Costs of Drug Development and Research and Development Intensity in the US, 2000-2018.

Importance: Understanding the cost of drug development can help inform the development of policies to reduce costs, encourage innovation, and improve patient access to drugs. Objective: To estimate the cost of drug development by therapeutic class and trends in pharmaceutical research and development (R&D) intensity over time. Design, Setting, and Participants: In this economic evaluation study, an analytical model of drug development constructed using public and proprietary sources that collectively cover data from 2000 to 2018 was used to estimate the cost of bringing a drug to market, overall and for specific therapeutic classes. The analysis for the study was completed in October 2020. Main Outcomes and Measures: Three measures of development cost from nonclinical through postmarketing stages were estimated: mean out-of-pocket cost or cash outlay, mean expected cost, and mean expected capitalized cost. Pharmaceutical R&D intensity, defined as the ratio of R&D spending to total sales, from 2008 to 2019, based on the time frame for available data, was also analyzed. Results: The estimated mean cost of developing a new drug was approximately $172.7 million (2018 dollars) (range, $72.5 million for genitourinary to $297.2 million for pain and anesthesia), inclusive of postmarketing studies. The cost increased to $515.8 million when cost of failures was included. When the costs of failures and capital were included, the mean expected capitalized cost of drug development increased to $879.3 million (range, $378.7 million for anti-infectives to $1756.2 million for pain and anesthesia); results varied widely by therapeutic class. The pharmaceutical industry as a whole experienced a decline of 15.6% in sales but increased R&D intensity from 11.9% to 17.7% from 2008 to 2019. By contrast, R&D intensity of large pharmaceutical companies increased from 16.6% to 19.3%, whereas sales increased by 10.0% (from $380.0 to $418.0 billion) over the same 2008 to 2019 period, even though the cost of drug development remained relatively stable or may have even decreased. Conclusions and Relevance: In this economic evaluation of new drug development costs, even though the cost of drug development appears to have remained stable, R&D intensity of large pharmaceutical companies remained relatively unchanged, despite substantial growth in revenues during this period. These findings can inform the design of drug-related policies and their potential impacts on innovation and competition.

Commentary: Reconsidering Pharmaceutical Research and Development Investments.

Following Lee and colleagues' (2023) article explaining how Canadians are being shortchanged by drug companies when it comes to investments in research and development (R&D), this rejoinder adds context and appends two other very problematic elements in the debate between wishful narratives over the industry's contribution in R&D and actual numbers. First, even the current stricter definition of R&D investment might simply be too large considering that elements such as seeding trials - a well-known marketing device - can be accounted for as R&D expenditures. Second, this rejoinder identifies how Statistics Canada acted in concert with Innovative Medicines Canada to reinforce the industry's preferred narratives around R&D expenditures. This situation puts into question the trustworthiness of Canada's statistical agency.

The Government and Pharmaceutical Innovation: Looking Back and Looking Ahead.

Current debates about the roles of the public and private sectors in pharmaceutical innovation have a long history. The extent to which, and ways in which, the public sector supports drug innovation has implications for assessments of the returns to public research funding, taxpayer rights in drugs, the argument the high prices are needed to support drug innovation, and the desirability of patenting publicly funded research.

Evolving Outsourcing Landscape in Pharma R&D: Different Collaborative Models and Factors To Consider When Choosing a Contract Research Organization.

Outsourcing has become an integral part of how research and early development (R&D) is executed in biotech companies and large pharmaceutical organizations. Drug discovery organizations can choose from several operational models when partnering with a service provider, ranging from short-term, fee-for-service (FFS)-based arrangements to more strategic full-time-equivalent (FTE)-based collaborations and even risk-sharing relationships. Clients should consider a number of criteria when deciding which contract research organization (CRO) is best positioned to help meet their goals. Besides cost, other factors such as intellectual property protection, problem solving skills, value-creation ability, communication, data integrity, safety and personnel policies, ease of communication, geography, duration of engagement, scalability of capacity, and contractual details deserve proper consideration. In the end, the success of a drug discovery partnership will depend in large part on the people who execute the science.

Estimated Research and Development Investment Needed to Bring a New Medicine to Market, 2009-2018.

IMPORTANCE: The mean cost of developing a new drug has been the subject of debate, with recent estimates ranging from $314 million to $2.8 billion. OBJECTIVE: To estimate the research and development investment required to bring a new therapeutic agent to market, using publicly available data. DESIGN AND SETTING: Data were analyzed on new therapeutic agents approved by the US Food and Drug Administration (FDA) between 2009 and 2018 to estimate the research and development expenditure required to bring a new medicine to market. Data were accessed from the US Securities and Exchange Commission, Drugs@FDA database, and ClinicalTrials.gov, alongside published data on clinical trial success rates. EXPOSURES: Conduct of preclinical and clinical studies of new therapeutic agents. MAIN OUTCOMES AND MEASURES: Median and mean research and development spending on new therapeutic agents approved by the FDA, capitalized at a real cost of capital rate (the required rate of return for an investor) of 10.5% per year, with bootstrapped CIs. All amounts were reported in 2018 US dollars. RESULTS: The FDA approved 355 new drugs and biologics over the study period. Research and development expenditures were available for 63 (18%) products, developed by 47 different companies. After accounting for the costs of failed trials, the median capitalized research and development investment to bring a new drug to market was estimated at $985.3 million (95% CI, $683.6 million-$1228.9 million), and the mean investment was estimated at $1335.9 million (95% CI, $1042.5 million-$1637.5 million) in the base case analysis. Median estimates by therapeutic area (for areas with ≥5 drugs) ranged from $765.9 million (95% CI, $323.0 million-$1473.5 million) for nervous system agents to $2771.6 million (95% CI, $2051.8 million-$5366.2 million) for antineoplastic and immunomodulating agents. Data were mainly accessible for smaller firms, orphan drugs, products in certain therapeutic areas, first-in-class drugs, therapeutic agents that received accelerated approval, and products approved between 2014 and 2018. Results varied in sensitivity analyses using different estimates of clinical trial success rates, preclinical expenditures, and cost of capital. CONCLUSIONS AND RELEVANCE: This study provides an estimate of research and development costs for new therapeutic agents based on publicly available data. Differences from previous studies may reflect the spectrum of products analyzed, the restricted availability of data in the public domain, and differences in underlying assumptions in the cost calculations.

Optimising medication data collection in a large-scale clinical trial.

OBJECTIVE: Pharmaceuticals play an important role in clinical care. However, in community-based research, medication data are commonly collected as unstructured free-text, which is prohibitively expensive to code for large-scale studies. The ASPirin in Reducing Events in the Elderly (ASPREE) study developed a two-pronged framework to collect structured medication data for 19,114 individuals. ASPREE provides an opportunity to determine whether medication data can be cost-effectively collected and coded, en masse from the community using this framework. METHODS: The ASPREE framework of type-to-search box with automated coding and linked free text entry was compared to traditional method of free-text only collection and post hoc coding. Reported medications were classified according to their method of collection and analysed by Anatomical Therapeutic Chemical (ATC) group. Relative cost of collecting medications was determined by calculating the time required for database set up and medication coding. RESULTS: Overall, 122,910 participant structured medication reports were entered using the type-to-search box and 5,983 were entered as free-text. Free-text data contributed 211 unique medications not present in the type-to-search box. Spelling errors and unnecessary provision of additional information were among the top reasons why medications were reported as free-text. The cost per medication using the ASPREE method was approximately USD $0.03 compared with USD $0.20 per medication for the traditional method. CONCLUSION: Implementation of this two-pronged framework is a cost-effective alternative to free-text only data collection in community-based research. Higher initial set-up costs of this combined method are justified by long term cost effectiveness and the scientific potential for analysis and discovery gained through collection of detailed, structured medication data.

Tying Medicare Part B Drug Prices to International Reference Pricing Will Devastate R&D.

According to Secretary Azar of Health and Human Services, implementing international reference pricing (IPI) in Medicare Part B will have minimal impacts. He has stated, "These savings, while substantial for American patients and taxpayers, cannot possibly pull out more than 1 percent of R&D." As companies traditionally spend 20% of free cash flow on R&D, we have measured the IPI impact according to industry standard metrics. The potential negative impacts of the international reference pricing plan, as it is currently structured, are numerous. Companies are likely to avoid developing Medicare Bart B physician-administered drugs in the future if it comes to fruition. Further, if distributing in any of the included countries in the benchmarking exercise that traditionally have prices far below that of the United States has the impact of creating lower US prices where the industry currently derives more than 80% of their global profit, companies will simply not seek market access in those benchmarked countries and patients in those countries will not receive the medicines they need. The idea that companies will be able to unilaterally raise prices in Europe defies logic and practice. Many countries in the EU have been threatening IP rights under the TRIPS clauses of the WTO for several years because of their belief that pharmaceutical pricing is unacceptably high right now, without the IPI. Harnessing real-world evidence would allow for increased competition by faster time to market. One wonders why an approach encompassing the improved time to market was not considered, as the reference pricing proposal as it stands now, ultimately, will reduce R&D budgets, impair the overall investment climate, and deprive patients the new medicines.

The Pay-Twice Critique, Government Funding, and Reasonable Pricing Clauses.

The federal government subsidizes the research and development of prescription medications. Thus, a captivating critique of expensive medications is that prices are too high because of taxpayer co-financing. This critique is often framed in terms of "paying-twice"-first for the research and second through the above market pricing of resulting products. Reasonable pricing clauses-which place some kind of pricing limitation on the exercise of license or patent rights governing a federally funded medication-are one proposed policy tool for addressing the pay-twice critique. This article provides increased analytical clarity as well as historical context to present-day debates about the privatization of federally funded research and prescription drug pricing. It makes three arguments. First, despite its pervasiveness and intuitive plausibility, the pay-twice critique is subject to differing interpretations which has important implications for the appropriateness of proposed solutions. Second, despite their initial attractiveness, the costs, necessity, and effectiveness of reasonable pricing clauses render the wisdom of this policy tool uncertain. However, third, given continued interest in reasonable pricing clauses, the NIH's previous experience with such a policy offers some useful lessons.

Design of Experiments in metabolomics-related studies: An overview.

Nowadays, Design of Experiments (DoE) approach is a very popular methodology of planning and conducting experiments, where the effect of each tested factor on the studied responses is systematically examined and documented. The results obtained in such manner represent the design space more precisely than in the case of One-Variable-At-Time (OVAT) approach, leading to reliable and comprehensive results, while saving time and resources. Despite such a large increase of interest in this approach recently, its implementation in metabolomics research seems to be limited. Therefore, in this short overview, apart from summarizing some basic concepts of DoE, we wanted to provide a guideline for those who are about to plan metabolomics-related experiments. This overview is divided into four sections. In addition to the first section, which will introduce the history and basics of DoE, second part will provide concise description of the most popular experimental designs. Furthermore, third section will describe examples of DoE application in metabolomics and related studies. We will conclude with fourth section, providing you briefly with opportunities and trends in metabolomics research utilizing experimental design.

Non-profit Drug Research and Development at a Crossroads.

In wealthy nations, non-profit drug R&D has been proposed to reduce the prices of medicines. We sought to review the ethical and economic issues concerning non-profit drug R&D companies, and the possible impact that their pricing strategy may have on the innovation efforts from for-profit companies targeting the same segment of the pharmaceutical market. There are two possible approaches to pricing drugs developed by non-profit R&D programs: pricing that maximises profits and "affordable" pricing that reflects the cost of manufacturing and distribution, plus a margin that ensures sustainability of the drug supply. Overall, the non-profits face ethical challenges - due to the lack of resources, they are unable to independently commercialize their products on a large scale; however, the antitrust law does not permit them to impose prices on potential licensees. Also, reduced prices for the innovative products may result in drying the for-profit R&D in the area.

Evidence Europe 2017. London, UK - February 22-23, 2017.

As the political backdrop changes in both the U.S. and Europe, volatility in the pharma industry is beginning to be felt as the sector becomes sensitive to the uncertainty. U.S. President Trump has stated he will pursue an agenda against high U.S. drug prices and is expected to seek to repeal the Affordable Care Act, while in Europe, Brexit casts further unknowns in regulatory authorization procedures, trade and external reference pricing. With these factors in mind, Terrapin's Evidence Europe meeting provided for a very topical discussion on the use of evidence to define and communicate value in healthcare. With a particular focus on real-world evidence, the conference used presentations, panel briefings and roundtable discussions to foster debate on the challenges faced by industry as it negotiates the current fragile environment.

Notable deals in the pharmaceutical industry in the fourth quarter of 2016.

During the fourth quarter of 2016, Cortellis Competitive Intelligence had 889 new deals added as part of its ongoing coverage of pharmaceutical licensing activity. This was an increase on both the last quarter (865) but a decrease from the same quarter for the previous year (915). This article will focus on highlighting a number of the most valuable and notable deals forged during the quarter, as well as a selection of deals from some of the most prolific deal makers. An update on milestones, options and terminated deals of significance will also be presented, along with an early outlook on the next quarter's pharmaceutical licensing activity.