Charles Hooper Archives

An FDA advisory committee voted that Gilead's Truvada is a safe and effective way to prevent HIV infections in high-risk individuals. The FDA will weigh the advisory committee's vote and is expected to make a final decision by June 15. If approved, Truvada will be the first drug to protect healthy people from acquiring HIV infections through sexual activity in what is called pre-exposure prophylaxis (PrEP). For instance, if one sexual partner has HIV but the other doesn't, the healthy partner can take Truvada every day to avoid becoming infected with the AIDS virus.

What is interesting is how many people argued against using Truvada for PrEP. For the most part, the logic of the critics was flawed. Consider the following analogy:

Many people eat hamburgers for lunch. Health advocates say these people should really be eating steamed vegetables. A new, healthier hamburger comes along (perhaps one that is made of lower fat beef or maybe half beef and half grains). Will these health advocates embrace this healthier hamburger? Probably not; they still want people to eat steamed vegetables for lunch.

What logical mistake are they committing? As David Henderson and I point out in our book, Making Great Decisions in Business and Life, they shouldn't compare reality with fantasy because fantasy is impossible. The only choice we have is between imperfect but feasible alternatives.

In an earlier posting, I described how India is trying to become a free rider, gaining the benefits of drug development without having to share in the costs.

The Indian government violated the intellectual property rights of Bayer and Onyx by breaking Nexavar's patent and giving a new license to Natco Pharma, an Indian company, to manufacture and market a generic version of Nexavar in India.

Roche has been paying close attention and sees the writing on the wall. Roche just announced that it would launch rebranded versions of Herceptin and MabThera/Rituxan in India at lower prices. Roche will, of course, sell a higher volume of these products at the lower price, but it is clear that Roche primarily aims to avoid "compulsory licenses." Facing the prospect of earning nothing or something, Roche has chosen the latter.

The Indian government was upset at Bayer and Onyx for not supplying Nexavar (sorafenib) in India at a "reasonably affordable price." India was also miffed that Nexavar was imported into India, rather than being manufactured there. Instead of just stewing, India took action. The government broke Nexavar's patent with a "compulsory license" and gave a new license to Natco Pharma, an Indian company, to manufacture and market a generic version of Nexavar in India until Bayer's patent expires in 2021.

What's really going on here?

Many governments have monopsony power when buying pharmaceuticals--that is, monopoly power on the buyer's side--and they use this power to get good deals. These governments are, in effect, saying that if they can't buy a medicine cheaply, their citizens won't have access to it. This ultimatum has two aspects. One, if the price is "too high," the pharmaceutical company won't sell a single bottle in that country. And two, if the government feels its citizens really need that medicine, it will break the drug company's patent. This threatened violation of intellectual property rights can bring a seemingly powerful drug company into quick compliance. When faced with a choice between making nothing or something, most drug companies choose the latter.

It is in everyone's interest to give drug companies an adequate incentive to invest in new drugs. To do so, drug companies must be able to price their drugs well above production costs to a large segment of customers to cover the expense of R&D. However, each individual government's narrow self-interest is to demand a low price on drugs--closer to the manufacturing cost--and let people in other countries pay the high prices that generate the return on R&D investments. Each government, in other words, has an incentive to be a free rider. And that's what many governments, like India, are doing.

Stem cells herald great medical advances and will certainly be one of the preeminent stories of this century. You have probably heard how the government has limited funding for stem cell research. For instance, the March 2012 edition of Popular Science reports that, "stem-cell research has been stalled because of anti-abortion activists' objection to deriving the cells from fetuses." You may even think that stem cell research has stopped altogether. You would be mistaken.

Hardly a day goes by when I don't read about exciting stem cell advances. Just today I read two articles: "Baxter begins Phase III trial of stem cell treatment for heart disease," and "Study: Dental stem cells can form liver cells." Yesterday I read how, "Ovarian stem cells may be capable of making new eggs."

Research doesn't seem stalled at all. What gives?

First, the federal government might have slowed stem cell research, but it certainly hasn't stopped it altogether. Second, even if the federal government stopped paying for any stem cell research, state governments, like California, pharmaceutical and biotech companies, and universities would still be doing research. The federal government gets disproportionate attention, but it isn't the only game in town. Third, many "news" stories consist not of unvarnished reporting but of arguments intended to persuade. Judging by my conversations with people, these articles have persuaded many. As a downside, they have helped create a pervasively pessimistic "the sky is falling" attitude among those who follow the news, but don't bother to dig deeper. Happily, almost every day brings exciting news from the stem cell front.

Italian economist Vilfredo Pareto, born in 1848, is widely known for his law of income distribution. He also studied economic efficiency and developed the concept of a Pareto improvement: changes can be made so that at least one person is better off and no one is worse off. A Pareto optimal situation means that no further improvements can be made.

Let's assume that everyone must eat dinner at 6:00 PM. I actually prefer to eat dinner at 6:00 but you prefer 7:00. A Pareto improvement would occur if I was allowed to eat dinner at 6:00--I'm are no worse off than before--and you could eat at 7:00, meaning you're better off.

Now consider Andrew von Eschenbach's proposal in The Wall Street Journal in which he proposed that, "[i]nstead, after proof of concept and safety testing, the product could be approved for marketing with every eligible patient entered in a registry so the company and the FDA can establish efficacy through post-market studies."

What would this do? The only difference, other than increasing the number of approved drugs, which would benefit everyone, would be the faster approval of most medicines and less information about a medicine right when it launches--remember it launched early--because most of the efficacy data would come later.

In economic terms, this is a Pareto improvement over our current situation. The more conservative patient, say Patient C, could wait for the full efficacy data. The bolder patient, say Patient B, could try new drugs sooner and actually help create efficacy data. Both parties would be better off, or at least equally well off, as they are today. Patient C, who would wait for the same amount of efficacy data as before, would be no worse off. Patient B, who would have more drugs to choose from and would have access to drugs sooner, would be better off.

Such a solution is a Pareto improvement, in that everyone is at least as satisfied as under the current system. Cautious patients would still get the assurance of reams of efficacy data, while patients who don't want to wait, wouldn't have to.

Andrew von Eschenbach wrote an op-ed piece for The Wall Street Journal in which he proposed that, "[i]nstead, after proof of concept and safety testing, the product could be approved for marketing with every eligible patient entered in a registry so the company and the FDA can establish efficacy through postmarket studies."

John LaMattina expressed disappoint in von Eschenbach's position via a Forbes article, laying out a few criticisms. I will address just one here. LaMattina stated that physicians, patients, and payers must be convinced, beforehand, that the risk of taking a new medicine is worth the potential benefit. I agree. He went on to say that if von Eschenbach gets his way, "[t]he doctor might just as well prescribe a placebo," implying that so little efficacy data would be available that new products would be indistinguishable from placebos. I disagree.

Von Eschenbach is not pushing placebos and is not against efficacy data in general; he simply wants to move most of the expensive and lengthy process of proving efficacy from before the product is approved until after. There will still be some proof of efficacy before launch--at least from the proof of concept and safety testing--but the decision on how much more proof of efficacy would be needed before launch would be the responsibility of the pharmaceutical companies, not a government agency.

Question: How do drug companies make internal go/no development decisions? Answer: With data on safety and efficacy. I guarantee that a new drug being developed for pain, will, at an early stage, have some data showing pain relief.

The last few days have seen a storm of outrage because the Patient Protection and Affordable Care Act (AKA Obamacare) will require all health insurance plans to cover contraceptive and sterilization methods, including the morning-after pill. Of course, Catholics and those who support the First Amendment's religious protections rallied against this new mandate.

Ignore for a moment the religious implications of this mandate and instead focus on the logic used by President Obama and three U.S. senators--Shaheen, Boxer, and Murray--in its defense. They argue that insurers "should" provide birth control for free because contraception actually reduces overall costs for insurers by preventing expensive pregnancies. They quote a statistic that it costs about 15% more for employers to exclude birth-control coverage.

These politicians are saying that profit-seeking organizations have missed an area to reduce costs and therefore increase profits. And so the government should force these insurers to take such cost-saving steps. This logic assumes:

(1) These politicians know more about the insurance business than the insurance companies themselves.
(2) The insurance companies are either stupid or biased against birth control to the extent that they are willing to forgo additional profits.
(3) Force, through government mandates, is a good method to enlighten the insurance companies and to achieve the optimal outcome.

I can't imagine how point #1 would be true. Regarding point #2, I make my business consulting with companies and, yes, there are some companies and individuals that make conceptual mistakes. However, marketplace pressures eventually steer companies toward good decisions. If not, these companies eventually lose to better managed companies. Point #3 could justify a whole shelf of books just by itself. Suffice it to say that government mandates bring with them a slew of unpleasant baggage that needs to be factored into the equation.

Imagine there is no regulatory agency saying which drugs are efficacious, and consequently, which drugs could be marketed. (Assume that safety is still regulated.) Pharmaceutical companies would develop and manufacturer medicines and sell them to patients. If the patient felt better or got better, he/she would keep taking that medicine. If the patient didn't get better, had a tolerability issue, or didn't see the value, he/she would stop taking that medicine.

The problem with this, as we all know, is the placebo effect. The patient's perceived net benefit is equal to the real benefit plus the placebo effect. There could be a real effect like reduced blood pressure or increased CD4 cell counts--or there could be none at all. The placebo effect could convince the patient that there's a real benefit even when there is none.

The FDA's approach to get around this problem is to separate the real effect from the placebo effect via clinical trials with large numbers of patients to determine whether the medicine is really working or not. Sometimes this divide-and-conquer solution isn't possible, or even necessary, when the entire patient experience is holistic and subjective.

Consider pain. In clinical trials, the visual analog scale is used frequently to assess a patient's perceived pain level. This is merely an objective measurement of nothing other than a subjective assessment. A patient's assessment of pain is highly individualized and situationally dependent.

Analogies can be powerful tools to help us think and act clearly. However, we need to ensure that our analogies are faithful, or they may do more harm than good. Consider the following statement by the FDA's Dr. Steven Hirschfeld in 2002.

"We don't want to put a weapon into the hands of a soldier until it has been tested, and tested under stress." He was comparing weapons to medicines, both of which have benefits and risks, and was saying that both weapons and drugs should be tested to ensure safety before they are used.

If someone is shooting at a target, his/her weapon had better be pretty safe. Since target practice is just a pastime, the benefit is relatively low and so should the risk.

If someone is in a dire situation in the middle of a war or crime scene and death is imminent, the benefit of a functioning weapon is substantially higher and therefore the acceptable risk can be higher, too.

Consider Cristy Kessler, a University of Hawaii associate professor who was suffering from three rare autoimmune diseases and was "preparing to die." She received an unapproved stem cell transplant in Turkey (i.e., an "untested weapon"). We can think of her as being in the middle of a bloody military battle. What is the value to her of safely getting off the battlefield? Incredibly high. And since she was in mortal danger, it didn't matter much whether her own defective weapon or her enemy's weapon delivered the final, fatal blow.

The real issue is the relative risks. Are we, as Americans in 2012, facing a target shooting situation or a battlefield situation? It's a battlefield--but even worse. One single disease, lung cancer, kills more Americans each year than the combined U.S. casualties from battle in the Revolutionary War, the War of 1812, the Mexican War, the Spanish-American War, World War I, the Korean War, the Vietnam War, and the Persian Gulf War.

The issue of bias was in the news again this week as the Wall Street Journal reported that "three of the advisers [at an advisory committee meeting to discuss four Bayer birth control pills] have had ties to Bayer, serving as consultants, speakers or researchers."

Bias can be a hindrance to good decision-making. Unfortunately, most of us have some biases, whether they are religious, political, philosophical, nepotistic, analytical, or economic.

Religious bias can affect one's views on contraceptives, the termination of pregnancy, and "pulling the plug" on seriously ill patients. Political bias arises when the decision maker tries to foster a favorable image or to support a particular party or politician. Philosophical bias can affect how we think about who should be treated, or whether certain conditions should be treated at all. Or, perhaps, whether drug companies should be allowed to profit by treating illness. Or, perhaps, whether actions are best taken through public or private organizations. Nepotism means giving advantages to friends or relatives. Individuals can be analytically biased by, for instance, confusing low-risk and high-risk situations or by lacking the right analytical tools to make good decisions. Economic bias is the most common target and was the subject of the Wall Street Journal article referenced above. It arises when a person can profit from a role as a supposedly impartial judge.

If the FDA was serious about bias, it would consider all kinds of bias--religious, political, philosophical, nepotistic, analytical, and economic--and set up systems whereby the expertise of experts could still be extracted while the effects of their biases was minimized.

"A bias recognized is a bias sterilized." -- Benjamin Haydon, British painter and writer

One of the provisions of the Patient Protection and Affordable Care Act, AKA Obamacare, is "free" preventive care. (Fact check: This care still costs money, but is paid for by someone else.) The thought is a good one, to pay a little now to avoid a larger payment later. (Fact check: The health care data don't support this assertion.)

The same logic, than an ounce of prevention is worth a pound of cure, can also be applied to the administration of health insurance. It should be self-evident that insurance companies don't spend money on administration just to waste resources. One reason insurance companies spend money on administration is to prevent fraud and abuse. Contrast this with Medicare. And we shouldn't forget that Medicare is the primary factor driving U.S. government debt to a percentage of GDP that will, in 15 short years, equal Greece's disastrous level today. Anyway, Medicare's apparent administrative costs are only about 2 percent, compared to 10-15 percent for private insurers. (Fact check: Medicare's own data show that when all true costs are included, its administrative expenses per life covered are actually higher than those for private insurers.)

What is important here is that health insurance organizations, be they Medicare or Humana, need to decide how much to pay upfront to prevent erroneous and fraudulent claims. If that amount is close to zero, as it is with Medicare, fraud and abuse will be rampant. By the government's own estimate, Medicare makes $50 billion in bad payments each year.

In what economists refer to as an unintended consequence, Obamacare's rule stating that health insurers must pay 85 percent or more of premiums on health care--leaving only 15 percent for administrative costs, marketing, and profits--may actually increase costs by limiting the ability of health insurers to catch and prevent erroneous and fraudulent claims. Pay me now or pay me later.

Recently it has become common in my consulting practice for one of my clients to say, "I can't believe that so-and-so wasn't a member of that recent FDA advisory committee." So-and-so being a renowned expert in the field. The reason for this person's absence was his or her ties to the pharmaceutical industry coupled with the FDA's emphasis on preventing potential conflicts of interest in advisory committees.

The FDA is supposedly a scientific organization that makes decisions based on empirical data. A drug company can't simply approach the FDA and say, "Theoretically, this should work," and expect FDA approval for a new drug. The FDA wants to see empirical evidence. Unfortunately, the FDA applies this standard to other groups, like drug companies, but not to itself. When it comes to potential conflicts of interest among advisory committee members, the FDA has simply rounded up the usual suspects and declared them guilty without so much as a trial. Why would the FDA need empirical evidence when the problems with conflicts of interest are so obvious?

Well, I do happen to have some empirical evidence in this arena and it comes from Sidney Wolfe, one of the pharmaceutical industry's most vehement critics. David R. Henderson and I wrote an article about it in early 2009.

In a 2006 study to look at potential conflicts of interest, where outside FDA advisors had ties to industry, Wolfe and four other authors published an article in the Journal of the American Medical Association that drew on 76 product-specific meetings of FDA advisory committees that involved yes or no votes on individual drugs.

There's an interesting discussion of prostate specific antigen (PSA) tests in the latest UC Berkeley Wellness Letter. The article critiques the U.S. Preventive Services Task Force's recommendation in October that all men skip PSA tests for prostate cancer screening. The Task Force had never actually recommended PSA screening and was prepared to recommend against it three years ago, but was afraid of the backlash.

The article clearly lays out the strengths and weaknesses of the PSA test. In an editorial postscript, the chairman of the editorial board admits that the male members of the board are split about future testing. "Two won't, several are considering stopping, while the rest will continue to be tested, though with some ambivalence."

Most medicine is ambiguous and the current PSA discussion merely underscores that fact. Even the informed editorial board of Wellness Letter is split on what to do. The final recommendation in the article is: "The decision is a personal one, and men should discuss the pros and cons of PSA testing with their doctors starting at about age 50, earlier if they are high risk."

Let's be honest. This is the recommendation for more than just PSA testing; it is the recommendation for all medical cases. All cases are personal.

Imagine the editorial board's uproar if the chairman decreed that the other members follow his decision, effectively forcing his preferences on them and eliminating the role of individualized treatment and experimentation.

Now imagine that he dictated his preferences to 313 million people and you get a good picture of the FDA. The FDA will never understand the specific circumstances and preferences of 313 million people. The FDA's autocratic approach denies Americans the opportunity to make personalized treatment decisions.

I was talking to a reporter recently and, after I explained my background, she snidely replied, "Oh, you work for the pharmaceutical industry." In her mind, I was tainted.

The facts are clear. I did work for Merck & Co. and later Syntex Labs, and have spent the last 17 years consulting for biotech and pharma companies ranging in size from two-person startups to the largest of companies. It's still strange to hear someone disparage the industry I voluntarily selected. Other than the disagreeable business of animal testing, I'm proud to work in the pharmaceutical industry, which, by the way, has done more for the betterment of mankind than perhaps any other industry.

Here's just one example. Maurice Hilleman, a fellow Merck employee, might have saved more lives than any other person in history. You see, Hilleman almost singlehandedly developed 40 vaccines over his 60-year career. Of the fourteen vaccines routinely recommended in current vaccine schedules, he developed eight. What's more, his vaccines save primarily children--healthy people with a long life in front of them.

In 1963, when his oldest daughter developed the telltale fever and swollen glands of mumps, he made a late-night trip to his laboratory to retrieve some equipment to culture her virus.

Using the isolate from his daughter, Hilleman attenuated the virus and shepherded it through testing and production in his typical forceful fashion. His younger daughter was a subject in early clinical trials. Both daughters survived and his ubiquitous mumps vaccine has since brought a classic childhood disease to the verge of extinction.

Yes, I work for the pharmaceutical industry.

Last week Merck & Co. agreed to pay $950 million to settle government allegations that it illegally promoted Vioxx (rofecoxib). Merck voluntarily removed Vioxx from the market in 2004, but it is still resolving legal claims.

Vioxx was approved in 1999 for the treatment of pain. In 2002, the FDA added a claim for rheumatoid arthritis (RA). However, the Justice Department claims that Merck promoted Vioxx for RA prior to 2002, which would mean Merck violated the FDA's off-label promotion rules.

Never mind that the FDA later agreed that Vioxx was safe and effective for RA and this assessment was based on a Phase III clinical trial of 1,100 RA patients. Is it any wonder that Vioxx was used off-label for RA when it had been approved for acute pain, osteoarthritis, dysmenorrhea, and migraine and was also shown to work in RA? This is a clear example of evidence-based medicine--there's no snake oil being sold here.

Let's examine a hypothetical snake oil situation and see just how unlikely it is. What if Merck had promoted Vioxx for something crazy, like breast cancer?

Step 1, Merck sales representatives call on oncologists and recommend that they try Vioxx for breast cancer patients. These physicians would say, "You're kidding, right? What data do you have? What's the mechanism of action? Is this a joke? What other doctors have used it that way and can I talk to them?" To this, the Merck sales reps would have no good response.

Step 2, an oncologist makes a huge mistake and prescribes Vioxx for breast cancer anyway.

If you were HIV positive, would you treat yourself with daily doses of drain cleaner? No, you wouldn't. You would instead use a drug like Atripla (efavirenz, emtricitabine, tenofovir) from Gilead Sciences. If you suffered from gastroesophageal reflux disease (GERD), would you use electroshock therapy or Nexium (esomeprazole) from AstraZeneca to treat it? Clearly, you would use Nexium.

These two examples are black and white and virtually all reasonable people agree that the drugs mentioned above are better for those conditions.

Not all assessments are black and white, of course; some are shades of gray. We need to realize that the FDA works primarily in unclear, gray areas, with some reasonable people saying a drug works and others saying it doesn't.

On Friday the FDA revoked the approval for Avastin (bevacizumab) for metastatic breast cancer and this is controversial because many people, including breast cancer patients, oncologists, the European Medicines Agency, and the National Comprehensive Cancer Network believe that Avastin is an important therapy for breast cancer.

The government's solution is to say that one and only one judgment will prevail--the judgment of the FDA. Here's a simple solution: Let us find our own path to the truth.

You might like Ford and I might like Toyota. You might like New York and I might like California. You might like Thai and I might like Mexican. Instead of being limited to the other's choices, you and I are both better off eating our favorite foods and driving our favorite cars, just as all breast cancer victims are better off having some real therapy choices.

Black and white situations are obvious and uncontroversial. Gray situations are not obvious. It is exactly in these unclear, gray situations that the FDA should step aside and let reasonable people follow their own judgment.

It was 20 years ago today that basketball great Magic Johnson shocked the sports world by announcing, at the peak of his career, that he had tested positive for HIV and would retire immediately. In 2004, ESPN ranked this announcement as the seventh most memorable moment of the past 25 years.

We can't forget that HIV was seen as a death sentence during that era. People in San Francisco and elsewhere were seen venturing out into public with visible opportunistic infections, as they inevitably wasted away from AIDS. Clouds of pessimism and fear hung in the air like San Francisco fog. Just consider what Oprah Winfrey said in 1987: "Research studies now project that one in five--listen to me, hard to believe--one in five heterosexuals could be dead from AIDS at the end of the next three years. That's by 1990. One in five. It is no longer just a gay disease. Believe me."

HIV is now treated as many other chronic conditions. What changed? At first, with a paroxysm of public outcry, AIDS activists convinced the FDA to be more lenient and expeditious and the agency approved Burroughs Wellcome's AZT (Retrovir/zidovudine) in an astounding time of seven days. (Duke University and the National Cancer Institute helped with some of the development of AZT.) Since then, we have Abbott, Agouron, Boehringer Ingelheim, Bristol-Myers Squibb, Gilead Sciences, GlaxoSmithKline, Merck, Pfizer, Roche, and Tibotec to thank for their alphabet soup of single-agent and combination products to treat HIV. Physicians now have nucleotide/nucleoside reverse transcriptase inhibitors, non-nucleoside reverse transcriptase inhibitors, protease inhibitors, integrase inhibitors, and entry inhibitors to choose from and HIV patients benefit daily.

Magic Johnson is as much alive today as he was twenty years ago, thanks to pharmaceutical companies and an FDA that saw the light.

You would think these ten simple words are clear enough: "Congress shall make no law...abridging the freedom of speech..." Apparently not. Congress did, of course, pass a law prohibiting pharmaceutical companies from promoting off-label uses for drugs and put the FDA in charge of that enforcement. Never mind that off-label prescribing is widespread, legal, and helps American patients. Never mind that Congress itself, Medicare, the Department of Veterans Affairs, the National Cancer Institute, and the National Institute of Health actively encourage off-label prescribing.

A drug's "label" is the drug's FDA-approved prescribing information--the package insert. Any approved use is considered on-label, while any use not listed on the insert is considered off-label, even though the off-label use may effectively treat a medical condition and reflect the best medical practices. Although the FDA tolerates off-label usage, it forbids companies from promoting such uses. Promotion is really just communication and communication is speech. So the FDA is in direct violation of the First Amendment. Something has to give.

This is not some academic issue, as pharmaceutical companies have been pressed into paying almost $12 billion in fines over the last decade. In fact, just today GlaxoSmithKline announced that it settled its case for a whopping $3 billion.

In other news today, pharmaceutical companies are mounting a concerted legal effort to overthrow or weaken this and similar rules. Their case got a boost this summer when the U.S. Supreme Court cited the First Amendment in striking down a related Vermont law. In its decision, the court wrote that speech used in drug marketing is a form of expression protected by the Free Speech Clause of the First Amendment. It's good that someone is actually reading the Constitution.

President Obama issued an executive order today directing the FDA to resolve and prevent critical shortages of vital medicines. "The president's action is a recognition of the fact that this is a serious problem, and we can and should do more to help solve it," said an administration official who asked to remain anonymous. "We can't wait anymore."

This is bad, but this is also good. This is bad because real Americans are being hurt by these shortages. This is good because it might shed some light on the real problem.

Consider the lesson of 19th century French economist Frederic Bastiat, who taught economists to study what is seen and what is unseen. There are the things we see and the things that are hidden from our view, which might be even more important.

The "seen" in this example is the shortage of vital medicines. The fact that there were 178 shortages reported by the FDA last year and there are confirmed cases of patients dying shows how important these medicines are. Can you see what is unseen? What is unseen is the shortage of vital medicines that never were.

If you'd never been born, well then what would you do?
If you'd never been born, well then what would you be?
Why, you might be a WASN'T!
A Wasn't has no fun at all. No, he doesn't.
A Wasn't just isn't. He just isn't present.
But you...You ARE YOU! And, now isn't that pleasant!
-- Dr. Seuss

"Wasn't drugs" are drugs that flunked the FDA's tests, or were never even explored because patents are too short, risks are too high, costs are prohibitive, marketing is difficult, payers are tougher, government rebates are too high, lawsuits are too expensive, and investors are just plain worried. FDA Commissioner Margaret Hamburg is not oblivious to this and doesn't like these trends, saying just weeks ago, "Timelines are long, costs are high, and rates of failure are distressingly high."

I think what Paul describes here is certainly a trend, but it has its limitations.

If each drug takes $1 billion to reach the market and 10 million people use it over its patent protected lifetime, then each patient contributes, on average, $100 to the development of that drug. If we keep shrinking the denominator, then the economics become more difficult. Taken to the extreme of personalized medicine, with one specific drug for each person, we cannot expect that one person to cover the $1 billion development cost. Even if the development cost drops to $1 million per new drug, the economics won't work.

I think the average development cost would need to drop to $10,000 per drug to be reasonable. To reach this price, we would need to exclude the FDA completely--allow drugs to be marketed without prior FDA approval--or allow the FDA to approve the process of drug development instead of each specific drug. With this arrangement, the FDA would evaluate and approve the process of developing personalized medicines, but would then stand aside and let the drug companies deal directly with patients, physicians, and managed care organizations.

Just like drug companies which built their business models on blockbuster medicines, the FDA will need to rethink its approach in the era of micro-market and truly personalized drugs.