Pharmaceutical innovations are responsible for some of the most exceptional health improvements we have witnessed in the past century. Each of the discoveries recounted in this book, and hundreds of other stories of invention not told here, have increased life expectancy and improved the quality of our lives. By simply swallowing a pill, we can fight infections with antibiotics, attack cancers with chemotherapy, lower high cholesterol levels with statins, control diabetes with blood sugar medications, and much more.
Few would question the enormous value these drugs have brought to our society, but there is still much potentially to be gained, and an expectation that these gains can be realized. For instance, estimates suggest that a one percent decrease in all-cause cancer mortality would be worth upwards of $500 billion to the US economy. Given this potential, it may be encouraging that private pharmaceutical R&D expenditures in the US have risen almost exponentially over the past three decades, approaching nearly $50 billion annually. Furthermore, the NIH funds roughly $30 billion in biomedical research, much of which is intended to spur new drug development. One would hope these investments are paying off, but are they? And if they are, is the payoff large enough to justify diverting resources to this activity? Finally, what is the best indicator of performance here? Is it the number of new drugs approved for use each year, or are we more concerned with the “quality” or “value” of these new drugs? And how has the payoff changed over time; have things gotten better or worse? The answer to this last question is, as is often the case, it depends – both on measures and on time periods.
Lately a steady stream of analyses of the pharmaceutical sector has lamented that this growth in R&D spending has not yielded a proportional surge of new products. Conventional wisdom, among those both inside and outside the industry, holds that for most of the past two decades the number of new drugs – especially “good” new drugs – has been declining at a modest but troubling rate. At a first glance, this perception of decreased productivity appears to hold true. The combination of rising spending and stagnant output means, through the magic of long division, that the average cost per new drug making it to the market has skyrocketed.