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Drug Development

2018 Drug Approvals: A Closer Look

Let’s have a look at the recent new drug approvals. 2018 was quite a year, by the numbers. C&E News has a comprehensive roundup: 59 approvals (versus 46 in 2017, which was already a record by itself), and about two-thirds of those small molecules. There are some very interesting molecules in the list, and I always recommend that medicinal chemists sit down every so often and look over the structures of approved drugs as if you’re seeing them for the first time (say, as screening hits). You might be surprised at how many of them you find chemically somewhat unappealing – would you aim for an n-hexyl ether in your final structure (Mulpleta/lusutrombopag), the heterocyclic ring in the lower section of Xofluza (baloxivir marboxil), or think that 3,4-diaminopyridine (Firdapse) or Diacomet (stiripentol) could be drugs at all?

Those last two also illustrate the tricky nature of drug approval statistics. Diaminopyridine has been kicking around as a therapy since at least the early 1980s, and stiripentol was discovered in 1978. They each have taken very winding paths to final US approval. There’s also Galafold (migalastat), which was isolated in 1988 and given orphan drug status by the FDA for Fabry’s disease back in 2004, finally approved this year. As an extreme example, you have Aemcolo, which is rifamycin (discovered in the Eisenhower administration), approved this year for traveler’s diarrhea. These all can be contrasted with Vitrakvi (larotrectinib), which is a new kinase inhibitor (TRK fusion proteins) that went from first-in-man to FDA approval in under four years (blazing speed, if you’re not in the business and wondering about that) and Onpattro (patisiran) which is the first RNA-interference-based drug to be approved anywhere at all (an impressive scientific achievement). So that 59 number is rather heterogeneous, as all year-by-year approval numbers are.

Interestingly, over half of those 59 (34 approvals) were for rare diseases, which is the natural outcome of the way things have been going in the industry for some years now. Not everyone is happy about that – C&E News quotes Peter Bach of Sloan-Kettering referring to these as “amazing science one-offs”, which is pretty accurate, and noting that each of them treat only a very small number of people (albeit people who in most cases had no treatments at all before these drugs were developed). So you have people who are being helped tremendously, on the one hand (although at great expense), but not that big an impact on overall public health, on the other. If you ranked drug approval years by number of patients affected, I don’t think 2018 would look as impressive.

And that leads to the next thing to think about: are recently approving drugs earning back the expense that went into making them? The first thought is “Well, they’d better”, and that ain’t wrong. IDEA Pharma has its annual roundup of innovation in the industry out, and they also have some thoughts about the finances involved. If you look at 2013-2017, their top-ten innovative companies still only average about one approval a year (while the bottom ten average about one approval every four years!). Interestingly, adding up R&D expenses over that time, both groups spend about $6 billion dollars per approval. And yes, those R&D figures have various amounts of SG&A (selling, general, and administrative expenses) rolled into them, but it’s money spent either way that has to be earned back. Is it?

Apparently not. There were 217 drug approved over that time span, and so far only 6 of them have reached cumulative sales of $6 billion or more. Note, that’s just sales – not profits. And it’s very much a power-law-looking distribution, with Gilead’s Harvoni and Solvadi raking in huge profits and most everyone else tailing off pretty quickly. Only 48 of the 217 have even added up to one billion in sales over this period. Mike Rea of IDEA sums it up this way:

So, we have a problem. Not only do most of the drugs we put into pipelines not make it to market, those that do are not even paying for their own R&D programmes, never mind the R&D for the failures around them.

Companies can talk about ‘innovation’ all they want, but this is an unsustainable state. Launching medicines that stand a chance of repaying their own investment has to be the measure of success, of productivity. The commercial environment is a whole lot easier to predict than the biology of the human. (Or, should be.)

Now, it’s worth remembering that consulting firms have an interest in making things appear dire, because their business is coming in to fix your horrible problems. But even if you turn those figures down quite a bit, they’re still unsettling. These drugs have many more years on the market, for one thing, but balancing that out is that they’re likely to show declining sales over the longer term. Not everyone spent that $6 billion per approval, either – the smaller companies probably didn’t, but balancing that out is that they’re generally bringing out drugs with smaller sales. And so on.

It does make you think. How much of the investment money flowing into biopharma over the last few years been coming from people who hope that they’re buying into the next Gilead? The VCs and other early-stage investors are (for the most part) smarter than that, but you do wonder about the investors in the publicly traded companies. In the end, very few companies and very few drugs are going to hit like that. Maybe none.


33 comments on “2018 Drug Approvals: A Closer Look”

  1. electrochemist says:

    Damned if you do, damned if you don’t. “Big pharma” routinely receives criticism for not focusing on rare but life-threatening diseases. The prevailing narrative is of a focus on blockbusters for financial reasons.

    Here we have an impressive list of new drugs to treat diseases affecting small numbers of patients. So, of course the costs of these treatments will be astronomical. You cannot have it both ways….

    1. Athaic says:

      That the cost for a new drug is high is understandable.
      When it is insulin getting its price boosted by about 200 to 300%…

      And again, as I posted before, the cost of drugs are less of an issue in non-US countries. Having a real healthcare system may be a factor.

  2. Andre Brandli says:

    Asher Mullard has published a similarly informative overview of the 2018 FDA drug approvals in the new issue of Nature Reviews in Drug Discovery:

  3. petros says:

    And on rare drugs look at the story that surfaced today in the UK where there are campaigners calling for the UK government to issue compulsory licences because of the cost of Orkambi. Vertex ‘ best offer to the NHS is GBP100,000 per patient per year.

    1. Lambchops says:

      I’m looking at interest at the figure quoted about manufacturing a generic for £5,000 per patient per year. I tried to find out more about how the researcher came to this figure but his publications are mostly related to low cost generic versions of other drugs (mostly for HIV), It may well be a valid figure and certainly a “generic” price will be a lot lower but it’s an absolutely meaningless one without any context on how it was arrived at.

      1. Lambchops says:

        There’s some more info here but insufficient to see exactly what was done (though it does at least appear that they are trying to take into account the various costs of generic manufacture and not taking an over simplistic approach).

        1. electrochemist says:

          Interesting…. Apparently, they had an academic gets quotes on custom synthesis of the API from several companies in India, and they extrapolated from there. Wonder if they knew enough to ask about GMP starting materials, Drug Master Files, PAI histories of the manufacturers, etc.

          The thing I noted is that they pointed to Vertex’ $500 MM share buy-back program as the justification for breaking their patent, proposing that they must have excess cash lying around if they didn’t need to invest it in R&D.

          If this strategy is successful for the UK government, other Pharma companies had better tread cautiously when considering share buy-back programs in the future…..

          1. johnnyboy says:

            The cost of making the generic is a red herring. The real issue here is that a first-in-class, innovative drug (ie. one that pushes all the right buttons in terms of what pharma should be doing, vs the Shkrelis et all), is being turned down by the NHS because the cost-benefit is not deemed sufficient (even when that cost is significantly lower than the US price). Who is right, here ? Vertex, who is playing hardball in the price negotiation, or NICE, who is denying patients the drug in the name of cost-cutting ? I don’t have the answer for that, and I doubt that any independent observer has. But it’s a question that will come up again and again, and I doubt that Pharma is going to come out on top in the public’s mind. You only have to look at how the issue is being framed in the Guardian, like Vertex is actually the one taking years off patients lives by being inflexible on price. It’s not the NHS that is going to get blamed here, and if Pharma continues towing the same line on price, more and more crazy measures like breaking patents are going to be considered.

  4. navarro says:

    isn’t one purpose of niaid and nih to investigate possible treatments for rare but life-threatening diseases?

    1. QA Guy says:

      indeed, however there is no mandate that they “deliver” on any investment…

  5. anon the II says:

    How come the software industry never gets hammered over the price/manufacturing costs ratio the way pharma does?

    I guess nobody dies if they don’t get the latest version of Word.

    1. Athaic says:

      Also, a lot of us are addicted to computers and smartphones.

      1. tlp says:

        too bad pharma companies can’t optimize for addictiveness

        1. steve says:

          Not true – Purdue Pharma did exactly that, hence the current opioid addiction mess.

    2. McChemist says:

      Because drugs are generally paid for by insurance, whose costs are then subsequently spread out to the public at large in the form of higher insurance prices. If a bunch of other people spend their money on some dumb overpriced EA game, that doesn’t affect me one bit. If a bunch of people start taking some insanely priced, minimally efficacious drug, that eventually hits me in the pocketbook.

    3. M says:

      Yeah, in addition to “no one dies because you can’t afford Word” there is also the fact that trying to afford Excel for someone’s parents never bankrupted an otherwise financially sound household. Death and bankruptcy do seem to cause emotional reactions.

      Don’t get me wrong, a peeve of mine is the fact that I’d have taken less ethical criticism if I had made more money designing video games than contributing to life saving treatments.

    4. cancer_man says:

      I would!

  6. agsone says:

    The C&E News pages seems to be only displaying 54 approvals right now, which is rather odd since all 59 were there when it was first published. Those earlier in the year seem to have disappeared – one of those was Erleada which as a thiocarbonyl is another compound that might not have made it further than HTS in some folks selection criteria.

    1. Design Monkey says:

      Selection criteria depend on intented area of use of potential drug. If anticancer, as for apalutamide – then anything goes, including explicitly toxic and chemically weird stuff, and no one will bat an eye about that. If a drug for not immediately life threating condition and for long term use – then nope, no freaky chemistry allowed, that’s a straight road to liabilities of side effects.

  7. Jeff says:

    From the relatively uninformed perspective of an outsider (my background is engineering, not pharmaceuticals or chemistry): it seems to me that although some of these new medications might have direct and immediate applicability to only a few people with rare diseases, the work to develop and test them still increases the broader pool of knowledge. Down the road, it seems like this additional insight into how our bodies work under one group of fairly narrow conditions — including what treatments work, and what do not — ought to eventually bear more general fruit.

    The things each of my projects teach me — whether my original approach worked or not — almost always become useful later, so I’ve learned to not begrudge failures.

  8. Barry says:

    The focus on rare diseases is not a bad thing. Remember that Gleevec was first approved for Chronic Myelogenous Leukemia (a rare disease) as an OrphanDrug. Only subsequently was it granted broader indications.
    An under-appreciated lesson of Gleevec is that the first indication in which one should run Clinicals should be the one with the clearest etiology. If that’s a rare disease, so be it. Once you’ve demonstrated efficacy where the etiology is clear, you can run more Clinicals–and you now have a revenue stream to defray them.

    1. sp3 says:

      Another important lesson from Gleevec is that you could charge a very high price for an innovative cancer therapy. It soon became the norm. If you look at the value to society of new antibiotics, they should command a premium price but that never became the norm. So now we have all large pharma focused primarily on cancer and we are left with only a few small companies struggling to survive with their antibiotic programs – Melinta, Paratek, Tetraphase, Achaogen.

      1. eub says:

        Yeah, I don’t understand this. In terms of expected years of life, antibiotics for otherwise-uncontrollable bacteria have to be way up there, aren’t they? The applicability may be severely limited to control resistance, but the price per patient you’d think would be as high as anything.

  9. Nick K says:

    Lusutrompobag! What a name!!

  10. Nick K says:

    Sorry, Lusutrombopag. Nearly as bad!

    1. steve says:

      Companies do that on purpose to make it hard to request the generic.

      1. CWC says:

        Do you (or anyone else) happen to have a source on that? All a patient has to do is ask their pharmacist “is a generic available for [brandname]?” and the pharmacist can do the rest. The pharmacy I worked in (back in the day) even had a box to tick that said “always replace with generic, if available.” Doesn’t matter if the patient cannot pronounce atorvastatin, just say “generic Lipitor.”

      2. eub says:

        It’s a USAN generic name, the company doesn’t have nearly that much freedom, the names have structure. In this case most of the name is the “-trombopag” which is the stem for thrombopoetin agonists. Which ended up sounding a bit goofy but does make sense.

        The “lusu-” I don’t know from the standard lists;
        does anyone have a full-blown USP Dictionary, Appendix VII?

  11. Stanislav Radl says:

    When I saw the first Shionogi patent claiming antiinfluenza activity of some dolutegravir analogs, I believed that the patent was intended to widen the dolutegravir patent protection. I was probably mistaken and baloxavir is the result of the molecular modification of these dolutegravir analogs.

  12. Design Monkey says:

    There is a little joke in name of on one drug. Xerava for any russian looks very close to a word “xerovo” (spoken as herova), which in slang means “bad state of things” .

  13. Mister B. says:

    2 questions.
    59 approvals, mostly drugs for rare diseases.
    1 – Does it prove the “fast track approval” process is useful ?

    2 – Can it be explain by something like “better a slightly efficient drug than nothing” in rare diseases ? So the next gen of drugs will hardly reach the market ?

  14. Mike Rea says:

    Thanks for including our additional analysis, Derek. We certainly don’t have a desire (or perhaps an interest) in making things appear dire – I took away that doing the right things well still creates value… (Maybe that’s because we’re not really a consulting firm… 😁) I’m an optimist.

    The 2019 Pharmaceutical Innovation Index will be out end of March 2019, and will include 2018’s batch of approvals. It’ll be fascinating to see how that cohort changes things.

  15. Jim T says:

    Minor point…it’s Sovaldi (not Sovladi).

    Always enjoy the writing!

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