E-drug: Science vs Shareholders (cont)
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In reply to Scott Hilstrom's suggestion, the following may provide
some useful considerations.
A basic consideration in the minimization of drug development costs
is whether products destined for more or less exclusive use in
economically disadvantaged countries should meet the regulatory
requirements of the US, Canadian FDD, and EU drug regulatory
authorities. One finds an answer in the world of family
planning/population control. There, the prevailing wisdom since
steroidal contraception began 40 years ago, is that all contraceptive
products, wherever their intended use, should be registered by FDA
and other leading agencies, as well as by agencies in the countries
involved. One should be very skeptical that bypassing these
regulatory standards would be politically acceptable -- even less so
as the leading regulatory authorities are converging upon world-wide
harmonization of requirements. That being the case, one faces a
relatively fixed program of developmental studies and tasks, and
correspondingly a relatively fixed set of costs and people skills to
execute the studies and tasks.
The development of pharmaceuticals based on new chemical entities is
a classic example of a high-risk investment, not unlike oil and gas
exploration. There is a market for capital to finance such high-risk
investments. (Shareholder expectations and share price-earnings
ratios are a part of the equation, but not its entirety.) So,
whoever is going to provide the capital for a high-risk, pharma R&D
program is going to expect the market rate of return -- otherwise,
one would put the money elsewhere, e g., other high risk programs, or
lower-risk, lower return programs.
An alternative to the foregoing is for governments to finance such R&D
programs. This approach has a rather bleak history. One part comes
from the USSR, which, in its 7-decade history, produced fewer than 10
new drugs that had enough perceived value for them to gain
registration and market entry in the western world. Another part of
the history are the new drug programs in epilepsy, drug abuse, and
cancer at NIH. One would have to look at each of these to see what
products have reached medical practice, and what their contributions
have been. I don't think, however, that an objective survey of these
programs would engender great optimism that we should pin our hopes
on governmental funding of new drug development as the mainstream of
therapeutic innovations for the future. An example of a foundation
support for pharma R&D was the Population Council's support of the
work on the norgestrel implant that finally came to market as
NORPLANT. Wyeth-Ayerst licensed the product when it
was almost ready for market entry. One would have to look at the
history of this program, but my recollection was that it was rather
extraordinarily long in development, and then, having finally reached
the marketplace, its early success quickly reversed, and the product
flopped -- from problems that arguably could have been recognized and
designed around by a more astute R&D program.
Quite in contrast to the situation 30 years ago, when there were
about 3 dozen 'big" research-based pharma firms, and virtually no
small pharma firms engaged in R&D, there are now many small firms
engaged in pharmaceutical R&D -- many in the San Francisco area, but
elsewhere as well. There may be a useful analogy in the brewing
business, which looked, about 25 years ago, to be narrowing down to
about a half-dozen giant firms worldwide, from an original industrial
base of a brewery in almost every village in the western world. But,
beginning in the early 80's, boutique breweries began to crop up,
and today there is a marvelous diversity of beers and ales that owe
their existence to entrepreneurs who saw the opportunity and went for
it. What made this abrupt turn-around possible was the demonstration
that good products from small breweries could
command premium prices, and thus survive economically ... NOT that,
in being small, they could underprice the big breweries. In the
brewing business, it was the economies of scale that earlier had
allowed a few firms to grow and gradually drive out of business small
breweries that tried to compete on price.
All analogies have their limits, but this one suggests the question: are there
substantial economies of scale in pharmaceutical R&D? The proliferation of
small pharma firms in the last 20 years would suggest that the answer
is 'no'. The mega-mergers among the big firms indicate a contrary
view among decision-makers in big pharma. My own view, having been
research director of one of the early small firms (ALZA), plus a
decade of close collaboration in product development with a number of
the big firms, is that the bigger the firm, the slower and more
bureaucratic is the R&D.
One final consideration is the inherent inflation in regulatory requirements,
engendered by gradually lessening naivete about what can go wrong
when one attempts to use novel molecules in therapeutics, or to use
physiologic agents in novel ways for therapeutic purposes. Both
approaches have their potential hazards, the gradual recognition of
which has led to ever more tests and studies to be done prior to
product registration and market entry. This inflation in
requirements for market entry has its origins mainly in public
attitudes about risk and safety, which are reflected in the politics
of drug regulation and associated legislative pressures, legislation,
and
rule-making. Some caricature this process as risk-averse regulators
running amok, but, as the late cartoon character, Pogo, once said,
"We have seen the enemy and he is us."
The notion is unreal that somehow one can go off into the bushes
somewhere in Africa and develop drugs on the cheap. The notion that
one can do it more
efficiently and more rapidly in small, well-equipped, well-staffed firms --
outside big pharma -- is demonstrably valid, but, like the boutique
breweries, the incentive to succeed is based on premium pricing, high
margins, and a competitive rate of return on the investments needed
to attract the people to make it happen.
John Urquhart, MD, FRCP(Edin)
Professor of Pharmaco-epidemiology,
Maastricht University, Maastricht, NL
Professor of Biopharmaceutical Sciences, UCSF, San Francisco
Chief Scientist, AARDEX Ltd/APREX Corp, Zug CH & Unon City, CA, USA
home office: 975 Hamilton Ave, Palo Alto, CA 94301 USA
email: urquhart@ix.netcom.com
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