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Fewer drugs approved,
more money spent
WHERE’S THE BEEF?
Three years ago, when biotech was at its Wall Street heights, personalisedmedicine and its promise were on everyone’s lips. Billions of dollars were beingput to work to make targeted medicine a reality. and genomics was thesolution.
With the completion of sequencing of the This growth in expense, however, has not led to By G.Steven Burrill
a commensurate increase in drug approvals. Since 1996, there has been a decrease in the number of efficient discovery and development, and lead us to new drug approvals, even as pharmaceutical com- personalised medicine, the holy grail of healthcare.
panies pour more money into research and devel- Among the tip of the coming iceberg of drugs in opment. New molecular entity (NME) approvals this class are the breast cancer drug Herceptin (tar- in 2002 were five from the world’s 10 largest phar- geted to the overexpression of the HER-2/neu maceutical companies – fully half of 1998’s total.
gene), Gleevec for Chronic Myeloid Leukemia, In short, it has been a tremendous learning curve Strattera for attention deficit hyperactivity disorder, anti-cancer mab Iressa, and AIDS medications and In 2002, the ‘innovation gap’, or cost of the treatment regimen that takes into account specific learning curve expressed in the difference between patient viral loads for diagnosis and treatment. the money spent and the number of new drugs Customised medicine couldn’t arrive any sooner.
approved, was the largest it has been in 15 years But pharmaceutical and biotech companies, for the industry as a whole. Just last year, pharma together as an industry, are going through a diffi- spent $32 billion in R&D, but received approvals cult transition. Blockbuster drugs which have led on only 25 new drugs. The $32 billion was double pharma to record revenues in the past five years what the industry spent on R&D in 1997, and are moving quickly toward patent expiration, rev- enue erosion from generics and intense competitivepressure from new therapies in every indication. Incubation period
In working to innovate, pharma companies have So, why haven’t pharma and its newly found been increasing their research and development excitement with biotech, and these new tools been expenditure in line with growing revenues. R&D more successful? The answer is complex. In part, spending now averages more than 15% of sales.
the explosion in genomic, proteomic, metabolitic, Business
toxicogenomic and other information and huge Innovation gap
increases in computing power that led to the map-ping of the human genome has enabled researchers Pharma R&D spend vs new drug approvals to dig deeper into our understanding of disease.
and its complexity. At the same time, the increase in information has also empowered the Food and Drug Administration to ask better and tougher According to the 2003 Tufts Center for the Study of Drug Development, the FDA review times have gotten shorter over the years. It would look like the FDA is becoming more efficient, but the time it takes to develop drugs overall is going up. In themost recent 40 year history of the pharma industry, 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 we’ve gone from development times of seven yearsand a cost of $200 million to $1 billion and 15 Source: Pharmaceutical Research and Manufacturers of America (PhRMA), Burrill & Company In short, where is the beef? Where is the benefit from all of this ‘whiz-bang’ technology? There hasbeen a great deal of effort to find and validate newtherapeutic targets, but precious few new drugs to FDA approval times 1987-2001
show for it. The beef, ultimately is in personalisedmedicine or theranostics – an amalgam of thera- peutics, diagnostics and information – where the industry can ultimately get to the translation of genomic and proteomic data and patient responses.
The transition from general patient population testing in proof and in the clinic to a tailored approach will mean higher chances for success in drugs. It is here that the patient individuation can lead to better selectivity in clinical trials, thus ensuring better selection criteria for patient respon- ders, and an increased probability of the drug’s efficacy. It may sound like science fiction, but for The regulators
From a regulatory standpoint, the FDA is also in
transition. Largely built to adjudicate risk in a sin-
Drug development times
gle drug-single indication model, the FDA is begin-ning to acknowledge that we live in a polypharma- cy world with dramatic genomic and phenomic dif- ferences. No longer are drugs being distributed to narrower and narrower sets of patients for single indications, but are instead being given to wider and wider groups for expanding indications. The approval most drugs received at one time was for select patients with selected indications, not the larger population. Patients on these subsequently approved drugs are also on multiple drugs.
Whoever the classic clinical patient was for an approved trial, we, as patients, are something else.
In November, the FDA began to work towards developing rules based on submissions of drugs (BLAs and NMEs) that will include pharmacoge- Business
nomics information about patient populations.
instead of oncology, and even more specifically to These guidelines will clarify when the FDA will certain forms of these diseases implicated by cer- require genetic testing as a component of trial design tain genetic permutations. The integration of and data gathering, and is expected to use this data genomic information into drug design, using per- to determine safety and efficacy. and approvability.
sonalisation as a basis for diagnosis and treatment, This is a major step toward a brave new world will make the firms horizontally, instead of verti- for the FDA, but one that is not so far in the future.
As the industry brings forward more drugs built Targeted pharmaceuticals and biologics such as from differential genomic data for smaller and spe- Iressa, Herceptin and Gleevec are promising, and cialised populations, we are going to need to see the FDA has responded with regulatory review reasonable change in the regulatory processes as times that have been among the shortest for any we move these into larger patient populations. We drugs. Marketplaces have also responded quickly.
may no longer see the FDA use the Phase III as the Targeted solutions do work for the betterment of finish line, but instead will see more Phase IV healthcare by reducing the cost and time of devel- (post-approval risk monitoring) with an increase in the Phase III approvals with restrictions and condi- As we better understand the body as a biologic tions. Phase III may end up more like a condition- system (systems biology), there will likely be fewer al approval. The FDA and the medical community ‘one size fits all’ aspirin-type drugs that perform will then track that Phase IV information more well for many patients, and instead we will see closely to see how the drugs work in larger popu- more treatment of the patient and the disease.
lations, adjusting labels and/or recalling approvals. We’ll move from largely treating the symptoms of In this new environment, the FDA is adjusting disease to treating the disease itself, and even more the risk-benefit quotient for patients so patients importantly, the emergence of disease. It is not just and medical providers will better understand the changing the healthcare paradigm, it is changing risks of new medicines. Regulators must become less of an adjudicator of risk and more of a trans-lator of risk. It may mean more recalls. It will G. Steven Burrill has been involved in the growth
result in frequent changes to labels and should and prosperity of the biotechnology industry for decrease the cost and reduce the time of drug 35 years. He currently serves as Board Chairman development, and will speed the path for beneficial for Paradigm Genetics (NASDAQ: PDGM) and therapies to find their patients. It will increase the Pyxis Genomics and as a Board member of amount of work in following a patient’s response.
Catalyst Biosciences, DepoMed (AMEX: DMI), Medicine built on specific patient data will, Galapagos Genomics, Inhibitex (observer), without doubt, drop the price of innovation. It will Targacept and Third Wave Technologies (NAS- also drop the risk of Adverse Drug Reactions DAQ: TWTI). Prior to founding Burrill & (ADRs). Each year, as many as 7% of all patients, Company in 1994, he spent 28 years with Ernst & or 2.2 million in the US, experience non-fatal Young, directing and co-ordinating the firm’s serv- ADRS and as many as 106,000 per year are fatal.
ices to clients in the biotechnology/life It is the fourth leading cause of preventable death sciences/high technology/manufacturing industries worldwide. In 2002 Mr Burrill was recognised asthe biotech investment visionary by the prestigious The buck stops here
Scientific American magazine (The Scientific Personalised medicine challenges the very thrust of American 50). He is a founder of the Foundation blockbuster-ology. Blockbuster drugs become bil- for the National Medals of Science and Technology lion-dollar sellers for the pharma industry: their and serves on the Boards of the Bay Area economic base a relatively short period of their Bioscience Center, the Bay Area Science approval, these drugs are applied to large patient Infrastructure Consortium, the California populations, examples being Viagra, Prozac, Healthcare Institute, the Exploratorium and the Cipro, Prevacid and the like. However, we are Kellogg Center for Biotechnology. Mr Burrill is about to see the pharmacoeconomic model change.
also on the Advisory Boards of the University of The pharma industry will move from multi-billion- California, San Francisco (UCSF) Foundation, the selling drugs to treat major disease categories (such University of Hawaii Medical School and the as heart disease or cancer), will instead become University of Wisconsin Foundation. He is a mem- providers of treatment in a single disease class, ber of The World Bank’s ‘Out of the Box’ group as such as prostate cancer, lymphoma or breast cancer well as an adjunct professor at UCSF.

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