GSK’s Witty: ‘Drugs should be cheaper’
pharmafile | March 15, 2013 | News story | Manufacturing and Production, Research and Development, Sales and Marketing | ABPI, GSK, Witty
Drugs should be cheaper, GlaxoSmithKline boss Sir Andrew Witty said at a conference this week.
His comments, reported by Reuters, may not be welcomed by others in the pharma industry, who have set great store by explaining how expensive developing medicines is in order to justify the cost of new drugs.
But Sir Andrew – an influential voice in UK pharma – disagrees. “It’s not unrealistic that new innovations ought to be priced at or below, in some cases, the prices that have pre-existed them,” he said.
“We haven’t seen that in recent eras of the [pharma] industry but it is completely normal in other industries,” Sir Andrew went on.
The $1 billion price tag often quoted as the cost of developing one new medicine is “one of the great myths of the industry”, he insisted. The figure is an average which includes products which fail, he says, so “if you stop failing so often you massively reduce the cost of drug development”.
GSK’s rate of return on R&D has risen by 30% in the last few years, he said: “It’s why we are beginning to be able to price lower.”
The ABPI says it typically costs even more than the figure Sir Andrew suggests. The trade body believes it costs £1.15 billion – pounds not dollars – “to do all the R&D necessary before a new medicine can be licensed for use”.
Although declining to comment directly on Sir Andrew’s comments, the ABPI gave a statement to Pharmafocus which talked of the ‘inherent risks’ faced by pharma companies developing medicines.
“That is why medicines are priced to allow companies to make a fair return on investment,” it went on.
Much of the rest of the ABPI statement echoes a recent report by The Office of Health Economics, which actually put the cost of R&D per new medicine higher still, at £1.2 billion.
A recent report by The Office of Health Economics actually put the cost of R&D per new medicine higher still, at £1.2 billion. The think tank also said the cost of pharma R&D has risen ten-fold in real terms over the past four decades.
Using published research data, the OHE report said there are four main variables which dictate how expensive R&D has become:
- ‘out-of-pocket’ costs of R&D – swallowed by a company, before adjusting for drug failures – which have risen 600% from the 1970s to now
- success rates, which have dropped from one in five in the 1980s to just one in ten in modern times – in part because more difficult diseases such as Alzheimer’s, cancer and autoimmune conditions, are being explored
- it now takes longer to get a drug from molecule to market: R&D time has jumped from six years in the 1970s to 13.5 years in the 2000s, as both regulation and the science itself have become more complex
- cost of funding has risen since investors expect greater returns now as their quid pro quo for the risks of investing in pharma R&D: these have grown from 8% in the 1970s to 11% now.
Making decisions earlier in R&D projects about candidates’ viability and moving clinical trials to countries such as China, are strategies companies are already using to mitigate rising prices.
Tie-ups which have become commonplace in pharma – for example between industry and academia – also help to spread the risks and rewards of R&D, the authors concluded.
Adam Hill
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