Few think of Athens, GA as a pharmaceutical development hub. But the town is home to no fewer than six pharmaceutical and biotechnology companies. One of these is the Abeome Corporation, founded in 2000. Abeome is a privately held biotechnology company that focuses on the development of therapeutic antibodies, one of the fastest-growing areas of pharmaceutical production. Though the company may be a “small fish” in the field of pharmaceuticals, they put a local face on a much larger controversy.
In recent years, the pharmaceutical industry has become something of a villain. Books and articles such as “Bad Pharma: How Drug Companies Mislead Doctors and Harm Patients” (Goldacre, 2013) tell of staggering profits at the expense of patients, inspiring disgust in many. And it is certainly true that high prices make beneficial medications out of reach for many patients.
“But what people don’t realize is that some drugs cost almost $2 billion in development alone,” says Abeome president Rick Shimkets. “And given that there is generally only a five to seven year period when companies may sell their products without competition from generics, they’re just trying to recoup their losses.”
Shimkets speaks to a struggle that is all the more acute for companies operating on a far smaller scale than industry giants such as Johnson & Johnson. Given the high costs of drug development and the fact that a company’s exclusive sales patent will typically expire about five years after a product hits the market, drug developers price new medications to bring maximum return before low-cost generics divide the market.
Additionally, not all products a company invests in will ever make it to market. When a new medication is finally approved for sale, the manufacturer attempts to recover not only their investments in that particular drug, but also investments in research that did not lead to the development of a saleable product.
“This is how the world works,” says University of Georgia pharmacy professor Gurvinder Rekhi . “But when the common man looks at the system, he just sees companies gouging him. He doesn’t see the ten other billion-dollar drugs that never made it on the market.”
The timeline of pharmaceutical development is complex, and many new medications do not survive the testing process. This process, designed to test both the safety and efficacy of new drugs, exists to protect consumers. But it is extremely lengthy and extremely costly.
Preclinincal research and development alone, in which a particular chemical or molecule is discovered to be potentially effective against a certain illness, can take as much as five years. Clinical research can last seven or more. But even reaching the milestone of clinical research is by no means a guarantee.
“Just because you get a product into Phase 3 [clinical trials with real patients] doesn’t mean you’ll ever get to sell it,” says Trevor Thompson, also of Abeome. And even those medications who make it this far face the hurdle of obtaining final approval by the Food and Drug Administration, a process which can take an additional two years of time and expense.
Of course, many have pointed out that pharmaceutical companies are doing far more than recovering losses. The BBC reports that Johnson & Johnson, one of the largest United States manufacturers, generated more than $13.8 billion in profit from a year’s revenue of $71.3 billion. Pfizer, another U.S. company, generated $22 billion in profit from a total of $51.6 billion in revenue.
“But who will do research without reward?” asks Rekhi. “If companies are not rewarded for what they put into these drugs, they will not continue to do research.” Are not all businesses motivated by profit? A brilliant chemist, no matter how great their desire to better humanity, also seeks to be rewarded for their labor.
The cost of medications creates an ethical issue fraught with tension on all sides. Pharmaceutical researches speak of their exasperation with being painted as villains when they are businesses that must recoup losses and generate profits like any other. Critics argue that the sheer necessity of medications for patients should introduce an ethical obligation not to raise prices overmuch.
“The way forward is efficiency,” says Shimkets. In the 1980s, most pharmaceutical plants could only produce between 5 and 5 milligrams per liter of product. Today’s plants produce between 5,000 and 20,000 mgs per liter, and that number is rising. With greater efficiency and lower production costs, drug manufacturers will not have to charge as much to recoup losses and generate a profit.
The legal arena can also be a source of balance. In 1983, the FDA ruled that those companies who do research on “orphan drugs” treating 200,000 or fewer patients per year receive a “fast track” through the testing process. The FDA also covers the cost of Phase 2 and 3 trials for these drugs, reducing the expense of production with the hope that savings will be passed on to the consumer.
This information brings a sense of nuance to a topic that I, like many people, formerly viewed in black and white: right, wrong. Good, bad. Villain, victim. Never before had I considered the true cost of pharmaceutical development when grumbling about the costs of my prescriptions. And yet….and yet. Are sky-high profits truly justified when people are forced to skip much-needed medications because of cost? If steps are being made in efficiency, when will consumers see the savings? Is there a clear answer? For me, the water has only grown murkier. But perhaps the water must grow murkier before it clears.
© 2015 Shelby Jarrett