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R&D "INCREMENTAL" GAINS FROM SEVEN THERAPIES PROVIDE $6.5 BIL. SAVINGS

Executive Summary

R&D "INCREMENTAL" GAINS FROM SEVEN THERAPIES PROVIDE $6.5 BIL. SAVINGS in annual treatment costs, according to calculations in a recently issued report from the National Pharmaceutical Council. The calculated current savings exceed the total annual drug industry R&D for the years when the products were developed, the National Pharmaceutical Council says. The new report is entitled "Pharmaceutical Research: Therapeutic and Economic Value of Incremental Improvements." The NPC calculation is a rough estimate of combined savings from the use of SmithKline Beecham's Thorazine (chlorpromazine) for psychosis; Hoechst-Roussel's Trental (pentoxiphylline) for diabetes-related peripheral vascular disease; Ciba-Geigy's Actigall (ursodiol) for gallstones; second-generation sulfonylurea agents for diabetes; Bristol-Myers' Carboplatin (injectable paraplatin) for cancer chemotherapy; third-generation cephalosporin antibiotics that are more convenient to administer; and Merck's second-generation beta-blocker Timolol for glaucoma and prevention of second heart attacks. Data on savings from reductions in surgery, inpatient care, and patient days away from work are drawn from research literature on these products, and the calculations assume all patients eligible for the therapies receive them. NPC says the report is aimed at countering three "misconceptions": that the drug development process has led to "unnecessary proliferation" of similar medicines; that the industry focuses R&D only on projects where a "substantial" return is expected; and that incremental improvements have been "too costly" and not ultimately of benefit to consumers. Sen. Pryor (D-Ark.) has been the most vocal critic of incremental research. During the drafting of his Medicaid prudent purchasing bill, Pryor asserted that much of the drug industry's research goes to drugs that raise health costs without offering much benefit over existing therapies. Noting that FDA approved 781 products between 1981 and 1988, NPC says that 182, or 23%, were new molecular entities. "Eighty-percent of total R&D expenditures ($26.2 bil. out of $32.7 bil.) were spent on the development of these 182 NMEs...The remaining 20% of total R&D expenditures was spent on the other 599 products representing chemical derivatives of marketed products, new formulations, as well as duplicate or generic versions of already marketed drugs," the report says. "Although 'breakthrough' therapies such as the beta blocker propranolol and the ulcer drug cimetidine attract public attention, it is the small, successive developments that generally make the difference to the majority of patients," the report states. "The breakthroughs, which are usually the first of a class, inevitably display deficiencies after they are widely distributed. Pharmaceutical companies use these deficiencies as opportunities to develop related compounds that are more effective, more selective and less toxic. The drugs of choice in a well-developed class are almost never the ones that were marketed first." NPC also addressed the practical realities of funding drug research. Maintaining that "no mature industry can sustain itself on income from breakthrough innovation alone," NPC argues that the drug industry needs the steady revenue from incrementally developed products in order to finance R&D, and that any research portfolio must contain a mix of projects of different risks. The report also draws a parallel between the drug industry and the telephone, computer and aviation industries, where "small wins and incremental innovation" add up over time to significant advances in technology.
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