Cost to Bring a Drug to Market - Article Example

Name: Course: Subject: Supervisor: Date of submission: Drug Cost Review Introduction Carter & Koehn, 2009, Since time immemorial, there has been complexity in development and drug discovery. In addition, there is highly rewarding endeavor which is quite promising, full of risks and high octane. Pharmaceutical companies spend good cash going through the tough process to have drugs on board. Some companies spend about $802 million to have a single drug face the market. The production cost of a single drug calls for great form of investment in terms of: i. Expertise in technology, ii. Human resources iii. Capital. iv. Before a new drug faces the market and be assured for human consumption it has to adhere to the standards of manufacturing and pass the test of regulations. The above four reasons, contribute towards the rising cost of development and research (R&D) of a New Drug Candidate or (NDE- New Drug Chemical Entities). However, this trend leaves a question about who is liable for the payment of the increase in the R&D cost for a new pharmaceutical. Having this question this article, therefore, laid three objectives: i. To describe the progressive change in the R&D pharmaceutical environment and the R&D processes effect. ii. To explore information and provide a detailed in regard to NCEs development and discovery of drug. iii. To assess the new drug regarding its societal value To achieve the above objectives, this article basically focuses on the large pharmaceutical market of US. This is because US houses sufficient treasure of information regarding drug discovery and marketing. In addition, other pharmaceutical markets do face the same issues just as US. 1. R&D change in pharmaceutical environment i. New drug development trends The rising health care needs among the population calls for development of drug therapy to actually respond to the demand. The drug researchers and expertise do respond to the manufacturing as per technology and other resources strength Dickson & Gagnon, 2009. Current trends aim at achieving the goal of preventing, treating and maintaining chronic illnesses at bay. Among these disease keenly looked at are the diseases associated with the elderly population. E.g. stroke, cancer, renal and cardiovascular disease (CVD). Among this group of terminal illnesses CVD is the leading and biggest killer Dickson & Gagnon, 2009. End of 2004, saw the treatment of CVD alone in US exceed $368 million. CVD also is the leading killer as compared to other causes of death among the human populations DiMasi, 2001. The number of persons who die from CVD increases annually. All health care systems look into improving the drugs. This calls for better-quality and unceasing research and technology NB: without research and technological upgrading the pharmaceutical field will have had no advancement and hence stagnated treatment. The health sector has new drugs in place e.g. thalidomide. In addition, some old drugs like digoxin are still in use. However, the drug in use currently has seen 20 years of progress. A substantial improvements is seen in the classes of long-established drugs e.g. the antipsychotics and atypical. Other new classes which have come up e.g. the statins drugs do offer great milestone. Alzheimer’s is among the disease that went for years without medications. Nevertheless, today it has treatment and prevention. 1980s saw the development of HIV/AIDS. To date, research is being done to find its curative measure. ii. Process of a new drug approval Just like other countries, US have a formal system that approves marketing in terms of advertisement or promotion in reference to new drug. US standards of drug approval are just like in other countries. However, the progression may differ from a nation to the other Dickson & Gagnon, 2009. On the other hand, advertisements in conjunction to other logistics that are required to ensure a new drug reaches the target client; adds weight to the consumer’s cost. This is because; firms will rate their sales to get returns on their expenses during production and marketing Dickson & Gagnon, 2009. Figure 1 below show drug approval process. From figure 1, there is clear indication as to why drug approval is time consuming and the process is complex. In 1960 the average approval stretch for a new drug was 7.9 years. This time had mounted to 12.8 years by the time the clock ticked 1990s see figure 2. The reason for this time increment can be counted from clinical trial period increase i.e. New Drug Application (NDA) submission takes time for a new drug to be filed for investigation. The reasons for this fact are: a) The specifity of a particular disease; the investigation is being carried on (DiMasi, 2001). b) Clinical trials in phase II and III has risen by 118% and 51% procedures on average per client respectively (DiMasi, 2001). c) The increased challenges of getting and recruiting subjects to carry on clinical trials Dickson & Gagnon, 2009. d) Currently, the clinical trials require more study subjects Dickson & Gagnon, 2009. e) There is increase in regulatory requirements Dickson & Gagnon, 2009. f) Data collected form different sources is supposed to be converged to a minimum of two points. Previously, this time was about 10-20 years for a new drug development. This time averages 9 to 12 years. In the last 20 years, this duration has shot up following the requirements of regulatory, complexity and lengthened clinical trials needed for chronic illness Dickson & Gagnon, 2009. g) iii. Risk component DiMasi, 2001, There is an increased risk in the pharmaceutical companies. This results from: a) The Economic Uncertainty b) Regulatory Uncertainty and c) Scientific Uncertainty. Regulatory and scientific risks contribute to the lengthened time and economic risk. The challenge with long scientific development time means that; a competitor is likely to discover a certain drug first. The unfortunate innovator therefore ends up being a loser. The time required for innovative drug approval also may result to regulatory uncertainty. As a result, due to lack of clarity of market approval of a new drug there is product delay in marketing. How to reduce these risks Pharmaceutical corporations are now realizing the need to work only on promising drugs and discontinue less assuring ones. To achieve this, they look at how cost effective a drug is going to be Dickson & Gagnon, 2009. Another measure is first reviewing how the drugs entering R&D get approved for marketing. E.g. anti-infective drugs has had highest approval rate of 28.1% since 1983 while CNS (Central Nervous System) has had the lowest rate of 14.5%. This show that new drug development is full of risk since the difference of highly rated and lowest rated drug is quite minimal Dickson & Gagnon, 2009. Summary on risks Business environment risk results from a prolonged period of discovery and approval of a NDA. There is lack of product sales predictability and compounds that enter clinical testing do pose a great threat of failure. The decision put in place to carry funding on clinical trials poster the economic success. Finally, the drug as it moves through the clinical phases successfully there is increase in stakes. See figure 3 below iv. Intellectual property protection Almost every nation does have a specific intellectual property protection Dickson & Gagnon, 2009, Intellectual property protection is a patent law that poses a spirit of domination on the innovator for duration of time. Usually, this period habitually is 20 years for pharmaceuticals firm sponsors. The reason is because cost of innovation is high. The cost of innovation is quite an investment comparing it to duplication which is quite a simple technique. Today, the patent life for a NDAs approval averages 11.4 years. v. Therapeutic competition Dickson & Gagnon, 2009, Patent life currently does no have a significant monopoly. This is because there is a high increase in the competition in the market for new pharmaceuticals. This also arises from the fact that different companies might be working together to come up with a drug of the same action. However, the drug may not contain equal ingredients. E.g. an antidepressant fluoxetine (Eli Lilly, Prozac) approved 1987. It was the first therapeutic remedy in this group in the SSRI (Selective Serotonin Reuptake Inhibitor). Sertraline (Zoloft, Pfizer) was the next product. However, it only received market approval four years down the line although serves the same purpose as Prozac. In COX2 inhibitors class Rofecoxib (Merck, Vioxx) and Celecoxib (Pfizer, Celebrex) approved May 1999 and December 1998 respectively. These two drugs were the first to get approval in this category within a five month span. vi. Generic competition The Hatch-Waxman Act 1984 enhanced the selling generic products in US. The main aim of this act was to: i. Following patent expiration, reduce barriers towards generic drug entry as well as raise the pharmaceuticals competition price. ii. Following the patent erosion of drugs during regulatory review and clinical trials, generic products aimed at restoring this setback. 2. New Drug R&D Cost DiMasi, 2001, Clinical trials and animal testing have increased. These procedures are counted for the increased cost in the R&D of pharmaceuticals. Table 1 below show some researches made in regard to the drug R&D cost by different expertise. To day, R&D estimates in new drug is $802 million US money. Dickson & Gagnon, 2009, Processes of drug developments if improved, is by far likely to impact positively in the drug field. This can be achieved by: a) Bringing down Clinical phase lengths by 25% this will see approximate $129 million (16%) costs reduced on the gross capital in developing a drug. b) Success rate upgraded to 33.3% from 21.5%. A single NCE can be saved on capitalization by $221 3. The R&D Investment of Pharmaceutical on societal value Figure 4 show how societal value and R&D are related. From the figure: a) pharmaceutical, regulation or scientific research disturbance adversely affects the social values Dickson & Gagnon, 2009. b) Disruption of sales funding to R&D lessens social returns Dickson & Gagnon, 2009 c) Multiple pathways are the only means towards improving societal benefits. Such pathways include: drug use improvement, creating regulatory environment which is favorable and improve development process which are efficient Dickson & Gagnon, 2009 i. New drug value and cost Dickson & Gagnon, 2009 and DiMasi, 2001 research show that: a) Medical expenditure has been inflating at the rate of 4-5% annually per recipient. b) GDP on the other hand indicates to increase at 1.2% rate annually. c) Use of new innovation and technology in pharmaceutical has a positive change in life expectancy of person. NB1: Increase in life time of a person does not really mean reduced cost. E.g. antibiotics use is known to lower disease and hence postpone death of the recipient. On the other hand, among the elderly the risk of developing cancer and CVD as well as renal disease increase; this is even expensive to treat. NB2. The R&D cost need to be looked into because; no matter the cost increment of drugs the pharmaceutical world can not be advocated to go back the ages when sulfonamides and mercurial diuretics were in use. Conclusion Carter & Koehn, 2009, Dickson & Gagnon, 2009, NCEs discovery and development is unusual this is because only the private sector finances this process. This means that the pharmaceutical research needs to generate sufficient funds or returns from the investment. This will ensure continuity cost cover for NCEs subsequent developments. Pharmaceutical industry is not viewed as a consumer product unlike other private business sectors. This fact solely gives hope that drug therapies might go down and be a bit affordable. However, government sees investing on new drug discovery as a threat. On the other hand, client view innovation positively. Increased government role, new therapy desire by the public and the cost increment in drug development do question on the new drug development cost. These principals call upon efficient resource utilization Dickson & Gagnon, 2009. References Carter G.T. & Koehn F.E. Rediscovering natural products as a source of new drugs, USA: Wyeth research, 2009 DiMasi JA. “Risks in new drug development: approval success rates for investigational drugs”. Clinical pharmacology and therapeutics journal 69: 297-307, 2001 Dickson M.. & Gagnon J.P. The cost of new drug discovery and development, USA: South Carolina; 2009 Read More

The health sector has new drugs in place e.g. thalidomide. In addition, some old drugs like digoxin are still in use. However, the drug in use currently has seen 20 years of progress. A substantial improvements is seen in the classes of long-established drugs e.g. the antipsychotics and atypical. Other new classes which have come up e.g. the statins drugs do offer great milestone. Alzheimer’s is among the disease that went for years without medications. Nevertheless, today it has treatment and prevention.

1980s saw the development of HIV/AIDS. To date, research is being done to find its curative measure. ii. Process of a new drug approval Just like other countries, US have a formal system that approves marketing in terms of advertisement or promotion in reference to new drug. US standards of drug approval are just like in other countries. However, the progression may differ from a nation to the other Dickson & Gagnon, 2009. On the other hand, advertisements in conjunction to other logistics that are required to ensure a new drug reaches the target client; adds weight to the consumer’s cost.

This is because; firms will rate their sales to get returns on their expenses during production and marketing Dickson & Gagnon, 2009. Figure 1 below show drug approval process. From figure 1, there is clear indication as to why drug approval is time consuming and the process is complex. In 1960 the average approval stretch for a new drug was 7.9 years. This time had mounted to 12.8 years by the time the clock ticked 1990s see figure 2. The reason for this time increment can be counted from clinical trial period increase i.e. New Drug Application (NDA) submission takes time for a new drug to be filed for investigation.

The reasons for this fact are: a) The specifity of a particular disease; the investigation is being carried on (DiMasi, 2001). b) Clinical trials in phase II and III has risen by 118% and 51% procedures on average per client respectively (DiMasi, 2001). c) The increased challenges of getting and recruiting subjects to carry on clinical trials Dickson & Gagnon, 2009. d) Currently, the clinical trials require more study subjects Dickson & Gagnon, 2009. e) There is increase in regulatory requirements Dickson & Gagnon, 2009. f) Data collected form different sources is supposed to be converged to a minimum of two points.

Previously, this time was about 10-20 years for a new drug development. This time averages 9 to 12 years. In the last 20 years, this duration has shot up following the requirements of regulatory, complexity and lengthened clinical trials needed for chronic illness Dickson & Gagnon, 2009. g) iii. Risk component DiMasi, 2001, There is an increased risk in the pharmaceutical companies. This results from: a) The Economic Uncertainty b) Regulatory Uncertainty and c) Scientific Uncertainty.

Regulatory and scientific risks contribute to the lengthened time and economic risk. The challenge with long scientific development time means that; a competitor is likely to discover a certain drug first. The unfortunate innovator therefore ends up being a loser. The time required for innovative drug approval also may result to regulatory uncertainty. As a result, due to lack of clarity of market approval of a new drug there is product delay in marketing. How to reduce these risks Pharmaceutical corporations are now realizing the need to work only on promising drugs and discontinue less assuring ones.

To achieve this, they look at how cost effective a drug is going to be Dickson & Gagnon, 2009. Another measure is first reviewing how the drugs entering R&D get approved for marketing. E.g. anti-infective drugs has had highest approval rate of 28.1% since 1983 while CNS (Central Nervous System) has had the lowest rate of 14.5%. This show that new drug development is full of risk since the difference of highly rated and lowest rated drug is quite minimal Dickson & Gagnon, 2009. Summary on risks Business environment risk results from a prolonged period of discovery and approval of a NDA.

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