Eroom's Law

Big Pharma and innovation are not consistent. Prove of theorem.

It is known and understood for those who has a little bit critical vision that commercial drug development has shown problems with efficiency and productivity for last 50+ years. The cost of development of a new drug is doubled every 9 years (Eroom's Low). The authors of the Erooms Low did very good investigation of the phenomenon. Let us make an additional step forward and try to find out what or who can stay behind this empiric low. In order to clarify the situation let us determine the main players of the drug development process:

1. Sick people who are the main consumers of Big Pharma.
2. Particular pharma companies.
3. Big Pharma – an abstract body consisted of a high-top pharma corporations with common lobbing interests, business operation patterns and marketing behavior.
4. Regulatory authorities.
5. Governments and politicians who can influence drug development process on macroeconomic levels.
6. Scientists who are directly involved in the process of innovative drug development.
7. Hospitals and medical staff

There are probably additional players who are not mentioned here but their impact will be probably weak.

Then let's imagine a situation when a new innovative discovery which can lead to a development a new blockbuster is evolving. Who will benefit from a novel super medicine and who will not (if any, - probably nobody will suffer, may be everybody will win and we still have the paradox with a decreasing of productivity in drug development process!)?

Sick people – for sure will benefit! Better condition, quality of life and probably survival – what could be in the world much better for the sick people?

A scientist who invents the miracle? Probably he will get Nobel Prize! Well, he is the obvious winner.

States and politicians. The will definitively not loose.

Hospitals and medical staff as well as FDA, EMEA and other national agencies – it is basically neutral, no big advantages, no huge losses in general neither.

A particular pharmaceutical company. Which one? The company who invents the drug – yes! It takes a jack pot! But for the competitors? They will suffer, undoubtedly. So, basically, innovation is a powerful weapon to win better position on the market and surprisingly somebody or something prevents pharmaceutical companies to apply this weapon and start a holy war against competitors for the better medicinal products!

Well... who is left? Yes – Big Pharma! Let's break it down. A company's assets can be divided in material assets and immaterial ones. If a novel drug comes to the market it does not affect material assets of the biggest pharmaceutical companies but it definitively deteriorates (probably very crucially and in unpredictable manner) immaterial assets of the competitors. Every new blockbuster on the market results in a chaos and turbulence. And how to take a control over the situation? To reduce innovation activity. Wait... In which way? You simply cannot order to scientists: Stop invent innovative drugs! Sure, but Big Pharma can (and in reality does!) lobby Regulator Authority to prevent novel drugs from coming to the market by increasing the control bariers for these new drugs. It can always be explained by improving the safety profile, who could argue that the safety is not important? But in which an extent? The rules were changed so much that Aspirin and many other well known drugs wouldn't be approved nowadays! And basically the help of regulatory agencies is well defined in the article as The ‘cautious regulator’ problem:

Progressive lowering of the risk tolerance of drug regu­latory agencies obviously raises the bar for the introduction of new drugs, and could substantially increase the associated costs of R&D. Each real or perceived sin by the industry, or genuine drug misfortune, leads to a tightening of the regulatory ratchet, and the ratchet is rarely loosened, even if it seems as though this could be achieved without causing significant risk to drug safety. For example, the Ames test for mutagenicity may be a vestigial regulatory requirement; it prob­ably adds little to drug safety but kills some drug candidates. Furthermore, for most of the past 60 years large and sophisticated drug companies may not have been disappointed to see the regulatory ratchet tighten because it reduced competition.

And how this ‘cautious regulation’ slowed down the approval process? Very nice example (it is defined as The long cycle time problem):

In the 1950s and 1960s, cycle times were remarkably short by modern standards. The regula­tor was less cautious and there was less molecular reductionism before agents were screened for efficacy in animal models and in patients. This sped up innovation. The first antidepressant, imipramine, was synthe­sized in around 1951. It was screened almost immediately in rats, and tested personally by a few scientists at the drug company Geigy. It was then tested without much success in various patient groups in 1952, tested again in 1953, found to be problematic in patients with psychosis in 1954 and tried yet again in 1955 before it was identified as an anti­depressant in 1956. It completed preclinical development and had not one but three clin­ical cycles within 5 or 6 years. In 2005–2006, the typical period of time in clinical develop­ment for a new drug was over 9 years. The biggest increase in development times came between the 1960s and the 1980s.

But the Big Pharma found another way how to reduce the pace of innovations, probably even more elegant one. What if replace a productive scientific paradigm by less productive and more expensive one? Just to wash a society's brain with a statement that genomics, nanotechnology, biotechnology etc are very crucial for the development of innovative products! Do you remember mountains of articles which stated that after the human genome is read we will cure almost all diseases like cancer, AD, Parkinson's etc etc etc. Several years are passed since the genome is clear but guess what? Cancer, AD and Parkinson's are not yet cured! What a mess! Are you disappointed? Probably not because Big Pharma did not expect it from the very beginning! But they changed the paradigm and it was the main target. Can you still hear that nanotechnology and biotechnology finally will help us to fight almost all dangerous diseases? Sure you do! And guess what? No way that I will buy it!

There is one modern russian proverb: Don't go hunting together with somebody who goes fishing. If you go to make a real innovative drug – do not take Big Pharma with you!