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

Aerial view of Genentech's campus in South San Francisco [Credit: Getty]

Genen­tech sub­mits a big plan to ex­pand its South San Fran­cis­co foot­print

The sign is still there, a quaint reminder of whitewashed concrete not 5 miles from Genentech’s sprawling, chrome-and-glass campus: South Francisco The Industrial City. 

The city keeps the old sign, first erected in 1923, as a tourist site and a kind of civic memento to the days it packed meat, milled lumber and burned enough steel to earn the moniker “Smokestack of the Peninsula.” But the real indication of where you are and how much has changed both in San Francisco and in the global economy since a couple researchers and investors rented out an empty warehouse 40 years ago comes in a far smaller blue sign, resembling a Rotary Club post, off the highway: South San Francisco, The Birthplace of Biotech.

Here comes the oral GLP-1 drug for di­a­betes — but No­vo Nordisk is­n't dis­clos­ing Ry­bel­sus price just yet

Novo Nordisk’s priority review voucher on oral semaglutide has paid off. The FDA approval for the GLP-1 drug hit late Friday morning, around six months after the NDA filing.

Rybelsus will be the first GLP-1 pill to enter the type 2 diabetes market — a compelling offering that analysts have pegged as a blockbuster drug with sales estimates ranging from $2 billion to $5 billion.

Ozempic, the once-weekly injectable formulation of semaglutide, brought in around $552 million (DKK 3.75 billion) in the first half of 2019.

As Nas­daq en­rolls the fi­nal batch of 2019 IPOs, how have the num­bers com­pared to past years?

IGM Biosciences’ upsized IPO haul, coming after SpringWorks’ sizable public debut, has revved up some momentum for the last rush of biotech IPOs in 2019.

With 39 new listings on the books and roughly two more months to go before winding down, Nasdaq’s head of healthcare listings Jordan Saxe sees the exchange marking 50 to 60 biopharma IPOs for the year.

“December 15 is usually the last possible day that companies will price,” he said, as companies get ready for business talks at the annual JP Morgan Healthcare Conference in January.

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Oxitec biologist releases genetically modified mosquitoes in Piracicaba, Brazil in 2016 [credit: Getty Images]

In­trex­on unit push­es back against claims its GM mos­qui­toes are mak­ing dis­ease-friend­ly mu­tants

When the hysteria of Zika transmission sprang into the American zeitgeist a few years ago, UK-based Oxitec was already field-testing its male Aedes aegypti mosquito, crafted to possess a gene engineered to obliterate its progeny long before maturation.

But when a group of independent scientists evaluated the impact of the release of these genetically-modified mosquitoes in a trial conducted by Oxitec in Brazil between 2013 and 2015, they found that some of the offspring had managed to survive — prompting them to speculate what impact the survivors could have on disease transmission and/or insecticide resistance.

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Pur­due threat­ens to walk away from set­tle­ment, asks to pay em­ploy­ees mil­lions in bonus­es

There are two updates on the lawsuit against Purdue Pharma over its role in fueling the opioid epidemic, as the Sackler family threatens to walk away from their pledge to pay out $3 billion if a bankruptcy judge does not stop outstanding state lawsuits against them. At the same time, the company has asked permission to pay millions in bonuses to select employees.

Purdue filed for chapter 11 bankruptcy this week as part of its signed resolution to over 2,000 lawsuits. The deal would see the Sackler family that owns Purdue give $3 billion from their personal wealth and the company turned into a trust committed to curbing and reversing overdoses.

David Grainger [file photo]

'Dis­con­nect the bas­tard­s' — one biotech's plan to break can­cer cell­s' uni­fied de­fens­es

Chemotherapy and radiotherapy are the current gladiators of cancer treatment, but they come with well-known limitations and side-effects. The emergence of immunotherapy — a ferocious new titan in oncologist’s toolbox — takes the brakes off the immune system to kill cancer cells with remarkable success in some cases, but the approach is not always effective. What makes certain forms of cancer so resilient? Scientists may have finally pieced together a tantalizing piece of the puzzle, and a new biotech is banking on a new approach to fill the gap.

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A fa­vorite in Alex­ion’s C-suite is leav­ing, and some mighty sur­prised an­a­lysts aren’t the least bit hap­py about it

Analysts hate to lose a biotech CFO they’ve come to trust and admire — especially if they’re being blindsided by a surprise exit.

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Scott Gottlieb, AP Images

Scott Got­tlieb is once again join­ing a team that en­joyed good times at the FDA un­der his high-en­er­gy stint at the helm

Right after jumping on Michael Milken’s FasterCures board on Monday, the newly departed FDA commissioner is back today with news about another life sciences board post that gives him a ringside chair to cheer on a lead player in the real-world evidence movement — one with very close ties to the FDA.

Aetion is reporting this morning that Gottlieb is joining their board, a group that includes Mohamad Makhzoumi, a general partner at New Enterprise Associates, where Gottlieb returned after stepping out of his role at the FDA 2 years after he started.

Gottlieb — one of the best connected execs in biopharma — knows this company well. As head of FDA he championed the use of real-world evidence to help guide drug developers and the agency in gaining greater efficiencies, which helped set up Aetion as a high-profile player in the game.

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While No­var­tis ban­ish­es Zol­gens­ma scan­dal scars — Bio­gen goes on a Spin­raza 'of­fen­sive'

While Novartis painstakingly works to mop up the stench of the data manipulation scandal associated with its expensive gene therapy for spinal muscular atrophy (SMA) Zolgensma— rival Biogen is attempting to expand the use of its SMA therapy, Spinraza. 

The US drugmaker $BIIB secured US approval for Spinraza for use in the often fatal genetic disease in 2016. The approval covered a broad range of patients with infantile-onset (most likely to develop Type 1) SMA.