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DBL%20Hendrix%20small.png College chemistry, 1983

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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August 9, 2012

Getting Drug Research Really, Really Wrong

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Posted by Derek

The British Medical Journal says that the "widely touted innovation crisis in pharmaceuticals is a myth". The British Medical Journal is wrong.

There, that's about as direct as I can make it. But allow me to go into more detail, because that's not the the only thing they're wrong about. This is a new article entitled "Pharmaceutical research and development: what do we get for all that money?", and it's by Joel Lexchin (York University) and Donald Light of UMDNJ. And that last name should be enough to tell you where this is all coming from, because Prof. Light is the man who's publicly attached his name to an estimate that developing a new drug costs about $43 million dollars.

I'm generally careful, when I bring up that figure around people who actually develop drugs, not to do so when they're in the middle of drinking coffee or working with anything fragile, because it always provokes startled expressions and sudden laughter. These posts go into some detail about how ludicrous that number is, but for now, I'll just note that it's hard to see how anyone who seriously advances that estimate can be taken seriously. But here we are again.

Light and Lexchin's article makes much of Bernard Munos' work (which we talked about here), which shows a relatively constant rate of new drug discovery. They should go back and look at his graph, because they might notice that the slope of the line in recent years has not kept up with the historical rate. And they completely leave out one of the other key points that Munos makes: that even if the rate of discovery were to have remained linear, the costs associated with it sure as hell haven't. No, it's all a conspiracy:

"Meanwhile, telling "innovation crisis" stories to politicians and the press serves as a ploy, a strategy to attract a range of government protections from free market, generic competition."

Ah, that must be why the industry has laid off thousands and thousands of people over the last few years: it's all a ploy to gain sympathy. We tell everyone else how hard it is to discover drugs, but when we're sure that there are no reporters or politicians around, we high-five each other at how successful our deception has been. Because that's our secret, according to Light and Lexchin. It's apparently not any harder to find something new and worthwhile, but we'd rather just sit on our rears and crank out "me-too" medications for the big bucks:

"This is the real innovation crisis: pharmaceutical research and development turns out mostly minor variations on existing drugs, and most new drugs are not superior on clinical measures. Although a steady stream of significantly superior drugs enlarges the medicine chest from which millions benefit, medicines have also produced an epidemic of serious adverse reactions that have added to national healthcare costs".

So let me get this straight: according to these folks, we mostly just make "minor variations", but the few really new drugs that come out aren't so great either, because of their "epidemic" of serious side effects. Let me advance an alternate set of explanations, one that I call, for lack of a better word, "reality". For one thing, "me-too" drugs are not identical, and their benefits are often overlooked by people who do not understand medicine. There are overcrowded therapeutic areas, but they're not common. The reason that some new drugs make only small advances on existing therapies is not because we like it that way, and it's especially not because we planned it that way. This happens because we try to make big advances, and we fail. Then we take what we can get.

No therapeutic area illustrates this better than oncology. Every new target in that field has come in with high hopes that this time we'll have something that really does the job. Angiogenesis inhibitors. Kinase inhibitors. Cell cycle disruptors. Microtubules, proteosomes, apoptosis, DNA repair, metabolic disruption of the Warburg effect. It goes on and on and on, and you know what? None of them work as well as we want them to. We take them into the clinic, give them to terrified people who have little hope left, and we watch as we provide with them, what? A few months of extra life? Was that what we were shooting for all along, do we grin and shake each others' hands when the results come in? "Another incremental advance! Rock and roll!"

Of course not. We're disappointed, and we're pissed off. But we don't know enough about cancer (yet) to do better, and cancer turns out to be a very hard condition to treat. It should also be noted that the financial incentives are there to discover something that really does pull people back from the edge of the grave, so you'd think that we money-grubbing, public-deceiving, expense-padding mercenaries might be attracted by that prospect. Apparently not.

The same goes for Alzheimer's disease. Just how much money has the industry spent over the last quarter of a century on Alzheimer's? I worked on it twenty years ago, and God knows that never came to anything. Look at the steady march, march, march of failure in the clinic - and keep in mind that these failures tend to come late in the game, during Phase III, and if you suggest to anyone in the business that you can run an Alzheimer's Phase III program and bring the whole thing in for $43 million dollars, you'll be invited to stop wasting everyone's time. Bapineuzumab's trials have surely cost several times that, and Pfizer/J&J are still pressing on. And before that you had Elan working on active immunization, which is still going on, and you have Lilly's other antibody, which is still going on, and Genentech's (which is still going on). No one has high hopes for any of these, but we're still burning piles of money to try to find something. And what about the secretase inhibitors? How much time and effort has gone into beta- and gamma-secretase? What did the folks at Lilly think when they took their inhibitor way into Phase III only to find out that it made Alzheimer's slightly worse instead of helping anyone? Didn't they realize that Professors Light and Lexchin were on to them? That they'd seen through the veil and figured out the real strategy of making tiny improvements on the existing drugs that attack the causes of Alzheimer's? What existing drugs to target the causes of Alzheimer are they talking about?

Honestly, I have trouble writing about this sort of thing, because I get too furious to be coherent. I've been doing this sort of work since 1989, and I have spent the great majority of my time working on diseases for which no good therapies existed. The rest of the time has been spent on new mechanisms, new classes of drugs that should (or should have) worked differently than the existing therapies. I cannot recall a time when I have worked on a real "me-too" drug of the sort of that Light and Lexchin seem to think the industry spends all its time on.

That's because of yet another factor they have not considered: simultaneous development. Take a look at that paragraph above, where I mentioned all those Alzheimer's therapies. Let's be wildly, crazily optimistic and pretend that bapineuzumab manages to eke out some sort of efficacy against Alzheimer's (which, by the way, would put it right into that "no real medical advance" category that Light and Lexchin make so much of). And let's throw caution out the third-floor window and pretend that Lilly's solanezumab actually does something, too. Not much - there's a limit to how optimistic a person can be without pharmacological assistance - but something, some actual efficacy. Now here's what you have to remember: according to people like the authors of this article, whichever of these antibodies that makes it though second is a "me-too" drug that offers only an incremental advance, if anything. Even though all this Alzheimer's work was started on a risk basis, in several different companies, with different antibodies developed in different ways, with no clue as to who (if anyone) might come out on top.

All right, now we get to another topic that articles like this latest one are simply not complete without. That's right, say it together: "Drug companies spend a lot more on marketing than they do on research!" Let's ignore, for the sake of argument, the large number of smaller companies that spend all of their money on R&D and none on marketing, because they have nothing to market yet. Let's even ignore the fact that over the years, the percentage of money being spent on drug R&D has actually been going up. No, let's instead go over this in a way that even professors at UMDNJ and York can understand it:

Company X spends, let's say, $10 a year on research. (We're lopping off a lot of zeros to make this easier). It has no revenues from selling drugs yet, and is burning through its cash while it tries to get its first on onto the market. It succeeds, and the new drug will bring in $100 dollars a year for the first two or three years, before the competition catches up with some of the incremental me-toos that everyone will switch to for mysterious reasons that apparently have nothing to do with anything working better. But I digress; let's get back to the key point. That $100 a year figure assumes that the company spends $30 a year on marketing (advertising, promotion, patient awareness, brand-building, all that stuff). If the company does not spend all that time and effort, the new drug will only bring in $60 a year, but that's pure profit. (We're going to ignore all the other costs, assuming that they're the same between the two cases).

So the company can bring in $60 dollars a year by doing no promotion, or it can bring in $70 a year after accounting for the expenses of marketing. The company will, of course, choose the latter. "But," you're saying, "what if all that marketing expense doesn't raise sales from $60 up to $100 a year?" Ah, then you are doing it wrong. The whole point, the raison d'etre of the marketing department is to bring in more money than they are spending. Marketing deals with the profitable side of the business; their job is to maximize those profits. If they spend more than those extra profits, well, it's time to fire them, isn't it?

R&D, on the other hand, is not the profitable side of the business. Far from it. We are black holes of finance: huge sums of money spiral in beyond our event horizons, emitting piteous cries and futile streams of braking radiation, and are never seen again. The point is, these are totally different parts of the company, doing totally different things. Complaining that the marketing budget is bigger than the R&D budget is like complaining that a car's passenger compartment is bigger than its gas tank, or that a ship's sail is bigger than its rudder.

OK, I've spend about enough time on this for one morning; I feel like I need a shower. Let's get on to the part where Light and Lexchin recommend what we should all be doing instead:

What can be done to change the business model of the pharmaceutical industry to focus on more cost effective, safer medicines? The first step should be to stop approving so many new drugs of little therapeutic value. . .We should also fully fund the EMA and other regulatory agencies with public funds, rather than relying on industry generated user fees, to end industry’s capture of its regulator. Finally, we should consider new ways of rewarding innovation directly, such as through the large cash prizes envisioned in US Senate Bill 1137, rather than through the high prices generated by patent protection. The bill proposes the collection of several billion dollars a year from all federal and non-federal health reimbursement and insurance programmes, and a committee would award prizes in proportion to how well new drugs fulfilled unmet clinical needs and constituted real therapeutic gains. Without patents new drugs are immediately open to generic competition, lowering prices, while at the same time innovators are rewarded quickly to innovate again. This approach would save countries billions in healthcare costs and produce real gains in people’s health.

One problem I have with this is that the health insurance industry would probably object to having "several billion dollars a year" collected from it. And that "several" would not mean "two or three", for sure. But even if we extract that cash somehow - an extraction that would surely raise health insurance costs as it got passed along - we now find ourselves depending on a committee that will determine the worth of each new drug. Will these people determine that when the drug is approved, or will they need to wait a few years to see how it does in the real world? If the drug under- or overperforms, does the reward get adjusted accordingly? How, exactly, do we decide how much a diabetes drug is worth compared to one for multiple sclerosis, or TB? What about a drug that doesn't help many people, but helps them tremendously, versus a drug that's taken by a lot of people, but has only milder improvements for them? What if a drug is worth a lot more to people in one demographic versus another? And what happens as various advocacy groups lobby to get their diseases moved further up the list of important ones that deserve higher prizes and more incentives?

These will have to be some very, very wise and prudent people on this committee. You certainly wouldn't want anyone who's ever been involved with the drug industry on there, no indeed. And you wouldn't want any politicians - why, they might use that influential position to do who knows what. No, you'd want honest, intelligent, reliable people, who know a tremendous amount about medical care and pharmaceuticals, but have no financial or personal interests involved. I'm sure there are plenty of them out there, somewhere. And when we find them, why stop with drugs? Why not set up committees to determine the true worth of the other vital things that people in this country need each day - food, transportation, consumer goods? Surely this model can be extended; it all sounds so rational. I doubt if anything like it has ever been tried before, and it's certainly a lot better than the grubby business of deciding prices and values based on what people will pay for things (what do they know, anyway, compared to a panel of dispassionate experts?)

Enough. I should mention that when Prof. Light's earlier figure for drug expense came out that I had a brief correspondence with him, and I invited him to come to this site and try out his reasoning on people who develop drugs for a living. Communication seemed to dry up after that, I have to report. But that offer is still open. Reading his publications makes me think that he (and his co-authors) have never actually spoken with anyone who does this work or has any actual experience with it. Come on down, I say! We're real people, just like you. OK, we're more evil, fine. But otherwise. . .

Comments (74) + TrackBacks (0) | Category: "Me Too" Drugs | Business and Markets | Cancer | Drug Development | Drug Industry History | Drug Prices | The Central Nervous System | Why Everyone Loves Us


1. PorkPieHat on August 9, 2012 11:45 AM writes...

Whew, what a doozy. This got published in the British Medical Journal. Who's reviewing this sort of publication, anyway? How does this pass without the critical review that you just gave? Is Light not aware of the shrinking of the industry? Im sure my former industry colleagues now selling real estate would love to have a word with him. This is beyond ridiculous.

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2. InfMP on August 9, 2012 11:48 AM writes...


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3. Ashley on August 9, 2012 11:57 AM writes...

What a wonderful article - thank you.
Perhaps these issues wouldn't be so dire if the citizens of this country would stop thoughtlessly and (to their way of thinking) effortlessy popping pills and start dedicating themselves to disease prevention and healthy living

That would only apply to some conditions, not Alzheimer's and cancer of course

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4. Ashley on August 9, 2012 11:58 AM writes...

What a wonderful article - thank you.
Perhaps these issues wouldn't be so dire if the citizens of this country would stop thoughtlessly and (to their way of thinking) effortlessy popping pills and start dedicating themselves to disease prevention and healthy living

That would only apply to some conditions, not Alzheimer's and cancer of course

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5. Twelve on August 9, 2012 12:11 PM writes...

The smug idiots who published that garbage will soon be forgotten, but your reply will live on. This apologia is luminous with clarity - it should be a mandatory reference for everyone who wants to understand the business/science tensions intrinsic to modern, high-stakes drug discovery.

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6. Experienced Drug Developer on August 9, 2012 12:15 PM writes...

Well told, Derek. Don't apologize for your anger and emotion - those of us who have done this for any period of time know you are right.

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7. Anonymous on August 9, 2012 12:20 PM writes...

Does anyone have an insight into Donald Lights' angle here? Most folks do the "there is no climate change" baiting when there is an agenda to reap financial benefits. Does he make that much from books and interviews, etc. to justify killing his professional reputation like this? Are there interest groups that would profit greatly to advance such provocative nonsense? What are they?

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8. Hap on August 9, 2012 12:39 PM writes...

1) Why should the authors taint a beautiful theory with facts and logic?

2) People fight harder for ideas, sometimes, than money. Both the (lowball, silly) drug cost estimate and this article probably have the agenda of trying to get the money to make drug costs (and other health care costs) from drug companies, and the argument is a way for them to rationalize that means to themselves. The mechanisms would also promote a more centralized system, with presumably the government having more power and businesses having less. For more selfish reasons, their arguments might get them political connections and power with certain people and groups, and perhaps money.

There's also the possibility that it's just the academic (in both senses) study of drug discovery. "Why are battles in academia so vicious? Because the stakes are so low."

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9. smurf on August 9, 2012 1:13 PM writes...

Thanks - your angry posts are often the best!

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10. noko marie on August 9, 2012 1:22 PM writes...

Rock on, man, rock on.

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11. Prof. Light on August 9, 2012 1:46 PM writes...

Damn it.

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12. qetzal on August 9, 2012 2:00 PM writes...


It gets him attention.

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13. Pig Farmer on August 9, 2012 2:30 PM writes...

"Without patents new drugs are immediately open to generic competition, lowering prices, while at the same time innovators are rewarded quickly to innovate again"
Er, no.... without patents no-one would bother to develop new drugs in the first place, since they would be unlikely ever to recoup their investment.
Looks like the lights are out chez Donald Light.

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14. Hap on August 9, 2012 2:40 PM writes...

12: Why doesn't he just get a reality show then and be done with it? The Jersey Shore's not far away - the culture clash between academia and the Shore ought to be hilarious enough to get MTV interested, right?

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15. Larry on August 9, 2012 3:10 PM writes...

Here's a kind word for prizes. They make sense when the big costs are upgront and marginal cost (e.g., cost per pill) are low, as they are for most drugs and if the prize is large enough to call out more research $, as would likely be the case for e.g., new antibiotics.

The prize would be used to purchase (and place in the public domain) the related patents. The size of the prize (and criteria for winning) would be announced in advance and the developer would have the option to not sell. Prizewinners could be manufactured and sold globally at everyday low prices.

Drugs that didn't win the prize would be marketed as the developer chooses, i.e., as they are today.

The X-Prize worked brilliantly both for space flight and for self-driving cars. Don't throw this beautiful baby out with the leftie bathwater!

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16. petros on August 9, 2012 3:18 PM writes...

I can see why this got you going Derek even though I can't read the full article

I can't see how a sociologist knows much about the problems of drug discovery (see

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17. Patrick on August 9, 2012 3:29 PM writes...

@5 "The smug idiots who published that garbage will soon be forgotten, but your reply will live on."

I don't think it is a good idea to be so dismissive of them, not matter how wrong they are. They know the public is eager to hear the things they are telling them. Their views will be widely disseminated and parroted.

For example, the dubious claims made only a few days ago have already appeared in Wikipedia, one of the world's most widely read websites ( It will stay there influencing, directly or indirectly, millions of people unless more knowledgeable people like Derek's readers step in to do something about it.

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18. Prometheus on August 9, 2012 4:20 PM writes...

@17 Wise words - whatever we think about the content, this will be in tune with the beliefs of many, possibly the majority of Doctors. I personally find it disturbing that The British Medical Journal sees fit to publish this but it says all we need to know about the reputation of the Industry.
Sadly, that reputation is for the main part self-inflicted - consider how this article might appear in the context of the recent 3 billion dollar GSK settlement.

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19. Phil on August 9, 2012 4:26 PM writes...


Have you thought about responding to the article on the BMJ website?

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20. anon2 on August 9, 2012 5:53 PM writes...

Preaching to the converted.

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21. Chemjobber on August 9, 2012 6:07 PM writes...

@Petros (#16):

Wow, what a find.

"As one of the founding fellows of the Center for Bioethics, Professor Light has continued exploring issues of distributive justice. He has tried to broaden the call for universal access to health care to involve conservatives and people of faith. Why, for example, do most conservatives in every other industrialized country support universal access while American conservatives do not? What Biblical texts speak to this issue?"


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23. John on August 9, 2012 6:50 PM writes...

Always interesting to read articles written by people with a vested interest in a subject. There is a bit of missing the wood for the trees here. You can take down any argument point by point, using selected counter-narratives and claim victory.

The real question is:

Are the best health outcomes generated by (a) giving large amounts of money to centralized organizations such as pharma companies or univeristies to do research into drugs or by (b) giving the equivalent money to community health care to persue non-drug interventions?

This is the true test of the relevance of pharma (uni and corporate) as it exists today, and I would be interested to hear a less angry and more considered response to this.

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24. J. Galt on August 9, 2012 6:59 PM writes...

Lexchin and Light are neo-marxists. The wonderfully successful company once called Solyndra comes to mind. This top-down command economy approach is no more sustainable than the current industry model. They are simply replacing the current private sector MBA's with government officials.

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25. Andy on August 9, 2012 7:54 PM writes...

Look at a fabulously successful oncology drug: rituximab. In one indication registration trial Genentech enrolled 162 patients in the treatment arm and 160 patients in the standard-of-care arm for a total of 322 patients. We (not Genentech) ballpark that the costs to run a registration trial comes in around $150k per patient. That puts the cost of just getting the one registration study done at $48.3M, so in the ballpark of the $43M Lexchin/Light estimate. BUT, that assumes that all the other development costs (preclinical through phase 2) are zero, and it assumes that every drug is the total efficacy blockbuster that rituxan is, and it assumes that every drug that goes to a registration trial succeeds, clearly all fantasies of the highest order.

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26. dearieme on August 9, 2012 8:25 PM writes...

"Most folks do the "there is no climate change" baiting when there is an agenda to reap financial benefits": you got any evidence?

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27. matt on August 9, 2012 11:00 PM writes...

I agree with most everything you said, and agree the BMJ article writers seem to have missed the target.

Playing devil's advocate toward a slightly different target, however, there is less sympathy for high development costs the more one realizes how executives have placed exorbitant bets on horses lame in two legs. There was no excuse for gambling on Phase III for bapineuzumab, when Phase II missed its targets, and there were myriad ways to reduce the risk and firm up understanding of what was happening. None of that research would have cost as much as a Phase III (did Forbes say J&J was taking a $300-400 million writedown for that?!), and the Phase III contributed to almost none of the needed understanding. Similar bad gambling scorn could be directed at GSK and Sirtris, and has been, on these pages. And one wonders, do the billion dollar fines like GSK paid get charged as an advertising cost? If advertising still shows a profit, perhaps the fine needed to be higher.

None of this diminishes the hard work of the employees of these companies, who suffer and will pay the price for these bad bets. Tighten your belts, kids, looks like daddy spent all the income at the horse track again. (Or was it loose women offering the benefits of red wine?)

Not to ignore the chancy nature of even the best Phase III: there are certainly obscure side effects and interactions that can bite even when due diligence is done. That's all the more reason to do risk reduction, in the form of making sure your Phase II results are positive, of developing diagnostics to determine what effect your substance has (on both sides of the BBB for CNS targets, maybe for multiple forms of the substance if they exist), or in the absence of the latter putting further trials on hold until more post-mortem analyses come in. Flying blind worked in the past; it appears it is not paying off now.

It seems clear that executive compensation in the pharma industry needs adjustment. Just as in banking, there need to be clawback provisions on executive pay and bonuses, certainly (at a minimum) in the case of large fines like the recent GSK case. Put the whistleblower report chain directly in their inbox, and yank back pay and bonuses for up to ten years after they've left if legal shenanigans get charged to their watch.

That way, when Andrew Witty is saying "Whilst these originate in a different era for the company, they cannot and will not be ignored," someone can ask whether he has clawed back some of the executive pay that rewarded the misbehavior and if not, why not. At the very minimum, investors should demand this. Certainly GSK wouldn't cover the cost of the fine, but in truth the fine wouldn't need to be nearly as large if the executives responsible were actually getting punished. In Cold War terms, the more accurate the placement, the smaller the warhead needs to be. Less collateral damage is a huge bonus.

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28. MoMo on August 9, 2012 11:06 PM writes...

Do you think Light is eligible now for an IgNoble award? Wait! Those are for real articles!

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29. Barry Bunin on August 10, 2012 12:06 AM writes...

This has got to be the funniest, passionate rant on In The Pipeline to date. Obviously struck a nerve. I was laughing and thinking. Of course public markets are efficient. With the fall of the USSR, we all thought capitalism certainly trumped communism. Now China is showing some coordination can be efficient and effective.

It is interesting to think about what would be most efficient in terms of absolute separated competition and absolute open coordination in the drug discovery space. Perhaps there are areas where groups can compete and collaborate at the same time. Targets and ideas are a dime a dozen, how much is insight vs timing vs execution to get to market with a winner. What is the optimal balance between which areas can be pre-competitive while others remain competitive?

Neglected diseases would be one area for experimentation with models.

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30. Adam Jacobs on August 10, 2012 1:49 AM writes...

Wow, I am in awe. I don't think I've ever read such a thorough and well argued take-down of any article published in the BMJ (or maybe anywhere!) before.

There is one point, however, I think you haven't mentioned, which is highly pertinent here. I am very concerned about the effects of over-regulation on pharmaceutical development costs. Clinical trials are unbelievably heavily regulated: we can barely sneeze without having to follow an SOP for it and filling in a form to say which direction we sneezed in and signing it in triplicate.

While I appreciate the motivations behind regulation of the pharmaceutical industry are entirely well-meaning and designed to promote patient safety, I cannot believe that the current status of regulation is anywhere near cost effective. In fact I recently went to a talk given by a regulator about a particular new regulation, and I asked him in the Q&A session whether any cost-benefit analysis of the regulation had been done. He looked surprised by the question and said that it hadn't.

It is certainly a problem that the costs of clinical development have been rising inexorably, and I suspect over-regulation is a huge part of that. We really need a more imaginative way of ensuring patient safety without the multi-billion pound price tag that the current system has. I'm not necessarily suggesting we do away with regulation altogether (although that could actually be worth considering, if coupled with something like unlimited personal liability for pharma company executives if patients are harmed in a reasonably-preventable manner) but I really do think the current system is way too complex and not fit for purpose.

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31. Billy on August 10, 2012 4:49 AM writes...

I don't want to comment on the content of Light and Lexchin's article, or your considered reply Derek. Just one point which as a research scientist and publisher in peer reviewed journals should tell you this house of cards never ought to have been built - the references.

Several of the key references to the authors arguaments come from their own literature - I said this in the past so it must be true! The one that really grabs me though and means the paper it is printed on will soon be making it's way to the trash can...

"The 1.3% of revenues devoted to discovering new molecules (Ref 23) compares with the 25% that an independent analysis estimates is spent on promotion,(Ref 35)..."

This "independant analysis - reference 35" is written by (of course) Joel Lexchin - one of the authors claiming it to be independant!

I rest my case, and the paper plane is well on its way.

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32. MK on August 10, 2012 7:02 AM writes...

@23: what do you mean by non-drug interventions? Reiki, voodoo or urinotherapy?

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