March 6th, 2014
There exist scientifically promising treatments not being tested further because of insufficient financial incentives. Many of these therapies involve off-label uses of drugs approved by the Food and Drug Administration that are readily available and often inexpensive. Pharmaceutical companies—largely responsible for clinical drug development—cannot justify investing in such clinical trials because they cannot recoup the costs of these studies. However, without prospective data demonstrating efficacy, such treatments will never be adopted as standard of care.
In an era of increasing health care costs and the need for effective therapies in many diseases, it is essential that society finds ways to adopt these “financial orphans.” We propose several potential solutions for the non-profit sector, pharmaceutical companies, health insurers, patient driven research and others to accomplish this goal.
Drug Development Today
Under today’s drug development model, the vast majority of clinical trials are sponsored by pharmaceutical companies, and the process is lengthy, expensive, and, some have argued, inefficient. The cost of developing a new FDA approved drug is estimated to exceed $1.2 billion, the average time from lead to market is typically over 10 years, and only 1 in 10 drugs entering a phase I study is finally approved. Thus pharmaceutical companies, seeking to recoup this investment, conduct a return on investment (ROI) calculation with attention to both scientific and financial considerations such as the chances of success and whether the therapy will be sufficiently profitable to justify the high cost of clinical development.
These considerations sometimes lead to inefficient outcomes from society’s perspective in which promising and potentially transformative therapies are not pursued because of improperly designed financial incentives. We call such therapies “financial orphans.”Read the rest of this entry »