> It doesn’t (have to) cost billions to bring a (successful) drug to market
> you’d be ignoring the costs of the 90% of drugs that fail in phase 1
It depends on what you call "bringing a drug to market".
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* Phase I costs little, around $1M during the trial, and involves only a small group of participants (one or two dozen people), so it's not multi-center and it is manageable by a few people at a biotech. The problem is that most phase I trials fail, but this is not an issue of cost, it's an issue of the way it is decided as explained by ramraj07, another commenter.
Too often it is started on a hunch without solid pre-clinical data, sometimes it is because the drug was tested and failed in another disease and the managers "pivoted" to a new disease because then it costs little to try again, sometimes it's just a "weird IP/financial trick" where you combine an existing drug and an unrelated drug. Then you know you have a relatively efficacious drug, no need for toxicity studies and you can patent it.
On the contrary, many trials could be done on drugs with good pre-clinical data, but that does not happen because it would be hard to patent.
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* A phase III costs around $25M for one or two hundred participants during the trial [0]. It lasts 6 months at most.
Some publications cite much higher numbers (~$1G), but this does not make sense as drugs are often developed by biotechs (startups, in other words) with only a few million in their pockets.
Another cost inflationary cause is subcontracting to CROs, as most biotechs do not have the manpower, knowledge and business connections to conduct the trial.
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* Once a drug receives commercialization authorization, a major company usually buys the rights and then starts the marketing phase. This starts with teaching doctors on how to prescribe and administer the drug. It means publishing articles in the mainstream medical press, inviting doctors to conferences and workshops, and paying medical sales representatives.
It is costly, this is probably where are spend the ~$500M but for me, this is not drug development costs, it's just marketing costs.
I'm sorry, but for industry-sponsored trials your figures are off by up to an order of magnitude, despite the numbers in the (18 year old) reference.
Phase I: a small biotech I know of in oncology has phase I costs in the order of $500,000 per patient; this is a higher-end cost, due to their sites being in the US (more expensive than Europe) and because as a small biotech they're had to outsource virtually every aspect of running the trial. In big pharma, per-patient costs were more like $70-100k per patient, but this was just the pure money paid patient (to the site, and external costs like drug supply and shipping) and ignored the cost of laboratory, clinical, operations, and data management work that was being done in house. All told, it would typically be hard to get even a phase I study completed for less than 10x your estimate, and this is before you consider any additional recruitment needed between dose escalation and phase III.
Phase III: again it depends on many factors, but in big pharma a trial cost of $100-200k per patient was again not unreasonable, and typical phase III trials where you're comparing to a meaningful established medicine are larger than 100-200 patients. A biotech I know of is unable to run a phase III for a promising drug without finding a partner to support the majority of the cost (which is >100m EUR in oncology) and they're not wasting money.
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A less anecdotal approach is to consider the total R&D costs of companies across a given timescale, and divide by the number of successes. It's a pretty old reference too, but Matthew Herper did this in 2013. [0] Yes, there were some outliers with low costs, but you'd have to understand the details for context. The typical costs were in the hunderes of millions to billions per successful drug.
> you’d be ignoring the costs of the 90% of drugs that fail in phase 1
It depends on what you call "bringing a drug to market".
_________________
* Phase I costs little, around $1M during the trial, and involves only a small group of participants (one or two dozen people), so it's not multi-center and it is manageable by a few people at a biotech. The problem is that most phase I trials fail, but this is not an issue of cost, it's an issue of the way it is decided as explained by ramraj07, another commenter.
Too often it is started on a hunch without solid pre-clinical data, sometimes it is because the drug was tested and failed in another disease and the managers "pivoted" to a new disease because then it costs little to try again, sometimes it's just a "weird IP/financial trick" where you combine an existing drug and an unrelated drug. Then you know you have a relatively efficacious drug, no need for toxicity studies and you can patent it.
On the contrary, many trials could be done on drugs with good pre-clinical data, but that does not happen because it would be hard to patent.
_________________
* A phase III costs around $25M for one or two hundred participants during the trial [0]. It lasts 6 months at most.
Some publications cite much higher numbers (~$1G), but this does not make sense as drugs are often developed by biotechs (startups, in other words) with only a few million in their pockets.
Another cost inflationary cause is subcontracting to CROs, as most biotechs do not have the manpower, knowledge and business connections to conduct the trial.
_________________
* Once a drug receives commercialization authorization, a major company usually buys the rights and then starts the marketing phase. This starts with teaching doctors on how to prescribe and administer the drug. It means publishing articles in the mainstream medical press, inviting doctors to conferences and workshops, and paying medical sales representatives.
It is costly, this is probably where are spend the ~$500M but for me, this is not drug development costs, it's just marketing costs.
[0] http://idei.fr/sites/default/files/medias/doc/conf/pha/conf_...