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Why drugs are expensive: It’s the science, stupid.

The views expressed are those of the author and are not necessarily those of Scientific American.


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A cartoon representation of part of the protein PCSK9, a significant new target for reducing cholesterol that until now has thwarted efforts to drug it (Image: Wikipedia Commons)

This is part 1 of a series of posts delving into the fundamental scientific challenges in drug discovery. Here are the other parts: 2

Often you will hear people talking about why drugs are expensive: it’s the greedy pharmaceutical companies, the patent system, the government, capitalism itself. All these factors contribute to increasing the price of a drug, but one very important factor often gets entirely overlooked: Drugs are expensive because the science of drug discovery is hard. And it’s just getting harder. In fact purely on a scientific level, taking a drug all the way from initial discovery to market is considered harder than putting a man on the moon, and there’s more than a shred of truth to this contention. In this series of posts I will try to highlight some of the purely scientific challenges inherent in the discovery of new medicines. I am hoping that this will make laymen appreciate a little better why the cost of drugs doesn’t have everything to do with profit and power and much to do with scientific ignorance and difficulty; as one leading scientist I know quips, “Drugs are not expensive because we are evil, they are expensive because we are stupid.”

I could actually end this post right here by stating one simple, predominant reason why the science of drug discovery is so tortuous: it’s because biology is complex. The second reason is because we are dealing with a classic multiple variable optimization problem, except that the variables to be optimized again pertain to a very poorly understood, complex and unpredictable system.

The longer answer will be more interesting. The simple fact is that we still haven’t figured out the workings of biological systems – the human body in this case – to an extent that allows us to rationally and predictably modify, mitigate or cure their ills using small organic molecules. That we have been able to do so to an unusually successful degree is a tribute to both human ingenuity and plain good luck. But there’s still a very long way to go; there are very few diseases for which we truly have drugs that are almost always efficacious and have little to no side effects. Most important diseases like cancer and Alzheimer’s disease are still problems looking for solutions, and even after a century of extraordinary progress in biology, chemistry and medicine the solutions seem a long way off.

That then, is the simple reason why discovering drugs is hard; because we are dealing with a biological system that still escapes our rational understanding and because we are trying to engineer a molecule that perturbs this incompletely understood system, and that too while being forced to satisfy multiple constraints. It’s like being asked to find a black cat in the dark, with the added constraint that one of your feet is bound to the top of your head, and you only get three tries.

The rest of this series will be devoted to a discussion of specific factors that contribute to this lack of understanding. The goal is not to list all possible complications in the discovery of new drugs but to give a flavor of the major challenges that drug scientists face at a very fundamental level, several of which have been known for decades and are still not circumvented. It is to drive home the fact that even on a basic level we are still groping in the dark. This forces us to often simply try out things, to navigate our way through the process by clumsy Edisonian trial and error, to try a hundred approaches before finding one that succeeds. If there can be one word that could be applied to the whole drug discovery and development process it is “attrition”; roughly 95% of candidates entering clinical trials fail, most commonly because of lack of efficacy, followed by unacceptable side-effects. And as we will see, it is very hard to predict either of these parameters at the beginning. No wonder drug discovery is expensive.

To appreciate the scientific challenges confronting drug designers it is important to understand at a basic level how drugs work. Almost all drugs are what are called “small molecules”, that is, small organic compounds like aspirin with a few dozen atoms, bonds and rings like benzene rings. Recently there has been a resurgence of “large molecules” like antibodies but for now we will focus on small molecules. For the purposes of this discussion the mechanism behind small molecule drugs can be boiled down to one statement: Drugs work by binding to proteins and modifying their function. As we all know, proteins are the workhorses of living systems, performing every single important function from growth and repair to response and attack. No matter what physiological process you are talking about, from launching an immune response to thinking creative thoughts, there will be a handful of key proteins involved in mediating that response. Not surprisingly, a fine balance between the activities of the hundreds of thousands of proteins in the body is necessary for good health and, equally unsurprisingly, any breakdown in this balance causes disease. While in theory the entire network of proteins in the human body gets perturbed in some way or another in a disease state (a problem that is of great interest to the discipline of systems biology), fortunately for drug designers it’s usually a handful of key proteins that are the major rogue players in any disease.

Depending on the disease the protein may be malfunctioning in different ways. In cancer for instance there’s typically an overproduction of proteins involved in cell growth. There may also be an underproduction of proteins involved in slowing down cell growth. This most commonly happens through mutations to the structure of the proteins, an unfortunate side consequence of the wonders of evolution which is a natural part of cell division. The overproduction of specific proteins is in fact a common determinant in most major diseases. The solution then sounds simple: discover a small molecule which binds to and blocks such proteins, which in the parlance of drug discovery would be regarded as drug “targets”.

But this is where our troubles begin. Firstly, it takes a lot of sleuthing and arduous biochemical and genetic experimentation to find out if a particular protein is in fact a major contributor to a disease. One of the major reasons why drugs fail in clinical trials is because the protein that is targeted by the drug doesn’t turn out to be that important for the disease, especially in large populations. There are several ways to probe the relevance of a protein to a particular disease state. Sometimes accidental clues come from natural genetic experiments in human populations in which the effects of incidental mutations in that protein can be observed; for instance one of the hottest recent targets in heart disease is a protein called PCSK9, and its significance was realized in part through the discovery of a young aerobics instructor in Texas with mutations in the protein and incredibly low cholesterol levels. But such cases are rare; more often than not scientists have to artificially silence the function of a protein using genetic engineering to find out whether it truly contributes to a specific disease state or a lack thereof.

But even if the protein’s role in causing disease is established, not every protein can then actually bind to a synthetic small molecule and be modulated by it, for the simple reason that evolution had absolutely no reason to cause it to do so. For instance the heart drug lipitor (atorvastatin) binds to and blocks the action of a protein called hydroxymethyl-glutaryl-coenzyme-A (HMG-CoA) reductase, a key protein involved in the initial steps of cholesterol synthesis. Cholesterol is one of the most important structural and signaling molecules occurring in living systems and the assembly line of proteins and genes for making it was put in place by evolution billions of years ago. There was no plausible reason why natural selection should have engineered HMG-CoA reductase to bind a bestselling drug which appeared on the scene a billion years later. And yet here we are, beneficiaries of the ingenuity of both chemists and nature in possessing a drug that is considered to be the most important heart disease medicine in history.

HMG-CoA reductase does bind lipitor, but many other proteins don’t. The binding of HMG-CoA reductase to lipitor is what makes it “druggable”. However many other proteins are considered “undruggable” and decades of attempts to “drug” them with small molecules have failed; an excellent example is a protein called Ras which is mutated and overproduced in one out of five cancers (recently however there has been a very promising to attempt to drug Ras which I will describe in another post). PCSK9 which was noted above has also proved to be undruggable until now. In fact a widespread belief holds that drug discovery is much harder now because most of the druggable proteins were picked in the 80s and 90s; this is the so-called “low hanging fruit” theory of drug decline. There are several reasons why a protein might not be druggable but one of the most common reasons is this: Druggable proteins have deep, small, well-shaped pockets that can embrace a small molecule the way a lock holds a key. Undruggable proteins on the other hand have shallow grooves spread across an extended area; a small molecule which tries to bind this surface faces a challenge similar to that confronting a climber who is trying to grab a foothold on a giant rock face. However it must also be remembered that the designation for a protein as “undruggable” may be nothing more than a provisional admission of ignorance; future advances in technology may well make the protein druggable. A protein which is shown to be both a major component of a disease and druggable is called a “validated target” which is now ripe for drug discovery.

In any case, the first problem in drug discovery then is that even if a particular protein is implicated in a particular disease, it may not be druggable. In addition, even if we were to successfully drug that protein, other proteins may also be involved in that disease which may compensate for its loss of function by being overproduced. This routinely happens in cancer and that is why cancer patients often become resistant to one particular drug; when you block one protein with a drug, other proteins which are also mutated and over-expressed take over, like an alternative pathway for an electrical circuit. It also happens frequently in case of antibiotics where bacteria can compensate for a drug target by producing other disease-causing proteins, or sometimes even by producing proteins which can destroy the drug. It is almost impossible for now to predict such kinds of alternative rewiring, a factor that significantly adds to the lack of predictive power in drug discovery.

This concludes the first part of the series. Drug discovery is difficult for two initial reasons; it is difficult to find out which proteins are involved in a disease, and even if you find them they may not be druggable and able to bind to a small molecule drug. In the next post we will see how, if we do find such proteins, do we then find the drugs targeting them. In other words, where do drugs come from?

Summary: Why is drug discovery hard?

Reason 1: Drugs work by modulating the function of proteins. It’s difficult to find out exactly which proteins are involved in a disease. Even if these proteins are found, it is difficult then to know if their activity can be controlled by a small molecule drug.

Select references:

1. The Quest for the Cure – Brent Stockwell (An excellent account of many modern concepts in drug discovery including genomics and undruggable proteins)

2. The Billion Dollar Molecule – Barry Werth. (A swashbuckling ride through the exciting and high-pressure world of a pharmaceutical startup (Vertex) which has now grown into one of the world’s most innovative pharmaceutical companies. The only book on drug discovery I know which reads like a combination of a fast-paced thriller and an epic romantic novel.)

3. Real World Drug Discovery – Robert Rydzewski (A succinct and yet comprehensive guide to all aspects of the science, art and business of drug discovery).

Note: As noted in my comment below, this series of articles is about the scientific challenges in drug discovery. It does not say that the science is the *only* thing that contributes to high drug costs and most people will agree that other factors like marketing and a skewed incentive system also significantly contribute. But none of this detracts from the fact that the science is hard, and that’s what these blog posts try to explain. Thus I will appreciate it if the comments are focused on the science rather than on other factors.

Ashutosh Jogalekar About the Author: Ashutosh (Ash) Jogalekar is a chemist interested in the history and philosophy of science. He considers science to be a seamless and all-encompassing part of the human experience. Follow on Twitter @curiouswavefn.

The views expressed are those of the author and are not necessarily those of Scientific American.





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  1. 1. sbassi 10:41 am 01/6/2014

    I read (sorry I can’t remember the source, but was an article against pharma industry) that about 90% of budget is wasted in marketing and only 10% is for the actual research. Is this true?

    Link to this
  2. 2. Jasonian42 11:30 am 01/6/2014

    Greed is not spelled “s-c-i-e-n-c-e”, stupid.

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  3. 3. sjn 11:40 am 01/6/2014

    It is true, that in the US, that the drug companies spend more on marketing than on R&D. The older generation will remember when drug companies were only allowed to advertise to doctors, in medical journals etc. and not allowed to publicly market their drugs. If we returned to that equal playing field, all drug companies could lower their prices by eliminating a bloated marketing budget that adds nothing to new drug research

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  4. 4. sault 12:12 pm 01/6/2014

    I was going to bring up how much drug companies spend on marketing too, but previous posters already covered that angle. However, it is unmistakable that the SAME drugs cost a fraction of their U.S. price in Canada and Mexico. How is this possible if these drugs are SOOO expensive to make? Wouldn’t the drug companies be losing money on these foreign markets, or is it just that the drug companies find it easier to bribe U.S. officials in order to continue their highway robbery of the American Public? I mean, they got a sweetheart deal from Congress that prevented the re-importation of these cheaper drugs back into the U.S. They also got a law passed preventing Medicare from bargaining over drug prices, costing the government hundreds of billions:

    http://www.politifact.com/wisconsin/statements/2012/sep/04/tammy-baldwin/uncle-sam-barred-bargaining-medicare-drug-prices-s/

    Look, when just Pfizer brings in about $40B ANNUALLY, you know there’s tons of money going into Big Pharma:

    http://www.pfizer.com/investors/financial_reports/financial_reports

    Maybe if they spent a little less money advertizing little blue pills or buying off Congress and more money focusing on drug development, maybe we could actually afford their products.

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  5. 5. BoRon 2:03 pm 01/6/2014

    Normally, a company doesn’t spend money on ads unless it increases their profits. Maybe they now have to run ads to keep from losing their business to competitors with more or better ads.

    But it’s also true that the science is hard and costly. It’s the really expensive drugs that hurt the consumer. If all aspirin and other cheap drugs cost a dollar more, maybe it would be better for the customers and they could maintain a level field of competition.

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  6. 6. curiouswavefunction 3:07 pm 01/6/2014

    Since a few commenters above have brought up the perennial question about marketing costs I want to get this out of the way so that hopefully I won’t have to say it again: I will be the first one to advocate more spending on actual research and less spending on marketing. In fact I think one of the sad days in the history of the pharmaceutical industry was when they started direct-to-consumer marketing at the expense of actual research.

    But there are three things to consider here. Firstly, depending on the company, R&D expenditures can range from 15% to 50% (the latter for smaller and medium sized companies). Secondly, outside the semiconductor industry the pharmaceutical industry is still one of the leading spenders on R&D.

    http://pipeline.corante.com/archives/2013/05/20/how_much_do_drug_companies_spend_on_rd_anyway.php

    Thirdly, even if the pharmaceutical companies spent more on marketing it still would not detract from the fact that it’s getting harder and more expensive to discover drugs purely from a scientific viewpoint.

    Since this series of articles is about the scientific challenges in drug discovery and since I agree that pharma should spend more on R&D and less on marketing, I hope we can direct the discussion toward the science instead of the marketing.

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  7. 7. RocketReeNee 3:09 pm 01/6/2014

    If this whole thing was science-driven, then generic drugs would not be rushed to market without assuring that the generic offered the EXACT relief the brand name dug offered I just lost two years of my life to a reaction to generic drugs. I am not alone with this problem. The arrogance of this scientist strongly explains why America has broken it’s love affair with science.

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  8. 8. zelimir 3:31 pm 01/6/2014

    The author is promoting obvious nonsense. It is an easly verifiable fact that the big pharma is continuously cutting basic research, which would imply that the big pharma does not think that basic science is important.

    I do research and drug development for Alzheimer’s disease. In case of Alzheimer’s disease huge amount of money is wasted because managers in drug companies are gambling with poorly characterised compounds and screening methods. More money is wasted on such gambling than on the real research. For example, Eli Lilly company wasted huge money and poisoned 2600 people with Semagacestat, a compound that they brought to the Phase III clinical trials even though all preclinical studies that this drug can activate as much as inhibit the target enzyme.

    Most of the money is wasted on failed clinical trials, and lots of bad compounds are put in clinical trials since the managers in big pharma are not evaluated by the strength of their basic science, but by the number of clinical trials they initiate. It is well known that the clinical trials are the most expensive part in drug development process. Yet the author of this text is promoting idea that drugs are expensive because the basic research is expensive.

    Most of the risky, and difficult steps are performed by the university labs, with cheap and often foreign labor force. The big pharma companies just skim the milk.

    The author of this text forgot to mention another good book in his references: The $800 Million Pill: The Truth behind the Cost of New Drugs by Merrill Goozner. Also the book The Quest for the Cure by Brent Stockwell does not imply in any aspect that drug companies are spending huge money to develop new drugs.

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  9. 9. rdholland 3:46 pm 01/6/2014

    Spending money on marketing does not imply less money is being spent on R&D. In fact, due to marketing, there may be more money available for R&D.

    A company could spend billions developing a drug. Assume there is no marketing. None. Not a penny spent on marketing. No marketing even to doctors. Is that what the anti-marketing people think is the best approach to getting a return on those billions of invested dollars? Or will the ROI end up being so pitiful there are less dollars (if any) available for future R&D.

    Marketing has a valuable purpose. Smart companies don’t throw money away. If marketing doesn’t increase the bottom line it won’t be used.

    And if you think these companies are wasting their money on marketing there is always one thing you can do. Start your own company and prove your point. Don’t spend any money on marketing. Your ROI will be so much better that soon all the investors will come your way. Assuming they even know you exist.

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  10. 10. AxelBoldt 5:02 pm 01/6/2014

    While it’s true that drug discovery is difficult (and I do appreciate your explanation of the process), it’s certainly false that this is the reason for the high drug prices.

    According to WHO ( http://www.who.int/trade/glossary/story073/en/ ) the pharmaceutical industry has profit margins of 30%, much higher than most other industries, and spends twice as much on marketing as on research and development.

    Why are the industry’s profit margins so insanely high? Because patients cannot and Medicare/Medicaid are not allowed to negotiate drug prices and must pay whatever the monopolists decide to charge. (See Bitter Pill: Why Medical Bills Are Killing Us, Time Magazine, Feb. 20, 2013, http://www.uta.edu/faculty/story/2311/Misc/2013,2,26,MedicalCostsDemandAndGreed.pdf )

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  11. 11. z34aa 7:07 pm 01/6/2014

    sault – It’s not making the drugs that’s expensive, it’s the discovering of it that is, which is what the authors articles are going to pertain to. The reason that companies in other countries can offer such low costs is because they don’t do the research for the drug. Once it comes on to the market from the company that does the R&D they copy that companies product and start selling it.

    I know it’s taken as common wisdom by most that people who run companies are greedy fools, but most of the time the truth is that while they might be greedy, they aren’t fools. If your stupid, and you make bad decisions you don’t succeed and your company fails. Oh, no doubt you get people that are incompetent in management at times, there is the Peter Principle after all, but unless they are really good at hiding it eventually their impatience will cost the company money, and companies don’t like that.

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  12. 12. z34aa 7:11 pm 01/6/2014

    Uh, incompetence, not impatience. Though I suppose that if they are both incompetent and impatient, they would be shown the door even faster.

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  13. 13. rshoff2 7:36 pm 01/6/2014

    Yes, it’s the science. But it’s so much more than that. It is not possible to take capitalistic motivations and internal political prioritization out of the equation. So yes, part of it is the science. We would like the pharmaceuticals to demonstrate why Americans need to pay more for that science than say the Europeans or other countries with socialized medicine.

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  14. 14. Curious Wavefunction in reply to Curious Wavefunction 9:56 pm 01/6/2014

    AxelBoldt: To maintain those kinds of profit margins pharmaceutical companies have massively cut R&D spending and laid off thousands of scientists and other personnel in the last few years; that’s the only way they can sustain those kinds of profits and keep investors happy (so while we are at it we also need to blame Wall Street which expects those kinds of margins). This picture also makes it clear that those margins are undoubtedly teetering on the edge of a cliff and the future is bleak. It’s also worth noting that the price of developing novel drugs can be as much as $6 billion so there is definitely a lot of cost to be recovered (http://www.forbes.com/sites/matthewherper/2013/08/11/the-cost-of-inventing-a-new-drug-98-companies-ranked/)

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  15. 15. yanxu1 1:46 am 01/7/2014

    Interesting perspective. Thought I’d jump in here on the discussion:

    I think it’s undoubtedly true that innovation is costly especially in areas of therapeutics that are neglected. However, it is also true that most pharma companies have refused to enter these areas, opting instead for “me-too” drugs that do not justify their costs. For example, of the 192 new active substances approved by Canada’s Patented Medicine Prices Review Board between 2001 and 2009, only 19 agents were classified as category 3, a product that “provides a breakthrough or substantial improvement.” On a bit of an ironic twist, Rx&D member companies as a whole spent <10% of their revenues on R&D.

    In 2012, 3 physicians at Memorial Sloan-Kettering wrote an editorial to the New York Times with a rationale about why they didn't want to add a $11,000/month drug (Zaltrap) to the formulary it uses to treat patients because it adds so little to another drug already on marketplace (Avastin) – Sanofi slashed the price of Zaltrap in 2 weeks' time. So I'm not sure if it's all innovation.

    Here are some references.

    1. Adams CP, Brantner VV. Estimating The Cost Of New Drug Development: Is It Really $802 Million? Health Aff (Millwood). 2006 Mar-Apr;25(2):420-8.
    2. Morgan S, Grootendorst P, Lexchin J, Cunningham C, Greyson D. The cost of drug development: a systematic review. Health Policy. 2011 Apr;100(1):4-17.
    3. Gøtzsche PC. Developing a new drug costs less than $100m, not $900m. BMJ 2013;346:f398

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  16. 16. pinetree 3:02 am 01/7/2014

    It would be fair game to say the challenge of finding and producing new drugs is a wicked problem. But this article makes the unsupported claim that this reason, not marketing, kick backs, or profiteering, is the main cause from the high price of drugs. As such it is not convincing, and that aspect of it appears to be little more than a puff piece for the industry. If you are going to assert an economic claim, then make an economic case for it. Don’t hide behind the assertion that playing with test tubes is hard.

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  17. 17. cstanyon69 3:57 am 01/7/2014

    I have only one thing to say: your entire argument is predicated on the presumption that we actually need to understand biology in order to manipulate it. We learn to throw a ball without learning Newton’s physics.

    Evolution has been developing ‘drugs’ for billions of years; a priori, there is no necessary difference between a small-molecule drug and a metabolite, or a toxin for that matter.

    We have the tools to develop customised molecules to order, depending on the assay we use to establish fitness in the test-tube or culture dish. I suggest that you look up aptamers (DNA, RNA and protein); it might inform your future blog posts.

    The real reason that drugs cost so much is the hubris of presuming that we *can* understand biology, combined with the assumption that we *need* to do so. Flemming discovered penicillin without knowing how it worked. It is only the need of the scientific establishment to justify its cost to bean-counters that has led to theory-based grants, which are at the heart of hypothesis-driven research.

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  18. 18. Curious Wavefunction in reply to Curious Wavefunction 7:02 am 01/7/2014

    Yes, we can discover drugs without understanding biology in fine detail and that’s why we have been successful so far. But this is precisely why so much of drug discovery, including Fleming’s discovery, has been based on pure luck. I am sure we will continue to get lucky in the future, but ideally we would like to make the process more predictable and less wasteful and this can only come from understanding the biology. In addition it’s always easy to get lucky with the low-hanging fruit.

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  19. 19. konewt 8:46 am 01/7/2014

    What do you think of the possibility of drug discovery using idle computer time from the masses ala the “search for SETI” program and others like that? Of course this is probably more of a brute force approach but could be fruitful at some level of luck. Thanks for the article and thought provoking aspects of science.

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  20. 20. sault 2:34 pm 01/7/2014

    z34aa,

    You are thinking about generic / knock-off drugs. I was talking about the EXACT SAME drugs from the EXACT SAME manufacturer that are a fraction of their U.S. price in Canada and Mexico. One of the reasons for this is because Big Pharma has much greater influence in our politics and we have much greater “regulatory capture” here.

    Drugs, much like all of healthcare, is also the ultimate sellers’ market in the fact that many people have to pay the Big Pharma piper or die. Therefore, the drug sellers have much more leverage than companies selling “discretionary products” like Playstations and doughnuts.

    Finally, the advertizing money the drug companies spend basically makes people their own drug pushers on their doctors. If you’re concerned enough about a certain condition you may or may not have, why do you need an advertizement telling you to “ask your doctor about our magic pill”? A doctor should be the one to make that determination, but prompting from their patient leads to overprescribing. And on top of that, some ads fake people into thinking they have some disorder when they’re actually fully healthy. The “Restless Leg Syndrome” ads from a few years back were a blatant scam to “psych” people into thinking they had the disease, for example.

    So, ad up all the needless advertizing, the outsized profit margins (AFTER paying their executives massive salaries and showering shareholders with dividens) and the political favors Big Pharma enjoys and drug prices SHOULD be around what they charge in Canada or maybe even lower.

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  21. 21. curiouswavefunction 3:07 pm 01/7/2014

    konewt: That’s definitely something worth doing. Computational methods for drug discovery have their limitations but since people are already using computers for studying protein folding, SETI and other problems they could certainly devote them to drug discovery too.

    sault and others: I am opposed to obscene CEO bonuses as much as anyone else. But the thrust of the matter is that high profit margins are important to a certain extent because otherwise you won’t have enough revenue to discover the next drug. And why do you need so much money to do this? Because the science is hard; that’s the point of this post. Just because pharmaceutical companies are spending less on R&D does not make the R&D any easier. In any case, there’s been enough discussion on marketing and revenues in this comments section. Any further discussion will only distract from the main topic of this series, namely the science, so from now on I will only let comments and questions about the science through.

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  22. 22. Kroeze 3:08 pm 01/7/2014

    It’s the title, stupid! If you want to inform or educate folks, then insulting them is not a great way to start. The article is fine, and interesting, and the comments are thought-provoking, too.

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  23. 23. Curious Wavefunction in reply to Curious Wavefunction 3:12 pm 01/7/2014

    The title is a take on Bill Clinton’s 1992 campaign slogan; it’s a pop culture reference, not an insult.

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  24. 24. llirbo 3:37 pm 01/7/2014

    The Lipitor mentioned in the article is seeing the scope of its usefulness being reassessed. In the meantime, billions have been earned at quite a substantial profit. Profit is fine, of course, but how much is too much? The interests of the ill seem to take second place to stockholders interests. Add to that the myriad serotonin re-uptake inhibitors which end up functioning as well as a placebo. Do not forget the new antipsychotics, such as Seroquel, Abilify, Risperidone and more which do not appear to be more effective than the older drugs.
    Yes, science is expensive, greed is more expensive. Too often the science is poor though.

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  25. 25. curiouswavefunction 3:43 pm 01/7/2014

    Indeed. One of the reasons antidepressants don’t work very well is because we are again targeting a system that is very poorly understood (I will talk quite a bit about psychiatric drugs in a future post). The science is especially hard in that case.

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  26. 26. curiouswavefunction 5:24 pm 01/7/2014

    Sorry sault but as indicated above, I deleted your comment along with two others reiterating the same points. Let’s keep the comments section about science; I think we have said enough about marketing and other problems.

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  27. 27. sault 5:52 pm 01/7/2014

    Do you still not understand that corporate profits are what’s left AFTER CEO pay, dividens and R&D are paid for? There’s plenty of revenue do fund drug development, but drug companies are slashing R&D to shower Wall st. and their execs with huge returns instead. You do realize that this, along with the political favoritism I highlighted earlier, undermines a lot of the points you’re trying to make, right?

    While developing drugs may be getting more difficult and expensive, you are only addressing the problem in a marginal way by ignoring the purely financial decisions Big Pharma companies are making when they determine the prices for their product.

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  28. 28. Dr. Strangelove 8:46 pm 01/7/2014

    Ash
    Your basic premise is wrong. Why are drugs expensive? Not because of science and R&D. As already stated, marketing cost is twice as much as R&D cost and profit margin is also higher than R&D cost. Drugs are expensive because of high marketing cost and high profit margin. It costs $5 billion to develop a new drug but that’s not the main reason why drugs are expensive.

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  29. 29. curiouswavefunction 9:26 pm 01/7/2014

    Strangelove and sault: Sorry, but you still don’t get it. If drugs were really easy to discover then there would be no need to spend so much on marketing, so that’s what partly dictates high marketing expenses. It was also one reason why pharma did not spend as much on marketing in the 70s. You also don’t get the fact that even if pharma determined drug costs from a purely financial standpoint (and yes, at least some drug pricing is in fact unfair and totally ad hoc), that still does not detract from the fact that the science is expensive, hard and poorly understood. And as I have mentioned before, R&D costs, while they could be increased, are still among the highest outside the semiconductor industry (see link above); the IT industry for instance spends way less on R&D and more on marketing. It would be a very different world if it took $500 million instead of $6 billion to discover a new drug, and much of that money comes from sunk costs and clinical trials.

    I am afraid that at this point we will just have to agree to disagree. I have already acknowledged more than once that marketing and CEO bonuses do contribute to the cost. If you still have a problem then we are not going to convince each other and it would be a better use of both your and my time to bring this discussion to a close. I think the debate has gone on long enough and has already detracted from the content of the post, so these will be the last comments I will allow that are not related to the science described in the post. Thanks for commenting.

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  30. 30. Effigal 2:03 pm 01/8/2014

    Did any of the commentors actually read the article? The author clearly acknowledges (several times) many factors that contribute to costs, besides the science. The article is about the SCIENCE, and provides a very nice overview of the scientific barriers inherent in developing new therapies.

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  31. 31. bio-nanoscientist 4:43 pm 01/8/2014

    Yes, drug discovery is hard. But a large fraction of it is paid for, not by pharma, but by the NIH, NSF, and other US government agencies, as well as foreign ones. Government-funded researchers publish their findings, which drug companies then build off of in drug discovery. The insight about drug binding pockets you cite cost drug companies little or nothing. So while the science in this article is interesting, I don’t see how it explains drug prices.

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  32. 32. johnryan213 5:15 pm 01/8/2014

    http://www.npr.org/blogs/health/2013/12/30/256885858/-1-000-pill-for-hepatitis-c-spurs-debate-over-drug-prices

    The above tells you all you need to know. $1000 for a pill. The independent analysis said the entire treatment should be $150-$250.

    Sure, the companies should be rewarded, but not at the expense of the public good. Johnson & Johnson made $60 billion dollars last year – that translates to over $160 million/day.

    This article did a fine job explaining how finding new drugs is difficult. It failed miserably in explaining how it’s expensive. Please don’t insult the intelligence of your readers.

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  33. 33. fibonacci 12:42 am 01/9/2014

    Can not agree with #17 enough.

    Drug discovery is hard because the science we do is stupid. Before the advent of molecular biology and the idea that you needed a target to specifically hit, new drugs were discovered by screening based on phenotype—throw in your molecules you’re interested in into a biological system and see if any of them produce the results you want. This approach to drug discovery was wildly successful and led to many of the drugs we still use today. In the 90s, however, targeted approaches to drug discovery began to take over–where the idea was that you first had to identify a target of interest, screen molecules against that target, and optimize the structure of those molecules to make a drug. Ever since we switched paradigms to this new approach towards drug discovery, we’ve become less and less successful and getting new drugs approved. #17 hits the nail on the head. As is often in biology, the sum is often greater than the parts. You can inhibit target X in an in vitro screen with high efficacy, yet when you move higher up to a working biological system–cells, animals, or people–you produce no efficacy or too much toxicity. This can be due to many reasons, the fact that cells have many other pathways around your target or your molecule that you thought you designed to be specific for your target ends up binding to many different targets. It’s no wonder why people are beginning to move back towards a phenotypic approach towards drug discovery. Scientists need to get over their arrogance that an insanely complex system like a cell can be digestible if you simply break it down into smaller parts. That’s not how life works. Your signal transduction cartoons with all the arrows is either wrong or almost always incomplete. How much time, money, and resources are wasted in drug discovery programs simply because scientists are too arrogant to admit they can’t understand how life works (which in the end raises costs for drug research)? In an age when molecular biology dominates funding and research, it is quite surprising that out of all the new drugs that were approved, a larger percentage comes from phenotypic screening rather than through targeted based approaches (see “How were new medicines discovered?” Nature Reviews Drug Discovery 10, 507-519 (July 2011)).

    The other insistence that almost all drug discovery programs make is this idea that new molecules must possess nanomolar potency against their target. Who came up with this stupid idea? Many, many, many compounds are thrown away right off the bat simply because they don’t have nanomolar potency. If nanomolar potency is required for new drugs, you’d literally wouldn’t have 90% of the cancer drugs that are currently used clinically. Why have drug discovery programs become fixated on this idea of high potency in in vitro systems, when the main target should be efficacy? For example, alkylating agents were one of the first discovered, and still are widely used, agents to treat cancer. If you were to test all 27 alkylating drugs in a NCI-60 panel, you’d fine that only 3 of them would actually have nanomolar IC50. Hormonal agents are also very effective for hormone sensitive cancers. None of the 15 hormonal agents that are currently clinically used possess nanomolar toxicity in the NCI-60 panel. If you were in a drug discovery program today, all of those hormonal agents and the 24 alkylating agents would have been thrown away. How about thalidamide or valproic acid, which are also being extensively studied in clinical trials, as well? Thalidamide is considered inactive in the NCI-60 panel. However, if you combine thalidamide with vacizumab and docetaxel, you get outstanding efficacy against prostate xenograft mice. Thalidamide is currently in phase II clinical trials in patients with metastatic prostate cancer and has shown remarkable efficacy. How about Valproic acid? In vitro, valproic acid needs low millimolar concentrations for HDAC inhibition and low cytotoxicity against cancer cell lines with IC50 values ranging from 0.5 to 6 mM. However, if you move to mouse xenograft models, valproic acid strongly inhibits tumor growth. Valproic acid, in combination with epirubicin, is currently in phase I/II clinical trials. What about highly potent molecules? Those should still be good right? How about the whole COX-2 fiasco with rofecoxib,celecoxib, and valdecoxib, that likely cost billions of dollars in waste money and drove up the cost of other drugs to cover the loss? All of those compounds had nanomolar potency, yet had significant toxicity that led to their demise. What happened to the school of thought that high potency in in vitro screening is always needed to avoid toxicity? If you worked in a typical drug discovery program you’d have thrown away valproic acid and thalidamide a long time ago in favor of bad molecules such as the COX-2 inhibitors listed above. How many good molecules does pharma throw away e every year simply because of potency based off of in vitro systems?

    One of the biggest reasons why science drives up costs of new drugs is because of the stubbornness to admit we don’t understand biology. Why do we still insist on bad science to screen for new drugs, when more holistic, although harder to explain result, approaches are producing better results? It may come as a surprise to many people, but the FDA DOES NOT REQUIRE a mechanism of action to approve a new drug. Molecular targeting and molecular studies are simply something we impose on ourselves because we think we are smart. After all, it feels academic to be able to draw some signaling diagram cartoons to explain how a drug works. Sure it is harder to work with a new molecule that possess an unknown mechanism of action, but it is still possible to successfully get it through the FDA as long as you show efficacy. Efficacy and safety should always be the foremost goals. The reason why the science is difficult and drugs are expensive is because we are doing bad science in the first place.

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  34. 34. curiouswavefunction 10:28 am 01/9/2014

    #32: Thanks for your thoughtful and comprehensive comment. I agree with almost everything you say, and especially your quip about throwing out compounds unless they are nanomolar inhibitors (you are absolutely right that many successful drugs are micro or millimolar inhibitors). Phenotypic screening is indeed how most drugs will be discovered and I am glad that we are again now moving toward phenotypic screening. That being said, I am usually wary of these “X or Y” approaches. I think that the choice of method should also depend on project. For instance structure based drug design worked very well for HIV protease inhibitors. In addition I see promise in genomic studies because initial efficacy and safety assessments may not be able to predict post-approval side-effects in very large populations. I thus favor an “all of the above” approach for drug discovery, precisely because the biology is so complex.

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  35. 35. jonhuie 12:09 pm 01/9/2014

    Of course there is very substantial cost in producing new drugs. But a huge part of the price consumers pay is due to the extreme riskiness of finding new drugs. Often very skilled researchers do everything right and find nothing useable – and valuable teams get disbanded. Other times researchers get lucky and create a blockbuster with relatively little effort – and then charge unconscionable prices.

    Unfettered capitalism works well for most commerce, but works badly for drug development. Government funded drug development would both greatly increase the number of drugs developed, and decrease the price of those drugs.

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  36. 36. Drmikeb100 3:37 pm 01/10/2014

    You are correct that drug development is expensive and there are many more failed new drugs that never reach the market than successful ones. However, this is not the only reason drugs are expensive in the US. In my experience in several Pharma companies, drug prices are not generally set by the cost of developing a specific drug, including the failed attempts along the way, but rather by what the market will bear. And, equally important, drug prices are government regulated in most of the world, but not here. Thus, in effect the US consumer is subsidizing drug costs for the rest of the world.

    Recently we saw a commodity drug that was selling for a few dollars approved for a new indication and the price was raised to more than $20,000. This is unrelated to costs. And directly related to profit. Profit is a good thing, without it we wouldn’t have many drugs – but overt greed is not good.

    So, my point is that although drug development is expensive, drug prices are set by market forces in the US and by governments in the rest of the world. If we could buy our drugs for what they cost in Canada or Europe we would save a bunch of money and perhaps other countries would have to pay more for their drugs if they want to keep them available without being subsidized by the US consumer.

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  37. 37. curiouswavefunction 4:21 pm 01/10/2014

    I think this is one of the most reasonable comments I have seen in this discussion thread. I agree with you.

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  38. 38. jstahle 5:34 pm 01/10/2014

    - it’s because next quarterly profit must be higher than previous quarterly profit – or the CEO will be fired.

    A risky business? the simple answer can be found in the size of the profits.

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  39. 39. thlej 8:30 pm 01/11/2014

    We want well-qualified professionals working on medical treatments. Once a potential new drug is found, we want it properly and fully tested before it’s considered for sales. These things cost money. But it’s certainly not the only factors that make drugs so expensive.

    When one drug company comes out with a new drug, other drug companies invest considerable money in experimenting with similar compounds which don’t quite violate the first company’s patent. They hope to find something they can sell as their brand’s competing product. Sure, they’d be really happy if they found scientific evidence that they found another chemical that provided more benefits with fewer side-effects. But if they find a chemical that is 99% as good as the first company’s drug, they won’t necessarily spend a lot more money looking for one that’s 101% as good. The company’s first priority is profit. Spending all this money to find a second drug that doesn’t necessarily do any more than the first drug is a factor in higher drug prices. Require that the second company’s drug must be 110% as good as the first drug, then you can argue the increased drug prices provide substantial medical improvement.

    Recently, a drug company has said it will change some of its methods to get doctors to choose its products rather than competitors. If all drug companies did this, it would take another expense away that could lower drug prices. However, up until this time this has contributed to higher drug prices.

    Advertising for drugs also is an expense which companies pass along to patients. In theory, advertising could let some patients learn about medications which their doctors haven’t mentioned (not because the doctor has determined it is inappropriate, but the doctor has somehow overlooked it). However, even if we assume drug companies should continue doing the same amount of advertising for exactly the same drugs, that doesn’t mean the advertisements should be identical. Rather than using the usual advertising industry tricks – such as showing scenes of happy actors who are pretending to be patients who use the drug – the commercial could be strictly informative rather than manipulative. This could reduce the cost of producing the commercials (less cost to pass along to patients) as well as reducing the number of patients asking doctors about medications which the doctor has already determined is not a good choice for the patient. (That extra time spent talking to doctors may not reduce drug prices, but it may reduce our national spending on medical care as a whole.)

    We know that for medical care (all types together) Canada spends far less per capita than the US does. As studies reported in Scientific American have indicated, the quality of medical care in Canada is similar to that in the US. Note: Canada’s population is in the neighborhood of only 1/10 that of the US. The smaller the population, the greater the overhead / administrative costs per patient will tend to be. All other things being equal, Canada’s medical care should cost more. It’s the US system which makes us pay more in spite of this. It’s not just the cost of science.

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  40. 40. Newbis 3:38 pm 01/12/2014

    The article seems to miss what seems to be the harder and more relevant question … not why are drugs expensive, but why are they so much more expensive than they used to be? 30 or 40 years ago, drugs were presumably just as hard to develop, yet they were much less expensive than they are today. The question that bears asking isn’t why they’re expensive, but why their cost seems to be going up exponentially.

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  41. 41. ultimobo 4:41 pm 01/12/2014

    my father was a doctor and I saw he was continually getting free ‘gifts’ of useful stationery or knick-knacks to keep on his desk, all branded with the name of the product they were pushing – he was also frequently visited by drug salespeople promoting their products, and got heaps of similar junk mail masquerading as ‘education’ – so marketing would be a big part of their budget

    sure developing new drugs is expensive – in my younger stupid days I was a volunteer for beta blocker trials for iPhar in Munich – as a footloose traveler I thought it was nice pay for free food and accommodation (in winter!)

    which is why I guess drug companies really like evergreening – or slightly changing their formula so they can re-register patents to keep them privately profitable (for them) and keep them off the Much-cheaper generic expired-patent list – that looks to me kind of mercenary, greedy and duplicitous …

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  42. 42. GatorFan 9:29 pm 01/12/2014

    All this doesn’t explain why people living in the USA pay far more for prescriptions than anywhere else in the world. How does science (and not greed) account for that?!?! It’s common knowledge that people in the USA order their prescriptions from other countries to save A LOT of money for the same prescription they’d buy in the USA, some of my family’s prescriptions are 3 times the price here as overseas.

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  43. 43. AkaMotr 11:27 pm 01/12/2014

    Healthcare business and healthcare system.
    Radical difference.

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  44. 44. Curious Wavefunction in reply to Curious Wavefunction 9:09 am 01/13/2014

    Only 36% or so of J&J revenue was from prescription drugs. I actually agree that drugs for conditions like Hep C should be made cheaply available. Still does not detract from the argument that’s hard and expensive to discover them though.

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