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.

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