With all eyes on the "fiscal cliff" posturing in Washington, the rising cost of pharmaceutical research and development is perhaps not as exciting a topic -- yet, in the long run, it may be just as important to the nation's future health.
In what seems like a constant refrain from the pharmaceutical industry, the Office of Health Economics, a U.K. think tank, found that total R&D costs for new drugs have skyrocketed since the late '70s -- from $199 million to $1.5 billion (both adjusted for inflation), a 750 percent increase. Even though some estimates have pegged the cost lower, while others higher, the take-away is that developing medicines and medical devices is expensive -- and it's not getting any better.
In that context, that we now see drugs costing more than $1 million should be little surprise -- clinical failure rates have increased, as has development time. This means that more and more companies need to recoup their investments in a shorter period of time (the effective patent life), with fewer drugs. It makes sense, then, that these costs would be passed on to patients -- there's little else to do, other than give up entirely.
But the bigger point to understand is the driving force of these costs: regulators consistently demanding larger clinical trials and more tests, especially to rule out rare side effects.
To be fair, regulators are only part of the problem. Some of the cost increase can be attributed to the fact that companies are looking for treatments for diseases that are very difficult to treat, like cancer and Alzheimer's. And with the abundance of good, cheap generics, companies have to generate more data to convince insurers to pay for the new pill instead of the old.
Still, much of the cost growth can be attributed to ever more stringent Food and Drug Administration regulations, which require more evidence from drugmakers, while making that evidence harder to obtain.
Take, for instance, antibiotics. A growing fear is that as the population develops greater antibiotics resistance, we may face a point in the near future when treating something as simple as strep throat will be a challenge. The logical regulatory response should be to find ways to streamline antibiotic development -- reducing regulatory barriers wherever possible without unduly compromising patient safety.
Rather than ramp requirements down, the agency has ratcheted them up. Clinical trial requirements for some indications require no previous antibiotic use for 30 days -- ignoring that when patients with serious infections are admitted into hospitals, they are routinely given antibiotics upon admission. Ruling those patients out from new trials makes drug testing much more time-consuming and expensive. On net, onerous regulatory requirements have helped drive the present value of antibiotics far below those of other classes of drugs, according to estimates by the London School of Economics.
What makes the FDA's hesitance even more perplexing is that in response to the AIDS epidemic in the early '90s, the FDA was surprisingly efficient at establishing a fast-track approval pathway for AIDS treatments and allowing companies to offer drugs to patients before final testing had been completed -- after all, if someone is dying of AIDS, the side effects of an unapproved drug pale in comparison. The accelerated approval paradigm can, and should, be scaled up for many other drug classes.
Under the leadership of Commissioner Margaret Hamburg, there have been welcome glimmers of a change in the agency's mind-set. In late November, an FDA advisory panel offered somewhat positive reviews of Vibativ, an antibiotic for hospital-acquired pneumonia that had been rejected twice in the past. More importantly, the FDA has acknowledged on several occasions that it needs to reform its clinical trial guidelines for antibiotics, and is developing a targeted pathway for treating drug-resistant infections. Still, more pressure from Congress and from infectious-disease experts will be needed to drive these changes home.
The FDA isn't and shouldn't be in the business of ensuring the industry's profit margins. But it also shouldn't promulgate regulations that make innovation counterproductive, pushing industry -- and the patients waiting for better antibiotics -- off a different kind of fiscal cliff.