Want to start a fight? Step one: Of­fer up an es­ti­mate for what it costs to de­vel­op a new drug

There’s no bet­ter way to get a de­bate un­der­way in bio­phar­ma than com­ing up with a hard es­ti­mate for what it costs to de­vel­op a new drug. In­dus­try crit­ics like Pub­lic Cit­i­zen have de­light­ed in call­ing out de­vel­op­ers for what they see as in­flat­ed num­bers. Tufts came up with the most fre­quent­ly cit­ed fig­ure: tot­ting up at $2.6 bil­lion. And FDA com­mis­sion­er Scott Got­tlieb even re­cent­ly cit­ed the high cost of drug de­vel­op­ment, ty­ing it to high prices when he laid out a plan to help speed up R&D in the US.

So this week it’s no sur­prise that a new study led by OHSU’s Vinay Prasad — which came up with a new num­ber: $648 mil­lion, or $757 mil­lion if you in­clud­ed the cost of cap­i­tal — has been spot­light­ed for days on Twit­ter as the de­bate rages on.

In com­ing up with this num­ber, Prasad and Sham Mailankody sin­gled out 10 com­pa­nies that had de­vel­oped one new can­cer drug to see how much it cost on av­er­age to win an ap­proval and what that ap­proval would be worth. While the cost ranged wild­ly be­tween the high and the low, $157 mil­lion to close to $2 bil­lion, the me­di­an of $648 mil­lion while af­ter a me­di­an 4 years of mar­ket­ing “to­tal rev­enue from sales of these 10 drugs since ap­proval was $67.0 bil­lion com­pared with to­tal R&D spend­ing of $7.2 bil­lion.”

Prasad’s bot­tom line:

In a short pe­ri­od, de­vel­op­ment cost is more than re­couped, and some com­pa­nies boast more than a 10-fold high­er rev­enue than R&D spend­ing—a sum not seen in oth­er sec­tors of the econ­o­my.

BIO’s Jim Green­wood, who’s been lead­ing an in­dus­try ef­fort to un­der­score the ex­tra­or­di­nary risks of drug R&D, quick­ly fired back, say­ing the study’s au­thors were try­ing to grind a fa­mil­iar ax with the in­dus­try. The num­bers don’t ac­count for the huge cost of fail­ures across the board — and in­clud­ed the big sums paid in ac­quir­ing two of the drugs as part of the re­ward — sin­gling out com­pa­nies that had won an ap­proval. And when you nar­row it down to the nov­el ther­a­pies that were ap­proved, the hard cost was $900 mil­lion — which they didn’t see as all that far from the $1.4 bil­lion in hard costs cit­ed by Tufts.

Not­ed Green­wood:

This in­dus­try, un­like any oth­er in­dus­try, has tremen­dous un­cer­tain­ty sur­round­ing fu­ture re­ward from on­go­ing R&D. Fail­ures are the norm in biotech. Due to this sim­ple fact, in­vestors will not in­vest in R&D com­pa­nies if there is no com­pen­sat­ing up­side for the few wins achieved across their port­fo­lio.

Per­haps Scott Got­tlieb said it best this week when he looked over the es­ti­mates and said that it wasn’t un­usu­al to spend more than a bil­lion dol­lars on drug de­vel­op­ment.

So we can all (most­ly) agree that the risks are daunt­ing — even in on­col­o­gy, where the FDA has been mak­ing big strides in speed­ing ap­provals — costs are at the least rel­a­tive­ly high and re­wards can be spec­tac­u­lar, pres­sur­ing pay­ers of all stripes.

We can al­so agree that this is one de­bate that will sim­mer on for some time to come.


Im­age: Vinay Prasad The Wash­ing­ton Post

UP­DAT­ED: Roche bags 'break­through' an­ti-fi­bro­sis drug in $1.4B biotech buy­out deal

Roche is snapping up a “breakthrough” anti-fibrotic drug in a $1.4 billion buyout.

The pharma giant announced Friday that it is acquiring Promedior, primarily to get its hands on PRM-151, a recombinant form of human pentraxin-2 (PTX-2) protein that has nailed down mid-stage clinical data on idiopathic pulmonary fibrosis and demonstrating its potential for a range of fibrotic conditions.

Endpoints News

Keep reading Endpoints with a free subscription

Unlock this story instantly and join 65,700+ biopharma pros reading Endpoints daily — and it's free.

(Image: Associated Press)

Amarin emerges from an ex­pert pan­el re­view with a clear en­dorse­ment for Vas­cepa and high odds of suc­cess when the FDA weighs in for­mal­ly

Several FDA experts who gathered Thursday to consider the landmark approval of Vascepa to reduce cardio events in an at-risk population voiced their unease about various aspects of the efficacy and safety data, or ultimately the population it should be used to treat. But the overwhelming belief that the data pointed to the drug’s benefit and clearly outweighed risks carried the day for Amarin.

The panel voted unanimously (16 to 0) to support the company’s positive data presentation — backing an OK for expanding the label to include reducing cardio risk. The vote points Amarin $AMRN down a short path to a formal decision by the FDA, with the odds heavily in its favor. Chances are the rest of the questions about the future of this drug will be hashed out in the label’s small print.

Endpoints News

Keep reading Endpoints with a free subscription

Unlock this story instantly and join 65,700+ biopharma pros reading Endpoints daily — and it's free.

Federal Trade Commission commissioner Rohit Chopra testifies on Capitol Hill (AP Photo/Susan Walsh)

FTC clears Bris­tol-My­ers’ $74B deal to buy Cel­gene — but Dems sig­nal a po­ten­tial hard shift against Big Phar­ma M&A

Bristol-Myers Squibb’s record $74 billion takeover of Celgene is a done deal. And it will all be over — except for the lingering complaints from die-hard Celgene investors — on Wednesday.

Like much else that’s going on in Washington these days, the vote among the 5 FTC commissioners split along party lines, with the 3 Republicans voting to clear the way and the 2 Democrats steamed over what they see as a major M&A move that will lessen competition and innovation. And that split has big implications for the M&A side of the business if the Dems take the White House in 2020.

Endpoints News

Keep reading Endpoints with a free subscription

Unlock this story instantly and join 65,700+ biopharma pros reading Endpoints daily — and it's free.

No­var­tis spin­out’s first an­ti-ag­ing PhI­II is a flop, so now they’ll turn to Parkin­son’s chal­lenge as shares wilt

Novartis spinout resTORbio is grappling with the collapse of its lead clinical program this morning — an anti-aging R&D failure that will badly damage their rep in the field.

Endpoints News

Keep reading Endpoints with a free subscription

Unlock this story instantly and join 65,700+ biopharma pros reading Endpoints daily — and it's free.

BeiGene CEO John Oyler at an Endpoints event in Shanghai, October 2018 (Credit: Endpoints News/PharmCube)

UP­DAT­ED: In a first, FDA green-lights use of a Chi­nese built can­cer ther­a­py — and more are com­ing

Weeks after Amgen took a $2.7 billion stake in BeiGene, the Beijing-based biotech has secured its first-ever FDA approval for zanubrutinib, a BTK inhibitor, months ahead of schedule.

BeiGene’s drug, branded as Brukinsa, has secured accelerated approval for adult patients with mantle cell lymphoma (MCL) — a typically aggressive, rare, form of blood cancer — who have received at least one prior therapy.

Endpoints News

Keep reading Endpoints with a free subscription

Unlock this story instantly and join 65,700+ biopharma pros reading Endpoints daily — and it's free.

What does $62B buy you these days? A lot, says Take­da ex­ecs as the phar­ma play­er promis­es a block­buster R&D fu­ture

First comes the $62 billion buyout. Then comes the asset auction and reorganization to pay down debt. Now comes the detailed pledge of a bigger, brighter future in drug development.

That’s where Takeda finds itself on R&D day today, about 11 months after closing on their Shire acquisition. R&D chief Andy Plump is joining CEO Christophe Weber and other top members of the team to outline a new set of priorities in the greatly expanded pipeline at Takeda, which has jumped into the top ranks of the world’s pharma giants in the wake of the Shire deal.

Endpoints News

Keep reading Endpoints with a free subscription

Unlock this story instantly and join 65,700+ biopharma pros reading Endpoints daily — and it's free.

GSK's asth­ma bi­o­log­ic Nu­cala scores in rare blood dis­or­der study

GlaxoSmithKline’s asthma drug Nucala, which received a resounding FDA rejection for use in chronic obstructive pulmonary disease (COPD) last year, has shown promise in a rare blood disorder.

Endpoints News

Keep reading Endpoints with a free subscription

Unlock this story instantly and join 65,700+ biopharma pros reading Endpoints daily — and it's free.

Mer­ck buys a fledg­ling neu­rode­gen­er­a­tive biotech spawned by an old GSK dis­cov­ery al­liance. What’s up with that?

Avalon Ventures chief Jay Lichter has a well-known yen for drug development programs picked up in academia. And what he found in Haoxing Xu’s lab at the University of Michigan pricked his interest enough to launch one of his umbrella biotechs in San Diego.

Xu’s work laid the foundation for Avalon to launch Calporta, which has been working on finding small molecule agonists of TRPML1 (transient receptor potential cation channel, mucolipin subfamily, member 1) for lysosomal storage disorders. And that pathway, they believe, points to new approaches on major market neurodegenerative diseases like Parkinson’s, ALS and Alzheimer’s.

Endpoints News

Keep reading Endpoints with a free subscription

Unlock this story instantly and join 65,700+ biopharma pros reading Endpoints daily — and it's free.

(Image: Associated Press)

No­var­tis scores its lat­est FDA OK — this time for a new sick­le cell dis­ease drug picked up in a $665M deal

Novartis’ decision to buy Oklahoma-based biotech Selexys 3 years ago for up to $665 million has paid off with an FDA approval today.

Blessed with the FDA’s breakthrough drug designation for a speedy review, the pharma giant has pinned down an approval for crizanlizumab, a new therapy designed to reduce the frequency of painful incidents of vaso-occlusive crises among sickle cell disease patients 16 or older.

Endpoints News

Keep reading Endpoints with a free subscription

Unlock this story instantly and join 65,700+ biopharma pros reading Endpoints daily — and it's free.