FROM JAMA INTERNAL MEDICINE
Research and development costs for cancer drugs are far lower than previous estimates, according to a new analysis, casting doubt on the common justifications by drug companies for the high prices of such medications.
The median cost to develop a cancer drug was $648 million, compared with the widely publicized figure of $2.7 billion, the study’s researchers said.
Lead investigator Vinay Prasad , MD, of Oregon Health and Science University in Portland, and Sham Mailankody , MBBS, of Memorial Sloan Kettering Cancer Center in New York, studied U.S. Securities and Exchange Commission filings for drug companies with no drugs on the market that received Food and Drug Administration approval for a cancer drug from Jan. 1, 2006, through Dec. 31, 2015. Researchers estimated cumulative research and development spending from initiation of drug development activity to date of approval. Earnings were identified from the time of approval to the present. Ten drugs and companies were included in the analysis.
Investigators found that the median time to develop a drug was 7.3 years. Five companies (50%) developed drugs that received accelerated approval from the FDA, and five drugs (50%) received regular approval. Five of the 10 drugs (50%) act on a novel target (ibrutinib, brentuximab vedotin, ruxolitinib, cabozantinib, and eculizumab), whereas the other five drugs (50%) are next-in-class drugs with a mechanism of action similar to that of a previously approved drug.
Results showed the median cost of developing a single drug in 2017 U.S. dollars was $648 million (range, $157.3 million to $1.95 billion), and the mean development cost was $719.8 million (JAMA Intern Med. 2017 Sep 11 doi: 10.1001/jamainternmed.2017.3601 ).
Drugs that received accelerated approval cost less to develop than did those that received regular approval, although that finding was not statistically significant, according to the study. From the time of approval to December 2016 – or until the company sold or licensed the compound to another company – the total revenue of the 10 drugs was $67 billion. The median revenue for these companies was $1.66 billion (range, $204.1 million to $22.3 billion), and the average revenue was $6.7 billion. Nine of the 10 drugs had revenues greater than their research and development spending. Revenue from sales of four drugs (ponatinib, ibrutinib, enzalutamide, and eculizumab) was more than 10-fold higher than research and development spending.
The analysis offers a transparent estimate of research and development spending on cancer drugs, the study authors said, and has implications for the current debate on drug pricing. They noted that prior estimates for the cost to develop one new drug range from $320 million to $2.7 billion, markedly lower than the study’s $648 million finding.
“In a short period, development cost is more than recouped, and some companies boast more than a 10-fold higher revenue than [research and development] spending – a sum not seen in other sectors of the economy,” the researchers explained. “Future work regarding the cost of cancer drugs may be facilitated by more, not less, transparency in the biopharmaceutical industry.”
Regarding their work, the authors noted that the data set is small, the filings studied are subject to strict guidelines and regulation, the analysis pertains only to cancer drugs, and potential tax breaks applied to research and development costs for drug companies are not accounted for.
Dr. Mailankody reported serving as a principal investigator for clinical trials with research funding from Juno Therapeutics and Takeda Oncology. He also reported receiving personal fees for speaking at the Wedbush Pacgrow Healthcare Conference 2016. No other disclosures were reported.
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