The big pharmaceutical companies are amazing. They run right at the limits of technology and take immense financial risks which benefit us all immensely, yet they are poorly understood. One of the main reasons that life expectancy has shot up in recent decades is because of these companies, their products improve the life quality of just about everyone on earth.
The process for creating a new drug is when researchers identify a potentially useful molecule. This is then patented and research, development and testing commence. The patent only lasts 20 years after which anybody can and does copy it in what is known as the generic market.
From the initial identification of the molecule to it coming to market takes 10 to 11 years (small biotech companies can sometimes get this down to 7 to 8 years). During the development process 9,999 out of 10,000 candidate molecules will fail in some way. The one that succeeds and makes it to market will cost $1.3 to $1.8 billion in order to make that j0urney.
If we take the average cost of getting to market as $1.5 billion and the average sales life before the patent runs out as being 10 years you can see that a new drug has to make a profit of $150 million a year just to break even. So it is hardly surprising that 80% of new drugs fail to make a profit in their patent lifetime.
Against this background the big pharmaceutical industry worldwide is retrenching. They are putting far less candidate molecules down the development pipeline. And we are all poorer for this as we will not get new drugs that would have raised the quality of our lives. These are the problems:
- Every drug has side effects, aspirin can cause gastric bleeding for instance. The parasitic, ambulance chasing solicitors have latched on to this and run a constant pitched battle of legal actions against pharmaceutical companies. This costs a fortune and makes it significantly more difficult to run a business. These solicitors cost us new cures for diseases.
- Money saving. Many countries have state health services that are highly inefficient and which penny pinch on drugs to make up for their mismanagement elsewhere. In Britain inept hospital management overspends £500 million a year just on basic supplies. Whilst doctors commonly prescribe generic drugs that are two or three generations old when there are more modern drugs available that do a far better job.
- Ten years of patent protection before the market is swamped by generic copies is just not enough for the big pharms to earn enough to pay for their huge investments. Book authors and pop artists get copyright protection for the author’s life plus 50 to 70 years.
Against this background it is hardly surprising that Pfizer are closing their research facility at Sandwich in Kent with the loss of 2,500 jobs. This reflects a worldwide trend and its consequence is less new and better drugs to cure us of our ailments. We lose out in quality of life.
So what needs doing? Well, as in so many areas the activity of solicitors needs to be tempered as currently they often do far more harm than good, we need a better balance. The length of patents needs to be looked at. And one very simple measure would be to give doctors freedom to prescribe. So they could offer the standard NHS, NICE approved drug, as normal. But then say that there is a state of the art drug available under private prescription. This has to be better because it is immoral that people are currently not even offered the option of the best drug for their condition.
All this matters a lot just now as the technology is emerging to create cures based on genetics. These offer hope for previously incurable diseases and also the potential to be a step change more effective than traditional chemical drugs. But the costs involved are huge, as is the risk. If pharmaceutical companies cannot run a viable business model then the drugs just won’t happen.