Everyone that’s not big pharma hates big pharma. Before getting into whether big pharma really does need to be big, let’s talk about what, specifically, is wrong with big pharma.
Big Pharma, Bigger Fraud
- These companies control drug prices and often inflate them for monetary gain
- Many life-saving drugs are unaffordable. This is unacceptable given that:
- Senior management takes away millions in bonuses and pay each year. In fact, health-care CEOs, as of 2015, receive the highest median pay of any of the 10 sectors (Equilar).
The list above is not exhaustive. There’s a lot about big pharma that is evil, unethical, cruel and downright wrong.
Being in the R&D space (albeit academic) myself, I want to spend some time talking about why the R&D is so expensive. To begin thinking about this, let’s look at some trends in the R&D process (Pew Charitable Trust):
What’s going on in the above bar graph? How did we discover so many antibiotics from 1940 to 1970 and then just stop? Did scientists get more stupid? Unfortunately not. This 1940-1970 period is called the golden age of antibiotic discovery. It started in the 1940s after Alexander Fleming discovered penicillin in 1928. In this golden age, scientists extensively cultured microbes known to produce antibiotics, extracted these antibiotics and tested them. Over the next few decades, this process exhausted all the low-hanging fruit – the most abundant antibiotics, the most effective antibiotics, etc. This golden age lasted a few decades but then the party was over. Virtually all bacteria that could be cultured on a Petri dish had been screened for antibiotics.
So have we already found all the antibiotics out there?
Thankfully, no. It is estimated that scientists can only grow about 2-4% of the Earth’s microbial diversity in laboratories. The vast majority of microbes and antibiotics are pending further investigation. Given that we can’t grow most of these bacteria in the lab, today’s process for drug discovery and development looks quite different. We now rely on modern-day approaches to antibiotic discovery – whole genome sequence, bioinformatics, screening libraries of synthetically-produced chemicals, etc. But we really have run out of easy options. The picture below illustrates this concept well.
Even before a drug makes it to a clinical trial, a lot of time and effort (and money) is spent on finding a suitable drug candidate. Basic research by thousands of academic laboratories around the world investigates hundreds of thousands of potential drug molecules. If a particular drug candidate gains appreciable attention, it might be investigated at a larger scale by pharmaceutical companies. Don’t get me wrong – pharmaceutical companies also try inventing drugs. It’s just a numbers game.
Today, an average clinical trial costs around US$ 30-50 million (Nature Reviews Drug Discovery. 2017. 16, 381–382)! Most potential new medicines fail because they are not effective against a disease, or have side effects. Because of this fact, big pharma companies need to have deep pockets. An unlucky decade in terms of new drug approvals could cost a pharmaceutical company billions of dollars. That’s a lot of money! But it’s also relative – if you consider this as a fraction of total revenue, it would only under 5% of a company’s total revenue.
So, I have two takeaway points here: (1) R&D is extremely expensive but it doesn’t explain why big pharma needs to be so big. As a scientist myself, I believe it’s time for big pharma companies to become “little pharma” companies. Unfortunately, we are living in a time where money talks and bulls*** walks.
(2) Academic laboratories around the world power most, if not all, of the scientific advances we make today. Whether it’s cancer, Alzheimer’s, new antibiotics, CRISPR/Cas genome editing, or organ transplants, academia works on it all and makes incredibly important discoveries. So, the next time you can advocate for additional funding for the sciences, please do so! This is money going towards advancing science that will help you and training young scientists (like me) for the future.
Hopefully, the next time you have a conversation about medicines, clinical trials, academic research, or the R&D process, you know what you’re talking about and can clearly outline the biggest issues with big pharma and why you’re against it.
Let’s review some of the facts talked about here:
- The biggest pharma companies have annual revenues well above US$ 50 billion.
- Big pharma CEOs make more money than CEOs of the other biggest market sectors.
- Only 17% of a pharma company’s revenue goes towards R&D. Typically, almost 50% goes to sales and marketing.
- The golden age of antibiotic discovery (1940-1980) is over. We are running out of antibiotics to treat dangerous infections.
- Clinical trials, the FDA process to approve new drugs, costs around US$ 30-50 million. Most potential new medicines fail clinical trials.
Here are some helpful resources if you want to read more: