January 08, 2008

More wailing and gnashing of teeth on the pharma productivity front, with the FDA approving a record low 14 new molecular entities in 2007, the lowest number since 1983.

How bad is the productivity picture? The In Vivo blog explains just how bad it is:

If you want to understand the decline in productivity industry wide, consider this: total R&D spending by brand-name companies in 1983 was $3.2 billion, compared to $43 billion in 2007. In other words, the industry spent $228 million per NME approved in 1983, compared to $2.7 billion each in 2007. Or, if you prefer, the extra $40 billion in R&D spending brought with it a total of four additional therapies.

Now, there is something to be said for industry gloom but here are a couple of other factors to consider. This is a mature industry that is extremely competitive with multiple product lines competing for scant health care dollars (think statins) against generics that, just a few years ago, were extraordinarily lucrative drugs for industry. And many more drugs will go generic in just the next few years. In other words, the industry today is competing against itself in more ways than one - an ironic side effect of the PhRMA boom in the 1990s.

Also, the relative risk tolerance of the public has changed over the last 10-15 years as ever larger portions of the population take one or more prescription drugs for chronic illnesses for what may be the rest of their lives. Again, this is a "side effect" of the fact that drugs are incredibly safe for the vast majority of people who use them; but once tens of millions of people start to use a single drug, anomalous side effects start to add up (think Vioxx).

As a result, Congress, the FDA and the news media have become sensitized to the postmarket risks of medicines taken for very long periods of time in very large patient populations, and the bar for safety has changed, whether the FDA will openly admit it or not. Drugs that might have been approved just a few years ago are not passing muster now.

Last but not least, the promise of the new technologies - genomics, bioinformatics, systems biology - are just beginning to be realized. Until now, companies were just throwing money at R&D with very little to show for it.

So things look bad now - but only in comparison to the tremendous successes that preceded them. And there is every reason to think that - in the long run - the industry will rebound as new technologies and sunk R&D costs finally bear fruit. The real question is: How long will this process take? After all, a risk averse Congress can push the FDA into a reactionary posture that may take years to shake off.

Posted by Paul Howard at January 8, 2008 03:40 PM

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