New study dismantles myth of high drug development costs

I'm embarrassed to admit that when I was a medical reporter for The Boston Globe in the '90s, I (along with many other journalists) would unthinkingly use the $800 million that the pharmaceutical industry said it cost to develop a new drug product. Industry apologists routinely threw out that exorbitant figure whenever anyone complained about high drug prices, and they made sure to note that it was based on "real research," studies done by the Tufts Center for the Study of Drug Development.

What I didn't realize then was that the $800 million was a highly inflated cost estimate produced by a center that received substantial industry funding and has very little credibility. The same goes for the latest cost estimate of $1.3 billion per new drug bandied about by the same folks.

Now, in a newly published report in Biosocieties journal, researchers at Stanford and the University of Medicine and Dentistry of New Jersey have taken apart both of these inflated cost estimates and shown exactly where they are wrong. Don Light and Rebecca Warburton note, for instance, that neither the $800 million or $1.3 billion estimate includes the substantial contributions made by taxpayers through tax write-offs for research and development. As it turns out, taxpayers indirectly pay for about 39 of drug company R&D. In addition, the industry-based figures are based on clinical trials (and number of participants) much larger than actual trials reported by the FDA and the National Institutes of Health.

Perhaps most disingenous, half of the industry estimates are not real costs, but exaggerated estimates of profits that companies might have made if they had not developed the drugs but just put their money into the stock market. As Light and Warburton note, "even if one were to accept the argument that profits foregone should be included as a 'cost' (which no other industry does), US government guidelines call for using three percent, not the 11 percent used by (the Tufts group). Light and Warburton argue that the pharm industry "cannot have it both ways."

They cannot treat R&D costs as if they are a long-term capital investment when tax authorities do the industry the favor of treating them as an ordinary business expense, fully deductible each year.

In their report, Light and Warburton attempt to reach a more realistic estimate for drug development, which, as they acknowledge, is hampered by the fact that the pharmaceutical industry is exceedingly secretive about its R&D data. But building on some of the data gathered by the Tufts Center and research done by Merrill Goozner of gooznews among others, they conclude that the real cost per "self-originated" drug product is closer to $180-231 million, a big reduction from the estimates that continue to be thrown out by industry spokesmen whenever they want regulatory concessions or more government spending. The latest example of this can be found in Christoph Westphal's op-ed in The Boston Globe, which I blogged about here.

The myth of high R&D costs not only exerts a destructive influence on state and federal policy, but it provides drug companies with an excuse for focusing on high-priced me too drugs (like Paxil and Seroquel), instead of developing lower priced drugs that might really save lives -- such as vaccines and treatments for disease. As Light and Warburton note:

The mythic costs of R&D are but one part of a larger, dysfunctional system that gives us mostly new medicines that have few or no advantages and serious side adverse reactions that have become a leading cause of hospitalization and death.

I couldn't have said it better.

Are we seeing a concerted drug industry campaign against the FDA?

There must be something in the air. Either that, or the drug and medical device industry has embarked on a concerted campaign to improve its tattered public image and bully the FDA into backing down from recent efforts to ensure that unsafe drugs and medical devices are kept from the market.

First appeared an op-ed piece in The Boston Globe early this week complaining that the average number of new drugs approved by the FDA since 2005 has dropped 33 percent and urging the FDA to once again speed up the process. The op-ed was penned by none other than Christoph Westphal, a biotech entrepreneur who made a mint when he sold his startup, Sirius, to GlaxoSmithKline in 2008 for a whopping $720 million.

Then comes a double whammy today in The New York Times: an op-ed piece by a former vice president at Merck calling for Congress to allow drug companies to work with other on joint direct to consumer advertising campaigns (as if the current barrage of television drug ads isn't bad enough), and an article in the business section decrying regulatory delays of medical devices and arguing that this slowdown is forcing some patients to go overseas. The article by Andrew Pollack raises the old canard that the pharm industry brings up whenever it wants concessions: that U.S. industry will lose its global competitive edge if the FDA doesn't relax its regulatory standards.

In his op-ed piece in The Globe, Westphal specifically criticizes the FDA's recent rejection of a drug to treat obesity, even though the agency had serious concerns about the drug's effectiveness and safety and its possible over-use as a treatment of first instead of last resort. He then goes on to urge $1 billion in additional funding by the federal government for early and late-stage drug development. The implication is that taxpayer money would be well-spent by supplementing research funding by the industry, which now pretty much controls drug testing and development with all the resulting conflicts of interest. Now, I would love to see the NIH take over control of clinical trials for new drugs if only to ensure less biased trial results and have blogged about that before. But somehow I don't think such independent research is what Westphal has in mind.

Speaking of possible conflicts, Westphal seems to have become a regular guest contributor to The Globe's op-ed page, which is interesting because his wife, Sylvia Pagan Westphal also is a regular op-ed contributor to the paper on medical issues. (I'll give Westphal this much: he's a brilliant marketer. He sold Sirius to GlaxoSmithKline on the promise that its one product, resveratrol, a basic ingredient in red wine, would become an anti-aging bullet. Yet just last year GlaxoSmithKline had to stop a clinical trial of resveratrol after a number of patients taking it developed kidney failure).

The Times' op-ed piece, disingenuously headlined "Better Drug Ads, Fewer Side Effects," essentially argues for weakening anti-trust regulations to allow the drug companies to work together on joint advertising campaigns that, in my mind, would be even more misleading than the television ads now dominating the air waves. The author of this piece, the former Merck exec who now works for law firms that represent drug companies, argues that these joint ads would inform consumers about diseases and treatment options (including drugs) and spare viewers "the assault of promotional messages, often unintelligible warnings about side effects and cloying images..." Yes, we could all do without the cloying images, but I guess I'd rather have unintelligible warnings than no warnings at all. Better yet, as I've blogged about before, what would really protect consumers is if Congress passed legislation prohibiting all direct to consumer advertising by pharmaceutical companies, period.

Why is the industry mounting what looks like a carefully orchestrated campaign to sway public opinion now? Perhaps because its lobbyists smell blood in the water. The House is now under the control of pro-business Republicans, and in recent weeks, even President Obama has gone out of his way to cozy up to big business interests. So industry officials must think this is the time to put pressure on regulatory agencies like the FDA, which in the last few years has shown an increased willingness to hold new drug and medical device approvals up to a higher level of scrutiny for safety and effectiveness. I just hope that, in the interest of public health and safety, the FDA stays strong.







.

Psychiatric journal refused to retract flawed antidepressant study

The Journal of the American Academy of Child and Adolescent Psychiatry has refused to retract a study finding that the antidepressant Paxil was safe and effective in adolescents despite evidence of fabrication, plagiarism and failure to disclose conflicts of interest on the part of its authors, according to two academic researchers.

In a paper published yesterday in the journal Accountability in Research, Jon Jureidini and Leemon McHenry recount the myriad flaws of study 329, the same clinical trial that prompted a New York State Attorney General's lawsuit against Paxil's maker, GlaxoSmith Kline, in 2004. The story of that lawsuit and how it helped propel reforms in the way drugs are tested and marketed is the subject of Side Effects. In that book, I exposed how the authors of study 329 failed to fully disclose their lucrative financial ties with GlaxoSmithKline and how they misrepresented the data in the study to make Paxil look safer and more effective than it really was. I've also written about the study's extensive flaws in my blog here and here.

In this week's paper, Jureidini and McHenry concluded that study 329 violated JAACAP's written policy in several ways:

1. Failure to disclose conflicts of interest of "authors."
2. GSK concealed commercially damaging data (about the study).
3. Fabrication (creation of a strong false impression that one primary outcome measure was positive by deliberately confusing it with another measure).
4. Falsification (post hoc changes to secondary outcome measures and misrepresentation of severe adverse effects).
5. Plagiarism (submittting a ghostwritten manuscript).

The two researchers said they brought evidence of these clearcut violations to the attention of the journal's current editor, Andres Martin, but he has so far refused to retract the study. In their paper, Jureidini and McHenry said this case makes them wonder how many industry-sponsored publications of clinical research are equally flawed. As they note:

It is unclear to what extent one can extrapolate from Study 329 since relatively few industry-sponsored clinical trials have been exposed to this level of scrutiny. Given, however, the vast operations of "publication planning" conducted by pharmaceutical marketing, there is little doubt about the degree to which industry-sponsored research is suspect.

As a result, they reach the conclusion that other researchers have: that publication of industry trials should be banished from the journals. Instead, "pharmaceutical companies should be obliged to post results of their trials on websites, leaving journals to independently and critically examine the raw data and conclusions," they argue.

That's one solution. Here's another, long espoused by Dr. Marcia Angell, the author of The Truth about Drug Companies: prohibit pharmaceutical companies from funding randomized clinical drug trials and instead have those trials funded by the National Institute of Health and conducted by independent researchers who are not on the drug companies' payroll.