When It Comes to Drug Development, What Do Our Dollars Buy?

What does bother him is the pharmaceutical industry’s huge investment in direct to consumer (DTC) advertising; “They are using the patient as a proxy for the physician since government oversight of drug companies’ contacts with physicians has intensified,” said Dr. Goldrich. “I’m very cognizant of that change, and vigilant that my decisions about what to prescribe are never influenced by what the patient has been bombarded with through drug company marketing,” he added. That means more of his time spent dispelling the marketing messages that patients receive from drug advertising.

The sense that heavy DTC advertising for new drugs inflates overall spending is reflected in a December 2003 study by Bain & Co. that puts an NME’s cost at $1.7 billion, 55% higher than the average from 1995 to 2000. It cited skyrocketing marketing budgets for new drugs as largely responsible for higher R&D and prescription drug costs. The Bain study included 12 months of sales and marketing costs incurred in launching a new drug.

Dr. Goldrich also keeps abreast of a drug’s efficacy and performance, particularly when its patent protection expires and competing firms produce generic equivalents. “For a while Claritin was extremely popular in its class, but when it went OTC [over the counter], the manufacturer stopped promoting it heavily. Now there are new and better drugs,” he said.

This example highlights the complex relationship between drug R&D, patent protection, and the cost of patients’ medications. Schering-Plough got its money’s worth from Claritin, according to Marcia Angell, MD, in her 2004 book, The Truth about Drug Companies (Random House, 2004): before the blockbuster drug’s patent expired, the firm raised Claritin’s price 13 times in five years, a 50% cumulative increase.

When a drug such as Claritin loses patent exclusivity and becomes available without a prescription, physicians and patients face a dilemma. Use the same formulation, now OTC, and face higher out of pocket costs because the drug is no longer a covered prescription drug? Switch to a generic equivalent with a low co-pay? Choose a newer drug that may be more effective and more expensive?

Drug R&D and Drug Prices

Another pertinent question in the drug R&D cost debate is development time. Are new drugs getting to market more quickly and cost-effectively than in the past?

The pharmaceutical industry argues that the long R&D process drives high drug prices. However, Salomeh Keyhani, MD, and colleagues found that clinical trial periods have not increased between 1992 and 2002, and that regulatory review times actually decreased during that period in their review of development times for 168 NMEs (Are Development Times for Pharmaceuticals Increasing or Decreasing? Health Affairs 2006; 25(2); 461–468).