Transcript How the Drug Industry Works

ARRRR! Drug
Development and
Discovery
Access to Essential Medicines De-Cal
Fall 2006- Week 2
Happy International Talk Like
a Pirate Day!
Drug companies make
medicines that cost “lots o'
doubloons”
My favorite pirate pick up
line: Avast, me proud
beauty! Wanna know why
my Roger is so Jolly?
Roadmap
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Evolution of the pharmaceutical industry
Research & development pipeline:
Identifying compounds
 Pre-clinical and clinical trials
 Production and distribution
 Marketing and sales
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The reality of Pharma
Evolution of Pharma
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Previously
unregulated
Huge gains in basic
scientific
understanding the
1950s and 60s
Modern drug industry
is centralized in about
ten major companies
Then
Now
R&D Pipeline
The Players:
Basic research
institutions
Contract
Research
Organizations
FDA
Small Biotech
firms
Big Pharma
R&D Pipeline
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Step 1: Basic laboratory research
Step 2: Preclinical testing after a promising
compound is found
Step 3: Investigational New Drug filing with
FDA
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Three phases of clinical trials
Step 4: New Drug Application (NDA)
Step 5: Sale
Clinical Trials
Phase I
Phase II
Phase III
Non-blind
experiments for
dosing
Single blind
experiments for
efficacy
Double blind
experiments
for efficacy
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Less of a pipeline, more of a
funnel . . .
Production and Distribution
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Developing
production
methods and
creating facilities
Distribution
Enormous
marketing
expenditures
The $800 million pill?
Important concepts
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Generic drug manufacturers
New Molecular Entities (NMEs)
 Bioequivalency
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Me-too drugs
Lifestyle drugs
Second indications
Pharma companies are ruthless profit
maximizers
The Politics of Pharma
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Organized into PhRMA (Pharmaceutical
Research and Manufacturers of America
Huge political lobby:
In 2001 Name-brand pharma spent $75.4
million on lobbying
 That same year generics spent $2.4 million
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The providers for a society that
increasingly relies on drugs
The Good
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In 2004 name-brand pharmaceutical firms
spent approximately $53 billion on R&D
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New medicines generated 40% of the twoyear life expectancy gain in 52 developed
countries*
* F.R. Lichtenberg, The Impact of New Drug Launches on Longevity, National Bureau of
Economics Research Working Paper No. 9754 (June 2003).
The Bad
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In 2001 an estimated 1.9 to 2.2 million
people were driven in personal bankruptcy
by health care costs*
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In 2004 pharma spent approximately
$1.25 billion per NME; in 1995 that
number was $317 million+
* Health care costs main cause of bankruptcy, study finds, The New Standard, at
http://newstandardnews.net/content/?action=show_item&itemid=1439
+R&D spending per NME Declines, Drugresearcher.com, at
http://www.drugresearcher.com/news/ng.asp?id=61610-r-d-nme-spend
The Questionable
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Decline in the efficiency of R&D (i.e. less
NMEs per R&D $ spent)
Mergers of big companies hurting R&D
The cost of marketing of pharmaceuticals
Direct to consumer advertising
Me too and lifestyle drugs
Arrr! That be questionable,
matey