Friday, February 29, 2008


“If you want to launch big ships, you have to go where the water is deep”- anonymous

I wrote earlier about how the costs and risks associated with drug discovery and development in a Big Pharma PRI are measured against the remote prospect that any individual NCE might attain “Blockbuster” levels of sales and profitability. The issues involved with an assessment such as this are quite complex.

First, the drug has to cure a disease and do it more safely than has ever been required before. Second, if the disease all ready has alternative therapies, the new drug has to treat it more efficaciously than the old ones. Third, if it’s more expensive, a case must be made to the reimbursing agencies that there is enough clinical benefit to the patient, and perhaps to society, so that they are willing to pay for it. I suppose it’s beside the point for me to highlight that in circumstances where neither the major beneficiary of the new drug, the patient, nor the individual who makes the decision that the drug should be prescribed and therefore has a major intellectual and emotional commitment to the decision, the physician, are the ones who pay for it. That makes these circumstances quite different from how things work in the rest of the world. Troublingly, the one who does, the insurer, has the greatest stake in not doing so willingly. All of this is probably superfluous at this point, but these therapeutic and reimbursement decisions are typically maddeningly complex.

The market assessment is an all-together different proposition. Just to scratch the surface - how many cases a year; is the disease curable or will it be treated for life; what will be the remaining patent life of the molecule if and when the drug is ultimately approved; can that be extended through formulation changes, additional new claims and what about the rest of the world? All of these must be considered in light of the fact that each new drug candidate carries a financial burden of it’s own, but also that of it’s failed predecessors – as well as the massive on-going costs of scientists, physicians and managers whose salaries and overhead are attributable as much to their forbearers as to them, whether new drugs ever emerge from their efforts, or not.

The whole process consists of trying to know the unknowable. Piling suppositions on top of projections and speculations and then multiplying them by shaky assumptions. In short, using any and every conceivable means to try to take some of the risk out of what is inherently an unknowable set of future outcomes in an undeniably risky business.

But suppose you don’t get paid to manage risk. What if you get paid to identify and measure risk; to bring every imaginable tripwire and booby-trap into the open; to insure that there are no surprises down the road. How then to reach the decision, ever, that any individual new compound be christened to undertake such a perilous and expensive passage. The peril and expense encompassing, of course, personal career risk as well as the actual project.

The reality of this situation is there is no penalty for terminating a promising project. In fact, in today’s climate almost nothing is more appreciated by management than an “early kill” neatly executed before the costs and risks get appreciable. A skilled Marketing manager can find more good reasons for a new drug to fail than you can possibly imagine if there is no penalty for not going forward and, on balance, no reward for endorsing the enormous risks of even the most promising drug candidate.

Little wonder then that so few compounds get far enough along in early development to produce a field of late stage drug candidates broad and diverse enough to improve the overall prospects and yield. Without the willingness to enthusiastically embrace risk and reap the harvest of some unexpected results, there can be little expectation of any upside surprise through the discovery of something that is genuinely new.

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