0013-7227/91/1281-0003$02.00/0 Endocrinology Copyright © 1991 by The Endocrine Society
Vol. 128, No. 1 Printed in U.S.A.
Editorial: Pharmaceutical Research is Expensive but Well Worth the Cost
A 4
It's time to set the record straight on pharmaceutical research and development. Certain industry critics are charging that drug companies are not spending enough of their earnings on worthwhile research. They say company research efforts are more directed towards developing "me too" drugs than new therapies for diseases like AIDS, cancer, and stroke. One persistent critic, for example, complains that "for every breakthrough product they invent, American drug companies bring 24 drugs to market that provide little or no therapeutic gain as rated by the Food and Drug Administration (FDA)." The real truth is that such criticism reveals a lack of understanding about the drug-discovery process and the nature of research itself. It unfairly dismisses the value of incremental improvements in existing drug therapies. And it simply ignores the extent of pharmaceutical company investment in R&D compared to other industries, and to the government's own investment in biomedical research. This year, member companies of the Pharmaceutical Manufacturers Association will spend $8.2 billion on research and development. About half of this investment will be dedicated to medicines that treat diseases commonly affecting the aging. These include 92 anticancer drugs, 91 drugs against cardiovascular diseases, and 76 drugs for other diseases including Alzheimer's, arthritis, diabetes, and osteoporosis. Also, 71 medicines and combination therapies are in clinical trials for AIDS and AIDS-related diseases such as Kaposi's sarcoma. In addition, 133 drugs are currently in clinical trials for 96 rare diseases, including anorexia, Chagas' Disease, leprosy, multiple sclerosis, muscular dystrophy, neonatal respiratory distress syndrome, and Von Willebrand's Disease. Private industry's investment in medical research and development now outstrips the total budget of the NIH, which supports the bulk of biomedical research performed in academic institutions. The research-based pharmaceutical industry's R&D investment this year will surpass NIH's $7.6 billion appropriation. In terms of R&D expenditures as a percent of net sales, no U.S. Received September 10, 1990. The author of this editorial, Mr. Gerald Mossinghoff, is the President of the Pharmaceutical Manufacturers Association.
industry outspends the pharmaceutical industry except electronic communications and computers, according to figures compiled by the National Science Foundation. The results are impressive. Nearly half of the new medicines that achieved worldwide acceptance from 1975 to 1986 originated in the United States. And contrary to the opinion of some critics, it is industry, not government or academia, that is the source of nearly all of the new drugs that reach the market. Ninety two of the 100 most prescribed patented drugs in the U.S. were patented by private industry. Members of the Pharmaceutical Manufacturers Association and its affiliates and other U.S. corporations hold about 47% of all genetic engineering patents in fields of Pharmaceuticals and health care, compared to 15% held by nonprofit organizations, 13% by universities, and 8% by the U.S. government (the remainder are held by foreigners). One aspect of pharmaceutical R&D often ignored by critics is the high risk of getting a new drug to market. According to a recent study at Tufts University, it costs $231 million on average to bring a new drug through discovery, clinical testing, development, and FDA approval to begin marketing. The cost has increased sharply in recent years. Major contributors to the increased cost include the intricate nature of modern research and the expense of the highly sophisticated laboratory equipment it requires. In addition, as the focus of research has shifted towards chronic and degenerative diseases, complicated and extensive clinical testing is often necessary to prove efficacy of new medicines. According to industry estimates, only one of every 4,000 drugs investigated for biological activity by drug company researchers ever becomes a marketed drug. In one study, only one drug in 21,000 turned out to be moderately successful economically, and just one in 60,000 proved highly successful. These are the drugs that support the entire research enterprise. A recent study by Duke University economist Henry Grabowski suggests that only 3 out every 10 drugs brought to market recovers the full cost of its development. With so many "dry holes," it is surprising that the industry produces as many "breakthrough" drugs as it does. With such drugs as Retrovir for AIDS, Mectizan for river blindness, EPOGEN for anemia, and Clozaril for schizophrenia, there can be no doubt such break-
The Endocrine Society. Downloaded from press.endocrine.org by [${individualUser.displayName}] on 13 November 2015. at 00:15 For personal use only. No other uses without permission. . All rights reserved.
EDITORIAL
throughs occur regularly. But, despite belittling remarks about "me too" drugs, other products brought to market by industry are also important. The critics cite FDA ratings. This is how it works: FDA gives each application for approval of a new drug an administrative rating, "A" for "important therapeutic gain," "B" for "modest therapeutic gain," and "C" for "little or no therapeutic gain." All minor improvements of existing products, chemical derivatives, new formulations, and new combinations, receive a "C" rating. The true measure of industry innovation must be its new molecular entities (NMEs), which receive approximately 80% of all R&D expenditures. By FDA's criteria, nearly 47% of the NMEs represented significant or modest gains over existing products. Of the 182 NMEs approved between 1981 and 1988, for example, 23 received "A" ratings and 62 "B" ratings. What of the "C" rated drugs? As FDA officials themselves readily concede, the ratings are for administrative purposes only, a method of triaging new drugs to speed approval of those thought to have the most potential, and not final judgments on a new drug's value. "The FDA agrees that the final judge of the usefulness of a drug is the practicing physician," noted the Associate Director,for New Drug Evaluation at FDA shortly after FDA's rating system was established. By that measure, the ratings have been something less than prophetic. Last year, for example, 10 of the top 20 drugs that received FDA ratings were classified as "C" drugs. Nine were "B" drugs. Only one had an "A" rating! Some drugs fail to get "A" ratings simply because they are modifications of existing drugs. Yet for half a century modification of existing Pharmaceuticals has been the chief method of creating new drugs. Before World War II, discovery methods were limited to trail-and-error observation and serendipity. Even with modern "rational
Endo • 1991 Vol 128 • No 1
drug design," where researchers try to design a drug to interfere with a specific step in a disease process, "the most fruitful basis for the discovery of a new drug is to start with an old drug," noted Sir James Black, the Nobel-laureate who pioneered this modern technique with the discovery of the first 0-blocker, propranolol, and the ulcer drug, cimetidine. In a study of the therapeutic and economic value of incremental improvements, Richard A. Levy, Ph.D., Vice President for Scientific Affairs at the National Pharmaceutical Council, noted that: 1) Modification of early cancer chemotherapeutic agents resulted in the immunosuppressant drug azathioprine, which established the feasibility of organ transplants, and in the herpes virus drug acyclovir. The development of the AIDS drug, AZT, was also based on principles resulting from this research. 2) Small changes in the structure of antihistamines with a phenothiazine nucleus resulted in chlorpromazine and in the antidepressant drug imipramine. 3) Manipulations of antibiotics resulted in agents important in treating diabetes and hypertension. "Many of today's important therapies represent substantially improved 'replacements' of older drugs," Levy said. "Although 'breakthrough' therapies attract public attention, the accumulation of small, successive improvements is generally more important. Breakthrough therapies inevitably have deficiencies, and the ultimate drugs of choice in a class are almost never the first marketed product." The truth is, pharmaceutical companies are making broad, long-term commitments to discovering important new therapies for the most serious diseases of mankind. And while they are about it, they are making solid progress in improving drugs already on the market. This not only serves the public interest but keeps America's pharmaceutical industry ahead of the rest of the world. Gerald J. Mossinghoff
The Endocrine Society. Downloaded from press.endocrine.org by [${individualUser.displayName}] on 13 November 2015. at 00:15 For personal use only. No other uses without permission. . All rights reserved.
Vol. 128, No. 1 Printed in U.S.A.
Editorial: Pharmaceutical Research is Expensive but Well Worth the Cost
A 4
It's time to set the record straight on pharmaceutical research and development. Certain industry critics are charging that drug companies are not spending enough of their earnings on worthwhile research. They say company research efforts are more directed towards developing "me too" drugs than new therapies for diseases like AIDS, cancer, and stroke. One persistent critic, for example, complains that "for every breakthrough product they invent, American drug companies bring 24 drugs to market that provide little or no therapeutic gain as rated by the Food and Drug Administration (FDA)." The real truth is that such criticism reveals a lack of understanding about the drug-discovery process and the nature of research itself. It unfairly dismisses the value of incremental improvements in existing drug therapies. And it simply ignores the extent of pharmaceutical company investment in R&D compared to other industries, and to the government's own investment in biomedical research. This year, member companies of the Pharmaceutical Manufacturers Association will spend $8.2 billion on research and development. About half of this investment will be dedicated to medicines that treat diseases commonly affecting the aging. These include 92 anticancer drugs, 91 drugs against cardiovascular diseases, and 76 drugs for other diseases including Alzheimer's, arthritis, diabetes, and osteoporosis. Also, 71 medicines and combination therapies are in clinical trials for AIDS and AIDS-related diseases such as Kaposi's sarcoma. In addition, 133 drugs are currently in clinical trials for 96 rare diseases, including anorexia, Chagas' Disease, leprosy, multiple sclerosis, muscular dystrophy, neonatal respiratory distress syndrome, and Von Willebrand's Disease. Private industry's investment in medical research and development now outstrips the total budget of the NIH, which supports the bulk of biomedical research performed in academic institutions. The research-based pharmaceutical industry's R&D investment this year will surpass NIH's $7.6 billion appropriation. In terms of R&D expenditures as a percent of net sales, no U.S. Received September 10, 1990. The author of this editorial, Mr. Gerald Mossinghoff, is the President of the Pharmaceutical Manufacturers Association.
industry outspends the pharmaceutical industry except electronic communications and computers, according to figures compiled by the National Science Foundation. The results are impressive. Nearly half of the new medicines that achieved worldwide acceptance from 1975 to 1986 originated in the United States. And contrary to the opinion of some critics, it is industry, not government or academia, that is the source of nearly all of the new drugs that reach the market. Ninety two of the 100 most prescribed patented drugs in the U.S. were patented by private industry. Members of the Pharmaceutical Manufacturers Association and its affiliates and other U.S. corporations hold about 47% of all genetic engineering patents in fields of Pharmaceuticals and health care, compared to 15% held by nonprofit organizations, 13% by universities, and 8% by the U.S. government (the remainder are held by foreigners). One aspect of pharmaceutical R&D often ignored by critics is the high risk of getting a new drug to market. According to a recent study at Tufts University, it costs $231 million on average to bring a new drug through discovery, clinical testing, development, and FDA approval to begin marketing. The cost has increased sharply in recent years. Major contributors to the increased cost include the intricate nature of modern research and the expense of the highly sophisticated laboratory equipment it requires. In addition, as the focus of research has shifted towards chronic and degenerative diseases, complicated and extensive clinical testing is often necessary to prove efficacy of new medicines. According to industry estimates, only one of every 4,000 drugs investigated for biological activity by drug company researchers ever becomes a marketed drug. In one study, only one drug in 21,000 turned out to be moderately successful economically, and just one in 60,000 proved highly successful. These are the drugs that support the entire research enterprise. A recent study by Duke University economist Henry Grabowski suggests that only 3 out every 10 drugs brought to market recovers the full cost of its development. With so many "dry holes," it is surprising that the industry produces as many "breakthrough" drugs as it does. With such drugs as Retrovir for AIDS, Mectizan for river blindness, EPOGEN for anemia, and Clozaril for schizophrenia, there can be no doubt such break-
The Endocrine Society. Downloaded from press.endocrine.org by [${individualUser.displayName}] on 13 November 2015. at 00:15 For personal use only. No other uses without permission. . All rights reserved.
EDITORIAL
throughs occur regularly. But, despite belittling remarks about "me too" drugs, other products brought to market by industry are also important. The critics cite FDA ratings. This is how it works: FDA gives each application for approval of a new drug an administrative rating, "A" for "important therapeutic gain," "B" for "modest therapeutic gain," and "C" for "little or no therapeutic gain." All minor improvements of existing products, chemical derivatives, new formulations, and new combinations, receive a "C" rating. The true measure of industry innovation must be its new molecular entities (NMEs), which receive approximately 80% of all R&D expenditures. By FDA's criteria, nearly 47% of the NMEs represented significant or modest gains over existing products. Of the 182 NMEs approved between 1981 and 1988, for example, 23 received "A" ratings and 62 "B" ratings. What of the "C" rated drugs? As FDA officials themselves readily concede, the ratings are for administrative purposes only, a method of triaging new drugs to speed approval of those thought to have the most potential, and not final judgments on a new drug's value. "The FDA agrees that the final judge of the usefulness of a drug is the practicing physician," noted the Associate Director,for New Drug Evaluation at FDA shortly after FDA's rating system was established. By that measure, the ratings have been something less than prophetic. Last year, for example, 10 of the top 20 drugs that received FDA ratings were classified as "C" drugs. Nine were "B" drugs. Only one had an "A" rating! Some drugs fail to get "A" ratings simply because they are modifications of existing drugs. Yet for half a century modification of existing Pharmaceuticals has been the chief method of creating new drugs. Before World War II, discovery methods were limited to trail-and-error observation and serendipity. Even with modern "rational
Endo • 1991 Vol 128 • No 1
drug design," where researchers try to design a drug to interfere with a specific step in a disease process, "the most fruitful basis for the discovery of a new drug is to start with an old drug," noted Sir James Black, the Nobel-laureate who pioneered this modern technique with the discovery of the first 0-blocker, propranolol, and the ulcer drug, cimetidine. In a study of the therapeutic and economic value of incremental improvements, Richard A. Levy, Ph.D., Vice President for Scientific Affairs at the National Pharmaceutical Council, noted that: 1) Modification of early cancer chemotherapeutic agents resulted in the immunosuppressant drug azathioprine, which established the feasibility of organ transplants, and in the herpes virus drug acyclovir. The development of the AIDS drug, AZT, was also based on principles resulting from this research. 2) Small changes in the structure of antihistamines with a phenothiazine nucleus resulted in chlorpromazine and in the antidepressant drug imipramine. 3) Manipulations of antibiotics resulted in agents important in treating diabetes and hypertension. "Many of today's important therapies represent substantially improved 'replacements' of older drugs," Levy said. "Although 'breakthrough' therapies attract public attention, the accumulation of small, successive improvements is generally more important. Breakthrough therapies inevitably have deficiencies, and the ultimate drugs of choice in a class are almost never the first marketed product." The truth is, pharmaceutical companies are making broad, long-term commitments to discovering important new therapies for the most serious diseases of mankind. And while they are about it, they are making solid progress in improving drugs already on the market. This not only serves the public interest but keeps America's pharmaceutical industry ahead of the rest of the world. Gerald J. Mossinghoff
The Endocrine Society. Downloaded from press.endocrine.org by [${individualUser.displayName}] on 13 November 2015. at 00:15 For personal use only. No other uses without permission. . All rights reserved.
