So A New Drug Takes $1 Billion?

By Louis Garguilo, Chief Editor, Outsourced Pharma

First, let’s consider toning down the billion-dollar baying; it’s become a confused expression of sardonic triumph: “Well, they say it takes a billion dollars to get a new drug nowadays! Harrumph!”

In 2015, is that really a lot of money to: drive the sciences of new and often more complex medicines that improve and save lives; employ thousands of highly skilled workers in the fight against diseases; and yes, keep businesses profitable so it can all continue?

Inflation calculations indicate that $1 billion would be equivalent in value to roughly half that – $500 million – in 1990 dollars. Actually, some research suggests that 1990 figure is in range with actual new drug development and commercialization costs back then.  

The billion-dollar mark is important for this reason: It directly feeds the growing homily that drug makers extract too high a price for new drugs. So perhaps some comparisons can help us ascertain the value of a billion dollars today. Here are items we could purchase collectively for that:

• Jessica Alba’s The Honest Co. ($170 vegan-leather diaper bags)
• A shot at becoming the president of the U.S. (but who would want that?)
• A CEO (in the finance industry)
• All the tickets to the movie The Avengers
• A Yacht

The list goes on (superciliously). It kind of makes one think spending the billion on a therapy for cancer – or cure for Hepatitis C – is indeed money well spent (at current publicized pricing).

Brian Overstreet, CEO, AdverseEvents

Brian Overstreet is devoted to helping us find that out, and in so doing also improving patient safety. He’s founder and CEO of AdverseEvents, which gathers and analyzes data regarding the total costs and overall safety of adverse drug reactions (ADRs) associated with FDA-approved drugs. We wrote about this specifically in an earlier article.

What also struck me in my discussion with Overstreet are his thoughts on our system of clinical trials. He sees this area as the real driver to the billion-dollar mark. While I mainly leave the subject of clinical trials to sister-publication Clinical Leader, I’m certain Outsourced Pharma readers will benefit from Overstreet’s analysis.

What’s In A Clinical Trial?

That clinical trials do not derive a value commensurate to the years of development and millions of dollars they extract is a growing theme. For example, The 21^st Century Cures Act that unanimously passed the U.S. House Energy and Commerce Committee is designed to streamline trials.

Overstreet has agreed since at least the early 2000s. That’s when, while at Sagient Research (acquired by Informa), he helped create an online research-product tracking the FDA approval process from preclinical to stage three. “We analyzed clinical trial reports, handicapped approvals, tracked stock prices, and built long-term financial models regarding sales, the stock price and other financial outcomes if drugs got approved.

“We became proficient in clinical data for health care,” continues Overstreet, “but in analyzing that data we realized although you may have proven efficacy, there remained a huge risk to patients, and to the economics of the company and entire healthcare industry.”

Overstreet says too much weight is assigned to clinical trials and too little to what develops post-commercialization. In a roundabout way, this is what Express Scripts is saying to Pharma: Some drug prices don’t correlate with the actual financial value derived from real-world impact on the healthcare system; they now want to measure that impact. It appears all players in health care are more-or-less coming to agreement on the need for downstream value measurements, and parenthetically, Express Scripts may be surprised at what they find (e.g., current Hepatitis C drugs are well worth treatment prices).

But this doesn’t address the initial financial burdens of trials. Heading in that direction, though, are the FDA’s Priority Review, Breakthrough Therapy, Accelerated Approval and Fast Track authorization, all attempts to streamline the time – and thus expense – to get to market.

The real issue, according to Overstreet, is that because clinical trials target a minor subset of the population, uniquely chosen for their homogeneous qualities to demonstrate some results of efficacy and safety, they do not in fact provide information commensurate with the emphasis currently placed on them. “It’s only after spending your billion dollars and ten years testing in limited clinical trials,” says Overstreet, “that you then get to understand if you really have a blockbuster, or a drug that will have label changes that drop anticipated prescriptions in half.”

“Let’s expedite the process to get drugs to market,” he says, “and then diligently track post-market surveillance in real-time, because that’s the ultimate clinical trial. The real-world, post-market data from millions of patients matters much more than the value of the results we ascribe to 3,000 people in a clinical trial. I am not saying we should forsake stage three altogether, but there has to be a way to get a drug to market quicker and less expensively.”

The process of change will not be easy. Even if the 21^st Century Cures Act and FDA actions are successful, Overstreet is concerned the healthcare system is not yet properly set up to adequately measure and then act upon the real-world safety data that would emerge once drugs come to market. AdverseEvents is one of the parties discussing with government agencies how best to monitor and use the data to inform decision-making at all levels of health care.

In theory at least, some of the time and money saved in getting to the market would be invested to track real-world costs, safety, and efficacy in real-time.  “I understand some may think this strategy would put patients at risk,” Overstreet says, “but we’re deluding ourselves if we think the current clinical trial process isn’t already doing that.”

A Solution In And Out Of The Clinic?

Overstreet’s position seems to address the various sides of the clinical trial discussion, and binds this front-end activity of the billion-dollar debate to the subsequent measurement of the real economic value, and safety, of new drugs.

First, it addresses those concerned that the expediting of trial-to-commercialization will negatively impact patient safety, including organizations such as the National Center for Health Research. Overstreet wants a new system precisely because the current one over-relies on clinical data that does not translate to post-commercialization patient safety or other realities; more will be done to systematically scrutinize real-world impact once drugs are widely dispensed. Second, it allows treatments to get to patients more quickly, a cry of patients and others that continues to grow. Also, with an accepted, expedited process and better safety monitoring, drug-makers would be less reticent to make exploratory drugs available to patients, particularly for orphan diseases where there is little or no current therapy. Third, the manifest mantra for measurement is implemented within a system of safety and efficacy that attaches real economic value throughout the entire healthcare system. Finally, all this might move us away from current arbitrary sentiments around the billion-dollar mark.