Letters to the Editor: Don't expect a correlation between an individual drug's development cost and price
Endpoints News recently reported on a new paper in JAMA that purports to show that there is no correlation between the price of a drug and its R&D costs. If the JAMA editors were to apply similar standards of evidence to a paper about a drug’s clinical trial, they would be justifiably criticized.
The paper cherry picks 60 out of hundreds of drugs, with the excuse that the relevant data for other drugs approved over the selected 10-year period were difficult to source. Imagine if a biopharma company only published data on 60 out of several hundred participants in a trial, claiming that the data from the others were “difficult to access.” The authors themselves note another significant weakness: that they did not have access to the net prices of many of the drugs in their sample. This reflects our system of drug rebates, in which pharmacy benefit managers, or PBMs, can receive 30%-50% or more of a drug’s list price, leaving the drug developer with a substantially lower actual, or “net,” price.
More concerning, the authors’ study design simply ignored the fact that for every FDA-approved drug, there are on average about nine others that made it into clinical trials, but failed to reach the market. Yet drug companies must invest huge sums developing the 90% of drug candidates that ultimately fail. The return on investment for each successful drug must take into account the expenditures on all of them, including the inevitable failures, or investors will not continue to support the development of new medicines. Therefore, one should not expect there to be a correlation between an individual drug’s development costs and its price.
Ron Cohen, M.D.
President and CEO