Today’s WSJ reports that Pharma is being squeezed from all sides.
2011 Looks Tough For Drug Companies (clickable)
Despite past news of huge billion dollar profits for Pharma, the ecosystem for pharmaceuticals has gradually eroded leaving pharma in a less tenable position. Pressure is mounting with health reform measures, while pharma has been hit hard by restrictive formulas, and the emergence of ‘generics’. Generics, once looked upon with suspicion and doubt have take over a large part of doctor prescribing habits. Doctors have been forced to prescribe generics by limitations of their patient’s plans and their formularies. Most generics are tier 1 (a classification of drugs in each formulary). It does not take long if you gaze at a typical plans formulary to see how much less the copay is for a generic drug. Specific drug formularies are easily found on plan websites.
Pharmaceutical R & D is expensive, as well as the FDA approval process, The previous model of marketing a new generation or modification of an older drug with attendant new patents (at a much higher price) will not work today. We have and will see a marked increase in new drug cycle times.
The NIH National Center for Drug Research (clickable)
“The National Institutes of Health has approved Obama’s decision to assist with funding for drug research and development through a Federal Research Center.
Federal officials concerned about the slowing pace of new drugs coming out of the pharmaceutical industry have decided to start a billion-dollar government drug development center to help create medicines.”
The New York Times reported on its website Saturday about the new effort that comes as many large drug makers, unable to find enough new drugs, are trimming back research
“ NIH chief Francis Collins is pushing ahead with ambitious plans to create a new center for translational medicine that will do some of the early-stage work for the drug development industry.
Collins' plan, endorsed by HHS Secretary Kathleen Sebelius and outlined over the weekend by the New York Times, is to bring together $700 million in R&D work under one roof at the National Center for Advancing Translational Sciences, where government scientists will pursue a billion dollars in funding to push the projects through the Valley of Death. Collins' blueprint calls for scientists to get enough proof-of-concept data in hand to whet pharma's appetite, spurring them to step in and finish the discovery work needed to obtain an approval.”
If I read this correctly, the FDA will have one arm to assess the safety of new drugs, and it’s sister NIH will be dueling.