Too Little Bang for the Buck in Drug Research?

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Whenever critics complain about the high cost of prescription drugs, the pharmaceutical industry's standard defense is that companies have to plow so much money into researching innovative new medicines. But a recently released report from the Government Accountability Office casts doubt on that rationale. Yes the industry is spending heavily on R&D, the GAO found, but it turns out big pharma isn't actually generating such a good return on their investments.

The congressional watchdog agency's 48-page study came up with disturbing numbers. From 1993-2004, spending by U.S. drug companies on research and development jumped 147%, from $16 billion to nearly $40 billion annually. But the number of applications the pharmaceutical firms submitted to the Food and Drug Administration for potentially groundbreaking new drugs during that 10-year period increased only a meager 7%. And since 1995, the applications for these innovative drugs have been dropping each year. "The productivity of research and development investments has declined," the GAO concluded.

Ironically, the shrinking pipeline comes at a time when basic science is bursting with new breakthroughs in fields like human genome decoding, which in turn have raised hopes for breakthrough cures and treatments of serious illnesses. But the numbers show otherwise. The GAO reviewed all 1,264 of the new drug applications submitted for FDA approval from 1993-2004 and found that 60% of them were actually for what industry analysts call "me too" drugs—variations of medications already out on the market. Only 12% of the applications were for what the FDA classified as "priority" new drugs—that is, medications with new chemical ingredients that will have significant therapeutic benefits in treating or preventing a disease.

The three Democrats who asked for the GAO study—Rep. Henry Waxman, Sen. Edward Kennedy and Sen. Richard Durbin—pounced on its findings as proof once more that corporate greed in health care is shortchanging consumers. "The report shows that much drug industry research doesn't translate into real breakthroughs for patients," says Kennedy. The Pharmaceutical Research and Manufacturers of America, which represents the drug industry, fired back that the GAO report only confirms that developing new drugs has become a more expensive, difficult and risky exercise for manufacturers. "Researchers are tackling increasingly complex diseases using new tools—such as genomics, proteomics and nanotechnology—that will take years to bear fruit," says PhRMA Senior Vice President Ken Johnson, adding that "more than 2,000 new medicines are in development, including 646 medicines for cancer, 146 for heart disease and stroke, 77 for AIDS, and 56 for diabetes."

But business interests have actually been a factor in curbing innovations, the GAO found. During the past decade the pharmaceutical industry has tended to focus on "blockbuster drugs" for large patient populations that can generate as much as $1 billion in annual sales, while ignoring "other drugs for more limited populations that generate much less revenue." Manufacturers find "me too" drug development less risky and more potentially lucrative than research into brand-new medications. Drug company mergers in the early 1990s also have resulted in the larger firms scaling back R&D into new drugs as they look to cut costs.

But the bottom line isn't the only culprit. It does take on average more than 13 years and often several hundred million dollars for a company to research and test a major new drug before it's presented to the FDA for approval. Only about one of every 10,000 chemical compounds that are first tested end up as medicine cleared by the feds. Converting basic scientific research into effective medicines to treat complex diseases like cancer has also become more difficult the past several years with more expensive and longer drug trials, as well as higher failure rates. There's also a shortage in this country of what are called "translational researchers"—people with both medical and scientific degrees who have the expertise to convert scientific discoveries into workable drugs.

The GAO had the National Academy of Sciences convene a panel of 14 doctors, scientists, pharmaceutical industry researchers and patient advocates to come up with ways to spur innovation. They recommended more collaboration among government, industry and academia. Colleges, for example, could offer more scholarships to train translational researchers. The government could offer more incentives for innovative drug research. Patents for breakthrough drugs could be extended from the current 20 years to 25-30 years, while patents for "me too" drugs could be shortened to 10 years. Otherwise the billions for research will end up producing bigger profits, but not necessarily better medications.