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Derek Lowe The 2002 Model

Dbl%20new%20portrait%20B%26W.png After 10 years of blogging. . .

Derek Lowe, an Arkansan by birth, got his BA from Hendrix College and his PhD in organic chemistry from Duke before spending time in Germany on a Humboldt Fellowship on his post-doc. He's worked for several major pharmaceutical companies since 1989 on drug discovery projects against schizophrenia, Alzheimer's, diabetes, osteoporosis and other diseases. To contact Derek email him directly: Twitter: Dereklowe

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June 23, 2004

It'll Cost You

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Posted by Derek

Over at Slate, NBC's Robert Bazell takes on the drug pricing issue, focusing on the newer oncology therapies. There's no denying that some of them are really costly, and that this is a situation that probably can't continue under the current system (which, to exaggerate only slightly, works like this: every cancer patient gets to try everything, and insurance/Medicare pays for it no matter what.) But the problem with Bazell's article is that it bungles enough other points that his main ones are obscured. One of them goes like this:

"Why are these drugs so expensive? It's hard to know exactly, since drug pricing is a sacred prerogative protected by acts of Congress and the details remain shrouded in trade secrets. But the simplest answer is that drug companies can charge whatever price they want. "

Ahem. That's as opposed to the perfectly transparent pricing mechanisms for, say, cars, toothpaste, and fish sandwiches, I guess. And those aren't even "sacred prerogatives"! Imagine what those things would cost if the businesses that provided them could charge whatever prices they wanted to! Good thing we don't let them. (And yes, I know that cancer drugs aren't exactly discretionary purchases - we'll come back to that one.) Bazell goes on:

"Erbitux and Avastin are both laboratory-produced antibodies (Erbitux blocks a chemical signal that tells cells to grow; Avastin cuts off blood supply to tumors). True, these antibodies are more expensive to produce than most pills, but only slightly-the technology can be replicated in any college biology lab. Production costs amount to few dollars a dose at most."

I hate to put myself in the position of defending Imclone and Erbitux, but this argument is exaggerated to the point of nonsense. I know what he's trying to say - that making monoclonal antibodies is an established technology - and up to a point, it is. But Bazell makes it sound like a bunch of undergraduates could whip up a batch of Erbitux for fifty bucks or so, and that is, to use a term of the pharmaceutical art, complete bullshit. Antibodies are actually a lot more expensive to produce than small molecules. Getting reproducible purity and performance from them is a completely different problem than with small synthetic molecules, and once made, they're significantly harder to formulate, store, and handle. (That's one reason why Iressa, for example, is cheaper by a factor of ten than Erbitux.)

Here's a challenge for Robert Bazell: Let's pick a random college biology lab or two by riffling through a directory, and see if they could produce a steady supply of GMP-grade doses of Erbitux (or any other antibody therapy). Let's just call them up and ask them! Anyone want to put some money down on the results? Bazell goes on:

". . .Like all pharmaceutical companies, BMS and Genentech cite research costs and the huge risks involved in drug development (many drugs fail; clinical trials are expensive ... but haven't we heard it all?) as explanations for the high prices of their drugs. But the real reason is that market forces do not apply to drugs."

I'm sorry that we're boring him. Unfortunately, those explanations get trotted out over and over again because they're true.

"Few individuals purchase these drugs as they would a head of lettuce, say, or a refrigerator. In the case of cancer drugs, health-insurance companies are the consumers. For those lucky enough to have insurance, their plan might pay; and indeed, oncologists say that, surprisingly, so far few have balked."

Now we're down to that nondiscretionary spending issue. It's a real one, and it applies not just to pharmaceuticals, but to every sort of health care. People value their health very highly, as they should. And it's not that market forces don't apply to drugs, it's that no one seems to want them to. If they did so more directly, insurance companies would indeed start to balk, and drug companies would have to decide if they could lower the prices of their new therapies coming through the research pipeline. And if they couldn't, they would have to decide not to take them through clinical trials at all. We would end up with fewer therapeutic options than we have now.

But a therapy that no one can afford is arguably about the same as no therapy at all, so that's not as much of a tragedy as it sounds. And it's certainly true, as the article goes on to point out, that many of these new cancer treatments aren't as effective as everyone would like. Unfortunately, the only way to find that out was to go ahead and spend the money and time to develop them, and take them all the way through clinical trials and regulatory approval. That's when you find out that your wonder drug isn't as wonderful as you'd hoped. But I'll stop right there; I can hear Robert Bazell starting to yawn. Here he comes again:

"But even the current meager benefit will encourage all cancer patients to seek (these drugs), and those who cannot get them, because they lack health insurance or their plan won't pay, to feel cheated. And a marketplace with absolutely no price control will only propel the drug companies to charge even more for future drugs, some of which may offer even less benefit."

Why, exactly, would we enter the market with something that's demonstrably worse than what's already out there? I know that the industry gets hammered for me-too drugs, but those work at least as well as the existing therapies, and they need some selling point that lets you argue that they're even better. I can testify, from personal experience, that projects get killed all the time in the drug industry because we can't beat the competition, either what's already on the market or in clinical trials. I've helped kill them. This hasn't been as big an issue in oncology, but it does happen, and it's going to be happening more often.

And the answer to all this, presumably, is price controls. Hard to say, since that's where Bazell's article ends, but that seems to be the prescription. I can just imagine what kind of price a group of elected officials will decide what is fair. We'll be tied up, top to bottom. It's not clear to me - it never has been - how forcing companies to earn less money from their drugs will cause them to produce better ones. (Think how much Imclone could charge if Erbitux actually worked better than it does.)

If you want a more detailed take on the cancer drug pricing issue, go back a couple of weeks to Matthew Herper's article in Forbes. It covers the same ground, but in a clearer fashion. Ultimately, I think what's going to happen is that there will be patients who will not get some of these drugs, largely because they won't do very much good - or none at all. If we get past the treat-everyone-with-everything style in oncology, it'll force us in the drug industry to modify our projections of market size, and we'll have to come up with a way to deal with it. Pushback from the insurance companies and physicans is a better check on the drug industry, to my mind, than a Central Office of Pharmaceutical Pricing could ever be.

Comments (28) + TrackBacks (0) | Category: Cancer | Drug Prices


1. John J. Coupal on June 23, 2004 11:26 PM writes...

The cluelessness of media stringers about drugs and drug pricing has never stopped many news people from spouting off. Unfortunately, many in the general public know as much about the drug industry as does Bazell, which is to say: precious little.

Bazell's intention is to be a concerned populist explaining to the common folk how and why they're being bamboozled. It's sad, because many people will believe him.

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2. Clark on June 24, 2004 9:03 AM writes...

I have never understood why the insurance industry doesn't fund research to determine who will be the responders, and who will not. It generally is not in the drug companies interest to fund such research (although it could possibly speed up later trials of the same drug in a different application), but it is definitely to the insurance company's benefit.

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3. Clark on June 24, 2004 9:15 AM writes...

Another point. The pundits inre drug costs do have some valid points. For instance, why is it that even in 'me-too' drugs, the cost does not come down very much? Statins are the perfect example. They are not that much different from one another and yet they are still huge money makers for their companies. That right there tells you that the competition is not all it should be.

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4. john on June 24, 2004 10:28 AM writes...

In re: me-too drugs...

The arguments for first-to-market and me-too aren't all that different, especially in the monoclonal antibody. Second to market doesn't mean it cost 3x less to develop.

Basic market analysis dictates that, if the market leader is charging $100 a pill, then I should charge close to that as well, in order to recoup my own costs...charging $50 for a dose that cost me $75 to develop doesn't make much sense, even if it drives market share. Selling dollars for $.75 apiece went out sometime in early 2000.

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5. Derek Lowe on June 24, 2004 11:07 AM writes...

Yep, the main advantage of a me-too drug is that you have a good idea of the market size for that therapeutic class, and you know what you have to beat in your competition. Both of those are rather mysterious for a first-to-market compound.

But you still have to do all the testing (safety, efficacy) that you'd have to do with a first-in-class. You have a better idea of how to run the clinical trials, which helps, but they still have to be run (and often run in a larger and more expensive form, to try to show a unique selling point versus the competition.)

The popularity of me-too therapies mostly illustrates the costs and uncertainties of developing the first-in-class stuff, not so much any major savings in and of themselves.

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6. David on June 24, 2004 1:09 PM writes...

The guy's an idiot.

In speccing out Mab production for companies' trials, it usually costs in the neighborhood of $5000 for a dosing regimen. Sure the costs come down a bit when you're scaling up, but these things aren't some pyrimidine derivative you can crank out for nothing.



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7. qetzal on June 24, 2004 1:41 PM writes...

I would love to see a thorough analysis of the economics of me-too drugs.

As John and Derek point out, development costs for a specific me-too aren't gonna be a lot lower than for the first in class. Maybe you can streamline clinical development of the me-too based on lessons from the innovator, but that won't cut your costs in half.

OTOH, it seems like development costs for me-toos as a class have to be lower. Me-toos are more likely to succeed, because they take advantage of the proof of concept and the development lessons offered by the innovator. So, the successful me-toos shouldn't have to cover the costs of as many me-too failures. If all else were equal (which it certainly isn't), I'd expect it would be vastly preferable to only develop me-toos.

Of course, that assumes that there are always plenty of innovators around to copy (not!), and that profit margins from me-toos are just as good as from innovators.

In fact, contrary to Clark's point, I suspect that me-toos do compete with one another to a degree, and that they should have lower prices and profit margins as a result.

It's far from perfect competition, no doubt. Despite the me-too moniker, no two drugs will behave the same for all patients. In many cases (I believe), it's common practice for docs to figure out empirically which particular me-too works best for a particular patient. Also, patients who are already reasonably satisfied on one drug are understandably reluctant to switch to a new me-too.

But I also believe there will often be lots of patients that could reasonably use any of several me-toos. If so, doesn't that virtually guarantee some competitive effect on pricing? (Unless, of course, you believe that the big pharmas are all in collusion, or you don't believe in competitive market theories.)

It would be really interesting to see a detailed analysis of two or three classes of me-toos. What was the innovator's initial price? How long before the first me-toos got approved? How did prices change as each new me-too entered the market? Do prices correlate with degree of drug "substitutability" (real or perceived)? Does the time gap between the innovator and the first me-too matter? (If there's a big lag, I can imagine the innovator being more willing to charge a premium at first, and reduce price once the me-toos arrive. But if the innovator knows that the me-toos are breathing down its neck, it might be smarter to price lower from the outset, to try to capture as much market as possible in a short time.)

How do me-toos affect the total market? Do they ever increase it? (If so, they may be "partial" me-toos, drugs that can benefit some patients who didn't benefit from the innovator.) Or do they just fragment the market into ever smaller pieces?

If, as Clark suggests, me-toos don't generally impact prices much, then I agree with his general point that competition is not "all it should be." But it doesn't tell us why. Many people prefer to think it's primarily greed and collusion among big pharma, but that's not the only reasonable conclusion. Maybe it's the opposite; maybe big pharma voluntarily charges the minimum price it can afford, even for innovators. Maybe they could charge more, but choose not to, so there's no room for price reduction when me-toos get on the market.

(I'll pause here so people can stop laughing and snorting derisively.)

Or maybe most of the "me-toos" aren't really me-toos at all. Even if they're all part of a class, they might mostly treat non-overlapping patient groups. So naturally, they wouldn't compete.

Or, maybe they really do compete, which just fragments the market. Individual drugs might sell fewer and fewer doses as each new me-too appears. In that case, the company might decide that since it's already losing revenue to declining market share, it can't afford to also reduce unit prices. Patients have more drugs to choose from, but the price per drug doesn't change so it looks like no competition.

It seems like the data to distinguish between these and other possiblities must be out there, but I don't know whether anyone's ever tried to pull it all together and do the analysis.

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8. Clark on June 24, 2004 2:14 PM writes...

While I agree fully that morally the drug companies should be entitled to get reimbursed for R&D for 'me-toos', I think that at least in the case of statins they are getting vastly more than that. That is virtually certain to be pointing to an inefficiency in the market - which should perhaps be rectified.

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9. MS Liason on June 24, 2004 4:35 PM writes...

"And it's not that market forces don't apply to drugs, it's that no one seems to want them to."

The statement above is one of the most insightful things I have ever read about this topic. Too true.

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10. Mcwop on June 24, 2004 4:43 PM writes...

I take medicine for an ongoing condition, and one generic worked great for me. The manufacturer ran into production problems, and because they could not earn a profit (or break- even on the drug), they simply stopped making it.

My current drug does not work as well.

My vote is for profitable drugs.

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11. William Knight on June 24, 2004 6:10 PM writes...

One of the things that I find striking in some of the comments from people above on this issue is a tone of arrogance. Sure, some of you speak from a position of technical expertise in the area, but the most important point of the Slate article is that something is fundamentally wrong and needs to be fixed. I'm not saying that the solution is obvious, but finding fault with little details here and there and making wisecracks about clueless media stringers conveys the impression of a small, select and smug group of people happily perched atop some precious resource.

It reminds me a little bit of the 'high priesthood' of software developers in the days of the big mainframes, before the personal computer, when software development was slow, expensive and mired in bureaucracy.

The current system of drug development is obviously not living up to its potential. I foresee a future where a lot more drugs are being produced by smaller, innovative companies for a lot less money. Perhaps one mechanism to enable this way would be for the government to provide some kind of system to underwrite the cost of clinical trials. The free market is not the solution to everything. Without government support of the educational system, transportation, healthcare, etc., the majority of us would be living a life far nastier, brutish and short.

William Knight

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12. John P. on June 24, 2004 6:15 PM writes...

Am I evil for wondering why so many people seem to think that everyone has a right to all the medication he/she could possibly need, no matter how expensive it may be?

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13. Clark on June 24, 2004 6:36 PM writes...


Well, I agree that something is wrong, but pathetically the Slate article did absolutely nothing whatsoever to elucidate that. And that is what people are poking at - just as they would poke at the drug companies' assertions that reimportation is bad because of safety issues. Both sides are arguing against their own strawmen. A very non-productive process. Let's find out what is broken (and I think 'me-too' drugs, and a bunch of other indicators as listed by The Economist, make it clear that something is broken) and then we can discuss possible fixes.

BTW - Looked up Pfizer's revenue (almost all profit) for their statin - $9B last year, and more than $25B over the last 4 years. I would be ok with that if they had no competition, but they do have competition - lots of it and all making similar types of profit. Their profit margin on a "me-too" drug is somewhere north of %2,500%. I won't argue how much is the right amount, but surely 2,500% is an indicator that something is broken.

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14. The Un-Candidate on June 24, 2004 8:29 PM writes...

Dear Mr. Knight:

If I may be so bold, I think that it is clear that drug discovery and development is far more difficult than software design.

I would submit to you that pharmaceutical scientists are not a "small, select, smug group of people perched happily on a resource", but a team of dedicated, intelligent people digging as hard as they possibly freakin' can into that hard mountain of a resource. (Oh, which, by the way, contains very few diamonds amongst the rock.) Bazell's article is the equivalent of walking up to those people and saying "now that you've found a gem, we want you to give it away."

I take it you're in the software area. Let me ask you this: how many products have you developed and are in the marketplace? One or two? I'm guessing with the audience of pharma types here (and the likely fifty or so man-years they represent), we might have one drug that's gone all the way. That's not incompetence, BTW, it's just that hard.

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15. qetzal on June 24, 2004 10:32 PM writes...

Wm Knight:

I agree that arrogance is counterproductive. If any of my comments had that tone, my apologies to all.

Unfortunately, I don't think having gov't fund clinical trials will work. If it's the same size trials, run just as rigorously, it's gonna cost about the same. Probably even more, since gov't funding will likely reduce the immediate incentive to be as efficient as possible. If the gov't actually runs the trials, I predict it would cost quite a bit more, unless that also means that the trials are run less rigorously (see below).

I've come to the personal conclusion that there are only two fundamental things that could dramatically reduce prices for new drugs.

One is if we ever figure out how to reliably identify the "good" drugs much earlier than we currently do. If animal tests could tell you with 90% accuracy which candidates would likely get approved, then the successful drugs would not have nearly as many unsuccessful ones to cover for. Even further, if animal (or other non-clinical) tests really were that reliable, one could arguably reduce the clinical testing by a substantial amount. That would reduce costs quite a bit more.

The problem is, no one really has a clue how to do that. Anyone who did could very quickly become exceedingly rich.

The only other option I can see is to dramatically reduce the regulatory requirements for approval. The reason drugs take an average of 7 yrs & hundred's of millions of dollars to get through clinical development is mostly because of the high standards they must meet for approval. They must go through lots of separate clinical trials (often 5-10 or more), and be tested in 100's, 1000's, sometimes even 10,000's of patients. All of the data generated must be very carefully documented, analyzed, etc.

Also, the processes for manufacturing and QC'ing the drugs must be rigorously developed, studied, proven, documented, overseen, etc.

All of this requires a huge amount of time and effort, and there's not much opportunity to bypass any of it. Admittedly, the number of patients in your trials will be lower if the total target population is small. But then you will also have fewer potential customers to cover your costs if you do get approved, so it's a bit of a no-win situation.

This is NOT meant to argue that we should do away with our high standards. I think there are very good reasons for most of the regulatory requirements, even if they are often a pain in the butt.

But the reality is that we, as a society, place a high burden of proof on our drugs, and that has inevitable costs. If we chose to dramatically reduce that burden, new drugs could get dramatically cheaper. Would that be a good thing? I'm not sure. I think maybe it would in certain circumstances, but probably not across the board.


I guess the fundamental point of my first rambling post is that I'm not convinced drug pricing really is "broken." Maybe it is, but I think it needs more careful and in depth analysis to be sure. That's what I'd like to see, and I think me-toos would be very instructive case studies.

The problem is that it's very easy to cherry pick examples to support whatever view you hold. You can cite numbers for Lipitor that make Pfizer look very bad. Mcwop gives a different example, where a company stopped making a drug because they couldn't make a profit. But the extremes don't tell the true story. A fair assessment requires looking at lots of examples.

I'm sure that you weren't trying to claim that Lipitor alone proves that the drug market is broken. Unfortunately, I think there are many people who are quite willing to look only at the most egregious-seeming examples and draw their conclusions accordingly.

And, FWIW, even the Lipitor example may not be so compelling. Here's an article that suggests there really IS competition among statins. It also supports what I said earlier about me-toos not really being interchangeable. Lipitor has enormous revenues in part because it's clearly better than any of it's predecessors. Now there's Crestor, which may be even better still, and Lipitor's share may be beginning to fall. (Total revenues are still rising, but it looks to me like that's mainly because the market itself is growing.)

Bottom line for me: I grant the possibility that the drug markets are not competitive enough, and/or that drug prices should not be so high. But I have yet to see a really convincing argument to that effect. Even if it's true, I have yet to see a proposed solution that would not just make things worse (IMHO).

P.S. Everything above is offered in the spirit of reasonable discussion and (at most) polite disagreement. Hope it comes across that way.

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16. William Knight on June 25, 2004 2:03 AM writes...

Mr. Un-Candidate:

As someone from a software background who is now working in molecular biology, I agree with you that drug development is MUCH more difficult than software design. However, I do believe that part of the problem is that the field is too small and isolated. One of the reasons that software development has been so successful in recent decades is because the personal computer has tremendously broadened the field of developers and users. I think something analgous to that is needed for drug development.

I think qetzal's suggestion for reducing regulatory requirements is a step in the right direction. The field needs to be opened up. Drug consumers need to be brought into the process. The barriers to entry for new players in drug development must be lowered. I would argue that the potential harms of reduced regulation would be more than offset by the benefits of a drug development industry that had the diversity, breadth and rapid innovation that we see in the current IT industry.

Of course, it is obvious that drug development is not the same as software development, because people's lives and health are directly at stake. But our lives and health are just as surely at risk if the field does not evolve more rapidly that it is currently doing.

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17. J Prusi on June 25, 2004 1:01 PM writes...

Mr. Knight,

I guess I'm confused as to exactly what you're proposing.

As you said, the widening in the software field was a result of the development of the PC. This reduced the physical plant necessary to run software from the "big iron" mainframes only available to large institutions to something that everyone could own.

I'm not sure what a similar development in research chemistry would be. I don't see the development of a "tabletop chemistry lab" that you can buy at Wal-Mart for a few hundred or thousand dollars occuring that will take the place of the large (and expensive) labs at research institutions. Granted, people said that about computers, too.

Hopefully someone who works in the field can enlighten me. But working from my own field--I'm a civil engineering student--it seems that equipping a lab is moving *away* from everyone being able to own one. The testing machines in the structures labs where I go to school cost more than some houses, and are getting more complicated as time goes on. The rise of the PC and finite element modeling *has* made forming predictive models much easier. And certainly most of the theoretical work can be done with pencil and paper or computers. However, at the end of the day, you still have to put a physical specimen into a big calibrated press with lots of expensive sensors to see if the theory works.

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18. J Prusi on June 25, 2004 1:02 PM writes...

Sorry about the bolded words in the previous comment. Apparently my closing tags ran off.

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19. David on June 25, 2004 1:06 PM writes...

Um. So what if Pfizer's made $25 B off of Lipitor?

How much money has MSFT made off of Windows (nearly all profit--oooh, bad bad bad Mr. Softie).

Let's say you (or your insurer) pays $1000/year for your Lipitor (about the cost for 40 mg/day for a year). Let's say you take that starting at age 50 until you're 75, and as a result, you don't have that heart attack at 62.

You've 1) avoided bypass surgery ($50K or so)
2) lost productivity and wages (minumum of $5-10K probably) and
3) will avoid complications (stroke, congestive heart failure)

Just avoiding bypass surgery is "worth it" in terms of paying for your Lipitor.

So quit yer whining, pop your pill and enjoy the fruits of drug research.

Lipitor is one drug that's probably worth every penny from a purely economic angle.

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20. William Knight on June 25, 2004 2:11 PM writes...

Mr. Prusi:

I believe that emerging 'lab-on-a-chip' technologies (which employ micro-fluidics in conjunction with electronic circuits) provides hope for low cost research equipment.

But what is even more important is to involve larger numbers of people in the development process, including the users. The importance of this in a developing technology is something that I don't feel is sufficiently appreciated by many.

An important factor in the rapid growth of computer software was the fact that millions of people became involved as users of the software. Even though they did not play a direct role in the coding and design, they were a vital part of the development process because they contributed to the cycles of evaluation and feedback. As a result, the sophistication and diversity of software became much greater than it ever could have in the old mainframe days.

As for what analogous expansions are possible in the biomedical field, I'm sure there are people with much better qualifications than myself to point the way, but I can throw out a few ideas.

Creating mechanisms for consumers to collect and report information about their physical conditions on a daily basis is one idea. I can imagine a voluntary, anonymous public database that people could sign up to, and contribute their vital statistics, what drugs they are taking, perhaps biochemical data from saliva assays. Such mechanisms will also help to lay the foundations for 'personal genomics', where individuals will use information about their own unique genetic traits to help with their medical care.

The potential market for such equipment and services is huge. The existing market of alternative herbs and medicines demonstrates that large numbers of people are willing to try and pay for non-traditional approaches. More scientifically-based technologies have a real opportunity to tap this market.

However, like integrated circuits and the Internet, government sponshorship is probably needed to get such projects off the ground. This would enable them to come to fruition much sooner than if left to the vagaries of the free market.

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21. qetzal on June 25, 2004 6:24 PM writes...

Mr Knight:

I think your goals are laudable and desirable. I wish I saw a way to achieve them.

All of the things you mention could be very useful in their ways. I don't see how any of them would make easier to identify good drugs.

Nor can I offer anything that I think has a better chance. Except, of course, what I said earlier - lower the regulatory requirements. In other words, we can be less demanding in how we define what makes a "good" drug, so more drugs will fit the definition.

That's the only short term "solution" I see. But I don't think our society wants to go in that direction, except perhaps in cases like cancer, where the disease is deadly, existing drugs work poorly, and people are more willing to try things that are less rigorously proven to be safe & efficacios.

Price controls will force prices down on existing drugs, but the medium-term result will be fewer new drugs. The more aggressive the price controls, the fewer new drugs we'll see.

I think any good, long-term fix has to involve getting much better at identifying "good" drugs even before testing them in people. There have been lots of ideas for how to do that. None has been particularly successful. New ideas about that come along all the time (e.g. pharmacogenomics), but short of a truly transforming discovery, I predict incremental progress at best.

But if you believe the the solution is "out there," and you're willing to use tax money to find it, I suppose you could set up a big grant program to fund research into how to streamline drug development.

I don't know how likely that is to work. After all, the pharmas already have a huge incentive to streamline development. Seems like they would have already tried any obvious, practical possibilities.

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22. Lawrence B. Ebert on June 29, 2004 8:07 AM writes...

Of the "me-too" drugs, was VIOXX a "me-too" drug after CELEBREX? Do either offer more pain relief than non-COX-2 inhibitors which do cost substantially less? Likely, more than 50% of the people needing pain relief don't selectively benefit from COX-2 inhibitors over other less-costly NSAIDs.

Merely as a footnote on Bazell, looking back to 1989, he was the one major network science reporter that didn't buy into cold fusion.

As a footnote on Erbitux, MIT did file a lawsuit against ImClone concerning the use of a cell line produced by a method for boosting the production of a protein in mammalian cells by using a tissue-specific enhancer claimed in US Patent No. 4,663,281.

Lawrence B. Ebert

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23. Weirdo on June 29, 2004 10:54 PM writes...

Rather than seem arrogant, let's point out a few facts for Wm. Knight et. al.

There ARE a bunch of small, innovative companies in drug discovery. They're called "biotechs". They all have a paradigm-shifting, fully integrated, genomics-based, drug discovery platform to increase the speed, efficiency, and quality of drug discovery.

Problem is, they usually don't find drugs. They find very interesting tool molecules, spend millions of dollars on them, then cash out or (less frequently) sell out to Big Pharma. Very, very few exceptions to this. I don't think you could name more than six or eight.

Yes, the promise of the new technologies has not paid off. Yes, drugs are "too expensive" (but at only ~8-9% of the total cost of health care, a 50% reduction in their cost only saves 4-5%!!!). Is the answer price controls or more small biotechs?

Ask Canada. How many good drugs discovered there in last decade?

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24. John Gault on June 30, 2004 12:48 PM writes...

W. Knight, You will have to forgive me for saying that you are infact the one who is arrogant. I believe it is arrogant for someone to acknowledge he does not have the "technical expertise" to solve the drug development problem and then proceeds to criticize others for not solving it. I believe it is arrogant for those in need of life saving new drugs to expect others to invent those drugs for them and then proceed to criticize those who just saved thier life of charging to much for the sevice. The arrogance to suggest that those engaged in drug discovery have not considered the few simple ideas you have put forward as solutions to the drug development problem, along with many many others you have no concept of, is monumental( For your information patient databases already exist and are being used in DD research, and the government already spend upwards of 4 billion on medical research (it's called the NIH)). Derek had it exactly correct when he said "It's not that market forces don't apply to drugs, it's that no one seems to want them to".
Drugs are important to people because they save lives, and they are worth a lot of money because of that (why are we willing to pay 2,000 for a plasma TV, or 20,000 for dodge minivan, but we are not willing to pay 5,000 for cancer treatment to save our life? The scientists that toil at lab benches every day for years on end to discover the drugs that will benifit society deserve to be taken more seriously than you give them credit for, and deserve to be compensated in the same way that any other profession does, according to the value of what they create. They don't deserve less because what they make is desparately needed by others (nor the companies that fund them).
I would like to ask everyone one question.
Is the world a better place because of the existance of pharmaceutical companies?

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25. Industry Guy on June 30, 2004 4:22 PM writes...


Lets not bash Canadian chemists. As one of the several working here in the US, we make up a larger majority that you think. In fact, two of Merck's last big entries to the market were prepared at Merck-Frosst Canada. I agree with you however, that the answer to drug pricing is not more technology or small biotechs, in fact, the use of technology tends to lead to increases in prices not lowering. Look at the investment in combi-chem apparati that clutter several big pharma labs no longer in use. I view alot of biotechs as trying to sell unproven ideas to those gullible enough to buy them. Sure there are exceptions, but lets not forget they are businesses to try to make money as well. I love how individuals scream at pharma for drug pricing, but buy new cars every 4 years....

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26. weirdo on June 30, 2004 10:31 PM writes...

Industry Guy,

No bashing of Candadian scientists of any kind intended. Bashing of Canadian price controls? Yes.

And Merck-Frosst? A subsidiary of a U.S. company, of course -- isn't a senior chemist from there now running Merck's San Diego site? How many Canadian (not Canadian supsidiaries of U.S. companies) drug companies or biotechs with any level of success?

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27. William Knight on July 2, 2004 3:39 PM writes...

Mr. Gault:

It's probably not productive to engage in this debate for much longer, but I have just a few comments. First, I don't believe that it is arrogant for someone to point out problems in an area where they may not be a top expert. Is it arrogant for someone to complain about traffic congestion when they are not an expert in Urban Transportation?

Second, the kind of databases that I am proposing are much larger than existing ones. I am envisioning a large, public anonymous database that involves a significant percentage of the current U.S. population (as well as other countries). We are talking of about hundreds of millions of people or more, a much larger resource of information than in previous DD databases.

Finally, you mention the lack of people paying $2000 for plasma tvs, $20,000 for minivans, and so on. Unfortunately, there are huge numbers of people who can't even dream of such discretionary purchases. They are having trouble enough paying rent and feeding their families. I agree with you that the world is a better place because of pharmaceutical companies, but the real question is, how much better could the world be than it is now? How much money is being wasted that could better spent elsewhere?

Sincerely, with no arrogance intended,

William Knight

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28. OCB on July 6, 2004 6:34 PM writes...

Mr. Knight: You seem to be well-intentioned but I must side with the majority here. A lot of money in DD goes into trying to find a cheaper way (earlier identification of losers, etc). Your proposal to involve the users more intimately in the process of DD would work...exactly how? What good will it do for Joe Sixpack to stare at a blackboard full of small-molecule structures and say "I like that one"? To the extent that the market should speak its mind, fine; but most firms work hard already to figure out the unmet need and devise the strategy that will deliver the best answer quickly and cheaply. But every firm faces the unavoidable cost of meeting government regulation, much of it directed not at safety but at efficacy. If FDA were to revert to its original mandate (safety) and let the market decide which pill was worth a hoot, there would be many more (and much cheaper) choices. They would still be better than the "supplements" that the FDA is impotent to control. (Fox last week featured a woman who bought some weight-loss "supplement" that ruined her liver. Result? Healthcare system pays six figures for emergency intervention, she's on immunosuppressants for the rest of her days, and the guy who sold her this trash changes his internet address.) What with reimportation in the offing, I'd say you will soon see a whole lot more breakdowns in the safety of the drug supply due to counterfeiters and profiteers, even as this erodes the margins for the legit companies. We're headed for the wall and I don't think your proposals will have much effect on the outcome. Cheers, OCB

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