by Dr.Harald Wiesendanger– Klartext
What the mainstream media is hiding
Why are drugs so expensive? There are two stories to tell about this. The first raves about the enormous research efforts of the pharmaceutical industry. The second makes it clear how outrageously the first one lies, conceals, and exaggerates.
How is a new drug actually developed? There are two narratives circulating about this: a marketing product and its clarification.
To many who naively swallow pills, the first narrative seems hardly less credible than Darwin’s theory of evolution. It is the story that manufacturers spread, and it has the characteristics of an ancient heroic epic. Inspired by the grand vision of one day freeing humanity from the scourge of illness forever, bold entrepreneurs hire brilliant scientists who spend years conducting tireless basic research. They explore the biological basis of every conceivable ailment in order to discover a novel chemical substance that reliably eliminates the defects they have identified, or at least significantly alleviates them, and does so much better than anything that has come before.
Four mandatory review steps ensure that this innovation is effective, safe, and well tolerated: first on cell cultures and laboratory animals (“preclinical development”), then on a few healthy adults (“clinical phase I”), then on a few sick people (“phase II”), and then on several hundred to a thousand patients (“phase III”). Only if these tests are unquestionably positive can approval be sought. The responsible, incorruptible authority has proven, equally incorruptible experts carefully review the results of all submitted studies. Only then does it give the green light.
From the idea for a new drug to its approval, an average of 11.8 years (1) pass, according to other sources 13.5 (2), or even 15 years (3). Isn’t it a testament to admirable strength of character to work persistently toward a lofty goal for so long, sparing no expense or effort?
Even after market launch, manufacturers, the government, and the medical profession naturally keep a close eye on the extent to which the new drug proves itself without causing harm (“Phase IV”) and whether it is suitable for other areas of application beyond the disease for which it was originally approved. To this end, extensive observational studies are carried out with the participation of thousands of practicing physicians and clinics. The manufacturers generously cover the immense costs of these studies out of their own pockets, even though the highly informative results benefit us all. If any worrying side effects are noticed after the fact, they are promptly reported; package inserts are then immediately changed and approvals revoked if necessary. After all, protecting the life and limb of us all is, of course, the top priority.
Inspired by a wonderful vision?
Driven by their wonderful vision of eradicating all disease forever, by exemplary entrepreneurial daring, scientific excellence, and the noble spirit of innovation, pharmaceutical manufacturers take on insane financial risks and burdens for our sake.
After all, only one in 5,000 to 10,000 drug candidates actually makes it to market (4); only one in a thousand survives preclinical testing, and only one in five of those survives clinical trials. In a comprehensive pharmaceutical database, the likelihood of approval (LOA) from phase I to the final green light between 2014 and 2023 was a meager 6.7%; the biggest bottleneck remains phase II.
Once the substance is finally allowed to be sold, the unfortunate producers earn only disappointingly short-lived profits. This is because patent protection usually expires after 20 years, and exclusive marketing rights lapse; then brazen idea thieves have free rein for cheap generics. Nevertheless, the top 50 pharmaceutical companies alone invest a total of $167 billion per year in “research and development” (R&D) (5); in Germany alone, the figure is said to be around €10 billion. As early as 2001, R&D costs for each new drug are said to have averaged a staggering $802 million. (6) More recent estimates even put the figure at $2.6 billion. (7)
Shouldn’t the industry be assured of universal sympathy, admiration, and gratitude for this? Doesn’t it relieve the state, with Nobel Prize-worthy generosity, of a Herculean task that should actually be its own: to preserve, restore, and improve public health?
Instead, it is treated badly: it is threatened with price caps and envied for its profits, without any consideration of how urgently profits are needed to shoulder the horrendous research costs. Incomprehensibly, drug manufacturers also have to pay taxes on the fruits of their pioneering work – as if they had not already done enough for the common good. Already burdensome approval procedures are constantly being tightened and prolonged, with no consideration for desperate patients who should be able to benefit from pharmaceutical breakthroughs as quickly as possible. Why are any tedious government checks still necessary when the preceding studies, generously funded by the manufacturers themselves, have already proven the efficacy, safety, and tolerability of the drugs at the highest scientific level? safety, and tolerability? Isn’t Big Pharma like Homer’s unfortunate, pitiful Sisyphus, condemned to roll a huge boulder uphill, only to have a demon named “severe side effects,” “unfavorable cost/benefit ratio,” or “expiring patent term” cause the stone to roll back down the hill?
Led by the nose
The second story develops from dispelling the first of its myths. What remains of the heroic epic is hot air. And the conclusion is: we are being led by the nose.
This starts with the alleged time required. An evaluation of data on 168 drugs showed that the time required for clinical testing and approval by the US Food and Drug Administration (FDA) shrank from an average of eight years to less than five between 1992 and 2001. (8) Under pressure from the pharmaceutical lobby, which is constantly pushing to speed up and simplify the allegedly petty, cumbersome, and patient-unfriendly approval process, the time frame has since been reduced even further—in special cases, it has been shortened to 1 to 2 months.
Nevertheless, developing a new drug remains a costly undertaking, to be sure. However, the pharmaceutical industry is misleading us about its own role in this process. The “R” in “R&D” – the most time-consuming, difficult, and creative part – is often carried out not only by small biotechnology companies, but also by government laboratories in university institutes and research facilities, financed by taxpayer money. This means that we pay twice for most drugs. It is primarily there that research is conducted down to the molecular level to find out what goes wrong in the body when we fall ill. And it is also there that the most important first steps in “E” usually take place: in the effort to discover or synthesize a molecule that accurately repairs a specific link in the chain of the disease process without causing major damage elsewhere. Only when such substances are subsequently tested on cell cultures, animals, and humans do pharmaceutical companies tend to get involved. Increasingly, they are taking the lead at the clinical trial stage
It would take an eternity to examine every conceivable candidate drug individually to see if it could be helpful. The industry takes a much more economical approach: its companies and suppliers have gigantic databases of potentially effective substances and their respective effect profiles. Computer programs scan them at lightning speed to determine whether they could be suitable for intervening in the disease process exactly where they should do so according to basic research. On the other hand, it is rather rare for completely new molecules to be constructed or extracted from animals, plants, or minerals. Instead of doing this entirely in-house, pharmaceutical companies prefer to rely on publicly funded research. Or they acquire licenses to market them and patent them for additional areas of application.
This was the case with some of the world’s best-selling drugs, such as the AIDS drug Retrovir (zidovudine, AZT), the cancer drug Taxol (paclitaxel), epoetins, which stimulate the formation and development of red blood cells (erythropoiesis), and imatinib (Glivec), which inhibits certain enzymes (tyrosine kinases). (9) In such cases, only a quarter to a fifth of the average costs of in-house development are incurred. (10) “The big pharmaceutical companies like Novartis and Pfizer,” denounces US linguist and capitalism critic Noam Chomsky, “only need to look around and then grab the most lucrative ideas. If the state did this itself, healthcare costs could be reduced enormously.” (11)
Old wine in new bottles
Packaging designs and trade names are truly “innovative” – but only very few of the approved preparations are. Hardly any of them contain a molecular substance that has never been seen before. Between 1998 and 2002, the US Food and Drug Administration (FDA) gave the green light to 415 drugs, an average of 83 per year; but only one in three, 133, contained a new active ingredient, and only 58 of these 133 were recognized by the FDA as having “a significant advantage over preparations already on the market.” Of the 23 cancer drugs that came onto the market in 2013, scientists at the University of Bremen found only one to be truly innovative — pertuzumab (“Perjeta”) for a particularly aggressive type of breast cancer — nine merely “limited,” and the rest not at all. (12) At least one thing it is not: too much.
It is preferable to put old wine in new bottles. Most contain the same substances as their predecessors, only slightly modified (13) – a molecular building block moved here, one cut out there, one added there – just enough to pass as an “innovation” for which renewed patent protection can be enforced; Me-too‘s, also known as “analog preparations” within the industry. “Research here serves to create and maintain patent territories, not to provide rapid and reliable help for patients,” an ex-pharmaceutical manager disillusioned us. (14)
The Danish pharmaceutical giant Lundbeck, for example, took this clever approach with its blockbuster Citalopram (Cipramil, Seropram, etc.), temporarily one of the most prescribed antidepressants worldwide, from the supposedly “new generation” of SSRIs, the “selective serotonin reuptake inhibitors.” Just as the patent protection expired in 2003, Lundbeck had a clever new patent ready. Citalopram is chemically composed of two halves (isomers), each of which is a mirror image of the other. Only one of them is active. Lundbeck removed the inactive half, patented the active half as a “novelty,” and renamed it escitalopram (Lexapro, Cipralex, Seroplex, etc.). (15)
Occasionally, chance also helps to reduce costs: during the clinical trial phase prior to the market launch of the substance, or in subsequent practical use, test subjects and patients often notice unexpected additional effects and possible applications. If, for example, it subsequently turns out that a blood pressure-lowering drug has a calming effect, it can quickly become an anxiety suppressant. A drug that was initially marketed as a liver protector was later used only to treat “discomfort” associated with diabetic nerve damage. A prostate medication suddenly became a remedy for hair loss. (16)
Antidepressants have similarly curious histories. When the German Reich ran out of fuel for its V2 rockets towards the end of World War II, chemists developed a new compound, hydrazine, which was suitable as a fuel substitute. But it also proved to be ideal for use in fuel cells and emergency power generators, as well as for corrosion protection. After the war, samples of it ended up in the research departments of several pharmaceutical companies. There, they wondered whether rocket fuel could possibly lead to new drugs. And indeed, in 1951, chemists at the Swiss company Hoffmann-La Roche succeeded in extracting a derivative called iproniazid from hydrazine, which effectively combats tuberculosis bacteria. Strange reports emerged from hospitals that tested the substance on TB patients: the active ingredient appeared to have a stimulating effect. Although seriously ill, some infected patients danced exuberantly in the corridors after taking iproniazid. What could be more obvious than to use it to treat people with depression? (17)
Take chlorpromazine, the world’s first antipsychotic drug: like most modern psychiatric drugs, it found its way into psychiatry via bizarre detours after unexpected side effects came to light. The underlying compounds, phenothiazines, had been synthesized as dyes in the late 19th century. In the 1930s, they proved effective as insecticides and against pig parasites. In the 1940s, they paralyzed rats so effectively in escape experiments that the animals could no longer avoid electric shocks. Surgeons then began using them to enhance the numbing effect of anesthetics. Soon after, chlorpromazine proved useful in alleviating allergies. It was noticed that many patients became emotionally numb, losing all interest; they no longer expressed concerns, desires, or preferences. And they stopped asking questions—a highly welcome effect in manic patients and other “difficult” psychiatric inmates. (18)
The success story of the sexual enhancer Viagra was similar. The active ingredient sildenafil had initially been tested, unsuccessfully, for strengthening the heart and circulation, for high blood pressure, and for angina pectoris.
A side effect was noticed that ultimately became the main effect for which the drug is sold at a high price: increased erections. (19) In search of additional indications, Pfizer tested, among other things, whether sildenafil could alleviate jet lag. Experiments with hamsters, which were tricked into believing they were experiencing jet lag on a transatlantic flight by turning off the lights prematurely, are said to have been promising. If successful, airlines will probably have to increase seat spacing in the future so that long-haul travelers can survive an intercontinental trip with a permanent erection unscathed. (20)
Pseudo-innovations as a business model
The temptation to turn pseudo-innovations into a business model is all the greater as genuine innovations become rarer. US physician Marcia Angell, long-time editor-in-chief of the highly respected New England Journal of Medicine and now a lecturer in social medicine at Harvard Medical School in Boston, puts her finger on the sore spot: ”Companies have only a few drugs in the research pipeline that could replace their blockbusters after their patents expire. This is the industry’s biggest problem today and, at the same time, its best-kept secret. All advertising claims about innovation are intended to conceal this very fact. The stream of new drugs has become a trickle, and only a very few of them are truly innovative in any way.“ The trend toward ”individualized” therapies tailored to individual patients, for example to their specific tumor, will exacerbate this problem, fears the head of Boehringer Ingelheim in Germany. Unlike in the past, there will no longer be drugs that are used uniformly for a large number of patients. “The era of big blockbusters will be a thing of the past.” (21)
Officially, the pharmaceutical industry vehemently denies that it is running out of brand-new blockbusters worth millions; behind closed doors, however, at internal meetings and conferences, its leaders are discussing with growing panic how to respond to this situation. Austrian medical journalist Hans Weiss witnessed this at a management conference in Barcelona: “We all know,” he heard one participant say, “that our productivity has declined. There are hardly any innovations left, and we have a credibility problem. Should we just continue as before? Continue to expand our sales teams? Continue to launch me-too drugs on the market? Continue to live off line extensions” – the marketing strategy of product line expansion that aims to come up with some new application or additional element shortly before the patent expiry date of a successful drug? (22)
More than a billion dollars in R&D costs per drug?
And from such a background, are we seriously supposed to believe that R&D costs average $802 million per drug, or according to other industry-related estimates, as much as $985 million, $1.395 billion, or even $2.6 billion?
A simple calculation shows that there must be something seriously wrong with these figures: divide the total amount that the pharmaceutical industry claims to invest in R&D by the number of newly approved drugs. In 2000, for example, it claims to have spent $26 billion on R&D, and $30 billion the following year; 98 and 66 “new drugs” were approved by regulatory authorities in those two years. (Only one in three of these were NMEs, or “New Molecular Entities.”) That would amount to $265 million before taxes or $455 million after taxes per drug, or $175 million before taxes or $300 million after taxes. (23) However, according to a comprehensive analysis by the consumer protection organization Public Citizen, the true costs after taxes are well below $100 million (24). Other estimates, after deducting tax savings, even put the figure at only $43 to $59 million (25) – that would be one-eighteenth of the expenses claimed by the manufacturers. A drop in the ocean compared to the industry’s usual sales revenues. (26)
And even $43 million is money down the drain if it is spent on useless pseudo-innovations that serve a single purpose: to generate additional revenue. Why don’t drug manufacturers have to prove that their new product is better than its predecessor, better than competing products, better than non-pharmaceutical therapies? Why are clinical trials conducted that compare a supposedly “innovative” drug not with existing, tried-and-tested remedies that have been used for years, but with placebos made of sugar, starch, or table salt? Why are studies conducted that measure clinically irrelevant surrogate markers such as blood values, metabolic products, or cell changes (27) instead of finding out what really matters: that symptoms, general well-being, and quality of life of patients? Absurd approval criteria have ensured that around 85 percent of all new drugs coming onto the market offer no significant advantages over existing preparations. (28) Pharmaceutical companies often test drugs even though their chances of success are predictably poor from the outset. Pfizer, for example, burned through millions of dollars in research funds on the inhalable insulin Exubera (29), only to withdraw it from the market in 2007. Experts had already classified it as unsafe, unnecessary, and unaffordable more than half a decade earlier. (30)
Back to the original question, which remains unanswered: Why do drugs have to be so expensive, despite the manageable costs of research and development? Because PR, advertising, and administration are expensive. Because investors and shareholders need to be satisfied. Because top managers are not satisfied with lofty visions. And because the widespread corruption in the healthcare system swallows up vast sums of money.
Notes
This article is an updated version of the chapter “The research fairy tale – The true path to the ‘innovative’ pill” from Harald Wiesendanger: Das Gesundheitsunwesen – Wie wir es durchschauen, überleben und verwandeln(2019). p. 112 ff.
(1)
According to Joseph DiMasi et al.: “The price of innovation: new estimates of drug development costs,” Journal of Health Economics 22 (2) 2003, pp. 151-85, DOI: 10.1016/S0167-6296(02)00126-1, www.klinikfarmakoloji.com/files/RD%20COST-DiMassi.pdf
(2) The Association of Research-Based Pharmaceutical Companies in Germany (vfa) cites 13.5 years in its publication Statistics 2014 – The Pharmaceutical Industry in Germany, 28 p.
(3) The US lobby association PhRMA stated 15 years in the 2000s, cited in Arznei-Telegramm 5/2011. It now assumes “at least ten years,” see www.phrma.org/advocacy/research-development/clinical-trials, accessed on April 9, 2017.
(4) According to the annual report of the industry association Pharmaceutical Research and Manufacturers of America (PhRMA): “Pharmaceutical Industry Profile 2002,” www.phrma.org.
(5) According to estimates by the IFPMA (International Federation of Pharmaceutical Manufacturers and Associations), the global umbrella organization of research-based pharmaceutical companies based in Geneva, for the year 2022: https://www.ifpma.org/wp-content/uploads/2025/02/IFPMA_Always_Innovating_Facts__Figures_Report.pdf
(6) The Pharmaceutical Industry in Germany. An Industry Portrait, 2nd revised edition, published by the Association of Research-Based Pharmaceutical Companies in Germany (vfa).
(7) According to the vfa brochure Statistics 2009 – The Pharmaceutical Industry in Germany. The figure was first made public in an article in the New York Times on December 1, 2001 (Robert Pear: „Research Cost For New Drugs Said to Soar“).
(8) Salomon Keyhani et al.: “Trends: Are development times for pharmaceuticals increasing or decreasing?”, Health Affairs 25/2006, pp. 461-468.
(9) See Marcia Angell: The Pharmaceutical Bluff – How Innovative the Pill Industry Really Is, Bonn/Bad Homburg 2005; H. Mitsuya et al.: Letter to the editor of the New York Times, September 28, 1989, quoted in Arznei-Telegramm 5/2011; M. Goozner: The $800 Million Pill – The truth behind the cost of new drugs, London 2004, pp. 160 f.
(10) Donald W. Light/Rebecca Warburton: “Demythologizing the high costs of pharmaceutical research,” BioSocieties 6 (1) 2011, pp. 34-50, DOI: 10.1057/biosoc.2010.40, http://link.springer.com/article/10.1057%2Fbiosoc.2010.40, accessed on April 9, 2017.
(11) Noam Chomsky in an interview with the Süddeutsche Zeitung No. 244, October 21, 2016, p. 22: “The state finances, the private sector collects.”
(12) www.aerztezeitung.de/politik_gesellschaft/arzneimittelpolitik/article/918799/tk-innovationsreport-neue-arzneimittel-oft-einfach-nur-teuer.html, accessed on October 20, 2016.
(13) According to Marcia Angell: The Pharma Bluff, op. cit.
(14) John Virapen: Side Effect Death – Corruption in the Pharmaceutical Industry. An Ex-Manager Spills the Beans, Mazaruni Publishing, 4th edition, 2008, p. 204 f.
(15) Peter Gøtzsche: Deadly Psychopharmaceuticals and Organized Denial, Munich 2016, p. 282 f.
(16) Spiegel online, May 23, 2007: “Pharmaceutical research absurd – The legend of omnipotent Viagra.”
(17) According to Zeit Magazin, June 24, 2016: “Depression – From shadow to light.”
(18) According to Gøtzsche: Deadly Psychopharmaceuticals, op. cit., p. 237 f.
(19) Arznei-Telegramm No. 5, p. 50.
(20) Spiegel online, May 23, 2007: “Pharmaceutical research absurd,” op. cit. ; Patricia V. Agostino et al.: “Sildenafil accelerates reentrainment of circadian rhythms after advancing light schedules,” Proceedings of the National Academy of Sciences of the United States of America 104 (23) 2007, pp. 9834-9839.
(21) Quoted from Zeit online, April 14, 2019: “Boehringer manager: The era of big ‘blockbusters’ is over,” https://www.zeit.de/news/2019-04/14/boehringer-managerin-zeit-der-grossen-blockbuster-vorbei-190414-99-816748, accessed on April 17, 2019.
(22) Marcia Angell: The Pharmaceutical Bluff, op. cit., p. 42; Hans Weiss: Corrupt Medicine – Doctors as Accomplices of Corporations, 3rd ed. Cologne 2008, p. 22.
(23) According to Angell, op. cit., p. 62 ff.
(24) According to Angell, op. cit., p. 61.
(25) According to D. W. Light/R. Warburton: “Demythologizing the high costs of pharmaceutical research,” BioSocieties 5/2011, pp. 1-17.
(26) According to Light/Warburton, op. cit., and C. P. Adams/V. Brantner: “Estimating the cost of new drug development: is it really 802 million dollars?”, Health Affairs 25 (2) 2006, pp. 420-428; 17 M. Goozner: The $800 Million Pill – The truth behind the cost of new drugs, London 2004, pp. 160-161
(27) Arznei-Telegramm 42/2011, pp. 33-35.
(28) Light/Warburton, op. cit.
(29) Arznei-Telegramm 38/2007, p. 105.
(30) Arznei-Telegramm