Friday, November 10, 2006

Profits Fuel R&D and Lead to Cures

As a follow up to Nick’s post, here are some points on drug discovery and development to put things in perspective:

The average cost to develop a new drug is $802 million - $1.7 billion. Even drugs that only make it to the first phase can still easily cost the drug company over $100 million.

Most drugs that drug companies enter into clinical trials are not approved, and less and less drugs are making it to approval, and the approval rate is declining. Over 25 years, the number of drugs that entered Phase 1 trials and eventually received FDA approval has decreased from 14% to 8%. The FDA is working to increase this rate through its Critical Path Initiative, which is looking at ways to make clinical trials more efficient and determine drugs that will ultimately fail at an earlier point in the process, but it’s a government agency, so the pace of that process is exactly what you would expect. Also, there is a move to add more regulations for after a drug is approved, adding even more costs and red tape to drug development.

Most drugs are not even profitable, only 30% of drugs produce revenues that match or exceed R&D costs. Drug companies are all looking for that blockbuster drug, to get as much profit as they can before generics get onto the market – this is what fuels the huge expenditures into R&D. If Democrats take away this incentive by enacting price controls, we can expect a significant decrease in the pharmaceutical pipeline and less pharmaceutical breakthroughs.

So, the party that campaigned so hard on all the possible miracle cures they claim will come from stem cell research will try to stymie the search for lifesaving drugs. Fortunately, Democrats are not immune to lobbying by pharmaceutical companies, and this idea will likely fall to the same fate that Hillary’s national healthcare plan did in the ‘90s.

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