Life Science Compliance Update

May 08, 2015

Pharmaphobia: How the Conflict of Interest Myth Undermines American Medical Innovation


Long a champion of physician and industry collaboration, Thomas Stossel, M.D., has published a new book entitled Pharmaphobia: How the Conflict of Interest Myth Undermines American Medical Innovation. In it, Stossel, a distinguished Harvard hematologist and researcher, decries the conflict of interest movement as detrimental to medical progress and ultimately the patients who would benefit from new, innovative therapies.

Writing about conflicts of interest has been an increasingly surefire way to get published—the Journal of the American Medical Association even has its own conflict of interest category. What’s often missing from both sides of the mostly academic “COI” debate, however, is a relation back of nebulous concepts to what is important: tangible medical innovations and patient well-being.

One of the reasons Dr. Stossel’s writing is so engaging is that he bucks this trend by illustrating in plain language what is at stake. “Physician-industry interactions have been critical to the development of a large percentage of the medical products that allow physicians to prevent heart attacks, cure cancers, and restore mobility to the elderly,” he writes.

Over the course of my career, medicine and industry have together made spectacular progress against diseases. Cardiovascular deaths are down 60 percent, HIV has been converted from a death sentence to a chronic disease, and cancer mortality is at a historic low. Despite such progress and the role of physician-industry interactions in fomenting it, physicians are reducing or severing their relationships with biopharmaceutical and medical device companies out of fear that their patients will mistakenly view such interactions as a sign of corruption, rather than expertise.

In addition to the large amount of ink being spilled in academic journals on COI, Stossel characterizes a number of recent legislative measures as being similarly “pharmophobic.” He points specifically to the medical device excise tax and the Physician Payments Sunshine Act, which requires pharmaceutical and device companies to report any payments to physicians and teaching hospitals of more than $10. These payments are reported on a publicly accessible website, “with minimal explanations,” he notes, which “stigmatiz[es] relationships that are critical to the development and dissemination of new medical products.”

“[O]ne of the highest-paid physicians in the Sunshine database is a world-famous vascular surgeon who received royalties for his invention of multiple aneurism repair devices,” Stossel illustrates. Similarly, "Paul Offit, who invented the rotavirus vaccine that is believed to have reduced the incidence of hospitalizations for rotavirus-induced diarrhea by more than 85 percent among U.S. toddlers since its addition to the childhood-vaccine schedule in 2006, is often maligned for his industry ties." Stossel concludes: “Such cases, along with research grants for clinical trials, dominate the largest payments documented under the Sunshine Act. They are unequivocally beneficial and should not be stigmatized in this manner.”

Dr. Stossel’s book also aims to illustrate just how important private industry has been to these amazing breakthroughs. Again, he is the perfect spokesman for this. “I’ve done medical research for most of my career, and people say that I’ve been successful at it," he notes. “I hope that this research will save lives someday, but only drug and device companies can make that happen.”

He writes:

Publicly supported academic research certainly advances medical knowledge. But converting that knowledge to clinical benefits isn’t straightforward. Helping patients justifies public research funding, but obtaining such funding depends far more on impressing grant review committees with the novelty and virtuosity of research than with its practical medical applications. I know, because following these precepts has certainly contributed to my success. I have had continuous government research funding for over 45 years, have published research papers in prestigious scientific journals, won prizes, and been elected to elite scientific societies. Yet no one has lived one second longer or better as a direct result of my research.

But regulations, largely stemming from the conflict of interest movement has only served to impede medical innovation. “Regulations always slow things down, and compliance and enforcement divert precious funds from research and development,” states Dr. Stossel. “It takes on average 16 years and costs over $2 billion to get a new drug approval by the FDA.” This delay matters:

For patients desperate for new treatments and cures, such delays can be lethal. Marketing restrictions mean doctors don’t learn about drug and device advances. Delays or prevention of potentially innovation-promoting relationships between researchers and industry have been documented. The myth that device and drug development isn’t difficult and expensive encourages enactment of taxes on companies and calls for price controls. Both inhibit innovation.


Dr. Stossel stands as a rare counter to the COI movement, and provides years of experience and patient-centered arguments to back it up.  Pharmaphobia: How the Conflict of Interest Myth Undermines American Medical Innovation is out now and available here. Also, read  a Q&A with Stossel about his book.

In full disclosure, Thomas Sullivan, Editor of Policy and Medicine is listed in the preface to Pharmaphobia, he receives no remuneration from the sales of this book or his work with Dr. Stossel.  

December 02, 2014

A Tough Road: Cost To Develop One New Drug Is $2.6 Billion; Approval Rate for Drugs Entering Clinical Development is Less Than 12%

High cost

Developing a new prescription medicine that gains marketing approval is estimated to cost drugmakers $2.6 billion according to a recent study by Tufts Center for the Study of Drug Development. This is up from $802 million in 2003—equal to approximately $1 billion in 2013 dollars, and thus a 145 percent increase in the ten year study gap. Furthermore, while the average time it takes to bring a drug through clinical trials has decreased, the rate of success has gone down by almost half, to just 12 percent.

Tufts breaks down its $2.558 billion figure per approved compound to include approximate average out-of-pocket cost of $1.4 billion and time costs (the expected returns that investors forego while a drug is in development) of $1.2 billion.

Furthermore, the estimated cost of post-approval research and development of $312 million “boosts the full product lifecycle cost per approved drug” to close to $3 billion. R&D costs include studies to test new indications, new formulations, new dosage strength and regimens, and to monitor safety and long-term side effects in patients” as required by the FDA as a condition of approval.

Tuft’s analysis was developed from information provided by 10 pharmaceutical companies on 106 randomly selected drugs that were first tested in human subjects anywhere in the world from 1995 to 2007.

“Drug development remains a costly undertaking despite ongoing efforts across the full spectrum of pharmaceutical and biotech companies to rein in growing R&D costs,” stated Joseph A. DiMasi, director of economic analysis at Tufts CSDD and principal investigator for the study. “Because the R&D process is marked by substantial technical risks, with expenditures incurred for many development projects that fail to result in a marketed product, our estimate links the costs of unsuccessful projects to those that are successful in obtaining marketing approval from regulatory authorities.”

According to DiMasi, rising drug development costs have been driven mainly by increases in out-of-pocket costs for individual drugs and higher failure rates for drugs tested in human subjects. This explanation stuck out to Don Seiffert, editor of BioFlash, who listened to DiMasi’s presentation last week:  “Based on an analysis of 1,442 experimental drugs that were in clinical tests in recent years through the end of 2013, DiMasi said the overall chance that a drug entering clinical development will be approved for marketing is just under 12 percent.”

"Approximately seven out of eight compounds that enter the clinical testing pipeline will fail in development," DiMasi said. "Put another way, you need to put an average of 8.5 compounds in clinical development to get one approval."

Seiffert notes that DiMasi arrived at the 12 percent figure using a "weighted average, since as of the study, just 7 percent of the 1,442 drugs had actually been approved. Fully 80 percent had been abandoned by the companies developing them, and the other 13 percent were still in active development. DiMasi said it's likely that many of the drugs in later development will eventually earn approval, hence the overall 12 percent rate."

The previous study set a success rate for drugs that enter human trials at 21.5 percent.

According to DiMasi, factors that likely have boosted out-of-pocket clinical costs include increased clinical trial complexity, larger clinical trial sizes, higher cost of inputs from the medical sector used for development, greater focus on targeting chronic and degenerative diseases, changes in protocol design to include efforts to gather health technology assessment information, and testing on comparator drugs to accommodate payer demands for comparative effectiveness data.

Consumer Advocate Groups Scrutinize Study

After the Tufts press release, a number of consumer advocates and academics took various shots at the data. James Love of Knowledge Ecology International believes the study is "long on propaganda, and short of details." Love urges readers to "put some pressure on Tufts to provide more details of what the data looks like." He references the most recent industry funded study on drug costs, from 2012, entitled "The R&D Cost Of A New Medicine," published in the Office of Health Economics (OHE). That study found R&D cost to be $1.506 billion. "[That] report was 98 pages," he states. "So far, we have a press release of 579 words" from Tufts.

Love questions a number of aspects of the study, including the fact that the study assumes that NIH provided no funding in the pre-clinical development of drugs. Furthermore, Love states that “we don’t know how many patients were in the trials (that were used to calculate the estimate) or how much money was claimed to have been spent per patient in the trials. Since the entire estimate was based upon the costs of the trials, we don’t have any idea of what the sample looked like.”

DiMasi responded to some of these critiques in the Wall Street Journal:

[T]he "OHE analysis was based on a small sample (with regard to clinical testing) of projects that were in some phase of clinical development from 1997 to 1999 and followed only to 2002.  The data for our study are effectively much more recent than the data used for the OHE report.

"What we are measuring is what private developers actually spent on development.  NIH research is complementary.  If the NIH does some basic research, or even clinical research, that has findings that developers find interesting and useful, then the cost of that NIH research is just part of the social cost of drug development.

"The social cost is the private cost PLUS what governments and non-profits spend that somehow contributes to the discovery and development of new drugs. If private developers spend less than they otherwise would because of the NIH research, then that is captured in our estimate because we are only measuring what private developers spent."

View the Tufts slide show here for DiMasi's methodology and calculations.


Preview | Powered by FeedBlitz


May 2015
Sun Mon Tue Wed Thu Fri Sat
1 2
3 4 5 6 7 8 9
10 11 12 13 14 15 16
17 18 19 20 21 22 23
24 25 26 27 28 29 30