we had a good discussion. I'd like to think that I helped emphasize that when we in the drug business say that drug discovery is hard, that we're not just putting on a show for the crowd.

But there's an awful lot of "Gosh, it's so cheap to make these drugs, why are they so expensive?" in this piece. To be fair, Till does mention that drug discovery is an expensive and risky undertaking, but I'm not sure that someone reading the article will quite take on board how expensive and how risky it is, and what the implications are. There's also a lot of criticism of drug companies for pricing their products at "what the market will bear", rather than as some percentage of what it cost to discover or make them. This is a form of economics I've criticized many times here, and I won't go into all the arguments again - but I will ask:what other products are priced in such a manner? Other than what customers will pay for them? Implicit in these arguments is the idea that there's some sort of reasonable, gentlemanly profit that won't offend anyone's sensibilities, while grasping for more than that is just something that shouldn't be allowed. But just try to run an R&D-driven business on that concept. I mean, the article itself details the trouble that Eli Lilly, AstraZeneca, and others are facing with their patent expirations. What sort of trouble would they be in if they'd said "No, no, we shouldn't make such profits off our patented drugs. That would be indecent." Even with those massive profits, they're in trouble.

And that brings up another point: we also get the "Drug companies only spend X pennies per dollar on R&D". That's the usual response to pointing out situations like Lilly's; that they took the money and spent it on fleets of yachts or something. The figure given in the article is 16 cents per dollar of revenue, and it's prefaced by an "only". Only? Here, go look at different industries, around the world, and find one that spends more. By any industrial standard, we are plowing massive amounts back into the labs. I know that I complain about companies doing things like stock buybacks, but that's a complaint at the margin of what is already pretty impressive spending.

To finish up, here's one of the places I'm quoted in the article:

I asked Derek Lowe, the chemist and blogger, for his thoughts on the principle of delinking R&D from the actual manufacture of drugs, and why he thought the industry, facing such a daunting outlook, would reject an idea that could turn fallow fields of research on neglected diseases into profitable ones. "I really think it could be viable," he said. "I would like to see it given a real trial, and neglected diseases might be the place to do it. As it is, we really already kind of have a prize model in the developed countries, market exclusivity. But, at the same time, you could look at it and it will say, 'You will only make this amount of money and not one penny more by curing this tropical disease.' Their fear probably is that if that model works great, then we'll move on to all the other diseases."

What you're hearing is my attempt to bring in the real world. I think that prizes are, in fact, a very worthwhile thing to look into for market failures like tropical diseases. There are problems with the idea - for one thing, the prize payoff itself, compared with the time and opportunity cost, is hard to get right - but it's still definitely worth thinking about. But what I was trying to tell Brian Till was that drug companies would be worried (and rightly) about the extension of this model to all other disease areas. Wrapped up in the idea of a research-prize model is the assumption that someone (a wise committee somewhere) knows just what a particular research result is worth, and can set the payout (and afterwards, the price) accordingly. This is not true.

There's a follow-on effect. Such a wise committees might possibly feel a bit of political pressure to set those prices down to a level of nice and cheap, the better to make everyone happy. Drug discovery being what it is, it would take some years before all the gears ground to a halt, but I worry that something like this might be the real result. I find my libertarian impulses coming to the fore whenever I think about this situation, and that prompts me to break out an often-used quote from Robert Heinlein:

Throughout history, poverty is the normal condition of man. Advances which permit this norm to be exceeded — here and there, now and then — are the work of an extremely small minority, frequently despised, often condemned, and almost always opposed by all right-thinking people. Whenever this tiny minority is kept from creating, or (as sometimes happens) is driven out of a society, the people then slip back into abject poverty.

This is known as "bad luck."

Comments (44) + TrackBacks (0) | Category: Drug Development | Drug Prices | Why Everyone Loves Us

April 29, 2013

Costing Just Too Much

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Posted by Derek

There's been a lot of rumbling recently about the price of new cancer drugs (see this article for a very typical reaction). It's a topic that's come up around here many times, as would be only natural - scrolling back in this category will turn up a whole list of posts.

I see that Bernard Munos has weighed in on the topic in Forbes. He's not being Doctor Feelgood about it, either:

All this adds up to a giant pushback against the astronomical drug prices that are becoming commonplace. It seems that price tags of $100,000 or above are becoming the norm. Of 12 cancer drugs approved in 2012, 11 cost more than that. As more drugs are offered at that level and their sponsors get away with it, it seems to set a floor that emboldens drug companies to push the envelope. They are badly misjudging the brewing anger.

The industry’s standard defense has been to run warm-hearted stories about the wonders of biomedical innovation, and to point out that drugs represent only 10% of healthcare costs. Both arguments miss the point. Everyone loves biomedical innovation, but the industry’s annual output of 25 to 35 new drugs is a lousy return for its $135 billion R&D spending. . .

That's a real problem. We in the industry concentrate on our end of it, where we wonder how we can spend this much for our discovery efforts and survive. But there are several sides to the issue. From one angle, as long as we can jack up the prices high enough on what does get through, we can (in theory) stay in business. That's not going to happen. There are limits to what we can charge, and we're starting to bang up against them, in the way that a Martingale player at a roulette table learns why casinos have betting limits at the tables. It's not a fun barrier to bump into.

And there's the problem Munos brings up, which is one that investors have been getting antsy about for some time: return on capital. The huge amounts of money going out the door are (at least in some cases) not sustainable. But we're not spending our money as if there were a problem:

Perhaps the mood would be different if the industry was a model of efficiency, but this is hardly the case. Examples of massive waste are on display everywhere: Pfizer wants to flatten a 750,000-square-foot facility in Groton, CT, and won’t entertain proposals for alternative uses. Lilly writes off over $100 million for a half-built insulin plant in Virginia, only to restart the project a few years later in Indiana. AstraZeneca shutters its R&D labs at Alderley Park and goes on to spend $500 million on a new facility in Cambridge.

Munos is right. We have enough trouble already without asking for more. Don't we?

Comments (37) + TrackBacks (0) | Category: Cancer | Drug Prices | Why Everyone Loves Us

April 2, 2013

Tecfidera's Price

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Posted by Derek

Let us take up the case of Tecfidera, the new Biogen/Idec drug for multiple sclerosis, known to us chemists as dimethyl fumarate. It joins the (not very long) list of industrial chemicals (the kind that can be purchased in railroad-car sizes) that are also approved pharmaceuticals for human use. The MS area has seen this before, interestingly.

A year's supply of Tecfidera will set you (or your insurance company) back $54,900. That's a bit higher than many analysts were anticipating, but that means "a bit higher over $50,000". The ceiling is about $60,000, which is what Novartis's Gilenya (fingolomod) goes for, and Biogen wanted to undercut them a bit. So, 55 long ones for a year's worth of dimethyl fumarate pills - what should one think about that?

Several thoughts come to mind, the first one being (probably) "Fifty thousand dollars for a bunch of dimethyl fumarate? Who's going to stand for that?" But we have an estimate for the second part of that question - Biogen thinks that quite a few people are going to stand for it, rather than stand for fingolomod. I'm sure they've devoted quite a bit of time and effort into thinking about that price, and that it's their best estimate of maximum profit. How, exactly, do they get away with that? Simple. They get away with it because they were willing to take the compound through clinical trials in MS patients, find out if it's tolerated and if it's efficacious, figure out the dosing regimen, and get it approved for this use by the FDA. If you or I had been willing to do that, and had been able to round up the money and resources, then we would also have the ability to charge fifty grand a year for it (or whatever we thought fit, actually).

What, exactly, gave them the idea that dimethyl fumarate might be good for multiple sclerosis? As it turns out, a German physician described its topical use for psoriasis back in 1959, and a formation of the compound as a cream (along with some monoesters) was eventually studied clinically by a small company in Switzerland called Fumapharm. This went on the market in Germany in the early 1990s, but the company did not have either the willingness or desire to extend their idea outside that region. But since dimethyl fumarate appears to work on psoriasis by modulating the immune system somehow, it did occur to someone that it might also be worth looking at in multiple sclerosis. Biogen began developing dimethyl fumarate for that purpose with Fumapharm, and eventually bought them outright in 2006 as things began to look more promising.

In other words, the connection of dimethyl fumarate as a possible therapy for MS had been out there, waiting to be made, since before many of us were born. Generations of drug developers had their chances to see it. Every company in the business had a chance to get interested in Fumapharm back in the late 80s and early 90s. But Biogen did, and in 2013 that move has paid off.

Now we come to two more questions, the first of which is "Should that move be paying off quite so lucratively?" But who gets to decide? Watching people pay fifty grand for a year's supply of dimethyl fumarate is not, on the face of it, a very appealing sight. At least, I don't find it so. But on the other hand, cost-of-goods is (for small molecules) generally not a very large part of the expense of a given pill - a rule of thumb is that such expenses should certainly be below 5% of a drug's selling price, and preferably less than 2%. It's just that it's even less in this case, and Biogen also has fewer worries about their supply chain, presumably. The fact this this drug is dimethyl fumarate is a curiosity (and perhaps an irritating one), but that lowers Biogen's costs by a couple of thousand a year per patient compared to some other small molecule. The rest of the cost of Tecfidera has nothing to do with what the ingredients are - it's all about what Biogen had to pay to get it on the market, and (most importantly) what the market will bear. If insurance companies believe that paying fifty thousand a year for the drug is a worthwhile expense, the Biogen will agree with them, too.

The second question is divorced from words like "should", and moves to the practical question of "can". The topical fumarate drug in Europe apparently had fairly wide "homebrew" use among psoriasis patients in other countries, and one has to wonder just a bit about that happening with Tacfidera. Biogen Idec certainly has method-of-use patents, but not composition-of-matter, so it's going to be up to them to try to police this. I found the Makena situation more irritating than this one (and the colchicine one, too), because in those cases, the exact drugs for the exact indications had already been on the market. (Dimethyl fumarate was not a drug for MS until Biogen proved it so, by contrast). But KV Pharmaceuticals had to go after people who were compounding the drug, anyway, and I have to wonder if a secondary market in dimethyl fumarate might develop. I don't know the details of its formulation (and I'm sure that Biogen will make much of it being something that can't be replicated in a basement), but there will surely be people who try it.

Comments (58) + TrackBacks (0) | Category: Drug Development | Drug Prices | The Central Nervous System

March 27, 2013

The NIH, Pfizer, and Senator Wyden

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Posted by Derek

Senator Ron Wyden (D-Oregon) seems to be the latest champion of the "NIH discovers drugs and Pharma rips them off" viewpoint. Here's a post from John LaMattina on Wyden's recent letter to Francis Collins. The proximate cause of all this seems to be the Pfizer JAK3 inhibitor:

Tofacitinib (Xeljanz), approved last November by the U.S. Food and Drug Administration, is nearing the market as the first oral medication for the treatment of rheumatoid arthritis. Given that the research base provided by the National Institutes of Health (NIH) culminated in the approval of Xeljanz, citizens have the right to be concerned about the determination of its price and what return on investment they can expect. While it is correct that the expenses of drug discovery and preclinical and clinical development were fully undertaken by Pfizer, taxpayer-funded research was foundational to the development of Xeljanz.

I think that this is likely another case where people don't quite realize the steepness of the climb between "X looks like a great disease target" and "We now have an FDA-approved drug targeting X". Here's more from Wyden's letter:

Developing drugs in America remains a challenging business, and NIH plays a critically important role by doing research that might not otherwise get done by the private sector. My bottom line: When taxpayer-funded research is commercialized, the public deserves a real return on its investment. With the price of Xeljanz estimated at about $25,000 a year and annual sales projected by some industry experts as high as $2.5 billion, it is important to consider whether the public investment has assured accessibility and affordability.

This is going to come across as nastier than I intend it to, but my first response is that the taxpayer's return on this was that they got a new drug where there wasn't one before. And via the NIH-funded discoveries, the taxpayers stimulated Pfizer (and many other companies) to spend huge amounts of money and effort to turn the original discoveries in the JAK field into real therapies. I value knowledge greatly, but no human suffering whatsoever was relieved by the knowledge alone that JAK3 appeared to play a role in inflammation. What was there was the potential to affect the lives of patients, and that potential was realized by Pfizer spending its own money.

And not just Pfizer. Let's not forget that the NIH entered into research agreements with many other companies, and that the list of JAK3-related drug discovery projects is a long one. And keep in mind that not all of them, by any means, have ever earned a nickel for the companies involved, and that many of them never will. As for Pfizer, Xeljanz has been on the market for less than six months, so it's too early to say how the drug will do. But it's not a license to print money, and is in a large, extremely competitive market. And should it run into trouble (which I certainly hope doesn't happen), I doubt if Senator Wyden will be writing letters seeking to share some of the expenses.

Comments (35) + TrackBacks (0) | Category: Academia (vs. Industry) | Drug Development | Drug Prices | Regulatory Affairs

March 18, 2013

GlaxoSmithKline's CEO on the Price of New Drugs

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Posted by Derek

Well, GlaxoSmithKline CEO Andrew Witty has made things interesting. Here he is at a recent conference in London when the topic of drug pricing came up:

. . . Witty said the $1 billion price tag was "one of the great myths of the industry", since it was an average figure that includes money spent on drugs that ultimately fail.

In the case of GSK, a major revamp in the way research is conducted means the rate of return on R&D investment has increased by about 30 percent in the past three or four years because fewer drugs have flopped in late-stage testing, he said.

"If you stop failing so often you massively reduce the cost of drug development ... it's why we are beginning to be able to price lower," Witty said.

"It's entirely achievable that we can improve the efficiency of the industry and pass that forward in terms of reduced prices."

I have a feeling that I'm going to be hearing "great myths of the industry" in my email for some time, thanks to this speech, so I'd like to thank Andrew Witty for that. But here's what he's trying to get across: if you start research on for a new drug, name a clinical candidate, take it to human trials and are lucky enough to have it work, then get it approved by the FDA, you will not have spent one billion dollars to get there. That, though, is the figure for a single run-through when everything works. If, on the other hand, you are actually running a drug company, with many compounds in development, and after a decade or so you total up all the money you've spent, versus the number of drugs you got onto the market, well, then you may well average a billion dollars per drug. That's because so many of them wipe out in the clinic; the money gets spent and you get no return at all.

That's the analysis that Matthew Herper did here (blogged about here), and that same Reuters article makes reference to a similar study done by Deloitte (and Thomson Reuters!) that found that the average cost of a new drug is indeed about $1.1 billion when you have to pay for the failures.

And believe me, we have to pay for them. A lottery ticket may only cost a dollar, but by the time you've won a million dollars playing the lottery, you will have bought a lot of losing tickets. In fact, you'll have bought far more than a million dollar's worth, or no state would run a lottery, but that's a negative-expectations game, while drug research (like any business) is supposed to be positive-expectations. Is it? Just barely, according to that same Deloitte study:

In effect, the industry is treading water in the fight to deliver better returns on the billions of dollars ploughed into the hunt for new drugs each year.

With an average internal rate of return (IRR) from R&D in 2012 of 7.2 percent - against 7.7 percent and 10.5 percent in the two preceding years - Big Pharma is barely covering its average cost of capital, estimated at around 7 percent.

Keep that in mind next time you hear about how wonderfully profitable the drug business is. And those are still better numbers than Morgan Stanley had a couple of years before, when they estimated that our internal returns probably weren't keeping up with our cost of capital at all. (Mind you, it seems that their analysis may have been a bit off, since they used their figures to recommend an "Overweight" on AstraZeneca shares, a decision that looked smart for a few months, but one that a person by now would have regretted deeply).

But back to Andrew Witty. What he's trying to say is that it doesn't have to cost a billion dollars per drug, if you don't fail so often, and he's claiming that GSK is starting to fail less often. True, or not? The people I know at the company aren't exactly breaking out the party hats, for what that's worth, and it looks like the company's might have to add the entire Sirtris investment to the "sunk cost" pile. Overall, I think it's too soon to call any corners as having been turned, even if GSK does turn out to have been doing better. Companies can have runs of good fortune and bad, and the history of the industry is absolutely littered with the press releases of companies who say that they've Turned A New Page of Success and will now be cranking out the wonder drugs like nobody's business. If they keep it up, GSK will have plenty of chances to tell us all about it.

Now, one last topic. What about Witty's statement that this new trend to success will allow drug prices themselves to come down? That's worth thinking about all by itself, on several levels - here are my thoughts, in no particular order:

(1) To a first approximation, that's true. If you're selling widgets, your costs go down, you can cut prices, and you can presumably sell more widgets. But as mentioned above, I'm not yet convinced that GSK's costs are truly coming down yet. And see point three below, because GSK and the rest of us in this business are not, in fact, selling widgets.

(2) Even if costs are coming down, counterbalancing that are several other long-term trends, such as the low-hanging fruit problem. As we move into harder and harder sorts of targets and disease areas, I would assume that the success rate of drugs in the clinic will be hard pressed to improve. This is partly a portfolio management problem, and can be ameliorated and hedged against to some degree, but it is, I think, a long-term concern, unless we start to make some intellectual headway on these topics, and speed the day. On the other side of this balance are the various efforts to rationalize clinical trials and so on.

(3) A larger factor is that the market for innovative drugs is not very sensitive to price. This is a vast topic, covered at vast length in many places, but it comes down to there being (relatively) few entrants in any new therapeutic space, and to people, and governments, and insurance companies, being willing to spend relatively high amounts of money for human health. (The addition of governments into that list means also that various price-fixing schemes distort the market in all kinds of interesting ways as well). At any rate, price mechanisms don't work like classical econ-textbook widgets in the drug business.

So I'm not sure, really, how this will play out. GSK has only modest incentives to lower the prices of its drugs. Such a move won't, in many markets, allow them to sell more drugs to make up the difference on volume. And actually, the company will probably be able to offset some of the loss via the political capital that comes from talking about any such price changes. We might be seeing just that effect with Witty's speech.

Comments (30) + TrackBacks (0) | Category: Business and Markets | Drug Development | Drug Prices

December 7, 2012

Pharmaceutical Shortages in Greece

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Posted by Derek

If you'd like to see how thoroughly a drug market can be screwed up, have a look at Greece. They're leading the way here as well:

Ten years after entering the eurozone, Greece is faced with the herculean challenge of persuading pharmaceutical companies to strike a bargain and lower the cost of the medicines they sell in the country. At present, there are fears of drug shortages in certain hospitals as a result of unpaid bills. . .During the last two decades Greece became a paradise for branded-drug producers, with generic medicines constituting only 12% of the drugs consumed in the country. Between 1997 and 2007, the amount of health spending per Greek citizen grew annually by 6.6%, bringing the country to fourth place worldwide, after South Korea, Turkey and Ireland, in terms of this growth.

The crisis comes, in part, as a result of the Greek National Health System racking up debts by treating pensioners and poorer locals with expensive branded drugs instead of generics. The government paid the pharmaceuticals mostly with state bonds that lost substantial value in the fiscal crisis, and, in response, they started turning off the faucet. . .

But there's another factor at work, too:

For many months, pharmacies have been reporting shortages of medicines as some distributors have reexported comparatively cheap drugs from Greece over to Germany and other European markets, achieving monetary gains of as much as 600%.

Yep, Greece has simultaneously managed to pay too much for pharmaceuticals and provide a lucrative opportunity to export cheap ones. If economics worked like electrical engineering, there would be huge sparks jumping across these gaps and things would be shorting out all over the place. Actually, that's pretty much what's happening as it is.

Comments (7) + TrackBacks (0) | Category: Drug Prices

December 3, 2012

Marcia Angell's Interview: I Just Can't

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Posted by Derek

I have tried to listen to this podcast with Marcia Angell, on drug companies and their research, but I cannot seem to make it all the way through. I start shouting at the screen, at the speakers, at the air itself. In case you're wondering about whether I'm overreacting, at one point she makes the claim that drug companies don't do much innovation, because most of our R&D budget is spent on clinical trials, and "everyone knows how to do a clinical trial". See what I mean?

Angell has many very strongly held opinions on the drug business. But her take on R&D has always seemed profoundly misguided to me. From what I can see, she thinks that identifying a drug target is the key step, and that everything after that is fairly easy, fairly cheap, and very, very profitable. This is not correct. Really, really, not correct. She (and those who share this worldview, such as her co-author) believe that innovation has fallen off in the industry, but that this has happened mostly by choice. Considering the various disastrously expensive failures the industry has gone through while trying to expand into new diseases, new indications, and new targets, I find this line of argument hard to take.

So, I see, does Alex Tabarrok. I very much enjoyed that post; it does some of the objecting for me, and illustrates why I have such a hard time dealing point-by-point with Angell and her ilk. The misconceptions are large, various, and ever-shifting. Her ideas about drug marketing costs, which Tabarrok especially singles out, are a perfect example (and see some of those other links to my old posts, where I make some similar arguments to his).

So no, I don't think that Angell has changed her opinions much. I sure haven't changed mine.

Comments (59) + TrackBacks (0) | Category: Business and Markets | Drug Development | Drug Industry History | Drug Prices | Why Everyone Loves Us

November 29, 2012

When Drug Launches Go Bad

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Posted by Derek

For those connoisseurs of things that have gone wrong, here's a list of the worst drug launches of recent years. And there are some rough ones in there, such as Benlysta, Provenge, and (of course) Makena. And from an aesthetic standpoint, it's hard not to think that if you name your drug Krystexxa that you deserve what you get. Read up and try to avoid being part of such a list yourself. . .

Comments (8) + TrackBacks (0) | Category: Business and Markets | Drug Development | Drug Industry History | Drug Prices

October 31, 2012

The Coming Battle Over Alzheimer's Disease

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Posted by Derek

Solanezumab is a story that won't go away. Eli Lilly's antibody therapy for Alzheimer's is the subject of a lot of arguing among investors: some people (and I'm one of them) think that there is no strong evidence for its efficacy, not yet, and that the amount of time and effort devoted to finding that out means that there likely isn't any meaningful efficacy to be found. Others are more optimistic, which is why Lilly's stock has risen in recent months.

The latest point of contention is an independent analysis of biomarker data which came out this week at a conference in Monaco. This suggests that there was a meaningful change in the amount of circulating beta-amyloid after treatment, which could mean that the antibody was working as planned to increase clearance of soluble amyloid, thus altering the amyloid balance in the CNS. It should be noted that this line of attack depends on several factors - first among them, that amyloid is a causative factor in Alzheimer's, and secondly, that clearing it from the periphery can affect its concentration and distribution inside the brain. There's evidence for both of these, and there's evidence against both of them. Such questions can only be answered in the clinic, and I'm glad that Lilly, Roche/Genentech, and others are trying to answer them.

What I want to focus on today, though, is an issue that comes up in passing in the Fierce Biotech link above:

Biomarkers and pooled data may help support further studies of the drug, as well as other programs that rest on the beta amyloid hypothesis, but they don't prove that solanezumab works as hoped. Nevertheless, the first sign of success in this field has fueled tremendous enthusiasm that something in the pipeline could eventually work--perhaps even pushing regulators to approve new therapies with something less than clear efficacy data. And any newly approved drug would find a massive market of millions of desperate patients.

That's a big "perhaps", one that's worth tens of billions of dollars. What I worry about is pressure building for the FDA to approve an Alzheimer's therapy (solanezumab or something else) based on these hints of mechanistic efficacy. The problem is, solanezumab hasn't shown much promise of improving the lives of actual Alzheimer's patients. Lilly's own trials showed a possible improvement in a measure of cognitive decline, but this did not show up again in a second patient group, even when they specifically modified the endpoints of the trial to look for it. And neither group showed any functional effects at all, which I think are what most Alzheimer's patients (and their family members) would really want to see.

But there really is such a huge demand for something, anything, with any hint of hope. People would line up to buy anything that got FDA approval, no matter how tenuous the evidence was. And that puts the agency in a very tough position, similar to the one it was in with the Avastin breast cancer issue. Update: there was, to be sure, more of a safety question with Avastin at the same time. You can argue that one of the main purposes of the agency is to make sure that medicines that people can be prescribed in this country will actually do some good, rather than raise hopes for nothing. You could also argue that responsible adults - and their physicians, and their insurance companies - should be able to make such choices for themselves, and should be able to spend their time and money in the ways that they best see fit. You could argue that companies with marginally effective (or ineffective) therapies face a huge moral hazard, in that their incentives are to get such treatments onto the market whether they do anyone else any good or not. None of these are foolish positions, but they are also, in places, mutually incompatible. Alzheimer's disease might well turn into the next place in which we thrash them out.

Comments (17) + TrackBacks (0) | Category: Alzheimer's Disease | Clinical Trials | Drug Prices | Regulatory Affairs

August 17, 2012

Good Forum for a Response on Drug Innovation?

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Posted by Derek

I wanted to mention that a version of my first post on the Light/Lexchin article is now up over at the Discover magazine site. And if you've been following the comments to that one and to Light's response here, you'll note that readers here have found a number of problems with the original paper's analysis. I've found a few of my own, and I expect there are more.

The British Medical Journal has advised me that they consider a letter to the editor to be the appropriate forum for a response to one of their published articles. I don't think publishing this one did them much credit, but what's done is done. I'm still shopping for a venue for a detailed response on my part - I've had a couple of much-appreciated offers, but I'd like to continue to see what options are out there to get this out to the widest possible audience.

Comments (23) + TrackBacks (0) | Category: Drug Development | Drug Prices

August 15, 2012

A Quick Tour Through Drug Development Reality

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Posted by Derek

I wanted to let people know that I'm working on a long, detailed reply to Donald Light's take on drug research, but that I'm also looking at a few other publication venues for it. More on this as it develops.

But in trying to understand his worldview (and Marcia Angell's, et al.), I think I've hit on at least one fundamental misconception that these people have. All of them seem to think that the key step in drug discovery is target ID - once you've got a molecular target, you're pretty much home free, and all that was done by NIH money, etc., etc. It seems that these people have a very odd idea about high-throughput screening: they seem to think that we screen our vast collections of molecules and out pops a drug.

Of course, out is what a drug does not pop, if you follow my meaning. What pops out are hits, some of which are not what they say on the label any more. And some of the remaining ones just don't reproduce when you run the same experiment again. And even some of the ones that do reproduce are showing up as hits not because they're affecting your target, but because they're hosing up your assay by some other means. Once you've cleared all that underbrush out, you can start to talk about leads.

Those lead molecules are not created equal, either. Some of them are more potent than others, but the more potent ones might be much higher molecular weights (and thus not as ligand efficient). Or they might be compounds from another project and already known to hit a target that you don't want to hit. Once you pick out the ones that you actually want to do some chemistry on, you may find, as you start to test new molecules in the series, that some of them have more tractable structure-activity relationships than others. There are singletons out there, or near-singletons: compounds that have some activity as they stand, but for which every change in structure represents a step down. The only way to find that out is to test analogs. You might have some more in your files, or you might be able to buy some from the catalogs. But in many cases, you'll have to make them yourself, and a significant number of those compounds you make will be dead ends. You need to know which ones, though, so that's valuable information.

Now you're all the way up to lead series territory, a set of compounds that look like they can be progressed to be more potent and more selective. As medicinal chemists know, though, there's more to life. You need to see how these compounds act on real cells, and in real animals. Do they attain reasonable blood levels? Why or why not? What kinds of metabolites do they produce - are those going to cause trouble? What sort of toxicity do you see at higher doses, or more long-running ones? Is that related to your mechanism of action (sorry to hear it!), or something off-target to do with that particular structure? Can you work your way out of that problem with more new compound variations without losing all of what you've been building in so far? Prepare to go merrily chasing down some blind alleys while you work all this stuff out; the lights are turned off inside the whole maze, and the only illumination is what you can bring yourself.

Now let's assume that you've made it far enough to narrow down to one single compound, the clinical candidate. The fun begins! How about