PharmExec Blog

Trends in R&D: The Widening Gap between Success and Failure

The Office of Health Economics (OHE) has released a new study examining drug development costs over the past 30 years. The study finds that out-of-pocket costs to bring a new medicine to market have increased over this period by 600%, success rates from proof of concept to registration have decreased at least twofold since the 1980s, with overall development more than doubling, from six years in the 1970s to 13.5 years in the 2000s. The most significant factors behind these sobering findings include drug companies going after increasingly complex and chronic conditions, regulators having developed more risk-averse approaches to approval, and various technological shifts making their disruptive way into the R&D schedule.

The OHE found that the average total R&D expenditure for a drug was $1 billion in early 2000s, but today has reached $1.5 billion. Current out-of-pocket development costs average $215-220 million. The study attributes the increase in out-of-pocket spending to cost per patient and number of patients in clinical trials, as well as an overall increasing complexity in trials. Drug companies have attempted to reduce costs by increasing their outsourcing to contract research organizations (CROs) in order to increase efficiency, as well as conducting clinical trials in emerging markets where costs are lower and patients are more easily recruited. But until regulatory conditions are strong, expertise is prevalent, and adequate infrastructure exists to support a rich clinical environment within these developing countries, the bulk of research remains in Europe and the US.  These are precisely the regions where cost is a more urgent concern.

Success rates for drugs have declined.  While one in five drugs in the 1980s went on to be successful, the 2000s saw only one of every ten medicines makes it through the gauntlet of clinical trials and subsequent approval. However, success rates for individual trial phases have remained stable since the 1990s. With regulatory hurdles making it more difficult, and as drugmakers prioritize in developing medicines for notoriously challenging areas such as respiratory, neurological and cancer illnesses,  it’s easy to see why failure has become twice as prevalent today than 30 years ago.

OHE found that more R&D failures are to be expected in the near term because of the onerous process of integrating new add-on technologies such as companion diagnostics and biomarkers into the R&D paradigm. The study optimistically points to initiatives already set in motion to drive up success rates including better preclinical screening, earlier involvement of health technology assessments (HTAs) to secure faster termination of less commercially viable medicines, and an increasing number of collaborations between competing companies and organizations. This trend also relates to the observation that more pharma companies are in-licensing drug candidates as opposed to filling their pipelines with self-originated medicines, as in-licensed medicines, according to the study, often show higher rates of success.

While the length of studies hasn’t changed since the beginning of the 2000s, the study pointed out that phase II and III time spans are becoming more similar. Suggestions by the OHE for shorter development times included focusing more on earlier phases to eliminate wasted time and money on therapies that don’t work (so these therapies don’t move into more expensive trial areas), and an overall increased flexibility in R&D management and organization.

‘Continue to experiment’ is the key “envelope message” from the OHE to the industry.

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One Comment

  1. Dennis Cosmatos
    Posted February 5, 2013 at 11:21 am | Permalink

    Having been actively working in Pharma since 1992 and seeing changes in the discovery, and development process throughout all of R&D, I noticed a distinct change around 2000 that I believe negatively impacted success rates. That involved the “industrialization” of research as it was called back then. The idea was to install target metrics on discovery to ensure a specific level of productivity by these scientists. Ever since that time, this process has been adopted by every other Pharma Company I worked for. The problem I see is that pharmaceutical discovery is “invention” and how can invention be demanded at a given rate. One organization set the bar at 15 New Chemical Entities (NCEs) per year. Then it was increased to 20 NCEs per year and the R&D head was labeled a genius for increasing the number of resulting filings (assuming those increase NCEs would result in filings and approvals).

    Working closely with these discovery scientists, I saw how human nature and human survival behaves when their backs are against the wall. Discovery scientists submitted two NCE that were identical except for a single molecule that, when questioned, they admitted would be quickly metabolized and changed to the prior entity. I do not blame these scientists as they are trying to make best of a difficult situation. What other industry demands discoveries?

    I think this has resulted in the generation of very poor quality compounds. Another quantity not quality approach that has been globally adopted by an industry! Is it just coincidence that Pharmaceutical R&D has seen less success since this approach has been installed?

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