Pharmaceuticals

Government Pills

I'm from the government and I'm here to help with new drug discovery

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Government expands on failure. All too often, government failure is treated as evidence that we need more government. Instead, government failure indicates that we should look for alternative results in the competitive marketplace. Unfortunately, the creation of the new National Center for Advancing Translational Sciences (NCATS) is a near perfect example of how government failure leads to further government interference with markets, in this case the market for new medicines. 

Over the past 15 years the number of new drugs that have been making it to patients' bedsides has been falling. In addition, after rising steeply for many years, research spending by large drug makers has recently declined. "I am a little frustrated to see how many of the discoveries that do look as though they have therapeutic implications are waiting for the pharmaceutical industry to follow through with them," said Francis Collins in The New York Times. Collins, as head of the National Institutes of Health, is spearheading the creation of the NCATS.

The problem is that Collins is frustrated with the wrong target. Most of the reason for the decline in new drug discovery can be encapsulated in just three letters: F-D-A. The Food and Drug Administration's drug approval process has become so onerous and expensive that pharmaceutical companies have been cutting back on the number of new drugs that they submit for approval. In 1996, the FDA approved 53 new chemical entities (novel drugs). New Molecular Entity (NME) approvals by the FDA fell to just 18 in 2007, bumping up to 21 this past year.

But is the FDA really to blame? Anti-pharmaceutical company activists complain that the drug companies spend twice as much on marketing as they do on research. In addition, the drug companies allegedly concentrate far too much on creating "me-too" drugs that are similar to those already successfully treating illnesses and not on innovative new drugs. While both claims have some truth in them, they are affected by the onerous regulations imposed by the FDA. If a pharmaceutical company knows that it can afford to get only one or two new drugs through the regulatory gauntlet per year, it will focus its research priorities on possible blockbusters that can be used to treat millions rather than engage in more speculative research on drugs aimed at treating tens of thousands. Thus FDA regulations narrow the drug development pipeline and slow research on pharmaceuticals aimed at treating serious but relatively uncommon diseases.

Drug companies are in the business of making money by selling medicines to sick people and they, just like any other businesses, set their prices based on what the market will bear. However, at the margin, a thin development pipeline encourages drug companies to flog the pharmaceuticals that they have already managed to get approved in the hopes of wringing as much profit out of them as possible before they go off patent. If companies could afford to have more drugs under development, they could count more securely on a future stream of profits. 

"The drug companies do almost no innovation now. It's just turning out one more drug that's similar to a blockbuster," asserted fierce drug company critic Marcia Angell, a Harvard University senior lecturer in social medicine, in 2003. "These are called copycat drugs, or 'me too' drugs. That's their major business now." Not so. Angell simply gets it wrong about how these drugs are developed. In fact, most research on so-called "me-too" drugs is done simultaneously by competing drug companies. They are not copy-catting one another, they are racing one another. In addition, the amount of time that a new drug enjoys market exclusivity has shrunk from five years to just over one year. This means that price competition breaks out between the new drugs faster than ever.

Although overall biopharmaceutical research and development spending continues to grow, R&D spending by big drug makers peaked at $47.9 billion in 2007, falling to $45.8 billion in 2009. This is significant because the big drug makers are the companies that can afford to spend $1 billion to get a new drug through the FDA's recondite approval process. The advent of the Great Recession no doubt had an impact on their R&D funding, but it is also likely that fears that the Obama administration's health care mandates will evolve into a system of drug price controls also contributed to the cuts.

Just how much is government slowing new drug development? A new study [subscription] by oncologist David Stewart and his colleagues at the M.D. Anderson Cancer Center in Houston, Texas, in the June 10, 2010 issue of the Journal of Clinical Oncology, sheds some depressing light on this issue. The article notes that the time from drug discovery to marketing increased from eight years in 1960 to 12 to 15 years now. They calculate that five years of this increase is the result of ever tighter regulations boosting the costs and lengths of clinical trials. The more stringent clinical trial regulations aim at the laudable goal of protecting cancer patients from harm, especially from death as result of drug toxicity. However, the M.D. Anderson Center researchers note that toxic death rates in clinical trials has in fact not significantly decreased. In 461 Phase I cancer trials between 1991 and 2002 involving nearly 12,000 patients, there were only 58 toxic deaths. In 227 trials between 1979 and 1990 involving about 6,500 patients there were 52 toxic deaths. Considering that they are afflicted with a terminal disease, the risks to cancer patients in clinical trials are quite small.

Without going into detail, the researchers calculate that the clinical trial regulations cost $2,700,000 per life-year saved. In contrast, dialysis costs $43,000 to $104,000 per life year saved; statin drugs cost $19,000 to $25,000 per life-year; and colorectal cancer screening costs $14,000. The regulations appear to save about 16 life-years over the course of drug development. On the other hand, the authors conservatively estimate that increased regulatory delays in drug approvals results in the loss of nearly 300,000 life-years in the U.S. Sixteen life-years versus 300,000 life-years! The authors conclude, "The current regulatory situation is unacceptable and seems to be unethical." A similar story of pervasive government failure holds for drug development aiming to treat other diseases.

Since the government is hampering the development of new medicines, the obvious solution would be to get the government to stop doing that. Unfortunately, the perpetrators of government failure (bureaucrats and Congress members) cannot see that they are the problem. As muckraker Upton Sinclair once observed, "It is difficult to get a man to understand something when his salary depends on his not understanding it." So instead of doing the right thing and reducing regulatory burdens, the government is responding as it is nearly always does by asking for more government. Thus is born the new NCATS, which is slated to be operational by October with an initial budget of $1 billion.

Instead of exacerbating government failure, what would a modernized system of drug development and approval look like? First, cut through the thickets of paperwork that are strangling the clinical trial process. The M.D. Anderson Center researchers estimate that review and documentation requirements delay research by as much as two years. Second, employ validated biomarker and surrogate endpoints when testing for safety and efficacy, enabling researchers to identify quickly specific populations of patients that will benefit from a new drug and those who will not. And restructure the drug review process to permit conditional approval of drugs based on shorter and smaller clinical trials. Informed patients initially treated with conditionally approved new drugs would essentially be monitored as though they were in phase three clinical trials confirming treatment effectiveness.

"The N.I.H. is not likely to be very good at drug discovery, so why are they doing this?," asked Dr. Mark Lively, a biochemist at Wake Forest University in The New York Times. That's a very good question. Creating the new NCATS amounts to adding what will turn out to be another dysfunctional government widget to an already baroque and broken drug discovery and approval process.

Ronald Bailey is Reason's science correspondent. His book Liberation Biology: The Scientific and Moral Case for the Biotech Revolution is now available from Prometheus Books.

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75 responses to “Government Pills

  1. Reduce corporate tax rates to zero and we’ll have more drugs than we know what to do with. The eeeviiil corporatations will probably invent diseases that they can develop the cure for.

    Did I mention that unemployment would fall precipitously? I didn’t? Well, I guess that would be a beneficial side-effect.

  2. This is your blog on drugs. Where do all the lost comments go? Are my socks there?

  3. This is your blog on drugs. Where do all the lost comments go? Are my socks there?

  4. This is your blog on drugs. Where do all the lost comments go? Are my socks there?

  5. I think they were hacked. My commenter information was pre-filled as “Pro Libertate”. Weird.

    1. I find this disturbing somehow.

  6. Yeah, get Algore on it, he’s a brilliant scientist!

  7. So, the US is expanding the War on Drugs again?

    1. This is something new – The War With Drugs?.

      We need another war that can’t possibly be won.

      1. We need another war that can’t possibly be won.

        I think my “War on My Creditors” falls into that category.

        1. In my case it is the “War on My Wife’s Spending” but, same difference.

  8. “On the other hand, the authors conservatively estimate that increased regulatory delays in drug approvals results in the loss of nearly 300,000 life-years in the U.S. Sixteen life-years versus 300,000 life-years!”

    Can we get these guys to do a study on TSA?

  9. Absolutely the FDA testing process could certainly be streamlined, as government red-tape is seldom anything but a proxy for keeping the major companies from competition (demonstrated by the fact that a lot of these companies even participate in drafting the regulations). However, I wouldn’t be opposed to price controls or some reasonable regulations regarding the sale of pharmaceuticals. After all, by granting patents for drugs, the government is basically giving the developer a temporary monopoly on their product; monopolies are abhorrent to a free market, but, in this case, are necessary to ensure that testing and innovation occurs in the future. Since the government is basically allowing sole sale rights for a limited period to one corporation, it isn’t unreasonable to think that these rights ought to come with some reasonable caveats (although all too often they do not) to ensure a fair and competitive market. And if pharmaceutical companies don’t like the idea of gaining exclusive rights to sale in exchange for some reasonable requirements, they would be, of course, free to keep their discoveries trade secrets and charge whatever they want.

    Bottom line, if the government grants your business a monopoly, even a temporary one, you should have to play by a few rules to ensure that the market remains free and fair.

    1. “Bottom line, if the government grants your business a monopoly, even a temporary one, you should have to play by a few rules to ensure that the market remains free and fair.”

      If the government grants a monopoly, there is no fair market.

      1. Intellectual property is a government creation. How well would the market work without it?

        Just one among many examples of ways the government creates the conditions for the market.

        1. Tony|1.25.11 @ 7:21PM|#
          “Intellectual property is a government creation.”
          Bullshit.

          1. Oh and what is it? One of those magical natural rights?

            Actually all property is a government creation.

            1. Tony|1.25.11 @ 7:32PM|#
              “Actually all property is a government creation.”
              Bullshit.

        2. You are assuming that “intellectual property” is good for the market, its not, its a government backed monopoly that protects the big guys. Since you are a conservative who has sees no problem with the current status quo, you should also then have no problem with the high prices these monopolies produce.

        3. Intellectual property is basically a discovery mechanism in which inventors are encouraged to tell us how they do something in exchange for a limited monopoly – as Lincoln said “patents add the fuel of interest to the fire of genius.”

          1. Ron Bailey|1.25.11 @ 10:55PM|#
            “Intellectual property is basically a discovery mechanism in which inventors are encouraged to tell us how they do something in exchange for a limited monopoly…”

            I’d say you’re using the term “monopoly” rather loosely. It is commonly presumed that the government actively enforces patents; it does nothing of the sort.
            As a holder of a patent, you can hire legal help to try to convince a jury that another agent “infringed” upon your patent. If the jury finds in your favor, you can stop the infringement and maybe collect damages.
            That’s the limit of the “monopoly” granted by the government.

            1. That’s a good one…

              …now tell me what happens if the company keeps selling it or refuses to mail you the money it owes you…

              …why do you hate liberty? Statist!

              …am i doin it right?

    2. But after the patent expires, the drug is free for any and all to manufacture. Which is better than if the drug was never discovered, tested, effectiveness determined, etc.

      So what if the price is exorbitant for 10 years? It’s the same effect as if it was never discovered during that time, sure, but after that time period? Yeah…everyone is far better off for it.

      1. While it’s true that it’s better for a drug to be cheaply available after the patent runs out than never available, it seems like a false dichotomy to say that the only choices are to either give the company (or person) that invented it an absolute monopoly or to accept that, without that, the drug would never have been invented at all.

        To reiterate: The purpose of the patent system is to ensure ingenuity by providing a means of profit to those who bring innovation to the marketplace. However, this doesn’t necessarily equate to an inventor being able to make virtually unlimited and unjustified profit simply by virtue of the fact that consumers of a pharmaceutical need that product to live, nor does it mean that, since consumers need the product to live, the inventor is or ought to be forced to live with excessively narrow profit margins.

        Basically, as long as there is a considerable profit incentive, companies, being driven by profits, will invest in research and development, and that profit incentive should be preserved. Yet at the same time, we should work to ensure that people or companies who file patents do not attempt to “game” the free market using the protections we the people have provided. The exact nature and extent of regulations which would accomplish this goal would be far to involved a conversation for this post, but I’m sure there would exist a middle ground wherein companies would be motivated to innovate and consumers would be protected from the more adverse affects of monopolies of the free market.

        1. “Yet at the same time, we should work to ensure that people or companies who file patents do not attempt to “game” the free market using the protections we the people have provided.”
          Bullshit.

          1. Haha, disregard that I suck cawks

    3. Yes, but what if I want to start a pharma company that doesn’t take IP (actually a dream of mine that I might try to execute). I STILL have to get FDA approval to sell my drugs.

      1. Tony’s right; patents are not natural rights…they’re a disgusting gov’t enforced monopoly. All patents do is prevent other firms from copying and getting generics out faster and cheaper. Even without patents, the profit incentive for R&D is STILL THERE, because by developing a drug, you’ll be the first one to market, and be the “name brand”.

        I’m elated when I can get a cheap Chinese knock-off of something that would otherwise cost a fortune (provided the quality is roughly the same, of course). In fact, my wife is a cheap Chinese knock-off of a white American woman.

  10. No surprises here. I’ve long had the thought that drugs cannot solve all of our medical problems. Cancer will never be cured with a pill (well, until it’s a pill filled with nanobots or some other method of altering one’s DNA.)

    So, it seems like the possibilities for pharmaceuticals are already drying up. Time to start looking at new technology.

  11. Pharmaceutical companies have very little incentive to cure people when they can just keep them on pills forever. Anyone care to argue otherwise? At least government R&D has a purpose other than finding ways to bilk people of more money.

    1. Tony|1.25.11 @ 7:22PM|#
      “Pharmaceutical companies have very little incentive to cure people when they can just keep them on pills forever.”
      So………………..
      what?

      1. So there are other important things in the world besides profits for corporations?

        1. Tony|1.25.11 @ 7:28PM|#
          “So there are other important things in the world besides profits for corporations?”
          Non-sequitur asshole. Try again.

          1. Fuck you, republicunt. I don’t have to take your abuse. And learn what a non sequitur is.

            1. Tony|1.25.11 @ 8:33PM|#
              “Fuck you, republicunt. I don’t have to take your abuse.”

              Yes you do, you lying asshole.

              “And learn what a non sequitur is.”
              Easy. See your brain-dead comment above, lying asshole.

              Oh, and: “republicunt”
              How clever! I’ll bet your third grade classmates are just howling with laughter, lying asshole.

    2. “At least government R&D has a purpose other than finding ways to bilk people of more money.”
      Bullshit. They call it “taxes” ad don’t bother to ask is you’d like to pay.
      BTW, you’re a lying asshole.

    3. HA!
      “At least government R&D has a purpose other than finding ways to bilk people of more money.”
      Dude…how clueless are you?
      Quit it man…you’re killing me with the humor…my sides hurt from laughing so hard.

      Oh…and the incentive is to actually sell their product versus the competitors. If J&J offers Drug 1 that merely treats Disease X, while Merck offers drug 2 that will cure you of Disease X, which will you buy? Yeah…drug 2.

      1. Or the companies could just collude. I don’t have time to go into details, and you wouldn’t believe me anyway, but there are some really, really bad things pharma companies engage in. Their business is simply not about curing people.

        1. Tony|1.25.11 @ 7:31PM|#
          “Or the companies could just collude. I don’t have time to go into details,…”
          You’re a lying asshole who doesn’t have the brains to support you lies.

        2. “I don’t have time to go into details, and you wouldn’t believe me anyway, but there are some really, really bad things pharma companies engage in…”

          I don’t have the time to go into details, and you probably wouldn’t believe me anyway, but there are some really, really bad things that government-sponsored research does.

          But I’ll try anyway: Did I tell you about the lab at NIMH where they take capuchin monkeys and create lesions in their brains and see what the behavioral/social effects were? They did this to about 50 monkeys. Thankfully, 25 which were control animals.

    4. At least government R&D has a purpose other than finding ways to bilk people of more money.

      Somehow I doubt that gov’t R&D is any different than the rest of the money-bilking gov’t….so, ummm, yeah?

    5. “Pharmaceutical companies have very little incentive to cure people”

      And lawyers have very little incentive to win a case for their client when they can let them get convicted and keep them in the appeals process (billable hours!) forever.

      1. Now that I think about it, Tony’s neanderthal line of reasoning might work for one industry, but not pharma.

        Government run schools have very little incentive to educate children when stupid ignorant adults are what create demand for more government services.

        1. While any corporation’s motives are easily explained, it’s not quite as clear that government officials are motivated by getting more people into government services.

          Though the first half of your supposition is correct. Republicans DO want people to be as stupid as possible, so they’ll vote for them. But then they want to take away all their services. So they want them REALLY stupid.

          1. A PI researcher at a research university has a pretty strong motivation to train more grad students and put them on the government grant teat. It’s called cheap labor.

          2. Tony|1.25.11 @ 8:57PM|#
            “While any corporation’s motives are easily explained, it’s not quite as clear that government officials are motivated by getting more people into government services.”
            Only to brain-deads, lying asshole.

          3. “Though the first half of your supposition is correct. Republicans DO want people to be as stupid as possible, so they’ll vote for them. But then they want to take away all their services. So they want them REALLY stupid.”
            So either you’re lying again, or you’re a dedicated Republican voter.

            1. You know what Tony? You’re absolutely right. I’ve been attacking you personally for awhile, and it’s unfair of me to single you out. I am a cunt-faced son of a bitch with a gay name.

          4. tony: “…it’s not quite as clear that government officials are motivated by getting more people into government services.”

            Maybe it’s not clear to you.

    6. “At least government R&D has a purpose other than finding ways to bilk people of more money.”

      HAHAHA, you’re such a tool. Spend 6 years at an institute for biomedical research and if you can really say that with a straight face you are a fucking retard.

  12. So, I’m having flash backs to when the Navy, during WWI,thought they were getting over priced, crap armor from the steel companies. They had the brilliant idea to start up their own steel mill to make armor plate faster, cheaper and better than those greedy private industry folks. First batch was delivered in ’21…..and was crap….and cost more than what the Navy said was rip off pricing from the private steel companies.

    I see this as being a huge money pit, with congress bastards fighting to get the drug research money in their home district. I wonder if this bastard agency will spread around to about 200 plus offices / labs, each in a different congressional district, in at least 30 states.

  13. Let the FDA go back to screening for safety, and leave efficacy to doctors and patients.

    1. How about an underwriter’s lab for pharma? Fuck the FDA. Also, FDA safety screens undertest minorities. So drugs that are safe in white folk probably aren’t safe in people like me.

      1. *aren’t necessarily. “probably” might be too pessimistic.

    2. Sorry, no can evaluate safety except in context of efficacy. Long before the statute specified efficacy testing, FDA was evaluating drugs for safety in terms of what was believed about their efficacy.

  14. I’m sure the “NIH Drug Discovery Institute” will be as credible as the creationist Discovery Institute.

    LMFAO

    1. The NIH Drug Discover Institute will have the highest possible credentials. Any academic researcher who challenges its reliability will stop getting government research funds.

      1. And they’ll be called a “Denier”!

  15. *aren’t necessarily. “probably” might be too pessimistic.

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  18. I trained myself for work in drug research as an undergraduate. Then Hillarycare almost passed. I could see that the government would take down the industry, and I changed my career plans. I went to graduate school for ecology and evolution. Now, I’m a writer. Who knows how many patients might have been cured by something I helped discover if I hadn’t changed course. The way I figure, there’s poet justice in the lack of new drug discoveries.

  19. I trained myself for work in drug research as an undergraduate.

    I did a hell of a lot of drug research as an undergrad. That’s why I only have a BA

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  21. I’m a medical writer, and I know first hand how ridiculously convoluted the process of applying to the FDA. Instead of applying a “guilty until proven innocent” model to every drug, they should let manufacturers market drugs however they like until the results of their trials say otherwise.

    For their part, the drug companies do a pretty piss-poor job of managing the projects themselves. We live in an electronic age. You would think data from each hospital would be uploaded immediately to a company’s central server and added to a database that continually updates relevant parameters for reports to the FDA. Nope. They’re getting there, but these companies are big boats, and they take a long time to turn.

  22. Some of the marketing of pharmaceuticals are horrific. Commissions to doctors, etc. Maybe not so much in the west anymore but many 3rd world countries it still happens regularly.

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