When the US Food and Drug Administration approved it in 2019 Novartis on gene therapy Zolgensma Many raised eyebrows at the drug's high price tag. At over $2 million per dose, the drug, developed to treat spinal muscular atrophy, was the most expensive in the world at the time. This is an example highlighted in a article in the medical journal The BMJ, where a British research team took a closer look at the phenomenon of skyrocketing drug prices.
Sharply rising median prices
In the article, the researchers highlight that American median drug prices have risen from USD 1 per patient per year to over USD 400 during the period 150 to 000. New treatments for rare diseases are primarily cited as reasons for the price hike, but the researchers point out that this is not the whole truth.
Prices are also rising for older and more common drugs. According to the article, for example, list prices for some insulin products have more than doubled between 2007 and 2018. A report from US authorities identifies 1 products that have increased in price by an average of more than 216 percent between July 30 and July 2021, far exceeding the inflation experienced by the world during the same period.
More is spent on sales and marketing
The research team reviewed the financials of the world’s 15 largest biotech companies from 1999 to 2018, with combined sales of a staggering $7,7 trillion. Research and development spending during the period was $1,4 trillion, while sales and marketing spending was $2,2 trillion. And not only that, they’re also spending more money on dividends and share buybacks.
According to an investigation by the US Congressional Oversight and Reform Committee, the 14 largest pharmaceutical companies spent a total of $577 billion on dividends and buybacks between 2016 and 2020, which was $56 billion more than they spent on research and development.
Trend change in recent years
However, the trend is that research spending as a percentage of sales has increased in recent years and that marketing spending has decreased. The authors also acknowledge the fact that mergers and acquisitions now play an important role in giving large pharmaceutical companies access to new, innovative drugs.
"Alongside evidence that large pharmaceutical companies are not involved in the discovery of most new drugs this suggests a shift of strategy from early-stage research and discovery to late-stage acquisition and development", they write.
Few clinical breakthroughs
At the same time, the question is raised as to whether these innovations actually represent any clear advances in the treatment of various diseases. Several studies in the US and Europe have shown that few drugs launched in recent years have added any real clinical value. And only a fraction have resulted in any major breakthroughs.
On the positive side, however, the increasing proportion of drugs being developed to treat rare diseases is highlighted. Between 2001 and 2005, 25 percent of all approved drugs in the US were targeted at rare diseases. Between 2006 and 2020, that proportion had risen to 48 percent, and in 2021 it amounted to more than half.
Provides suggestions for improvements
In conclusion, the authors of the article do not see any reason for companies to pass on increased costs for research and development to patients through sharply increased prices. According to them, companies in the biotech industry should be able to generate more clinically valuable innovations with current resources. In the article, they list a number of proposals aimed at authorities that aim to better target research towards actual medical needs.
One proposal is to make patent systems more stringent to avoid rewarding only chemical innovations that do not add any real clinical value. Better communication is also being requested from health authorities regarding development priorities and how to strategically use public research funds. The researchers also propose reforms to reward companies that deliver clinical benefit while discouraging strategies that involve copying or extending the exclusivity of drugs.