Cost of developing new drugs may be lower than industry claims: trial

The cost of developing drugs is high because of all the drugs that fail, after requiring lots of money to develop. You can't just look at the successful drug and say that's the cost. There are drugs that don't get to the trial stage, so also you can't just look at trials, even if you include failed ones.

The researchers cited in this article seem to be promulgating the fallacy that we need only look at the cost of a successful drug trial, and that's the cost. The drugs magically appeared out of nowhere, for free, and equally magically, they are working drugs, so we already know our trial will succeed. It's just a charade we have to go pay for to get the government's rubber stamp, and then it's all good!

What about the public funding that led to research and presumably went towards some of the failed attempts?

It sounds like there’s simply not enough information to gauge if pharmaceutical companies are being honest about their claims of R&D costs.

There is nothing stopping governments around the world from spending money to do their own R&D and conduct their clinical trials.

If the government hands out grants, about which information is subsequently hard to get, that points to a gaping transparency issue squarely on the government side.

Pharma R&D companies that are publicly listed should have some information about their balance sheets.

Private equity ones are going to be the most opaque. That's kind of their prerogative.

They do. But then the patents gets leeched by big pharma companies investing a fraction of the development costs.

Why does the government allow big pharma companies to “leech” the patent? What does that even mean? Can you describe the steps by which big pharma obtains the patent?

I used to be in the academic side of the so-called industry and I can tell you that most drugs fail because of horrendously bad decisions and hypotheses. Most companies make decisions on what drugs to take to trial on stupidly misleading preclinical data and have been graciously rewarded for their mistakes with no consequences.

There is no "academic side" of the pharmaceutical industry. There is just academia.

And the goal of academia (publishing) are very different than the industry (identifying a new drug).

Agree. I don't think there is any signal from the "academic side" of this discussion. All of the detailed relevant information is very proprietary. I know multiple large players in the industry that share huge amounts of data with academics regularly, but not that data. Decision makers are informed by internal experts with just as many bona fides (and more) than academic peers. Having been in both worlds, and admittedly in my opinion only, academics do well to move their technical fields forward into new and exciting and useful science medicine and economics but do little (well nothing really) in delving into or even accessing the actual data that directly informs clinical trial decisions. That said, I can totally understand why Pharma clinical trial decisions are baffling to academics. E.g., why did aduhelm go forward to (conditional) market approval? That one is baffling to me, but I don't have the data:)

[edit] I'm going to add something here. The grandparent refers to "stupidly misleading pre-clinical data." Pre-clinical data informs very inexpensive (relatively) Phase I studies. And there is a ton of it. You might have potentially misleading pre-clinical data that suggests the possibility of an entirely new therapeutic mechanism of action for a huge unmet need coupled with massive amounts of pre-clinical data that demonstrates a near certainty that the intervention will be safe. That's the entire point of moving forward to a Phase I or Ib (or maybe even II) study. The 1000x-10,000x more expensive phase 3's are not relying on pre-clinical studies.

Then what are the phase 3s relying on? Why is it so hard for such a bunch of supposedly smart people to figure out why their expensive trials are not successful often? Here’s a simple answer: it doesn’t actually matter to the individuals. They still get paid.

I’m from the academic side in the sense have talked to many folks who quit industry to start jobs and come from a lab that did get a drug into the market eventually. I might not know this “secret data” you speak of but given the results are crap, I think they speak for themselves anyway.

>Most companies make decisions on what drugs to take to trial on stupidly misleading preclinical data and have been graciously rewarded for their mistakes with no consequences.

Could you elaborate on this? Are you saying that some groups/people in those companies "ignore" the honest interpretation of their preclinical data and run phase I studies just so that they have something to run?

> Here’s a simple answer: it doesn’t actually matter to the individuals. They still get paid.

I'm wondering how much you're actually involved in research to make a statement like that.

Scientists at these companies are likely out of a job if the trials aren't successful (especially for start-ups that have one shot).

The answer is - when you're developing a brand new molecule, often for a recently discovered pathway, in a biological organism that is so complex we barely understand it, failure shouldn't be surprising.

Because it’s unbelievably hard to

1. Produce a molecule that does what you want it to in the body

2. Figure out how to get that molecule where it needs to be in the body

3. Prevent it from doing all sorts of other gnarly things

4. Convince people you’ve succeeded in doing 1, 2, and 3 to the degree they’re willing to volunteer themselves to put this new molecule inside their bodies — without incentivizing them in any way

5. Convince enough people to do that and collect enough data about them to know for a fact that your drug does X and does not do Y

6. Convince regulators that not only have you done 1, 2, 3, 4, and 5, but that it’s also better on some dimension than the currently available treatment

In short: because it’s ridiculously hard. If it’s easy you should go give it a shot, help millions or billions of suffering people, and make billions of dollars in the process. Why wouldn’t you?

Academia identified over 30% of approved drugs in the past 10 years, and that share is growing. There is a ton of incentive for academics to identify new drugs.

Yup. Only a small fraction of drugs ever make it to human testing. The winners have to pay for all the losers and then some (consider: You can play a game where you bet $1 and have a 1 in 10 chance of getting $10. Completely fair, but if you play long enough you're guaranteed to go bankrupt.)

There's also the time factor. Suppose you spend $100M to develop and sell a drug that brings in a total of $150M over it's on-patent lifetime. You *lost* money.

Most startups that aim to market a drug don't work like that. The majority just buy the rights to a molecule from academic research, perhaps the founder's research. Before any trials, they have to raise a lot of money, more than enough to pay the founders, so even if the trials fail, the people that make the decisions still get paid.

The large drug companies don't develop many new drugs anymore, and they don't fire their scientists when a trial fails. The people that make the decision on whether or not to move to clinical trials from preclinical data are not necessarily scientists either and they certainly will not be fired. Their decision on whether or not to proceed with trials is far more complicated than for an academic or an early startup such that it can make sense for a large pharma company to attempt a trial even if it is unlikely to work if the expected payoff is sufficient. They will definitely still get paid.

This is wrong on a few points.

Yes, scientists still get paid but the draw of start ups (like tech) is lower pay, and potential upside through equity.

So if the drug fails, they just lost a significant amount of money versus staying in big pharma, and they lost their job.

And for big pharma, if you don’t create new drugs, the company revenue falls and lay offs occur (like what is happening right now at several big pharma).

The risk is much higher at a start up that it’s “do or die”, than big pharma, but it’s still there.

Go and look at the massive layoffs that Pfizer, BMS, and other big pharma have done over the years.

Give me 50 mill and I'll do it. I'm not even kidding, I have multiple targets and a viable plan. And yes I'm aware of the list of things you listed and roughly what it takes to do all of them. Sure for a layman or an unfunded expert it might be daunting. But thats what these companies spend hundreds of billions at. Just listing out the complexity of the process says nothing about why they still don't succeed at it. I'm pretty sure boeing would have and continue to list all the problems in sending a rocket to space for cheap, while spacex continues doing that. Nothing different here.

> Yes, scientists still get paid but the draw of start ups (like tech) is lower pay, and potential upside through equity.

> So if the drug fails, they just lost a significant amount of money versus staying in big pharma, and they lost their job.

This is true of the scientists that aren't making the decisions. The ones that do make decisions are going to be able to retire if the startup was funded enough for clinical trials.

­> And for big pharma, if you don’t create new drugs, the company revenue falls and lay offs occur (like what is happening right now at several big pharma).

Do you have data according to which the current layoffs in big pharmas are significantly affecting decision-makers? Because that's the matter at hand.

As far as revenue decline, sure, for a given definition of "new drugs". The actual argument I've put forwards is that for a big pharma, it can make sense to run trials which are unlikely to succeed and with limited clinical utility if the financial upside is sufficient, which is not true for uni labs or biotech startups.

> Go and look at the massive layoffs that Pfizer, BMS, and other big pharma have done over the years.

Pfizer does "massive" layoffs every year, and just like BMS, every time a lot of the affected employees aren't executives fired due to unsuccesful trials, but employees of companies they bought.

As far as researchers getting laid off, big pharmas are infamous nowadays for firing researchers when R&D pipelines are sucessful just as much as when they fail. Researchers are made redundant either way, unless for some reason further research in the same domain is needed (which often isn't the case). It also happens pretty often in startups that end up selling IP.

You are on forum about VC-funded startups. You can get 50M if you really want and what you're saying is true