January 8, 2015

Drug Sponsors Challenged to Contain Health Care Costs while Boosting Productivity

BOSTON – Jan. 8, 2015 – Drug developers will implement strategies over the next year to improve clinical study performance to help control R&D costs and boost overall productivity, while increasing their focus on the development of cost-effective therapies that can help lower health care spending, according to the Tufts Center for the Study of Drug Development.

“The key challenge for drug sponsors, policy makers, and payers is to balance the need for new, innovative medicines with the equally pressing need to bring health care spending under control,” said Tufts CSDD Director Kenneth I Kaitin. “But developing products that can treat complex diseases is expensive, as it now costs nearly $2.6 billion to develop and gain marketing approval for a new prescription drug.”

He added that drug sponsors looking for the most promising returns on investment have been transitioning from a high-volume, low-margin business model to a low-volume, high-margin model by directing a growing share of their resources toward development of precision medicines, specialty pharmaceuticals, and orphan drugs.

However, many of these narrowly targeted products now in development may encounter strong resistance when they reach the market over the next several years, from payers who are increasingly seeking lower-priced therapeutic alternatives, he said.

Kaitin made his comments in connection with the release today of the Tufts CSDD Outlook 2015 report on pharmaceutical and biopharmaceutical trends. The report also noted that:

  • Drug and biologics developers will expand their investment in new cancer therapies as a consequence of advances in the scientific understanding of the molecular basis of human cancers and cancer immunotherapy and its role in resistance.
  • The U.S. Food and Drug Administration will respond to Congressional calls for improved clinical trial efficiency by supporting initiatives, such as the Lung Cancer Master Protocol, that create a single clinical trial infrastructure for testing several drugs simultaneously.
  • Biosimilars are poised to have a significant impact on the U.S. and EU markets, with monoclonal antibodies (mAb) constituting the biggest target for developers; U.S. approval of a relatively large number of biosimilars is likely within one to three years.
  • Adoption of simple (e.g., early futility, sample size re-estimation) and more sophisticated (e.g., dose response, randomization ratios) adaptive clinical trial designs will accelerate as functions within sponsor companies vie to increase data quality and program success rates.

Tufts Center for the Study of Drug Development
Sandra Peters

Business Communication Strategies
Peter Lowy