Drug Development Life Cycle - Costs and Revenue

6,999 views

Published on

Presentation explains the Drug Development Process in terms of time/costs from initial research to final manufacturing. It presents strategies for increasing profits/decreasing costs, shows the impact of generics and details how Information Technology fits into this equation. It uses research from DiMasi and Grabowski to identify drug costs and product revenue.

Published in: Health & Medicine
0 Comments
3 Likes
Statistics
Notes
  • Be the first to comment

No Downloads
Views
Total views
6,999
On SlideShare
0
From Embeds
0
Number of Embeds
29
Actions
Shares
0
Downloads
216
Comments
0
Likes
3
Embeds 0
No embeds

No notes for slide

Drug Development Life Cycle - Costs and Revenue

  1. 1. DRUG DEVELOPMENT PROCESS Bob Sturm Director, IT Validation
  2. 2. Goals for Today• To understand the Drug Development Process• How long does it take?• How much does it cost?• Where does I.T. fit in?
  3. 3. Purpose of I.T. at any company• What is the purpose of I.T. at any company?• Why does I.T. exist?
  4. 4. Purpose of I.T. at any company• As told to me by a manufacturing company CFO – I.T. exists to increase profits or decrease costs – After profits and costs, everything else is fluff
  5. 5. Purpose of I.T. at any company• Told to me by a manufacturing company CFO – I.T. exists to increase profits or decrease costs – After profits and costs, everything else is fluff• I added that following the law comes first – FDA, CIA and SOX• Then we have the profits and costs axiom
  6. 6. Service Level Agreement I.T. Vision Statement• The goal of the I.T. organization is to support its customers to bring new patient treatments to market by providing information technology services that optimize business processes to reduce time and cost associated with product development.
  7. 7. Drug Development Process – 28,800 hits
  8. 8. Process vs. Creativity over Time Time
  9. 9. Drug Development Cycle Time to Market - 2003 Infotechgraphics.com/projects/drug-development-cycle/
  10. 10. Critical Path for Medical ProductDevelopment and Approval per the FDA FDA, Challenge and Opportunity on the Critical Path to New Medical Products 2004, p. 4
  11. 11. Three Dimensions on the Critical Path - FDA FDA, Challenge and Opportunity on the Critical Path to New Medical Products 2004, p. 10
  12. 12. Drug Development Cycle – FDA InteractionsFDA, Challenge and Opportunity on the Critical Path to New Medical Products 2004, p. 12
  13. 13. CDER New Drug Development and Review Process  See notes for additional explanation of this chart.
  14. 14. Clinical Trial ProcessPh 3 Costs Exceed $26,000 / patient-2006 (1) 1) prnewswire.com, Phase 3 Clinical Trial Costs; Ph 1: $15.7k/ patient, Ph2: $19.3k/patient, Ph3 $26k/patient  See Definitions for an explanation of the Approval Process
  15. 15. Drug Development by the Numbers (DiMasi et al, 2003, except where noted)• Drug synthesis to FDA approval is about 12 years• Drug Synthesis to IND is ~4.3 years• IND submittal to NDA submittal is ~6 – 7 years• NDA submittal to FDA approval is ~0.5 – 1.5 years• Clinical phases 1, 2 and 3 are ~5.7 years (phases overlap each other)• Only 1 in 3 drugs cover their R&D costs (1)• Roche stopped a Ph 3 study of 15,000 patients for a cholesterol drug (2) 1) Grabowski et al, “Returns on R&D”, 2002, p. 27: 2) Pharmalot.com, August 2012
  16. 16. Total Drug Development Costs (1) 2011: New drug development costs are about $1.3 billion (2)1) DiMasi et al 2003, p.167. Columnar years are 1979, 1991 and 20032) http://csdd.tufts.edu/news/complete_story/pr_outlook_2011/, Drug developers are aggressively changing the way they do R&D
  17. 17. Clinical Trials (Trail Duration and Capitalized Expected Costs (1) / Approved Drug)• Phase 1 (22 months / $30.5 million) – Evaluate Safety• Phase 2 (26 months / $29.5 million) – Identify the correct dosing level – Monitor safety• Phase 3 (31 months / $37.4 million) – Evaluate safety in a large population over time – Evaluate effectiveness (Meets it’s end points?)• Long Term Animal Studies (37 mo / $3.0 million)• Phase 4 – Marketing studies DiMasi et al, 2003, p. 165, Table 3 1) Includes out-of-pocket costs, inflation rates, cost of capital, attrition rates, see DiMasi pp 158 – 161;
  18. 18. Total Costs/Approved Drug – the Math: C x P = E• (Actual Capitalized Costs) X (Probability of success) = Capitalized Expected Costs• (Actual Capitalized Costs) X 21.5% (1) = $100.4 Mil• Actual Capitalized Costs = $467 Million• Preclinical Costs = Discovery + Preclinical• Preclinical Costs = $335 Million• Total Costs / Approved Drug = $802 Million 1) 21.5% - Source: DiMasi et al, 2003, p 165;
  19. 19. IND Filing to NDA Filing Time(All NMEs Approved 1981 to 1989) Differences due to process efficiencies and drug types
  20. 20. New Product Revenue – 2002 Approved drugs Avg. of 118 NMEs introduced into the US market from 1990 - 1994
  21. 21. Generics Quickly Impact Sales Volume• For 2010 within six months of a patent loss, generics took more than 80% of sales volume from the branded version (on average). (1)• Plavix (BMS) went off patent in May 2012. Within 2 months it’s sales dropped by 60%. (2)• Avapro (BMS) went off patent in March 2012. By July 2012 it’s U.S. sales dropped by 85%. (2)• Singulair (Merck) went off patent in August 2012. Merck expect sales to drop by 90%. (3) Fierce Pharma: 1) April 20, 2011; 2) July 25, 2012; 3) August 6, 2012
  22. 22. Impact of Generics
  23. 23. Increased Product Revenue
  24. 24. Strategies for Profits / Costs• Fail fast, Win quick• Focus on niche population instead of a block buster – Genentech’s Heparin• Adaptive trial design – Modify the trial at specific points• Reformulate and extend patent exclusivity – Oxycontin – Perdue Pharma (1)• Get an expert opinion to shorten the clinical trial time – KaroBio for their cholesterol drug (2) 1) Wall Street Journal - June 28, 2012 2) Business Week May 31, 2010
  25. 25. Drug Dev. Cycle - Application Systems CCP4 Infomatica MOE Business Intelligence SLIM STAT CRMCellomicscHCS Viewer WinNonlin Gov’t Pricing System/MedicaidGeneGo MediData SAPRigaku Refrigeration ManagerPipeline Pilot Calibration ManagerSymyx Compound Reg Chemstation /Chemlaunch/ChemstoreSymyx Isentris SASLasergene eCTD Xpress/ ISI ToolboxGCK Documentum / Ascent CaptureIDBS Activity Base Argus Drug SafetyResearch Discovery Pre-clinical Clinical FDA Commercial
  26. 26. Where Does I.T. Fit In?• Decrease Costs – Cloud strategy – SharePoint 2010 – FAST search• Increase Profits – Reduce time to product launch
  27. 27. Questions??
  28. 28. DefinitionsBLA: Biologics License Application NDA: New Drug ApplicationCNS: Central Nervous System NME: New Molecular EntityIND: Investigational New Drug R&D: Research & DevelopmentFDA: Food and Drug AdministrationNCE: New Chemical EntityApproval process: Final review of process before patients are recruited. It includesdrug supply, randomization, FDA forms, signed patient consent forms , CRFs and LifeSciences company and vendor project team readiness, etc.
  29. 29. References• DiMasi, et al, 2003. The price of innovation: new estimates of drug development costs. Journal of Health Economics 22, 151- 185.• Grabowski, H.G., et al, 2002. Returns on research and development for 1990s new drug introductions. Pharmacoeconomics 20 (Supplement 3), 11-29.• Food and Drug Administration, March 2004, Challenge and Opportunity on the Critical Path to New Medical Products

×