Estimating the Cost of Industry Investment in Drug Research and Development: A Review of Methods and Results

Use of Clinical Trial Characteristics to Estimate Costs of New Drug Development

Importance

Despite their importance to patients, health, and industry, the magnitude of investments in drug research and development (R&D) remain nebulous. New policies require more granular and transparent R&D cost estimates to better balance incentives for innovation and returns to developers.

Objective

To estimate per-drug R&D costs using a novel, reproduceable approach and to describe firm-level R&D costs per discrete unit of R&D activity (1 patient-month).

Design, Setting, and Participants

This economic evaluation used cross-sectional data to estimate 2014 to 2019 costs per patient-month. Costs per patient-month were calculated using data from 268 US publicly traded drug developers, contributing 1311 firm-year observations, that were highest ranked by assets or market capitalization, after exclusions. Per-drug costs were calculated from all R&D activity through approval for a cohort of 38 new drugs approved by the US Food and Drug Administration in 2019. Data were analyzed from January 2022 to July 2024.

Exposure

R&D activity, measured in terms of clinical trial patient-months.

Main Outcomes and Measures

This study used a 2-step approach to estimate R&D costs, first allocating firm-year-level total R&D spending across similarly aggregated patient-months, and then aggregating these incremental costs to estimate drug-level R&D costs per new drug.

Results

Among 268 developers assessed, 20 large firms accounted for 80.8% of all patient-months and had 27.4% lower mean and 26.7% lower median costs per patient-month compared with other firms. Each 1% increase in patient-months was associated with a 0.9% increase in R&D costs. R&D costs per new drug were highly skewed, with a lower median (IQR), at $708 million ($247 million to $1.42 billion) than mean (SD), at $1.31 ($1.92) billion, after adjusting for the cost of capital and discontinued products. Without these adjustments, direct costs per new drug were a median (IQR) of $150 ($67.6-$453) million and a mean (SD) $369 of ($684) million. While estimated R&D costs varied in sensitivity analyses, mean costs were always substantially greater than median costs.

Conclusions and Relevance

This economic evaluation found median per-drug R&D costs toward the lower end of the range from prior studies, with a mean closer to the middle of the existing range despite the broad scope of included costs. These findings suggest parallel development across indications, adjustment for discontinued products, and a small number of expensive development programs are particularly important drivers of R&D costs.

Kinetics-Based State Definitions for Discrete Binding Conformations of T4 L99A in MD via Markov State Modeling

As a model system, the binding pocket of the L99A mutant of T4 lysozyme has been the subject of numerous computational free energy studies. However, previous studies have failed to fully sample and account for the observed changes in the binding pocket of T4 L99A upon binding of a congeneric ligand series, limiting the accuracy of results. In this work, we resolve the closed, intermediate, and open states for T4 L99A previously reported in experiment in MD and establish definitions for these states based on the dynamics of the system. From this analysis, we arrive at two primary conclusions. First, assignment of simulation trajectories into discrete states should not be done simply based on RMSD to crystal structures as this can result in misassignment of states. Second, the different metastable conformations studied here need to be carefully treated, as we estimate the time scales for conformational interconversion to be on the order of 102 to 103 ns─far longer than time scales for typical binding calculations. We conclude with a discussion on the need to develop enhanced sampling methods to generally account for significant changes in protein conformation due to relatively small ligand perturbations.

Organ-on-a-Chip Models-New Possibilities in Experimental Science and Disease Modeling

'Organ-on-a-chip' technology is a promising and rapidly evolving model in biological research. This innovative microfluidic cell culture device was created using a microchip with continuously perfused chambers, populated by living cells arranged to replicate physiological processes at the tissue and organ levels. By consolidating multicellular structures, tissue-tissue interfaces, and physicochemical microenvironments, these microchips can replicate key organ functions. They also enable the high-resolution, real-time imaging and analysis of the biochemical, genetic, and metabolic activities of living cells in the functional tissue and organ contexts. This technology can accelerate research into tissue development, organ physiology and disease etiology, therapeutic approaches, and drug testing. It enables the replication of entire organ functions (e.g., liver-on-a-chip, hypothalamus-pituitary-on-a-chip) or the creation of disease models (e.g., amyotrophic lateral sclerosis-on-a-chip, Parkinson's disease-on-a-chip) using specialized microchips and combining them into an integrated functional system. This technology allows for a significant reduction in the number of animals used in experiments, high reproducibility of results, and the possibility of simultaneous use of multiple cell types in a single model. However, its application requires specialized equipment, advanced expertise, and currently incurs high costs. Additionally, achieving the level of standardization needed for commercialization remains a challenge at this stage of development.

Collaboration for new therapies: maximizing health and innovation

Introduction

Innovative medicines and vaccines can provide direct health benefits to patients and populations by preventing, treating and curing diseases, and also drive wider socioeconomic and productivity gains. However, researching and developing them is complex and risky. Funding for life sciences R&D has different sources: public, charitable/NGO, and private sector. We believe there is consensus that all are required, although there is less understanding about their respective roles, synergies, and funding priorities. The purpose of this paper is to provide an overview of the current life sciences innovation ecosystem in Europe, highlighting challenges for funding and innovation of new therapies and our proposed options to address these.

Methods

The basis of this paper stems from the reflections made by the co-authors during a webinar with title "Collaboration for new therapies: maximising funding and innovation," in March 2023, with further targeted literature reviews.

Results

We identify eight challenges in the European life sciences ecosystem, some closely related, and nine options that we think might be helpful to address them. Each option on its own can have different levels of 'impact', but collectively will provide synergies among them, and thus maximize their impact.

Discussion

It is critical to ascertain how the strengths of each actor can be leveraged to bring new medicines/treatments to market, quicker and more efficiently. We need a trusted environment, with strategic collaborations between the public and private sectors, and policy initiatives and incentives should be targeted to strengthen the infrastructure with the aim of fostering such optimal alliances.

Another string to your bow: machine learning prediction of the pharmacokinetic properties of small molecules

INTRODUCTION

Prediction of pharmacokinetic (PK) properties is crucial for drug discovery and development. Machine-learning (ML) models, which use statistical pattern recognition to learn correlations between input features (such as chemical structures) and target variables (such as PK parameters), are being increasingly used for this purpose. To embed ML models for PK prediction into workflows and to guide future development, a solid understanding of their applicability, advantages, limitations, and synergies with other approaches is necessary.

AREAS COVERED

This narrative review discusses the design and application of ML models to predict PK parameters of small molecules, especially in light of established approaches including in vitro-in vivo extrapolation (IVIVE) and physiologically based pharmacokinetic (PBPK) models. The authors illustrate scenarios in which the three approaches are used and emphasize how they enhance and complement each other. In particular, they highlight achievements, the state of the art and potentials of applying machine learning for PK prediction through a comphrehensive literature review.

EXPERT OPINION

ML models, when carefully crafted, regularly updated, and appropriately used, empower users to prioritize molecules with favorable PK properties. Informed practitioners can leverage these models to improve the efficiency of drug discovery and development process.

The landscape of biomedical research funding in Brazil: a current overview

OBJECTIVE

The objective of this narrative review is to discuss the current state of research funding in Brazil.

MATERIALS AND METHODS

This study is based on the most recent edition of the course Funding for Research and Innovation in the University of Sao Paulo School of Medicine which was a three-day course with 12 hours of instruction. The course brought together leading experts in the field to comprehensively discuss the current state of research funding in Brazil. Each speaker provided a presentation on a specific topic related to research funding. After the workshop, speakers assembled relevant topics in this manuscript.

RESULTS

collaborative research is critical for securing research funding. It optimizes proposal competitiveness, amplifies societal impact, and manages risks effectively. As such, fostering and supporting these collaborations is paramount for both researchers and funding agencies. To maintain the highest integrity in research, investigators involved in these collaborations must disclose any relationships that could potentially influence the outcomes or interpretation of their projects.

CONCLUSIONS

In Brazil, the mainstay of research funding stems from public entities, with agencies such as CNPq, CAPES, and state bodies like FAPESP, FAPERJ, FAPEMIG and others at the forefront. Concurrently, industry funding offers viable pathways, especially through industry-sponsored studies, investigator-led projects, and collaborative initiatives. The Brazilian funding landscape is further enriched by innovative platforms, including crowdfunding and the contributions of institutions like the Serrapilheira Institute. Internationally, esteemed organizations such as the National Institutes of Health (NIH) and the Bill & Melinda Gates Foundation stand out as potential funders.

Valutazione dell’innovatività e negoziazione di prezzi e rimborso dei farmaci: raccomandazioni da un panel di esperti

This paper illustrates the recommendations of a Working Group (WG) on the assessment of drugs innovativeness and the negotiation of price and reimbursement. The WG included researchers, institutions, clinicians, patient representatives and pharmaceutical companies.

The first part of the contribution summarizes the literature on drug pricing models, which was considered in the WG, and, in particular, the pricing criteria, the evaluation and negotiation processes, the management of the uncertainty of the evidence, the use of cross-reference pricing and price negotiation for new indications of existing drugs.

The second part illustrates the results of the WG with a focus on innovativeness assessment, value framework and price negotiation. The main recommendations of the WG are: to define more specific criteria for the identification of comparators and endpoints for macro therapeutic areas/settings; to produce guidelines on the use of indirect comparisons and studies supporting this evidence; to consider the drug value as the main driver of price and reimbursement negotiation; to maintain flexibility in the negotiation process, but, at the same time, to give greater structure and predictability in the assessment of value for money, with a more qualified role of cost-effectiveness and a range of threshold values for the incremental cost-effectiveness ratio; to selectively reintroduce Managed Entry Agreements and the Indication-based pricing model; to implement an early dialogue between the Italian Medicine Agency and the pharmaceutical companies in order to optimize the negotiation process, and a structured involvement of scientific societies and patient representatives.

Antifungal therapy of Candida biofilms: Past, present and future

Virtually all Candida species linked to clinical candidiasis are capable of forming highly resistant biofilms on different types of surfaces, which poses an additional significant threat and further complicates therapy of these infections. There is a scarcity of antifungal agents, and their effectiveness, particularly against biofilms, is limited. Here we provide a historical perspective on antifungal agents and therapy of Candida biofilms. As we reflect upon the past, consider the present, and look towards the future of antifungal therapy of Candida biofilms, we believe that there are reasons to remain optimistic, and that the major challenges of Candida biofilm therapy can be conquered within a reasonable timeframe.

Spending on Phased Clinical Development of Approved Drugs by the US National Institutes of Health Compared With Industry

Importance

The launch of the Advanced Research Projects Agency for Health to advance new cures and address public concern regarding drug prices has raised questions about the roles of government and industry in drug development.

Objectives

To compare National Institutes of Health (NIH) spending on phased clinical development of approved drugs with that by industry.

Design

This cross-sectional study examined NIH funding for published research reporting the results of phased clinical trials of drugs approved between 2010 and 2019 and compared the findings with reported industry spending estimates. Data analysis was performed between May 2021 and August 2022 using PubMed data from January 1999 through October 2021 and NIH Research Portfolio Online Reporting Tools Expenditures and Results data from January 1999 through December 2020.

Exposures

Drugs approved between 2010 and 2019.

Main Outcome and Measures

National Institutes of Health funding for published research describing applied research on approved drugs, basic research on their biological targets, and phased clinical trials related to drugs approved between 2010 and 2019 were evaluated using Mann-Whitney U tests. All costs were inflation adjusted to 2018.

Results

National Institutes of Health funding for basic or applied research related to 386 of 387 drugs approved between 2010 and 2019 totaled $247.3 billion. Of this amount, $8.1 billion (3.3%) was related to phased clinical development. This funding contributed to 12 340 publications on phased clinical trial results involving 240 of 387 (62.0%) drugs. Average NIH spending was $33.8 million per drug, including $13.9 million per drug for phase 1, $22.2 million per drug for phase 2, and $12.9 million per drug for phase 3 trials. Spending by NIH on phased development represented 9.8% to 10.7% of estimated industry spending, including 24.6% to 25.3% of estimated phase 1, 21.4% to 23.2% of phase 2, and 3.7% to 4.3% of phase 3 costs. Considering 60 products for which estimated industry costs were publicly available, NIH spending on clinical trials was significantly lower than estimated industry spending (sum of averages, $54.9 million per drug; mean difference, $326.0 million; 95% CI, $235.6-$416.4 million; 2-tailed paired t test P < .001). More than 90% of NIH funding came through cooperative agreements or program projects and centers, while 3.3% of NIH funding came through investigator-initiated research projects.

Conclusions and Relevance

In this cross-sectional study, NIH funding for phased clinical development of drugs approved between 2010 and 2019 represented a small fraction of NIH spending on pharmaceutical innovation. This spending focused primarily on early-phase clinical trials and research capacity and was significantly less than estimated industry spending on clinical development. These results may inform the efficient allocation of government funding to advance pharmaceutical innovation.

An Industry Survey on Unmet Needs in South Korea's New Drug Listing System

INTRODUCTION

Since introducing the positive listing system in 2007, the South Korean government has undergone multiple changes in its drug listing system. As there is a lack of studies that evaluate the system from an industry perspective, this paper examined South Korea's new drug listing system from the suppliers' perspective.

METHODS

We surveyed members of the three main pharmaceutical industry associations online. The survey (a 5-point Likert scale) covered their satisfactory levels, demands, and updates on the current new drug listing system, especially pharmacoeconomic evaluation, pharmacoeconomic evaluation exemption, and risk-sharing agreement.

RESULTS

A total of 56 respondents participated in the survey. The self-reported satisfaction level for value recognition of new drugs was 1.6 (± 0.7) points (5 points = very satisfied). The most highly demanded reforms for PE, RSA, and PEE were incremental cost-effectiveness ratio threshold (92.9%), reimbursement scope expansion (91.1%), and eligible disease (83.9%). Lastly, they also claimed that the indication-based pricing system must be introduced (83.9%).

CONCLUSIONS

Pricing and reimbursement policies need to improve in such a way that would enable better access to new drugs while still facilitating their development. Given the nature of the current system, some innovative rare disease treatments and anticancer drugs remain unreimbursed, resulting in low satisfaction levels across the pharmaceutical industry. Hence, pathways to speed up the reimbursement assessment process and expand the range of reimbursable diseases are required. Pharmaceutical companies are also important stakeholders, like in the case of clinicians and patients, and their opinions should also be considered in the process of pricing and reimbursement policy reforms.

Biosimilars for the next decade in Latin America: a window of opportunity

INTRODUCTION

Biosimilars are gaining popularity in Latin America (LA). The biosimilars market is expected to grow rapidly over the next decade as a cost-effective alternative to expensive patented biologics. The drivers for the growing demand include needs for affordable health care, the prevalence of chronic diseases, expiration of patents for numerous biologic medicines and the advent of artificial intelligence (AI). Countries such as Argentina, Brazil and Mexico have implemented regulatory frameworks for the approval of biosimilars as well as for investment in local manufacturing capacity, sale, and distribution. Some LA countries face challenges related to low quality institutional frameworks and deficient public policies for regulatory harmonization of these medicines.

AREAS COVERED

The aim of this article is to analyze the broad window of opportunity for biosimilars in LA (Brazil, Mexico and Argentina) in the next decade, considering their regulations and institutional quality, as well as an affordable cost for patients with chronic diseases and highlight the biosimilars approved in the three countries studied. Likewise, the future contribution of AI in the drug R&D process is considered.

EXPERT OPINION

Preparing the next decade of biosimilars in LA will involve improving international regulatory frameworks, institutional quality, investments and capacity in R&D (competencies, infrastructure, and AI).

Gene Therapy for Neuromuscular Diseases: Health Economic Challenges and Future Perspectives

Highly efficacious, potentially curative gene therapies holds immense clinical promise, but also present complex challenges. At the time of regulatory approval and health technology assessment (HTA), evidence of efficacy and safety of gene therapies is often uncertain. In addition, research, development, and manufacturing costs, small pools of eligible patients, and the fact that many gene therapies are administered only once means that they frequently are associated with very high “one-off” price points. Although only a limited number of products have been brought to market globally, hundreds of clinical trials of gene therapies, including several of monogenetic neuromuscular diseases, are currently ongoing. Over time, as more and more conditions become amendable to gene therapy, the number of transformative, high-cost treatments is likely to increase considerably. For these reasons, concerns have been raised regarding the suitability of current health policy systems, including HTA frameworks, in ensuring appropriate access to these therapeutic innovations while simultaneously safeguarding value for taxpayers’ money, as well as affordability and sustainability. This review provides a summary overview of current challenges and future perspectives of gene therapies for neuromuscular diseases from a health economic point of view.