Is pharmaceutical R&D providing value for money?

Is pharmaceutical R&D providing value for money?

Much has been made of the huge costs involved when pharmaceutical companies attempt to bring new drugs to market.

Last year, the International Federation of Pharmaceutical Manufacturers & Associations suggested that $135 billion (£113.9 billion) a year is being spent on global medical research and development (R&D). While it is encouraging to see scientists making so many important breakthroughs, it does beg the question; can we really afford this huge outlay?

What does NICE think?

In the UK, the National Institute for Health and Care Excellence (NICE) ultimately has the final say on whether drugs are cost-effective. In an ideal world, every single piece of research will result in a brand new treatment that can save huge numbers of lives, but the astronomical costs involved mean that governments have no choice but to be selective.

A recent article in the Times newspaper suggested the decisions made by NICE could deter drug companies from setting up bases in the UK. In response to the piece - which was written by the news provider's business editor Ian King - NICE chief executive Andrew Dillon explained why the body has to make so many seemingly harsh decisions.

"Mr King quotes Jonathan Emms, the managing director of Pfizer in the UK, who says that it costs £1.2 billion to bring a new medicine to patients. Although this is a number that seems to go up each time it's estimated, it clearly is expensive to develop new drugs," Mr Dillon wrote.

"Companies are entitled to expect a return on their investment, but health services have to be confident that the extra benefit to patients justifies the price."

He added that if it really does cost £1.2 billion to create a new drug, companies need to take a step back and consider if this expense is truly justified.

So, will drug firms avoid the UK?

Despite claims made in the Times article, Mr Dillon thinks drug developers will recognise there are far more advantages to conducting R&D in Britain than disadvantages. That said, he underlined the fact the industry is extremely competitive and that the UK has to "compete hard to win its share".

The NICE chief also stated the body has improved over the past decade and has built a good reputation around the world. He also clarified just how much pressure is on the organisation to keep the pharmaceutical industry running smoothly.

"NICE is, quite properly, scrutinised closely on its decisions and the methods we use to arrive at them. We have changed and improved over the decade and more that we have been advising the NHS," he added.

Recent rejections

The global economic downturn in 2008-09 forced the government to take a much firmer grip on public spending and this means every penny spent by the NHS has to count. This has made NICE's job even more difficult and a number of recent treatments have been rejected for use by the health service.

In August, the body concluded that the breast cancer drug everolimus - also called Afinitor and manufactured by Novartis Pharmaceuticals - should not be routinely issued to patients by the NHS because it is not cost-effective. Speaking at the time, Mr Dillon said the independent appraisal committee agreed that the treatment could delay the growth and spread of breast cancer by around four months, but it was not clear how long it could extend a person's life when compared with the drug exemestane alone.

"With limited NHS funds, it's important we make recommendations based on how well a treatment works compared to alternative treatments in the NHS, as well as any associated side effects and the cost that the health service is being asked to pay," Mr Dillon commented.

"Using the evidence that was available, the committee concluded that everolimus is not a cost-effective option for the NHS."

Looking to the future

Although cases where NICE has advised the NHS not to adopt a particular drug will inevitably make headlines, there are many more examples of the organisation sanctioning some life-changing treatments.

It is clear that pharmaceutical R&D is not cheap and drug developers may need to spend more time weighing up the pros and cons of launching new studies. That said, with the economy showing clear signs of revival, there is a chance that more money will be invested into drug making in the next few years, which can only be a good thing.