Discovery and development impacts on pharma R&D

That was the verdict made by Dr Robert Ruffolo, senior vice president of Wyeth as he made his keynote speech at the annual Drug Discovery Technology conference in London this week.

Dr Ruffolo, who is the president of research and development at Wyeth Pharmaceuticals, was adamant that the environment for pharmaceutical R&D was changing, with the main challenge stemming from decreasing R&D productivity.

From a 1996 industry high of approximately 65 new molecule entities (NMEs), that figure has whittled down to just under 40. Despite this, the amount invested into R&D has gone from $18 billion (€13.5bn) in 1996 to just under $35 billion in 2004.

"R&D productivity has decreased across the industry. We are spending more than ever before but are producing less as well,"​ he said

One major factor that was contributing to this trend was the negative impact mergers and acquisitions were having on R&D output. The high profile deals between French pharmaceutical group Sanofi-Synthelabo and Aventis, forming Sanofi-Aventis and Sweden's Astra and Britain's Zeneca in 1999's $36 billion merger has clearly dented pharma R&D budgets. He cited the three years post merger as a figure in which the full effects of an acquisition could be seen.

Pharmaceutical R&D investment is currently the highest in the world, a measure of the risk involved. Research-based pharmaceutical companies use 17 per cent of their total sales on research and investment compared to the computer software and services industry, which uses 10.5 per cent.

The costs of discovering and developing a new drug are increasing faster than budget increases. According to Bain's drug economic model, 2003, the cost of producing a drug has increased from $1.1 billion in 1995-2000 to $1.7 billion in 2000-2002.

Ruffolo paid particular attention to the factor of regulation burden (over-regulation) and the lack of international harmonisation as the sources of increasing and/or unachievable standards, which has seen the R&D process unnecessarily played out, pushing costs out of control.

The opinion of the pharmaceutical industry is that there is an air of increasing regulatory conservatism, said Ruffolo, who added that there has been a noticeable shift in the risk/benefit ratio, so long an accepted measure of a drugs value. The scrutiny of public opinion has forced the equilibrium to be redefined.

He said: "Too much emphasis is placed on the risks of a drug without looking at the benefits the drug provides. HIV drugs are extremely toxic but there is no public outcry. The public are engaged and understand that the risks involved because patients taking them benefit overall."​

The lack of any coherent regulatory guidelines was also targeted as a major burden on the industry. The differing standards of medicine in the US, Europe and Japan are complicating clinical trials. Drugs that may be approved by the Food and Drug Administration (FDA) may be forced to undergo additional tests by its European equivalent, (EMEA) or even be rejected outright by the Japanese authorities.

Ruffolo insisted that the image of the pharmaceutical industry has never been in a worse state, quoting the recent withdrawals of certain so-called blockbuster drugs as reasons why confidence in medicines had dropped to an all time low. While Ruffolo accepted that his part as a leading industry figure made him partially to blame, he insisted external factors had made the situation untenable.

Ruffolo further pointed to a example of an article published in the British Medical Journal (330:7, 2005), which reported on the FDA's decision to 'review 'missing' drug company documents.' A FDA clinical review was quoted as saying "if this report was done by (Eli) Lilly, it was their responsibility to report it to us."

Congressman Maurice Hinchey was reported to have said: 'This is an alarming study that should have been shared with the public and the FDA from the get go, not sixteen years later.'

"The case demonstrates the need for Congress to mandate complete disclosure of all clinical studies for FDA approved drugs."

However, a later article, which appeared in the same journal (330:211, 2005) an investigation revealed that all the documents that were Eli Lilly's were disclosed in the correct manner. The journal was quoted as saying they did not intend to suggest that Lilly caused these documents to go missing.

Ruffolo pointed out that whilst the initial BMJ report was covered by all the major television networks such as NBC, ABC, and CNN, the retraction by BMJ was not reported on a single major network.

He went on to further claim that overall costs of healthcare were spiralling rapidly not just in the US but worldwide. When expressed as a percentage of the Gross Domestic Product (GDP) of each country the figures made for revealing reading. The US came top with 13.9 per cent followed closely by Germany at 10.7 per cent. The UK and Japan came in at 7.6 per cent a piece.

Whilst the figures may suggest pharmaceuticals make up a large proportion of this cost, figures presented say this is not the case. According to Ruffolo, drugs only make up a small part of total healthcare spend. Drugs, expressed as a percentage of GDP, saw the US at 1.7 per cent. France and Italy were only slightly higher at 1.9 per cent whilst the UK was only at 1.2 per cent. Japan was only slightly more at 1.4 per cent.

Ruffolo further put the decline of R&D productivity down to high drug costs, which he said were increasing rapidly. Indeed, according to the Kaiser Family Foundation, a detailed breakdown of the medical industry, prescription drugs reported a 15 per cent increase in cost. Physician services and hospital care were found to be lagging significantly behind at 5 and 3 per cent respectively.

He concluded: "When compared to other industries, we are the most regulated industry in the world and our increasing investments in R&D demonstrate this. R&D costs are increasing to a point that are just not sustainable and we need to ask ourselves just how long we can keep going like this."​