The Tufts Center for Drug Development issues its annual assessment of the state of R&D in Big Pharma, noting that industry faces a cumulative tide of challenges marked by a dramatic reversal in societal attitudes toward risk. Productivity gaps in the pipeline aside, perhaps the biggest problem is political — convincing stakeholders to strive for balance between longer-term value and the potential short-term dangers posed by new therapies has never been harder.
“These are very difficult times for the research-based industry. To be successful, the industry is going to need to improve the efficiency of its R&D process, attract the assistance of regulatory authorities around the world, and get a handle on an increasingly difficult reimbursement environment,” Tufts Center Executive Director Ken Kaitin told Pharm Exec. The importance of replenishing the pipeline with useful new medicines has never been more stark, as this year and next also mark the peak in the trend toward patent expirations. The industry is on the cusp of an unprecedented loss of revenues: at least $130 billion, according to IMS and other industry data crunchers.
The primary conclusion of the report is the unrelenting progression of costs. It is now higher than ever, with the average price tag to bring a compound from discovery and proof of concept to commercialization, minus opportunity cost, topping out at $1.3 billion. And fewer new products are likely to be anointed as blockbusters, with annual sales in excess of $1 billion. The science behind these medicines is more daunting while the data on efficacy is questionable, particularly when framed in the long-term perspective that is increasingly required by payers. The Tufts research also documents the ways in which payers and intensifying therapeutic competition within classes are combining to slow uptake of new drugs, with most fresh innovations failing to realize the initial sales expectations of Wall Street after launch.
In response, pharma is doing better within its own zone of control, focusing on internal changes designed to lower operational costs and slow the failure ratio for compounds at a late stage of development. These measures include greater reliance on translational science to help identify the right disease targets for new molecules; a commitment to partnering with external service providers to share risks, reduce cycle times, lower costs, and improve resource management; and greater use of sophisticated portfolio management techniques. These approaches are promising in that they lower costs while also ensuring that development programs are prioritized around those compounds most likely to find favor in the marketplace.
Other near-term trends highlighted in the Outlook 2011 are the following:
* The FDA will focus its efforts on confronting new emerging threats to public health, led by antibiotic resistance, emergency drugs, anesthetic agents, new therapies for cognitive disorders, and newer and better pain medications.
* Although more than half of all FDA-regulated clinical trials in 2010 were conducted outside the US, sponsors will seek to decrease the number of countries hosting development activity in an effort to reduce global logistical and regulatory complexity. Consolidation of effort will be the norm.
* Monoclonal antibodies (mAbs) remain the hottest arena for competitive research, as annual global sales of these products currently approach $40 billion.
* Among private payers in the US, risk-sharing agreements to manage uncertain outcomes and costs —where pharmaceutical companies agree to share the risk regarding a newly approved product’s cost effectiveness in clinical practice — will become more common.
One issue not noted in the report is the implications of conducting so much trial work in settings outside the US on the flagging attitude toward risk. If the industry proves lax in regulating itself with the strong internal controls required to prevent abuse or neglect in countries where official trial standards are weak, then confidence in the science behind research could wane, leading to fewer new approvals.