Tim Worstall

Paying For Drug Development

A quick question for those who oppose drug patents.

AstraZeneca’s potential blockbuster drug for treating stroke patients
has failed a crucial clinical trial, the pharmaceuticals group said
today.

The experimental NXY-059 medicine "showed no efficacy" and
"did not meet its primary outcome of a statistically significant
reduction in stroke-related disability" in Phase III clinical trials,
which measured the treatment against a placebo.

It will have cost in the region of $300 to $400 million to get the drug this far. It’s a failure, a pop.

If AstraZeneca is not allowed to make fat profits from those drugs that do work, do get through phase III trials, where is that money going to come from? Without patents, what is the mechanism being proposed for the financing of the development of new drugs?

In

6 responses

  1. Guido Fawkes Avatar
    Guido Fawkes

    The patents versus no patents debate is a straw man.
    Reasonable patent policy versus monopoly profits arising from evergreening.
    New patented preparations always seem to arise when old patents are just about to expire. A cynic might think that was because of some profit maximisation strategy unrelated to development process of new compounds.
    Shorter patents and an end to ever-greening versus monopoly profits. Tim the cost of development quoted by the industry is not real but inflated to justify their margins.
    Tim adds: Patents on drugs tend to last 7 or 9 years after their approval (a total of 17 years and 8-10 for the approval process). You want it to be shorter than that?
    What do you think hte development cost of a drug is? Total, it appears to be around the $800 million level. You want to point me to something that refutes that?
    ‘Justifying margins’? Does big Pharma make a larger (properly risk adjusted) return on capital than other industries?

    Reply
  2. HJHJ Avatar
    HJHJ

    I think this illustrates the poor return on drugs and medical treatment in general. The vast majority of strokes happen to people who smoke, or are overweight due to poor diet and lack of exercise.
    Avoidance is surely a better bet than expensive palliative treatment – but then too many groups have a financial interest in treatment rather than avoidance.

    Reply
  3. Fixed Point Avatar
    Fixed Point

    How to finance drug development

    The news today that AstraZeneca failed to meet phase III trials for its stroke drug NXY-059 has prompted Tim Worstall to ask opponents of drug patents
    If AstraZeneca is not allowed to make fat profits from those drugs that do work, do get through phase…

    Reply
  4. 1skeptic Avatar
    1skeptic

    -Figures like $400 million and $800million- whats the breakup of this, whats the money being spent on? At say $200k/year, this is 200,000 man-years of research. If spread over say 10 years, this would involve 20,000 fulltime researchers. Does this seem credible?
    -If Astra wants to spend such money, why is it incumbent on us to protect their return? Dell sets up PC manufacturing plants without having a patent on the PC, and does billions of dollars worth of business. As an example, should we restrict sales of other brands in Ireland if Dell sets up a plant there.
    -Is there no innovation possible without this lottery model? Linux seems to be doing fine without a patent.
    -If there is an unnecessarily costly model of regulation,perhaps that model can be attacked and not entrenched further by guaranteeing profits to the few companies who can afford to play

    Reply
  5. andrew duffin Avatar
    andrew duffin

    Those who are clueless about the costs involved in bringing a drug to markent, and the awesome regulatory hurdles that are put the way of the process (ie most of the commenters here) could read a short primer here:
    http://pipeline.corante.com/archives/2004/09/09/how_it_really_works.php

    Reply
  6. The Remittance Man Avatar
    The Remittance Man

    “Without patents, what is the mechanism being proposed for the financing of the development of new drugs?”
    Why that renowned institution driven by common sense and altruism, the government, of course.
    It’s obvious that a minister, whose only experience is as a lecturer at some down at heel poly, would be far better at deciding the priorities for drug R&D than a pharmaceutical industry expert. Especially when said failed teacher cum minister was advised by civil servants almost exclusively graduates of Oxford with degrees in PPE or the classics.

    Reply

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