It’s much cheaper to develop cancer drugs than pharmaceutical companies claim, say the authors of a new analysis.
According to the analysis of R&D costs associated with ten new cancer medicines and subsequent revenue earned, the return on investment is of a magnitude not seen in other industries.
The US study found the median R&D cost for a publicly traded company bringing its first cancer drug to market was about $648 million – significantly less than the often-quoted, industry-funded estimate of $2.7 billion.
Five drugs originated within the same company while five were acquired at some stage during development; five acted on a novel target while five were next-in-class to previously approved drugs. All but one drug had FDA orphan drug designation.
The analysis of publically available data found the median revenue from a drug was $1,658.4 million.
For four drugs, ponatinib, enzalutamide, ibrutinib and eculizumab, revenue was more than 10-fold higher than R&D spending.
The study authors said ‘blockbuster drugs’ such as eculizumab had been able to generate more than $12 billion in revenue – more than 15-fold higher than R&D costs – despite a small market size.
The authors concluded development costs for cancer drugs were more than recouped in a relatively short amount of time.
An Invited Commentary published in JAMA Internal Medicine said the pharmaceutical industry consistently generated the highest profit margins of all US industries.
However not even US President Donald Trump ‘who had campaigned against high drug prices’ had been able to effect countermeasures such as establishing reference pricing or value-based pricing schemes for new products.
“Current pharmaceutical industry pricing policies are unrelated to the cost of research and development. Policymakers can safely take steps to rein in drug prices without fear of jeopardizing innovation.”
Medicines Australia was invited to comment on the analysis but did not respond.