There’s been so much written about Pfizer’s failure to get torcetrapib through clinical trials and big pharma’s outdated blockbuster mentality that it’s easy to overlook that pharma is finally making some progress in reducing the huge cost of drug development. And that sometimes going for the home run makes sense.
When Pfizer started studying this drug candidate about 10 years ago, the kinds of efficiencies available to drug sponsors did not exist. By doing more in early clinical trials—which cost far less than big phase III trials—drug companies will be able to decide much sooner if a drug has a chance to succeed. In the future, we should see far fewer of these late-stage blow-ups...
Big Pharma companies such as Eli Lilly have been working at reducing average drug costs from $1.2 billion to $800 million. Lilly has really been a leader in these efforts. A $400 million savings is certainly nothing to sniff at. Lilly and others are getting better by not only killing drugs earlier in their pipeline, but by using biomarkers, deploying software to track trials data in real-time, and taking their trials to emerging markets where costs are lower.
With these kinds of efficiencies, Big Pharma may not have to totally abandon the blockbuster strategy that so many criticize. The industry is slowly changing its blockbuster mindset. But what if group think on this issue is at least partially wrong?
Sometimes a big bet on a potential blockbuster is worth the risk. It is easy to say after the fact that Pfizer messed up. But clinical research is never easy. Still, Pfizer was willing to plunk down $1 billion to fill a $12 billion annual revenue hole, which is expected to appear when its cholesterol drug Lipitor goes off patent in 2010.
If the naysayers get their way and price controls are implemented in the not-to-distant future, pharma will have less money to spend on the big, riskier projects. But, could the same critics one day be asking the question: Why isn’t there a drug company around that will spend the big money to swing for the fences and solve a major health concern?