For those of us who love reading about big pharma expenditures, a new Forbes analysis:

There’s one factor that, as much as anything else, determines how many medicines are invented, what diseases they treat, and, to an extent, what price patients must pay for them: the cost of inventing and developing a new drug, a cost driven by the uncomfortable fact than 95% of the experimental medicines that are studied in humans fail to be both effective and safe.

A new analysis conducted at Forbes puts grim numbers on these costs. A company hoping to get a single drug to market can expect to have spent $350 million before the medicine is available for sale. In part because so many drugs fail, large pharmaceutical companies that are working on dozens of drug projects at once spend $5 billion per new medicine.

http://onforb.es/14JGaPq

I cannot for the life of me figure out what makes the cost so exorbitant. Is it the salaries of those highly educated researchers? Is it some malpractice insurance?

At $5 billion, we will never see a cure in my lifetime!
Peggy

Thanks for posting the link to the article. The comments made to the article are worth reading also.

I think care is needed in discussing this. For instance, companies with no new drugs are excluded. Their costs need to be taken into account - leading to an increase in, mainly, the 1 drug companies' costs.

I doubt if we are comparing like with like. I suspect that large companies are more likely to go for the blockbuster drugs that cost more to research.

Either way, the numbers are scary. Taking up something that Peggy said, what worries me more than not seeing a cure in my lifetime, is seeing a cure I can't afford.

Something has to give. I suggest turning the thing on its head using clinical trials based on the individual, with a need to prove no harm, rather than efficacy. See:

http://neurotalk.psychcentral.com/thread191454.html

John

Yes, the costs are ridiculously high, but it's not really $5 billion for a new drug. The average for a new drug was $350 million (still crazy high). The $5 billion figure comes from all of the failures added in. So, the average R&D expenditure per new drug approval is $5 billion. Unfortunately, only about 5% of experimental drugs end up successfully completing all phases of research to get approved for actual sale and use.

I recall Marcia Angell exposing one of the accounting practices of the pharmaceutical industry in pricing costs of new drugs--the loss of potential income from alternative investment, thus "tying up" revenue for research and development of a drug was factored into the equation. That number was found by Dr. Angell to be quite considerable.

These 2 articles read like PR material from the Pharmaceutical industry. Their bottom lines belie the message in these articles--ie the industry will soon have to cease their "real" work if costs do not come down.
Really--has anyone looked at the profits from drugs?

Interesting and illuminating articles titled "Institutional Corruption & Pharmaceutical Policy"

http://www.ethics.harvard.edu/lab/fe...me-symposium--

Big Pharma expenditures are generally in this ballpark:

25% profit

25% marketing

25% making pills and running the company

15% Research

The rest covers:

- the $30 billion in fines for criminal actions, felony and fraud since 1992

- out-of-court settlements with people harmed by their drugs

- according to M.A. Gagnon and J. Lexchin (PLOS 5, No.1) “in the United States, the pharmaceutical industry spends up to $42 billion in promotion towards physicians every year, which is, on average, $61,000 per physician per year to influence their prescribing habits and generate profits.”

- paying patient advocacy groups and increasing numbers of paid internet posters. But maybe that is covered in the marketing budget.

The cost of the actual research is not where the action is.

http://www.pharmamyths.net/files/Bio...arch_Costs.pdf

Demythologizing the high costs of
pharmaceutical research
Donald W. Lighta,b,* and Rebecca Warburtonc



Abstract It is widely claimed that research to discover and develop new pharmaceuticals entails high costs and high risks. High research and development (R&D) costs influence many decisions and policy discussions about how to reduce global health disparities, how much companies can afford to discount prices for lower- and middle-income countries, and how to design innovative incentives to advance research on diseases of the poor. High estimated costs also affect strategies for getting new medicines to the world’s poor, such as the advanced market commitment, which built high estimates into its inflated size and prices. This article takes apart the most detailed and authoritative study of R&D costs in order to show how high estimates have been constructed by industry-supported economists, and to show how much lower actual costs may be.

Besides serving as an object lesson in the construction of ‘facts’, this analysis provides reason to believe that R&D costs need not be such an insuperable obstacle to the development of better medicines. The deeper problem is that current incentives reward companies to develop mainly new medicines of little advantage and compete for market share at high prices, rather than to develop clinically superior medicines with public funding so that prices could be much lower and risks to companies as well.

they expect big profits and dividends and anyone with a pension or 401k likely owns shares of big pharma.
obama got elected to change things, pretty hard to do in our political system where representatives have to spend half their time raising campaign funds.

in a democracy, one can offer the opinion we only have ourselves to blame if things don't work at the way they should.

and drugs are just going to get more expensive. the new extended release CL, rytary from impax labs is going to be very expensive.

Hi Soccertese, I am sickened by a society that allows the sick to be exploited in the way the Pharmaceutical industry and in fact the medical system as a whole does. I know there are good people working in these industries, attempting to remedy these egregious acts. Alas, not enough of them. and of course it is all about the $$$$.

I couldn't possibly agree more with all of the points made. With regard to corruption in the industry, I spent 25 years in the financial industry (a little bit of corruption there also) so I've become very cynical with regard to most industries. I believe that industrial corruption is wide spread and the larger the industry (e.g. pharmaceutical, financial, oil & gas etc.) the worse the problem. Maybe one day something will be done about it, but I don't have much hope given the sums of money involved worldwide.

With regard specifically to the pharmaceutical industy, we can probably make some distinction between old line "big pharma" and the smaller biotechnology industry. Big pharma has largely given up on the concept of "innovation" in their research. Instead, they have decided to farm out the process of innovation, and the associated risk, to smaller biotech companies. The common model today is to let the smaller companies do all of the initial research, animal studies and typically phase I safety. Then, they step in and buy partnerships, or even the whole company, to finish off the phase II and III research, and "market" the product with their sales force. This can be readily seen by the small percentage of novel, "first-in-class" drugs that have come directly from big pharma the past decade as compared to biotechs. As mentioned in several of the linked articles, it's much easier, and less risky, for big pharma to bring to market "me-too" products and let the early stage risk of novel therapies rest with smaller biotechs and the venture capital markets that support them. How many drugs are currently marketed for heartburn and gastroesophageal reflux; for blood pressure; for cholesterol. These are the largest selling drugs in the world and you can't even name all of the them, no less distinguish one from the other. Unfortunately, this is a poor model for the public which is dependent on new drug innovation. Actually, its also a poor model for the shareholders of big pharma, as can be seen in their stock prices and market caps which are well off their highs of the 1990's. At the same time, the market has rewarded the innovation of the more creative biotechs with huge gains.

We, the patients and advocates, have more control here than we do with the issue of corruption. Just imagine if we all decided to only participate in research involving new, novel and innovative therapies and products. Or, if we decided to only participate in a study for a second-in-class product if the research paradigm included testing against the first-in-class as well as a placebo.

Patients controlling the pharmaceutical industry. What a dream......