Who’s Going to Pay for Future Drug Development? (Part 1)

3/22/11

(Page 2 of 3)

 holes in their revenue streams, whereas biologics (i.e. protein-based drugs) have faced (at least in the U.S.) virtually no generic challengers. The development of biosimilars and biobetters, which are essentially generic or improved versions, respectively, of biologics, is an emerging trend within both Big Pharma and Big Biotech companies. These types of generic medicines have been available in Europe and other places for years, but the lack of a defined regulatory pathway has kept these drugs out of the U.S. market. The FDA is expected to release guidelines clarifying such a pathway in the near future, and many companies have already announced publicly that they are planning on producing these drugs in the future.

The biosimilar movement is somewhat worrisome from the perspective of those patients who are anxiously awaiting the development of new drugs for their illnesses. Why? While the development of biosimilars should eventually result in significant financial savings for individual consumers as well as the federal government (exactly how much is muddy), it will clearly divert money from the research and production of novel drugs. The development program for a biosimilar should be much cheaper than for a new drug (though still likely to run several hundred million dollars), but can be readily justified on a corporate level because the likelihood of marketplace success is very high.

The Government and Academia: Pharma’s Hope to Fill the Pipelines. (Funding Level: $30.5 billion at the NIH, $250 million from the Pentagon, $54 million from DARPA, and $608 million in SBIR and STTR grants, plus individual State funding (hundreds of millions per year)

The numbers above clearly illustrate that the federal government is the major financier of U.S. biomedical research, which has been channeled primarily through the National Institutes of Health. Pharma and biotech companies have taken advantage of this funding by establishing collaborations with academic investigators who are recipients of federal research grants. In the past, these collaborations generally took the form of engaging with individual investigators at specific institutions. More recently, however, this process has metamorphosized into agreements in which pharma has aligned itself with entire departments or institutions. As mentioned above, academia has been a fruitful source of new drugs for both pharma and biotech companies. The exact terms of these agreements are seldom publicized, raising questions about the degree of control and influence the companies have over the research and, more specifically, over the investigators themselves. Can they delay publications? Do they get to review (and approve) presentations before they are given? It’s certainly not clear to me if or how these agreements effect traditional academic freedoms.

Pharma’s recent lack of productivity in producing new drugs stimulated the Obama administration to propose forming a billion-dollar government drug development center within … Next Page »

Stewart Lyman is Owner and Manager of Lyman BioPharma Consulting LLC in Seattle. He provides strategic advice to clients on their research programs, collaboration management issues, as well as preclinical data reviews. Follow @

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