Share |





The Real Reason Drug Companies are Failing?
The FDA has gotten tougher, but that's not the only problem.

Josh Bloom, Ph.D.
Medical Progress Today
April 14, 2011

Trouble in the pharmaceutical industry has become so evident that major news organizations are belatedly taking note of it. This was evidenced by a recent plethora of stories about the slew of looming patent expirations major drug companies are facing. Some important reasons have been examined, but there is much more to the story. As a former pharmaceutical researcher for more than two decades I can fill in a few gaps that are not being discussed.

Within the next few years, many drug companies will have important drugs fall off a "patent cliff." Among the blockbusters expiring this year are Pfizer's cholesterol drug, Lipitor, and Sanofi-Bristol-Myers Squibb's blood thinner Plavix, which have combined sales of over $15 billion annually. In total, lost income due to patent expirations is expected to be $50 billion industry-wide, a rather sinister number, considering that the total R & D budget for the entire industry was about $60 billion last year.

There are a number of reasons that this is happening now, some of which are preventable while others are not. First, U.S. patent law allows a 20-year period during which a company may exclusively market their product. While this may seem like a long time, upon closer inspection it is not. Patents are typically filed about two years after the inception of a research project. Once the patent issues, the clock starts ticking. Currently, total time from the beginning of a program to approval of the drug is about 14 years, or about 12 years post-patent. This leaves about eight years for the company to sell the drug. After eight years and five minutes, a generic company will start selling it, at which time the sales of the brand name drug will drop to nearly zero. Most drugs will not earn back the roughly one billion dollars it took to develop them, making the multi-billion selling blockbuster drug essential to the economic equation.

Worse still, there are some politicians talking about reducing the patent life of new drugs, in which case you might as well fold up the whole industry and go home. It will not survive, except perhaps in Asia, where much research is already being outsourced.

Unfortunately, new drugs are not replacing expiring multi-billion dollar sellers. In fact, just the opposite is true, although it is not due to a lack of effort. For example, Pfizer spent years looking for a replacement for Lipitor, but the replacement candidate, torcetrapib, despite raising HDL, the so-called "good" cholesterol, actually increased death rates during clinical trials, and it was withdrawn. Hundreds of millions of research dollars went down the drain with it. Having failed in other attempts to replenish its pipeline through the discovery process, Pfizer took the "predator" route and bought Wyeth for its product line in 2009, laying off about twenty thousand employees in the process.

In the torcetrapib case, the decision to stop development was clear and correct, but this decision-making process has become increasingly muddled in recent years thanks to the FDA, which has become so cautious that it seems to focus only on the potential risks of a new drug, ignoring all the potential benefits. This mentality, and the unreasonable demands of the FDA has reduced new drug approvals to historic lows, despite ever increasing industry research budgets. This is the crux of the problem.

As an illustration, Pfizer recently developed an experimental anti-obesity drug, Contrave, which successfully passed through all clinical trials only to be rejected by the FDA, even though the agency's own expert advisory panel recommended approval by a 13-7 vote. Shortly thereafter, Pfizer announced the firing of another 3,500 scientists, including its entire antibiotic research division. (This is at a time when antibiotic-resistant bacteria are rendering old antibiotics useless and this research is needed more than ever.) Prior to Contrave, the FDA rejected two other obesity drugs in 2011, and also withdrew a marketed drug, which is rather ironic considering the Obama administration's focus on reducing obesity.

To say that government policies negatively affected productivity in drug discovery is over-simplified. Mother Nature also has a say. Advances by fits and starts are the norm in science. In this sense, it is unpredictable. The 1990s were the "golden years" of pharmaceutical research, during which time scientists were generating new therapies for a host of previously unmet medical needs, including novel drugs for high cholesterol, AIDS, chemotherapy-induced nausea and vomiting, migraine headaches, and erectile dysfunction. First-in-class drugs seemed to be flying out of the labs into the pharmacies.

But the 1990s was also the time when the FDA enacted new mechanisms for speeding drug approval, like the Prescription Drug User Fee Act and "accelerated approval" for early stage cancer drugs. Innovation flourished and the agency took a proactive approach to helping to bring those innovations to market. The era came to a halt with the 2004 Vioxx debacle, and controversies surrounding antidepressants for adolescents.

If one turns back the clock to the 1990s or early 2000s, when drug discovery success was at its peak, and adds twelve years of patent protection, it is easy to understand why the industry is now running on financial fumes.

Although it may be convenient to blame an agency or an industry for the lack of innovation, this may or may not be true. In reality, some diseases are simply much easier to conquer than others. During the golden years, the relatively "easy" targets were those that were solved. In a fortunate confluence of events, advances in chemistry, molecular modeling and biology arrived together, such that the technology was available to tackle the new diseases. Once the low-hanging fruit was gone, the next set of targets was not so easy. Alzheimer's, cancer, and Parkinson's disease are still largely unmet medical needs, despite considerable research. There is no one to blame here we are now simply faced with more challenging diseases. Since scientific progress tends to be cyclical, one could reasonably expect another wave of breakthroughs and blockbuster drugs at some point.

But the equation seems to have changed. The FDA's reluctance to support incremental innovations has led to a dearth of new products that can sustain the industry until the next breakthrough comes along.

As a result of the industry's worsening balance sheet, mergers, outsourcing and mass layoffs have decimated pharmaceutical research in the U.S. The point is rapidly approaching, I fear, when the U.S.-based industry will enter a period of irreversible decline, much as European pharmaceutical companies did in the 1980s when over-regulation and price controls drove the companies to the U.S. We are repeating these mistakes - along with a few new ones - and the consequences will be severe.

With tens of thousands of pharmaceutical scientists out of work (mostly permanently), the pace of discovery will inevitably slow even further. And tomorrow's potential scientists will take a look at what happened to their predecessors and go elsewhere. When it's time for the next breakthrough, there may be no one around to discover it. In the meantime, we will have to be content with cheap, outdated generics and wonder what we are missing out on.

Dr. Josh Bloom spent more than two decades as a research chemist in the pharmaceutical industry. He is now the Director of Chemical and Pharmaceutical Sciences at the American Council on Science and Health.

home   spotlight   commentary   research   events   news   about   contact   links   archives
Copyright Manhattan Institute for Policy Research
52 Vanderbilt Avenue
New York, NY 10017
(212) 599-7000