|Pharmaceutical production costs are rising |
because companies have more hurdles
to pass during the testing phase.
by Lane Hirning
Product Management Director, MasterControl Inc.
Judging by a recent report forecasting future growth, the pharmaceutical industry is thriving despite the recent economic downturn. A market research firm is estimating a 30 percent increase in global medicine spending by 2018, which is great news for the industry (1). The same report cited the anticipated launch of 200 new revenue-boosting drugs within the next five years.
Amid this robust growth, what are some of the things that you can look forward to in the near future? I was asked this question recently. Short of sounding like Jim Cramer of CNBC’s “Mad Money” fame, I picked the following trends as likely to influence pharma in the near term. They all have one thing in common—they reflect the impact of technology on medicine and the health-care process.
Top 5 Pharma Trends
#1 The outbreak of measles and Ebola highlights the importance of vaccines and the pharmaceutical industry.
From Jan. 1 to May 1, 2015, the U.S. Center for Disease Control and Prevention (CDC) reported 169 cases of measles (2) in 20 states and the District of Columbia, part of an outbreak that originated in Disneyland. The majority of people who got measles were unvaccinated, according to the CDC.
There’s a need to re-educate parents about the importance of vaccination and to counter the misinformation that autism is caused by vaccines. I don’t want to question parents’ decisions, but they need to get all the data. Those who are afraid of vaccines might not have the right information. Remember the retracted 1998 study (3) in the U.K. that falsely linked autism to vaccines? It has resulted in a major setback in vaccination.
Unlike measles, there is no vaccine for Ebola at present—39 years after the disease was discovered in Africa. The World Health Organization said more than 26,000 people have contracted the disease and 11, 064 have died from the recent outbreak, mostly in Africa (4). Some people have criticized the pharma industry for its lack of interest in developing Ebola vaccine. Developing a product is expensive. Pharmaceutical companies need to do a balancing act between addressing a public need and running a business, which is hard to do.
This article is related to the Whitepaper: Top 5 Trends in the Pharmaceutical Industry in 2015.To get the full details, please download your free copy.
#2 The prices of generics continue to rise.
A report by Elsevier showed that out of a sample of 4,421 drug groups, 222 increased in price by 100 percent or more between November 2013 and November 2014. Seventeen drug groups increased by 1,000 percent or more (5).
The price hike is partly due to mergers of manufacturers, resulting in fewer players in the market. The FDA has also become stricter in regulating generic manufacturers. Both factors have contributed to drug shortages, which when combined with increased demand, led to price increases. We can also expect the prices of generic drugs to continue to go up because of more complex medicines, which are more expensive.
#3 Pharmaceutical apps in the consumer space are becoming more popular.
I’m for apps that give people more information than what they would find in an insert to a medication package. Apps can be very helpful for consumers doing comparison shopping of prescription-drug prices and getting the latest information and research pertaining to diseases. This consumer-level type of apps could lead to more DIY health care. So the purveyors should be responsible in providing science-based information and be accountable for that information.
Today pharmaceutical mobile apps range from aggregating top cancer news to glucose monitoring and identifying high-risk heart patients. The FDA has clarified its oversight of apps for medical devices in separate guidances, but it hasn’t expressed its opinion on the use of pharma apps. Expect any FDA opinion or guidance on pharma apps to also impact the growth of usage.
#4 Drug development costs continue to rise.
The Tufts Center for the Study of Drug Development estimated the cost of drug development and approval at about $2.6 billion in 2014, up by more than three times from $802 million in 2001 (6).
Production costs are rising because companies have more hurdles to pass during the testing phase. The FDA has raised the bar in terms of safety, requiring a larger sample population. A good example of this is the anti-nausea drug Zofran (ondansetron), which can lead to an abnormal and potentially fatal heart rhythm among patients with underlying heart conditions and those who are predisposed to low levels of potassium and magnesium in the blood. The FDA put the drug under ongoing review and the manufacturer, GlaxoSmithKline, was asked to conduct a thorough study (7).
#5 U.S. initiative gives precision medicine a boost.
The movement toward development of precision medicine or personalized medicine got a boost from President Obama’s The Precision Medicine Initiative introduced in January 2015 with a $215 million budget (8). The project will help develop a new model for patient-driven research to provide clinicians with new tools and therapies.
Precision medicine refers to the customization of treatments for individual patients based on genetic and other information. I think precision medicine will help drug companies pick the right people and the right clinicians for specific clinical trials, which should lead to more effective trials and better outcomes.
This article is based on a white paper, “Top 5 Trends in the Pharmaceutical Industry in 2015.” If you’re interested in reading more about these trends, download the complimentary white paper below.
Lane Hirning is a pharmacologist with extensive IT experience in the pharmaceutical industry. He’s a product management director and also a technical product manager at MasterControl. He specializes in product development for the pharmaceutical, blood, and biologics industries, especially large-tier companies. He began his career as a research scientist at NPS Pharmaceuticals Inc. for seven years. He then went on to serve various roles as an IT executive for 12 years. He joined MasterControl in 2006.
(1) From a press release by the IMS Institute for Healthcare Informatics, Nov. 20, 2014, http://www.imshealth.com/portal/site/imshealth/menuitem.c76283e8bf81e98f53c753c71ad8c22a/?vgnextoid=8269f454d4ac9410VgnVCM10000076192ca2RCRD&vgnextchannel=5ec1e590cb4dc310VgnVCM100000a48d2ca2RCRD&vgnextfmt=default
(2) U.S. Center for Disease Control and Prevention website, http://www.cdc.gov/measles/cases-outbreaks.html
(3) “Retracted Autism Study an Elaborate Fraud, British Journal Finds,” by the CNN Wire Staff, Jan. 5, 2011, http://www.cnn.com/2011/HEALTH/01/05/autism.vaccines/
(4) From the WHO website (May, 11, 2015 report)
(5) “Why Are Generic Drug Prices Shooting Up?” by Trefis Team, Forbes.com, Feb. 27, 2015, http://www.forbes.com/sites/greatspeculations/2015/02/27/why-are-generic-drug-prices-shooting-up/
(6) Tufts Press Release, Nov. 18, 2014, http://csdd.tufts.edu/news/complete_story/pr_tufts_csdd_2014_cost_study
(7) From the FDA website, http://www.fda.gov/Safety/MedWatch/SafetyInformation/SafetyAlertsforHumanMedicalProducts/ucm272041.htm
(8) Fact sheet issued by the White House, Jan. 30, 2015,