Big Money in Big Pharma

[stephen-guilfoy]

Like many people, I’ve been astounded by the cost of some specialist drugs. Before I worked with this industry, I consumed the tabloid headlines aghast at treatments that could cost the patient or their insurer thousands or even hundreds of thousands of dollars per year. If you’re reading this then you probably know enough about the industry to have an opinion, and in fact you may be sympathetic to the manufacturers that charge these prices.

But we’re in the minority, many people out there in the street react quite angrily to these spiraling costs. Even my own friends have such strong opinions that I can recall several heated discussions with me arguing the case for the seemingly money grabbing pharmaceutical giants. So, why do people react this way, and what’s to be done? Before reading on, let me make the disclaimer that this is my personal view. Time for a rant then maybe?

Just How Much Can Drugs Really Cost?

Some hard facts first. The world’s most expensive drug is believed to be Soliris. The graph below, courtesy of Forbes.com, shows just how much money we’re talking about.



 

Learning a little more about what it does, I turn of course to the easy option. Soliris is the trade name, and the drug name is Eculizumab. For those who know their drugs, you’ll spot immediately that this is a monoclonal antibody. Great for our company, as we have excellent solutions for their characterization . But what does it do?

Well, Soliris is a terminal complement inhibitor and it used to treat several rare conditions including atypical haemolytic uremic syndrome (aHUS) and paroxysmal nocturnal haemoglobinuria (PNH). Worryingly, my research indicates that guaranteed efficacy is less than certain, although as both the FDA  and EMA  approved it, we should not have too much to fear. As always with the regulators, one of the key ways to state why approval was granted is to say that “the benefits are greater than the risks.” The side effects can be nasty, but then again have you read the side effects for any over the counter drug recently? You may be unpleasantly surprised.

Let’s get off the science and move on to the dirty bit, the cost. It seems that Soliris costs half a million dollars per year in the USA, or to put it another way, $1,200 per day. These are the statistics that get the tabloid newspapers so riled. But are the costs justified?

It depends on your point of view. One thing that the naysayers seem to forget is the risk that pharmaceutical and biopharmaceutical producers have to navigate during the development process. It depends where you look, but it seems that the typical development time for a complex biopharmaceutical drug such as Soliris is about 10-12 years. The average development cost is about $2.5 billion. Worst of all, you incur that cost and that development time without any guarantee that the drug will exhibit the required efficacy-to-contraindication ratio.

And that’s before we’ve got as far as the regulators! Needless to say, they are risk averse, as they should be, so if there is any doubt about your new three billion dollar drug, they’ll say no. In case you’re wondering about how much compensation you get for those wasted billions? Correct, not a dime. There’s a great graphic by phmra.org that shows this in a little more detail:



There’s also a rather lovely infographic that you can get direct from the FDA.

Does It Make a Difference How Many People Take the Drug?

For specialist drugs like Soliris, perhaps one of the most significant factors that affects pricing is not the development time or cost, but rather the small potential cohort of patients who may need the drug. The less common the condition, the less patients and naturally the greater the cost required to recoup those lost billions. Typically such drugs are known as “orphan” drugs. For drugs like Soliris, the number of potential patients (in the US at least) numbers below 10,000. That’s orders of magnitude less than the number of patients that might require the most lucrative drugs such as Abbvie’s Humira.

But my intention was for this blog to be balanced, so what’s the argument in the other direction? Abbvie made $1.5 billion in profit  in just the last quarter, mostly due to the aforementioned Humira. Is that obscene? Personal opinion of course. Companies in all sectors of business make large profits, which is great if you are a shareholder, but a bitter pill to swallow (so to speak) if you require their medication.

So what about biosimilars, basically the generic versions of biotherapeutics? If you can imagine a Walmart-branded monoclonal antibody then you’re at the extreme but plausible end of the biosimilar spectrum. Surely they’ll be cheaper? Not so fast…. The legislators are all in a tizz about biosimilars  and in fact it may take just as much time, money and effort to verify their efficacy as it does with the innovator (original) drug.

Even worse, the producers of the original biotherapeutic won’t go quietly into the night. For example, Abbvie intends to fight any launch of biosimilar versions of Humira until at least 2022, stating "Any company seeking to market biosimilar versions of Humira will have to contend with this extensive patent estate, which AbbVie intends to defend vigorously." Despite this, my sources tell me that there are several, if not many, drug producers planning Humira biosimilars. It will be an interesting show down to say the least.

But Just How Cheap Can Drugs Be?

But let’s finish on a lighter note. Bizarrely it is harder to find out which are the cheapest drugs in the world, but after considering aspirin, paracetamol and other analgesics I found that the raw material for paracetamol costs $5 per Kg. That equates to about 0.25 of a cent per tablet. Here in the UK you can buy generic paracetamol in supermarkets for about 1 (British) penny (approximately 1.3 US cents) so the mark up is less than I thought.

This leads on to a great take-away fact for the day: assuming you took one paracetamol per day, bought from the supermarket, the cost difference between that and taking Soliris every day is an astonishing five orders of magnitude. You read it here first.

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