The Wall Street Journal today has a front-page article on the "grim prognosis" facing Big Pharma, as a number of big-selling drugs soon will lose patent protection even as the companies have fewer new products in the pipeline, as the FDA has become ever-more averse to purported safety risks, and as the costs of drug development rise sharply, in particular for late-stage safety-and-effectiveness trials. This article is certain to engender a lot of discussion and commentary: The firms are shrinking, and the article implies that fewer cures are in the offing, although the heavier implicit focus is on the issue of investment in pharmaceutical stocks and the like.
Yes, there are important problems facing the pharmaceutical industry, but color me far less pessimistic than the article implies. To begin, note what the article does not say, to wit, that research budgets are shrinking. That suggests that the capital market still views pharmaceutical R&D as profitable endeavors prospectively, regardless of what Moody's and the other rating bureaucracies say, green-eyeshade institutions that almost always look backward rather than forward.
Note as well that the recent decline in new drug introductions has a lot to do with the fact that PDUFA was passed in 1992, which had the effect of speeding the approval process significantly (for awhile, anyway), and a bow-wave of drugs was approved in the late-90s to early 2000s period. To some nontrivial degree, the more-recent slowdown has to do with an approval cycle driven by that early PDUFA experience.
The real news, which really is not news at all, is that the FDA and the rest of the relevant part of the Beltway are driven more than ever by powerful political incentives to avoid negative headlines. And so drugs are too safe and are approved too slowly, which means that more death and suffering occurs because beneficial medicines are held off the market too long. Perhaps more important, the industry is changing significantly because pharmacological science is changing: The era of individualized medicines is looming as a direct effect of advances in biological and genetic science. That may be bad for the bureaucrats, and in the short term for the firms forced to deal with them; but in the larger sense this technological advance will yield a huge advance in our ability to reduce human suffering, and no newspaper article can tell me that such a scientific revolution will not prove salutary in spades for Pharma's bottom line.
[cross-posted from www.medicalprogresstoday.com/blog/]
Yes, there are important problems facing the pharmaceutical industry, but color me far less pessimistic than the article implies. To begin, note what the article does not say, to wit, that research budgets are shrinking. That suggests that the capital market still views pharmaceutical R&D as profitable endeavors prospectively, regardless of what Moody's and the other rating bureaucracies say, green-eyeshade institutions that almost always look backward rather than forward.
Note as well that the recent decline in new drug introductions has a lot to do with the fact that PDUFA was passed in 1992, which had the effect of speeding the approval process significantly (for awhile, anyway), and a bow-wave of drugs was approved in the late-90s to early 2000s period. To some nontrivial degree, the more-recent slowdown has to do with an approval cycle driven by that early PDUFA experience.
The real news, which really is not news at all, is that the FDA and the rest of the relevant part of the Beltway are driven more than ever by powerful political incentives to avoid negative headlines. And so drugs are too safe and are approved too slowly, which means that more death and suffering occurs because beneficial medicines are held off the market too long. Perhaps more important, the industry is changing significantly because pharmacological science is changing: The era of individualized medicines is looming as a direct effect of advances in biological and genetic science. That may be bad for the bureaucrats, and in the short term for the firms forced to deal with them; but in the larger sense this technological advance will yield a huge advance in our ability to reduce human suffering, and no newspaper article can tell me that such a scientific revolution will not prove salutary in spades for Pharma's bottom line.
[cross-posted from www.medicalprogresstoday.com/blog/]
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