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Government regulation and industry practices stalling drug development finds new report

drugs_production1The majority of new medicines entering the market offer few clinical advantages over existing alternatives according to a new analysis article published in the British Medical Journal. Authors of the study, Huseyin Naci and Elias Mossialos of the London School of Economics and Political Science (LSE) and Alexander Carter, Imperial College London, conclude that both government and industry practices are responsible for the innovation deficit in the pharmaceutical sector. 

Although record numbers of new drugs are hitting the market (41 approvals in the US and 40 in Europe in 2014 alone; compared to a 50 year average of 20 approvals a year), studies evaluating the clinical importance of new drugs consistently report a negative trend when it comes to drug performance. Data suggests, for example, that just 10% of the 122 new medicines that came onto the European market between 1999 and 2005 were superior to drugs already on offer. Despite the paucity of clinically superior drugs, the pharmaceutical market grew by a factor of 2.5 in real terms between 1990 and 2010.

The study argues that government practices, including a low bar for market entry of new products, stagnating government investment in research, and inconsistency in international regulations, are actively discouraging innovation. “Regulatory demands run counter to facilitating the development of better medicines” the authors contend. “As a result of inconsistent and unpredictable regulations, pharmaceutical companies need to tailor their drug applications on a market-by-market basis, often using expensive, local contractors, and are unable to find economies of scale for their global activities.”

Low evidence requirements from regulators are resulting in faster approvals with significant implications for drug safety, the authors find. Data indicates that there has been an estimated 35% increase in safety warnings and market withdrawals since 1992, with over a quarter of drugs approved since then receiving black box warnings or being withdrawn from the market.

Effects of government policies are compounded by industry practices that place a disproportionate emphasis on marketing versus research, the paper states According to some estimates, companies spend almost twice as much on promotion as they do on research and development. As a result, marketing drives prescriber and patient behaviour and therefore industry profits. For example, atorvastatin, thanks to an intensive marketing campaign, became the best-selling medication in history despite a lack of comparative evidence for its superiority to cheaper generic alternatives such as simvastatin.

Industry also prefers continued investment in established areas to risky research, where fewer than one in 10 molecules that enter development receive approval after an average development period of 13.5 years. This encourages research on me-too products, which provide more reliable returns on investment at the potential expense of breakthroughs in other areas and in breach of the implicit contract between firms and society. There are currently more than five statins, over 15 β blockers, and over 30 antidiabetic drugs.

“In recent years, pharmaceutical companies have been struggling to find the next blockbuster products without acquiring promising drug candidates from other firms” state the researchers. “Overall, the value of mergers and acquisitions activity in the industry exceeded $694 billion between 2000 and 2010. Such widespread deal making activity may have negative consequences on population health owing to delayed or even lost opportunities to develop therapeutically beneficial drugs.”

The article advocates policy options which prioritise therapeutic areas and make investment in them more economically attractive, and recommends that governments monitor takeovers to encourage competition and deter industry-wide consolidation. The authors also call for governments to provide preferential reimbursement for drugs that offer clinically meaningful improvements.  They conclude that improving the drug development process will require “collective, concerted regulatory action” at the international level, to “reward the development of clinically superior medicines”.

‘Why the drug development pipeline is not delivering better medicines’ is Huseyin Naci, Assistant Professor of Health Policy at LSE, Alexander Carter, Policy Fellow at Imperial College London, and Elias Mossialos, Professor of Health Policy at LSE and Director of LSE Health.  



Huseyin Naci, Assistant Professor of Health Policy, Department of Social Policy, h.naci@lse.ac.uk (@NaciLse)

Elias Mossialos, Professor of Health Policy, Department of Social Policy, e.a.mossialos@lse.ac.uk (@mossialos)  

Jess Winterstein, LSE Press Office, 020 7107 5025, pressoffice@lse.c.uk

5 November 2015