As Biden sig­nals in­ter­est in link­ing drug prices with R&D costs, new study finds costs per NME are in­creas­ing

Eroom’s law (es­sen­tial­ly the op­po­site of Moore’s law) holds that the de­vel­op­ment of new drugs has be­come slow­er and more ex­pen­sive over time. And a new analy­sis, pub­lished this month in Phar­ma­coEco­nom­ics, con­firms not on­ly that costs have gone up over the years but the dif­fi­cul­ty in track­ing how R&D has shift­ed.

Pres­i­dent Joe Biden last week sig­naled an in­ter­est in link­ing drug prices to R&D costs as part of his wider pledge to bring down the cost of pre­scrip­tion drugs. The de­tails of how to track such a link be­tween R&D and price still need to be ironed out in Con­gress.

Ger­man and Span­ish au­thors said in this lat­est analy­sis that R&D costs per new mol­e­c­u­lar en­ti­ty are def­i­nite­ly in­creas­ing over time, but they ac­knowl­edged that there’s “no uni­ver­sal­ly cor­rect an­swer re­gard­ing how much it costs, on av­er­age, to re­search and de­vel­op an NME,” and dif­fer­ences in ther­a­peu­tic ar­eas and types of drugs on­ly com­pli­cate cur­rent pa­pers that seek to iden­ti­fy this holy grail of bot­tom line num­bers.

The Tufts Cen­ter for the Study of Drug De­vel­op­ment fa­mous­ly said in 2016 that it costs al­most $3 bil­lion on av­er­age to de­vel­op a new drug. But the au­thors of this lat­est pa­per said that “their re­sults can­not be sub­stan­ti­at­ed,” part­ly be­cause their da­ta are shield­ed from ex­ter­nal scruti­ny. Sim­i­lar­ly, much low­er R&D es­ti­mates pub­lished in a JA­MA pa­per from can­cer docs Vinay Prasad and Sham Mailankody are cri­tiqued for be­ing bi­ased too, par­tic­u­lar­ly as the study re­lied on small­er com­pa­nies and or­phan med­i­cines, which the Phar­ma­coEco­nom­ics au­thors said can have 50% low­er R&D costs than non-or­phan drugs.

For this lat­est pa­per, the au­thors present a com­pi­la­tion and a crit­i­cal as­sess­ment of all pub­lished es­ti­mates of the pre-launch av­er­age R&D costs per NME.

The analy­sis in­ves­ti­gates 5 fac­tors af­fect­ing the in­vest­ment in R&D, which they said were most of­ten men­tioned in the lit­er­a­ture: ther­a­peu­tic class; or­phan or non-or­phan drugs; bio­phar­ma firm size; NCE or new bi­o­log­i­cal en­ti­ty (NBE); and self-orig­i­nat­ed or li­censed-in.

Even among ther­a­py-spe­cif­ic es­ti­mates, there were ma­jor dif­fer­ences among the 7 pa­pers that the analy­sis ex­am­ined. For ex­am­ple, in on­col­o­gy, Fal­coni et al. es­ti­mat­ed R&D costs of $2.1 bil­lion, which was one of the high­est to­tals, while the Prasad and Mailankody es­ti­mate was con­sid­er­ably low­er at $944 mil­lion.

“Ad­di­tion­al­ly, reg­u­la­to­ry in­no­va­tions in­cen­tiviz­ing re­search on rare dis­eases—part­ly by re­duc­ing com­pa­nies’ out-of-pock­et R&D costs, re­duc­ing the time from sub­mis­sion to ap­proval, and shift­ing risk to the post-au­tho­riza­tion pe­ri­od—have led to the au­tho­riza­tion of many treat­ments based on few­er da­ta and sur­ro­gate mea­sures on­ly,” the au­thors wrote. “This might ex­plain a neg­a­tive ef­fect on the pre-ap­proval R&D spend­ing while po­ten­tial­ly im­pact­ing post-launch R&D costs. How­ev­er, some fac­tors sug­gest po­ten­tial­ly high­er av­er­age R&D costs of bring­ing an or­phan drug in­to the mar­ket. For in­stance, the R&D process for or­phan drugs is marked by dif­fi­cul­ties in re­cruit­ing pa­tients for clin­i­cal tri­als, thus in­creas­ing costs per pa­tient. Fur­ther­more, rel­a­tive­ly less med­ical re­search is con­duct­ed on rare dis­eases, re­sult­ing in a lim­it­ed clin­i­cal un­der­stand­ing of such dis­ease process­es.”

But there are still so many un­knowns, the au­thors con­tend. For in­stance, they say the ev­i­dence is still in­con­clu­sive on whether small­er bio­phar­ma firms are more ef­fi­cient than larg­er firms in bring­ing new drugs in­to the mar­ket. There is al­so a lack of da­ta mea­sur­ing the R&D costs of li­censed-in drugs, which of­ten have high­er suc­cess rates than mol­e­cules de­vel­oped in­ter­nal­ly.

And the au­thors note that it’s de­bat­able whether the trend in cur­rent, in­creas­ing R&D cost es­ti­mates can pre­dict the de­vel­op­ment of fu­ture drugs.

“There is no sim­ple an­swer to our orig­i­nal ques­tion of how much it costs (on av­er­age) to re­search and de­vel­op a new med­i­cine, specif­i­cal­ly an NME. Av­er­age R&D costs mask es­sen­tial sources of het­ero­gene­ity,” they added.

We de­tect­ed a trend in­di­cat­ing that cap­i­tal­ized costs per NME are in­creas­ing. If the trend con­tin­ues, it might have im­pli­ca­tions for the vi­a­bil­i­ty of the re­search-based bio­phar­ma­ceu­ti­cal in­dus­try’s busi­ness mod­el. How­ev­er, even this in­ter­pre­ta­tion re­lies on the as­sump­tion that cur­rent or past trends are in­di­ca­tors of fu­ture trends, which is de­bat­able. Fu­ture in­creas­es in R&D costs might re­flect the grow­ing com­plex­i­ty of tar­get dis­eases, but ul­ti­mate­ly these in­creas­es will be a func­tion of the evo­lu­tion of di­rect costs, at­tri­tion rates, and de­vel­op­ment times. These fac­tors might be in­flu­enced by tech­no­log­i­cal ad­vances, the emer­gence of pre­ci­sion med­i­cine, the re­sult­ing ‘or­ph­a­niza­tion’ of in­di­ca­tions, and the de­vel­op­ment of com­pan­ion di­ag­nos­tics al­low­ing ef­fec­tive strat­i­fi­ca­tion of pa­tient sub­pop­u­la­tions.

Biotech and Big Phar­ma: A blue­print for a suc­cess­ful part­ner­ship

Strategic partnerships have long been an important contributor to how drugs are discovered and developed. For decades, big pharma companies have been forming alliances with biotech innovators to increase R&D productivity, expand geographical reach and better manage late-stage commercialization costs.

Noël Brown, Managing Director and Head of Biotechnology Investment Banking, and Greg Wiederrecht, Ph.D., Managing Director in the Global Healthcare Investment Banking Group at RBC Capital Markets, are no strangers to the importance of these tie-ups. Noël has over 20 years of investment banking experience in the industry. Before moving to the banking world in 2015, Greg was the Vice President and Head of External Scientific Affairs (ESA) at Merck, where he was responsible for the scientific assessment of strategic partnership opportunities worldwide.

No­var­tis' sec­ond at­tempt to repli­cate a stun­ning can­cer re­sult falls flat

Novartis’ hopes of turning one of the most surprising trial data points of the last decade into a lung cancer drug has taken another setback.

The Swiss pharma announced Monday that its IL-1 inhibitor canakinumab did not significantly extend the lives or slow the disease progression of patients with previously untreated locally advanced or metastatic non-small cell lung cancer when compared to standard of-care alone.

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How Chi­na turned the ta­bles on bio­phar­ma's glob­al deal­mak­ing

Fenlai Tan still gets chills thinking about the darkest day of his life.

Three out of eight lung cancer patients who received a tyrosine kinase inhibitor developed by his company, Betta Pharma, died in the span of a month. Tan, the chief medical officer, was summoned to Peking Union Medical College Hospital, where the head of the clinical trial department told him that the trial investigators would be conducting an autopsy to see if the patients had died of the disease — they were all very sick by the time they enrolled — or of interstitial lung disease, a deadly side effect tied to the TKI class that’s been reported in Japan.

No­var­tis dumps AveX­is pro­gram for Rett syn­drome af­ter fail­ing re­peat round of pre­clin­i­cal test­ing

Say goodbye to AVXS-201.

The Rett syndrome gene therapy drug made by AveXis — the biotech that was bought, kept separate, then renamed and finally absorbed by Novartis into its R&D division — has been dropped by the biopharma.

In Novartis’ third quarter financial report, the pharma had found that preclinical data did not support development of the gene therapy into IND-enabling trials and beyond. The announcement comes a year after Novartis told the Rett Society how excited it was by the drug — and its potential benefits and uses.

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FDA is much worse than its reg­u­la­to­ry peers at proac­tive­ly dis­clos­ing da­ta, re­searchers find

The European Medicines Agency and Health Canada continue to outpace the FDA when it comes to proactively releasing data on drugs and biologics the agency has reviewed, leading to further questions of why the American agency can’t be more transparent.

In a study published recently in the Journal of Law, Medicine, & Ethics, Yale and other academic lawyers and researchers found that between 2016 and April 2021, the EMA proactively released data for 123 unique medical products, while Health Canada proactively released data for 73 unique medical products between 2019 and April 2021. What’s more, the EMA and Health Canada didn’t proactively release the same data on the same drugs. In stark contrast, the FDA in 2018 only proactively disclosed data supporting one drug that was approved that year.

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Ugur Sahin, AP Images

As pres­sure to share tech­nol­o­gy mounts, BioN­Tech se­lects Rwan­da for lat­est vac­cine site

BioNTech’s first mRNA-based vaccine site in Africa will call Rwanda home, and construction is set to start in mid-2022, the company announced Tuesday at a public health forum.

The German company signed a memorandum of understanding, after a meeting between Rwanda’s Minister of Health, Daniel Ngamije, Senegal’s Minister of Foreign Affairs Aïssata Tall Sall, and senior BioNTech officials. Construction plans have been finalized, and assets have been ordered. The agreement will help bring end-to-end manufacturing to Africa, and as many as several hundred million doses of vaccines per year, though initial production will be more modest.

UP­DAT­ED: Eli Lil­ly toss­es a mar­quee pain drug and hits the gas on Alzheimer’s — as Bio­gen’s suf­fer­ing opens mar­ket to ri­vals

The furious chorus of critics that brought sales of Biogen’s ultra controversial Alzheimer’s drug aducanumab (sold as Aduhelm) to a near halt is opening up some big opportunities for a major league rival that has long sought the lead role in this largely untapped megamarket.

In its Q3 update today, Eli Lilly — noted for its dogged persistence in attempting for years to get solanezumab across the FDA finish line — said that it has begun a rolling submission of its rival Alzheimer’s drug donanemab in search of an accelerated approval. Anne White, senior VP of Lilly’s neuroscience unit, acknowledged during the investor call the challenges Biogen has faced with uptake and noted Lilly may face similar hurdles.

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Vas Narasimhan, Novartis CEO (Simon Dawson/Bloomberg via Getty Images)

With San­doz con­tin­u­ing to drag on No­var­tis, Vas Narasimhan says he may fi­nal­ly be ready for a sale or spin­off

After years of rehab work aimed at getting Sandoz in fighting trim to compete in a market overshadowed by declining prices, CEO Vas Narasimhan took a big step toward possibly selling or spinning off the giant generic drug player.

The pharma giant flagged plans to launch a strategic review of the business in its Q3 update, noting that “options range from retaining the business to separation.”

Analysts have been poking and prodding Novartis execs for years now as Narasimhan attempted to remodel a business that has been a drag on its performance during most of his reign in the CEO suite. The former R&D chief has made it well known that he’s devoted to the innovative meds side of the business, where they see the greatest potential for growth.

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James Peyer, Cambrian CEO

Brent Saun­ders joins $100M Se­ries C for a com­pa­ny out to be the Bridge­Bio of ag­ing

About a year ago, James Peyer, a CEO and co-founder of the little known longevity biotech Cambrian Biopharma, was trying to find some R&D talent last year when he met with more than a bit of experience in that department: David Nicholson, the former R&D chief of the erstwhile pharma giant Allergan.

It turned out Nicholson already had an interest in Peyer’s field. In their Allergan days, he and COO Brent Saunders held weekly meetups where they tried to figure out how to take the company’s dominance in aesthetics — which, until recently, was often what people meant by anti-aging science — and expertise with more traditional drug development, and use it to make drugs that extend people’s lifespan.

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