Dances with Pharma: part 1 – why are drugs so expensive?

Thanks to advances in research, survival from cancer has doubled in the UK over the past few decades.

And although part of this progress has been down to better diagnosis, surgery and radiotherapy, it’s impossible to deny the role played by the pharmaceutical industry, which has brought forward many life-saving and life-extending drugs.

But although the chances of surviving cancer are better than they have ever been, more people are being diagnosed with the disease every year and need treatment.

What’s more, as the cost of developing drugs increases and fewer drugs make it through the pipeline, some new cancer treatments are simply unaffordable at the prices they are being offered for.

The strain this is putting on the health budget is not a situation that benefits anyone.

In this first instalment in a two-part series, we’ll take a look at how cancer drugs get to patients, and at some of reasons behind the spiralling costs.

In part two, we explore how Cancer Research UK works with the pharmaceutical industry – both in developing new treatments, and in trying to make them available to as many people as quickly as possible.

The do-si-do begins – the NHS has limited resources

The NHS’s resources are finite, and need to be allocated wisely. As our population ages, more people develop – and survive – cancer.  As a result, these resources are getting spread ever more thinly, and the squeeze is predicted to continue.

Like anyone on a fixed budget, spending more in one area means making cuts elsewhere, and the NHS is no exception. But weighing up the costs and benefits across the wide range of medical conditions and treatments that the NHS provides is a difficult job.

The task of deciding whether a new cancer drug should be made available via the NHS falls to the National Institute for Health and Care Excellence (NICE) in England and Wales, the Scottish Medicines Consortium (SMC) north of the border, and the government in Northern Ireland (who decide whether to support NICE’s recommendations).

These organisations weigh up the benefits of a new treatment against its cost, compare this to what’s already offered by the NHS, and make recommendations on whether they consider the new treatment ‘value for money’.

Contrary to popular belief, NICE has actually approved more than six in 10 of the cancer treatments it has assessed (around 150 cancer drugs since the year 2000).

They also currently make special allowances – known as ‘End of Life’ guidelines – to take into consideration the fact that some cancer drugs extend life rather than cure, but are nonetheless valuable treatments for people with advanced cancer.

But there are instances – and they are occurring more frequently – when new cancer drugs are rejected by NICE because, despite being effective treatments that should be accessible for patients, they’re not as cost-effective as the current standard care.

In some circumstances, when NICE is still in the process of assessing a drug, or after it has been rejected, patients in England can access that drug via individual funding requests or the controversial Cancer Drugs Fund. These options have helped thousands of patients receive treatments they otherwise would not have access too, but they are far from ideal. And the Cancer Drugs Fund was originally set up as a short term measure while NICE looks at the way cancer treatments are funded – it’s certainly not sustainable as a long term solution.

All of this raises two burning questions. Why are the prices of some new drugs so high? And are they worth it? Let’s look at some of the factors associated with the cost of making a new drug, and whether their sale price is always justified.

It’s just a jump to the left – new drugs aren’t cheap

1) Investing time and money

One of the reasons new drugs are so expensive is because they cost a lot to develop and manufacture. As the graphic on the right shows, on average, a new drug will take more than 12 years to develop from start to finish at a cost of more than £1 billion, and the bill is increasing as time goes by.

This financial burden falls mainly on the shoulders of pharmaceutical (pharma) companies.

The biggest costs for any one drug are usually the clinical trials and regulatory processes necessary to make sure a new treatment is safe and effective. Because peoples’ safety is paramount, taking shortcuts to cut costs is not an option.

The manufacturing process itself can also influence cost. A significant number of modern-day drugs have to be made or purified from living cells – called biologics, they are technically more difficult and costly to manufacture than man-made chemicals. This family of treatments include antibodies, such as trastuzumab (aka Herceptin).

And moving away from ‘one size fits all’ treatments – like conventional chemotherapy – towards more tailored treatments that reflect the genetic makeup of individual cancers, means that while a drug may be better suited to some patients, the days of the single ‘blockbuster’ drug are over.

Instead, the future of cancer treatment lies in a multitude of different targeted therapies, with correspondingly smaller potential markets – pushing the price of drugs up.

But there are other factors that come into play too, which could (and should) be questioned to try and reduce development costs and make drugs cheaper.

2) The price of failure

When a pharma company launches a new drug, its price tag usually reflects the cost not only of making that one particular successful drug, but also the large sums of money and time spent on other treatments that failed along the way.

Drugs can fail for two main reasons: the side effects are unacceptable, and/or it doesn’t work well enough.

Again, the reasons leading up to this are complex:

• Sometimes scientists working for industry don’t get the same results as the scientists who first carried out experiments on a new drug, so development is halted.
• In other cases it’s a result of researchers not fully understanding how a drug affects cells (so not anticipating its adverse effects).
• And lastly if there is no clinical test to prove the drug’s hitting its target, doctors might not know if patients are receiving the correct dose in clinical trials.

On top of this, people are complex. Despite extensive testing in the lab, a promising drug doesn’t always translate into an effective medicine because it’s difficult to model the intricacies of human disease in the lab. Furthermore, every cancer patient is a unique individual, meaning there is a wide range in how people respond to treatments and what side effects they experience – something scientists don’t yet fully understand.

Lastly, cancer itself is a hugely complex family of diseases. The progression of ‘one size fits all’ into more personalised treatment has led to improvements in survival, but at the same time means testing new treatments is more complicated.

For example, modern targeted treatments will often only work for a certain group of patients based on a particular fault driving their cancer, so doctors need to have strict criteria to select the right group of patients to enrol in a clinical trial. If a new treatment is tested in patients who don’t stand to benefit from it, the trial results will make it look like the drug doesn’t work well – wasting huge amounts of money and, even worse, potentially losing a promising treatment.

It’s important that the research community as a whole continues looking into the reasons behind drugs failing during development, and works hard to improve it to help get better treatments to patients faster.

3) The long game

Another factor driving up drug prices is the length of time a company will have to wait before they start to make money from a new medicine.

The discovery, development and testing of a new drug is a slow process in itself, but then the red tape and layers of bureaucracy to get a new drug approved and in the clinic for patients further compounds the problem.

Patents – effectively a form of copyright that companies take out in the early stages of research to ‘own’ their discoveries – are usually only valid for 20 years, so the clock is already ticking long before a drug makes it to market.

Given that it can take 10-15 years to go through the development and trials process, that doesn’t leave long for a company to make money before the patent expires, and other companies can make and sell the drug too.  This gives the original company a solid incentive to set the initial price as high as they can.

Cutting the red tape, administrative costs and time taken for drug licensing and approval could help reduce drug prices by getting treatments to patients faster, and widening the window of time during which companies can profit.

4) Profit margins

Of course, as well as the above – scientific – reasons, pharma companies are (obviously) companies, and are therefore duty bound to generate profit for the shareholders who invested in them in the first place. And their profit margins are continuing to grow at a rate that some consider excessive.

They are also multinational organisations, and so have to generate profits in many different countries. Sometimes that means prices – and profits – in one country affect prices in another. From a company’s point of view, it can make sense to set prices according to this international market, even if that means one or more countries can’t afford it.

They also spend large sums on advertising and marketing too – especially in countries other than the UK, where healthcare is funded in different ways. This money must also be recouped from drug sales.

5) ‘Me too’ drugs

There’s one final point worth making, and that’s about ’me too’ drugs. These are drugs that are similar to, or work in the same way as, drugs that have already been developed and approved. They are sometimes modified versions of existing drugs, but the changes made by the manufacturer mean they can apply for a new patent. Their appearance on the market is becoming more frequent, which stirs up mixed opinions.

On the one hand, in developing a ‘me too’ drug, a pharma company can avoid most of the risk of it not working, as the underlying science has already been done. So theoretically the drug costs them less to develop, a fact not always reflected in the price charged for them.

But on the other hand, ’me too’ drugs can just reflect the fact that rival companies might be working on similar drugs at the same time – in which case they wouldn’t be any cheaper for the pharma company to develop. And there’s also the argument that having rival ’me too’ drugs competing with each other actually drives down drug prices, as companies try to undercut each other.

Cha cha – sliding towards a better future

So, as we’ve seen, there is an on-going battle between the pharma companies trying to maximise their profits and the tax-payer funded NHS needing the best value for money and bound by finite resources.

So where does Cancer Research UK fit in to the picture?

Our heart lies with improving outcomes for patients with cancer. We want to see drug development become cheaper, more efficient, less prone to failure, and quicker. This will help accelerate progress and get new and better treatments to people who need them.

And to do this, we need to work with the pharmaceutical industry.

In the next post, we take a more detailed look at some of the ways we’re supporting drug development, and where partnerships with pharma companies fit into the picture.

Emma

• Read part two of this series – How Cancer Research UK works with industry

Image credits:

• Pills by Daniel Foster, via Flickr under CC-BY-NC-SA 2.0
• Do-si-do by Doug Geisler, via Flickr under CC-BY 2.0
• Cha-cha-cha by XL Peabrain, via Flickr under CC-BY-NC 2.0