Drug Dollars

Pharmaceuticals generally have 20 years of exclusivity (patent) from the time of regulatory approval.

Lipitor, the biggest selling drug of all time, generates 11 billion dollars in annual global sales for its producer Pfizer. It too is Australia’s most popular prescription drug, generating more than 10,000,000 scripts each year. Another drug of the same class as Lipitor is a good case in point also. A year before the patent on simvastatin expired, the cost of a 40 mg pill was $3 in the UK; five years after the patent lapsed and it is eleven cents.

Not all that glitters is gold. Regulators are still haunted by Vioxx in 2004, and have become stricter in their assessments.

Nevertheless, it costs $1.4 billion to bring each new drug to market.

Or does it?

Donald Light, professor of comparative health care at Stanford University, in Demythologizing the High Costs of Pharmaceutical Research suggests the real median costs for the pharma industry could be closer to US 180-230 million dollars but as little as $43 million for bringing a self-originated new chemical compound to market.

Governments have been using cheap generic versions of antibiotics for a generation now and the returns on the research investment are so small that only two major companies are running research into developing antibiotics. Of 2950 medicines being developed in 2010: 800 were for cancer; 250 for cardiovascular disease; and only 83 were antibiotics. Antibiotics also generally involve short treatment courses and, with the rising fear of microbial resistance, their use needs to be restricted as much as possible.

The industry has adopted a number of approaches in order to protect their billion-dollar pills, including:

• extend and protect the existing patents that surround their products through the courts
• mergers and acquisitions
• expanding into generic markets themselves – e.g. GSK joined up with SA drug maker Aspen to sell off-patent drugs to the developing world
• adopt smaller pill sizes and of different shape
• the switch from prescription to direct-to-the-consumer drug — e.g. Claratyne — is rare
• biologics – industry predictions that the TNF inhibitor adalimumab (Humira) will be the world’s most lucrative prescription drug by 2016 – very complexity, particularly in manufacturing process makes them harder to copy safely
• biosimilars are the rival versions of the biologic medicines the originator companies develop