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Why Are So Few Blockbuster Drugs Invented Today? (nytimes.com)
58 points by forrest_t on Nov 13, 2014 | hide | past | web | favorite | 57 comments



Sam Peltzman's book "Regulation of Pharmaceutical Innovation" shows, with statistics, that the 1962 FDA requirements that drugs be proved to be effective has resulted in a dramatic slowdown of new and effective drugs, caused by the high cost of proving effectiveness.

He also shows that the ineffective drugs prevented from coming to the market are far outweighed by the effective ones that are delayed or never developed at all.


Approaching the question from an analytical perspective, there's a very concrete, market-economic based reason for putting the brakes on such development:

1) The information asymmetry between the public and drug developers is absolutely astronomical. This undermines any free-market attempt to keep bad drugs out of the market. Moreover, nobody with the resources to prove drugs ineffective has the incentive to do so.

2) The predicative power of the science is pitiful. 90% of drugs that make it to Phase I trials do not make it through Phase III.[1] In other words, companies have no idea whether drugs will work until they actually test them on people. Indeed, there is a decent amount of evidence showing that many drugs that pass Phase III trials don't work.

The cost of proving efficacy through human trials is unavoidable. The question isn't whether or not to conduct trials, the question is whether you do those trials as part of the approval process, or by selling drugs that don't work to the public at large. The inherent information asymmetry involved makes the latter a less than compelling proposition.

[1] http://pipeline.corante.com/archives/2014/01/10/a_new_look_a...


As for your first point, I think there are two factors that run counter to it.

1) The FDA already regulates what companies can say about their drugs. If there is no evidence your drug is effective, the FDA could certainly stop you from saying there is.

2) Without efficacy data, insurance companies won't pay much. To be honest, I would bet insurance companies wouldn't cover such drugs at all. It would be entirely on the patient to cover the costs.

Taking my second point further, if you can't charge a premium for your drug, I doubt pharma companies would even develop drugs they can't prove are efficacious. Gathering efficacy data takes a lot of money, but so does safety data. If you can save 50% on clinical trial costs, but only charge 10% the price, it's a losing proposition.


Peltzman addresses this point in his book, again using statistics from before and after 1962, and found the "effective" mandate did not significantly improve the percentage of new drugs that turned out well, it just halved the absolute number.

I have suggested that the FDA offer an "effective" endorsement that a company could go through the approval process to get. The carrot for the company would be that only legally consenting adults could receive drugs without the endorsement, and they'd have to specifically sign a contract saying they understood that the FDA did not endorse it as effective. A further carrot would be that they'd be immunized from liability lawsuits for endorsed drugs.


That book is nearly 40 years old and predates withdrawal of DES and subsequent decades of litigation (see http://en.wikipedia.org/wiki/Diethylstilbestrol). Surely there must be some more contemporary analysis. I've herad essentially the same arguments in person from Richard Epstein and found it strange that he pitches this argument without addressing this extremely well-known counterexample.

Furthermore, if the 1962 requirements are so onerous why have not European and Asian drug manufacturers been able to capitalize on this American regulatory shortcoming? Europe has no shortage of pharmaceutical expertise and is a larger consumer market than the US, so if the theory about the FDA being at fault were sound then other markets should be awash in life-saving medications and correspondingly improved mortality outcomes directly attributable to the wider choice of pharmaceuticals after 50 years of regulatory imbalance.

edit: Also, what stops drug manufacturers doing what makers of vitamins and dietry supplements do, ie saying 'may have beneficial effect XYZ - this statement has not been evaluated by the FDA.' True, that might weaken firms' brands since consumers seem to value the FDA's approval, but if there were a bunch of demonstrably efficacious non-approved drugs then presumably consumers would discount the FDA's approval in proportion.


The 1962 amendments add "effective". The FDA was already mandated to require things be "safe". The example you give falls under the latter requirement, which is not what Peltzman's book is about.

I know nothing about European and Asian pharmaceutical regulation. They likely have something equivalent to the FDA's mandate.

It's my understanding that vitamins and dietary supplements are classified as "food" and not "drugs" and so fall under quite different regulatory systems.


My understanding is that the 1962 amendments addressed both safety and efficacy, notwithstanding the existence of earlier safety requirements, but I'll concede you that point and stick with the economic question I asked above.

I know nothing about European and Asian pharmaceutical regulation. They likely have something equivalent to the FDA's mandate.

That seems a rather large assumption - that foreign pharmaceutical regulatory regimes are so similar as to result in substantially similar economic outcomes. I'm no expert on the subject, but the European regulatory environment seems rather more diverse than you appear to imagine: http://www.commonwealthfund.org/~/media/Files/Publications/I...

It's my understanding that vitamins and dietary supplements are classified as "food" and not "drugs" and so fall under quite different regulatory systems.

So what? If consumers can buy a 'nutritional supplement' that provides a discernible health benefit, do they especially care whether it is branded as a food supplement or a drug? Given the burgeoning 'dietary supplement' market (with some $30 billion a year it seems the answer to that one may be 'no.' In other words, if you have something that definitely works why not just market it as a food supplement and let consumers throw money at you?


But have any of these supplements been proven to have "decernable benefit" (aside from the placebo effect)?

ed on 2012-05-15 Dietary Supplements and Cancer Prevention: Balancing Potential Benefits Against Proven Harms Authors Abstract

Nutritional supplementation is now a multibillion-dollar industry, and about half of all US adults take supplements. Supplement use is fueled in part by the belief that nutritional supplements can ward off chronic disease, including cancer, although several expert committees and organizations have concluded that there is little to no scientific evidence that supplements reduce cancer risk. To the contrary, there is now evidence that high doses of some supplements increase cancer risk. Despite this evidence, marketing claims by the supplement industry continue to imply anticancer benefits. Insufficient government regulation of the marketing of dietary supplement products may continue to result in unsound advice to consumers. Both the scientific community and government regulators need to provide clear guidance to the public about the use of dietary supplements to lower cancer risk. © The Author 2012. Published by Oxford University Press.

http://m.jnci.oxfordjournals.org/content/early/2012/04/24/jn...


I doubt it and that's why I don't consume any myself, even vitamin pills. I'm just pointing out that if the pharmaceutical industry found the regulatory burden as onerous as is suggested, it could take a different approach to marketing its products, and yet it has not done so.


> So what?

The FDA decides what is a food and what is a drug, and such determination determines what regulatory requirements and oversight will be applied. The two are very, very different in that regard.


And yet the nutritional supplement industry has grown by leaps and bounds while making hand-wavey claims about the efficacy of its products and slapping on a figleaf along the lines 'these statements have not been evaluated by the FDA.'

You keep dodging my point; if drug regulation is so burdensome, why have none of the drug companies taken a promising product and tried marketing it as a nutritional supplement instead? The worst that could happen is that they get slapped on the wrist and told to label it differently. 'Nutritional supplements' are notoriously under-regulated at the moment, so what do the pharmaceutical companies have to lose?

My theory is that despite all the complaints about the regulatory burden and the nightmare-inducing sums of capital at risk, pharmaceutical firms in the aggregate are actually doing great business. I am simply not persuaded that there is massive opportunity cost in undeveloped medicine because otherwise firms in less tightly regulated markets should be cleaning up by making drugs that don't have to meet the FDAs efficacy standards, and there should be a thriving black market in importing them to the US. We should be deluged with stories about great drugs that reduce mortality by improving clinical outcomes at affordable cost that are widely available elsewhere but not in the US or EU because of gloomy bureaucrats.


> if drug regulation is so burdensome, why have none of the drug companies taken a promising product and tried marketing it as a nutritional supplement instead?

As I explained before, the FDA will not allow that.

> My theory is

Peltzman's statistics show that new drug development dropped in half in the US coincident with the 1962 amendments.

> less tightly regulated markets

Can you give an example drug market in a 1st world country where this is true?


But the FDA does allow it Walter. 'nutritional supplements' are sold in large quantities with little interference, even when they are clearly thinly-disguised pharmaceutical products, as in this example, discussed elsewhere in the thread: http://awakebrain.com/

I'm not endorsing any of these products (obviously, I hope) but they're pharmaceuticals, some of which require a prescription in their originating country of Russia. You haven't explained why the FDA will not allow other manufacturers to sell products with similarly vague claims, merely asserted it.

Peltzman's statistics show that new drug development dropped in half in the US coincident with the 1962 amendments.

Which were also coincident with the Thalidomide/birth defect problem, to which the regulations were partly a response. Is it not equally possible that drug companies felt more cautious in the wake of that fiasco? I hate to trot out the chestnut about correlation and causation, but I think it applies here.

> less tightly regulated markets Can you give an example drug market in a 1st world country where this is true?

No. I said less tightly regulated market; requiring it be a 1st world economy is shifting the goalposts a bit on your part. It would require far more work than I am willing to put into a HN comment to quantitatively measure the regulatory burden in in different developed countries; I've also ready provided yo with examples of differences in the regulatory regime of 6 European countries above.


> But the FDA does allow it

The FDA decides what is a drug, and what is a supplement, under the laws passed by Congress, and therefore which regulatory regimes apply. Not the company.

http://www.fda.gov/Food/DietarySupplements/

> Is it not equally possible that drug companies felt more cautious

The thalidomide disaster had nothing to do with effectiveness of a drug. It had to do with safety, and the FDA did not approve thalidomide in the US prior to the 1962 amendments under their authority to require safety.

> 1st world economy is shifting the goalposts

Not really. The 1st world will be the customers where the money is, and those regulations will apply regardless of where a drug is developed. Secondly, investing billions producing a state-of-the-art lab in a 3rd world country is not something investors will be happy about - problems with any and all of corruption, unstable governments, security, clean water, reliable power, unskilled local labor, rampant crime, unpredictable regulatory environments, culture, etc.

I do recommend you read the book. It deals with your questions. It's available on Amazon.


But the fact is that obvious pharmaceuticals are marketed as supplements, and the FDA does nothing. Yes, they have authority to decide what is a drug and what is a supplement, but but it's clear they don't exercise it aggressively. It's no good saying that 'the FDA would never allow it' when there's abundant evidence that in fact they allow it all the time. You can legally buy all sorts of unlicensed pharmaceuticals, you just can't your doctor to write a prescription for them or your insurance company to cover the cost, which is obviously problematic for many people.

The thalidomide disaster had nothing to do with effectiveness of a drug. It had to do with safety, and the FDA did not approve thalidomide in the US prior to the 1962 amendments under their authority to require safety.

That doesn't alter the possibility that it could have influenced the behavior of drug manufacturers.

Not really. The 1st world will be the customers where the money is, and those regulations will apply regardless of where a drug is developed. Secondly, investing billions producing a state-of-the-art lab in a 3rd world country is not something investors will be happy about - problems with any and all of corruption, unstable governments, security, clean water, reliable power, unskilled local labor, rampant crime, unpredictable regulatory environments, culture, etc.

All these potential problems are true, and yet Russia, India, and China all have growing pharmaceutical industries (to name but three) notwithstanding these problems and intermittent scandals (which cause western drugs to fetch a premium in China, for example, due to the public perception of being developed and manufactured to higher standards). Given the size of these countries and their demonstrably looser regulatory regimes, we ought to be seeing a lot of competitive products. India and China are certainly not such profitable markets for drugs as the US is, but the economic input costs are also lower so it's not like there's no economic incentive to produce.

The problem I have with your argument is that it generalizes the effect of the 1962 amendments and their effectiveness provisions to the entire world, and you handwave away every objection by saying that the whole world is sufficiently like the USA that changes in FDA policy 50 years ago had a global inhibitory effect on drug development. This seems myopic, to say the least. I'm quite willing to buy the idea that Peltzman's book provides a good illustration of how changes in the regulatory environment affected the US pharmaceutical industry (while disputing that this would be the only factor), but as I said in the first place it was published 40 years ago and I'm extremely skeptical of your suggestion that we can ignore 40 years of technological and economic change.


An interesting essay on different drugs used in different countries, from a doctor: http://slatestarcodex.com/2014/08/16/an-iron-curtain-has-des...


Amusingly enough he concludes with a link to an online store, and sure enough you can buy any of this stuff without a prescription, thanks to the following disclaimer: Note: The FDA has not evaluated or endorsed this product. It is not intended to diagnose or treat any specific illness or medical condition. Please consult your physician prior to using this or any other nutritional supplements or medications. This product is manufactured in Russia and the packaging text is in Russian.


why have not European and Asian drug manufacturers been able to capitalize on this American regulatory shortcoming

Drug regulations are quite uniform among Western nations. For more reading google "ICH"... International Conference on Harmonisation of Technical Requirements for Registration of Pharmaceuticals for Human Use....


I appreciate that, but according to its own history page the ICH didn't come into being until 1990, so that leaves nearly 30 years since the 1962 FDA amendments during which one might have expected to see measurable variations in the pace of innovation under different regulatory regimes.


Valid point, but even before the ICH there was a lot of knowledge sharing among Western countries with regards to drug regulation. There are some minor differences even today, but it's pretty consistent.


Great comment. Alex Tabarrok's book Launching the Innovation Renaissance makes a similar point.

That neither Peltzman nor Tabarrok are even name checked in the article is distressing.


What stops these drugs from being developed in European countries with more relaxed rules and then brought to the US market afterwards?


My understanding is a drug cannot be brought to the US market until it meets the FDA's effective standards. This is regardless of where it is developed.


> They found that for every billion dollars spent on research and development since 1950, the number of new drugs approved has fallen by half roughly every nine years, meaning a total decline by a factor of 80. They called this Eroom’s Law, because it resembled an inversion of Moore’s Law

It's not an inversion of Moore's law, it's totally consistent with it. Every time you shrink transistor size by half, you spend exponentially more capital on the new fabs: http://www.futrfab.com/wp-content/uploads/2012/04/Small-Volu... (Figure 2).


The idea that all the easy to discover drugs have been found isn't really accurate. What's actually happening is that the FDA has signaled that they are going to do slightly more to make sure drugs targeting the general public are reasonably safe and actually plausibly work, and so the drug manufacturers have basically just given up in trying to pass even this minimal bar. This is why they are all targeting rare diseases, not because they are inherently more profitable to treat, but because the FDA bar for safety and efficacy is lower.


I disagree. Traditional drug firms have proven they're unable to adequately innovate with internal R&D due to large bureaucratic overhead. Additionally, old blockbuster drug patents are rapidly expiring and these firms have nothing new to offer except for small iterations on the old drug (e.g. a small change in chemistry which offers no to very little additional benefit to the patient while securing a new patent for the firm). In short, competition is increasing and they're unable to make huge leaps forward in technology to stay ahead of the competition.

Recognizing these facts, large firms have begun prospecting and betting on start-up companies who focus on rare diseases because this is a space where innovation has very little bureaucratic overhead and there is very little competition. Also, this is also a space in which the market size is small and where barriers to entry are high, reducing the threat of future competition.

In fact, if big companies believe they have bought a company with a promising drug, they would prefer higher hurdles for FDA certification to reduce potential competition.


I think this prospecting will create a problem though. If big pharma increasingly prefer to purchase startup biotech companies that have an asset at whatever phase the pharma is looking for, then the only people developing new drugs will be small startups. It reduces the opportunity for assets built for one target to be worked up in another area (e.g. an autoimmune drug to be tried in models of ALS). It also discourages non-risky scientists, as the jobs will increasingly be in volatile companies that leave you wondering if your company card will work when you check into a hotel at a conference.


Agreed. It is a problem but you have to wonder if the market will be self-correcting. If there are no companies left to prospect, what will fill the gap? Maybe the major question is how long will a prospecting strategy last?


I agree entirely. There is no doubt that the FDA has become more and more rigorous over time. And yes, pharma companies have responded by moving to therapeutic areas that are easier to get FDA approval in. Cancer is another great example. It's not the only reason for the shift, but it's a big one[1]

[1]http://biotechtranslated.com/2011/07/24/it%E2%80%99s-like-wa...


Cost per transistor is still plummeting IIRC though, while for them cost per drug is rising.


The cost per new drug is a capital cost, not a production cost. So the right comparison isn't cost per transistor (that's more like cost per pill), but rather cost per new die or cost per new process shrink.


Ok, so I work with a lot of immunologists and micro-bio people. The short answer is that science is hard. The slightly longer answer is that science is a lot about luck and sweat. Penicillin was mostly discovered by accident, as with Viagra and many other blockbusters. This is the more observational side of science, not the predictive side. The smart-insulin that was described is firmly in the predictive side, the sweat side. Luck is a factor of having a lot of scientists looking at a lot of things. Sweat is one scientist looking at one thing. Both are valid, but one takes a lot less time.

And that is the issue, time. Why not so many recently? The time involved is much higher. The low hanging fruit of the tree of science has mostly been picked at this point (At least I hope so). The blockbusters are then higher up and take considerably more effort to reach. Smart insulin needs nuclear magnetic resonance imaging, a lot of modeling and p-chem, trial after trial to verify results, a lot of post-doc and grad students, data processing and computer scientists, and the resources of a lab and a half. Penicillin was a petri dish that wasn't properly sterilized.

Science takes time, and as humans, we go for the easiest science first. We should not sacrifice safety for speed.


> Science takes time, and as humans, we go for the easiest science first. We should not sacrifice safety for speed.

I agree, but it is also a function of money. Pharmaceutical companies often rely on basic research from academia to get pointed in the right direction. As that decreases, there are fewer academics discovering fewer new pathways that pharma can target drugs for.

Additionally, funding is aimed at investigators who are likely to succeed. It is common for a lab to essentially work one grant ahead of funding in order to be sure to deliver.


> Funding is aimed at investigators who are likely to succeed.

You have no idea. Friends at other universities have a very high end microscope 'core' that can be used all that apply as a shared cost and time device. Orientation went great, 'yeah, its awesome to use, you get great data, blah blah blah'. When she came to the lab however, she found that only 2 professors' labs could use the core, as they had outbid all the other professors for the time, for then next 15 years. Its a small thing, but it speaks to the incredible gains that go to the 'winners' and the scraps that are given to 'losers.'


D.R.A.C.O. is a broad spectrum antiviral developed at MIT, but currently languishing without almost any funding. It theoretically can cure almost any virus, and has been successful in vitro and in mice. The mechanism should work in humans, and yet no one wants to fund it. It's completely baffling to me that no one is aware of this, and that it's not being fast-tracked and funded by governments around the world:

http://en.wikipedia.org/wiki/DRACO_(antiviral)


I don't know enough about DRACO, but I would argue that pharma companies have already kicked the tires and passed on it.

I know a few people that work in pharma business development and they scour academic labs for anything of value. For whatever reason, they don't believe that DRACO as value, at least right now.

In the meantime, if it's as promising as you say, academic labs shouldn't have trouble getting funding to further develop it.


> I don't know enough about DRACO

So what are you saying besides laying out your untested assumptions about how the world works? There are endless reasons why research doesn't get funded, and many of those aren't because the research is bad.

> In the meantime, if it's as promising as you say, academic labs shouldn't have trouble getting funding to further develop it.

What evidence do you have to back this up?

Do you have any idea on how much money is made in treatments for viral disease? Do you know how much would be lost if all viral disease was cured?


Thank you for posting this!

I just did some research and found out that the primary researcher on DRACO is Todd Rider from MIT. Now, when I saw that name, I said to myself, "Is that the same Todd Rider from MIT that did the thesis on non-equilibrium fusion reactors?". Apparently it is: http://www.businessweek.com/magazine/todd-rider-has-a-kill-s...

I really need to meet this guy.


Could Kickstarter be an option?


I don't know the legal issues involved with Kickstarting a drug, but I do know of at least one medical technique (Vasalgel) that has been/is being crowdfunded, so it is possible.


Because of government controls and bureaucratic incentives: on the one hand, the FDA is by its nature and rules inclined to block new drugs and medical devices; on the other hand, potential inventors are either turned off or handicapped by the FDA rules and controls.

I've developed internal software tools for healthcare companies -- having had to study and learn the FDA rules, and having seen what these companies go through, I'd rather give up on engineering than work in the development of medical devices. A sane, creative mind cannot work and flourish under compulsion.


Interestingly, a quite high amount of breakthrough treatments were discovered by accident. Antibiotics, the original antidepressants, antipsychotics, lithium, viagra and others were all found initially that way.

Which may imply that our discovery approach has benefited from happy accidents which are hard to replicate and where the basics have been found already.


I think Viagra was discovered during clinical trials for hypertension. It (and it's fellow PDE5 inhibitors) is used in cardiac care, but the market is larger for "erectile dysfunction". There are certainly programs in big pharma to screen known drugs (that are already deemed safe for humans) in assays aimed at new targets.


Because medicine has only recently become a science. 150 years ago, medicine was far more likely to hasten your death or kill you than improve your situation, and the only medical intervention that actually sometimes delivered results was surgery.

At some point, the claims that it made started to be tested rather than simply taken on authority, basic knowledge was accumulated, and the low hanging fruit was plucked. The rest of the fruit is harder to get to, or may even be largely exhausted IMO, because the field is still operating as if all sicknesses have the possibility to be cured by a magic potion (taken orally or injected.) Now, most announced discoveries are simply false, and the largest selling drugs either useless or intoxicants (statins, SSRIs, Xanax, Adderall, etc.)

I'm pleased about research on parasites and gut flora, though. It's being reduced to poop pills in its media coverage, but it's not the standard magic potion bit.


I'm not fully sure why you've been downvoted, but I think your comment on SSRIs is a bit misguided. I don't know enough about the others you've mentioned (statins, Xanax, Adderall, etc.) but the evidence for the efficacy of SSRIs is very strong and they certainly aren't intoxicating.


Got a link for that? Several publications have been making the news lately showing antidepressants are really no better than placebo in general

http://www.scientificamerican.com/article/antidepressants-do...


Try this:

http://slatestarcodex.com/2014/07/07/ssris-much-more-than-yo...

...which also sort of goes along with this overview of depression treatment in general:

http://slatestarcodex.com/2014/06/16/things-that-sometimes-h...

The relevant upshot of that first link includes:

(1) Everybody agrees SSRIs are at least somewhat better than placebo

(2) Placebos really are unreasonably effective compared to non-treatment, so even merely being as effective as placebo is a huge benefit, not to mention being somewhat better than that.

(3) What constitutes a "clinically significant" improvement (even relative to placebo) turns out to be kind of arbitrary. As in, a drug that misses that arbitrary goal might still be hugely beneficial to people. (especially if you compare it to non-treatment)

(4) Glomming all SSRIs together into one big lump to reach conclusions about the group combines some that work pretty well with some that are known to not work well at all, which can bring down the average effectiveness of the group to below that arbitrary "clinically significant relative to placebo" mark even though individual SSRIs might on their own be more likely to make the cut.


A lot of interesting drugs are developed and marketed only overseas these days. The Russian pharmaceutical industry has come up with a lot of interesting ones lately.

For example:

http://pharmstd.com/page_22.html


I've seen this cited several time on HN recently, is there a better source for this? Sorry, I imagine a lot of this stuff is in Russian only, but I would love if you could give an article/book/post about this sort of thing.


This is their best selling drug:

http://en.wikipedia.org/wiki/Arbidol

It's marketed as an over the counter cure for Influenza and only sold in Russia and China.

I guess the proof is in the pudding. Death rates for influenza are low by world standards in Russian and China:

http://www.worldlifeexpectancy.com/cause-of-death/influenza-...

Of course that could be a fluke and this drug is just a sugar pill because all medicine not approved by the FDA is fake, right? We have the most expensive medicine in the world, by far, so it must be the best!


> Doing so, he knew, would require years of clinical trials in preparation for a new-drug application submission to the F.D.A. “That’s the only reason people were afraid.”


Derek Lowe has another theory: http://pipeline.corante.com/archives/2014/11/06/what_happens...

Your average startup brings exactly one drug to market, and then is aquired and broken up. The current system does not encourage building institutional experience in the field, in fact it destroys it.


Great review article on this topic in nature: http://diyhpl.us/~bryan/papers2/bio/Diagnosing%20the%20decli...


Maybe they are, but there are hurdles in getting them to market. Here's an example about Merck's suvorexant.

http://www.newyorker.com/magazine/2013/12/09/the-big-sleep-2



I believe the biggest reason is the lack of embracing software in the process. You still have people standing around in front of beakers and petridish. You are using the same darn rigid rules from 18th century. This is why progress is so slow.

Imagine if you opened up the vast knowledge of drugs and creating new drug and testing it was as easy as writing a program, it would do wonders.

Software is not eating up the world in this slice of the market.


Silly that they need to invent new drugs when there are so many "blockbusters" right here to be grown from the ground and used




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