If You Build It Will They Come
If You Build It Will They Come
Drug Development: If You Build It, Will They Come?
It’s no secret that developing drugs is expensive. The cost to bring a drug to market has more than doubled over the past 10 years. The Tufts Center for the Study of Drug Development (CSDD) estimates that the cost to develop a new pharmaceutical drug now exceeds $2.6 billion. This estimate includes an out-of-pocket cost of $1.4 billion and an opportunity cost of $1.2 billion in returns that investors forego on that money during the 10+ year a drug spends in development. In addition, another $312 million is spent on post-approval development, such as studies on new indications, formulations, and dosage. This makes the average total lifecycle cost of developing a new prescription drug $2.9 billion. The rise in these costs is due primarily to the increased complexity of clinical trials, a greater focus on chronic and degenerative diseases, and additional pressure from insurers for studies showing greater comparative drug effectiveness data.
Since developing drugs is such a high-risk, expensive, and long-term endeavor, there is little room for error. Furthermore, once a drug achieves regulatory approval it now must overcome the even riskier challenge of COMMERCIALIZATION. Falling short of investor expectations at launch is a nightmare. The graveyard of failed pharmaceutical product launches is crowded.
Even the most promising potential blockbusters can end up as bitter disappointments due to lackluster sales.
Sales can fall short of expectations due to many reasons, including payer pushback for price gouges. For example, K-V Pharmaceuticals’ new treatment for the prevention of premature births failed miserably when it began selling for $1,500 a dose (or $30,000 for a full course). This price was astronomical given that competitive products were already available for $10 to $20 a dose. Payers called the pricing “ludicrous and offensive.” K-V tried to salvage its product with a price cut – offering the drug at $595 or even less than $300 for Medicare. But, that wasn’t enough and K-V filed for bankruptcy.
Dendreon’s Provenge is another example of a disappointing launch, largely due to a matter of timing. (Of course, it’s eye-popping price of $93,000 didn’t help either). Provenge was anticipated to be a truly revolutionary new product. It was slated to be the first oncology drug to use the immune system to fight cancer. But, the drug’s launch was pushed out when it was forced to go back and conduct another late-stage study to prove that it worked as billed against prostate cancer. As a result, Provenge had to launch at the time when the entire market was about to undergo a dramatic shift with the approval of drugs that were preferred more by physicians and patients, such as Zytiga for late-stage use and Xtandi as an oral alternative.
Another example of a lackluster launch is Sanofi’s Multaq, designed to treat an irregular heartbeat. Regulators worried about evidence of side effects such as liver, cardiovascular, and lung disease. Doubts about its use as a front-line therapy began to develop and new restrictions on its use were recommended. Sales fell well below expectations and the drug acquired a troubled reputation that will be almost impossible to overcome.
These are just a few examples of bitter disappointments. We could continue to list more drugs that overcame development hurdles only to fall short with commercialization. WITH PRESSURE FROM HEALTHCARE PROVIDERS, PATIENTS, AND PAYERS, HOW DO YOU INCREASE YOUR DRUG’S CHANCES OF SUCCESS AT LAUNCH?
The key is to begin preparations for commercialization long before positive Phase 3 results and regulatory approval. Careful, proactive consideration must be given to crucial components that will ultimately impact market effectiveness such as:
- CLINICAL TRIAL DESIGNS: It is imperative to understand how your clinical trial design will be received by the medical community so that you can make necessary adjustments when possible and/or anticipate pushback at launch. Feedback on indication statements, endpoints, inclusion/exclusion criteria, dosages, and formulations are crucial.
- CLINICAL TRIAL OUTCOMES: Understanding how the results from your clinical trial will be received by healthcare providers, payers, and patients is central to grasping the true potential and demand for your drug at launch. Clinical trial outcomes for your drug could include information on its efficacy, side effects, tolerability, and response rates.
- COMPETITION: You must have a firm grasp on the competitive landscape. Not only do you need to know what drugs are on the market in your therapeutic area, but you also need to know what is in development as well.
- PRICING: This is not an easy task. Setting the correct price from the beginning is crucial to a successful drug launch. You only get one chance to show that your drug’s efficacy is worth the cost.
- DISEASE STATE DYNAMICS: Do you know the impact of the key players in your therapeutic area? Being fully mindful of the complex web of interactions, roles, and influences of thought leaders, specialists, physicians, nurses, patients, and caregivers is critical to entering the market with a bang.
- MARKETING STRATEGY: Having a clear and impactful go-to-market strategy for your drug is vital. Who are your target patients and physicians? How will you position your drug compared to the competition? What should your drug’s brand stand for? What should your drug’s brand campaign encompass? What messages should you communicate about your drug’s brand?
The right market research can help you make better marketing decisions early in the development of your drug so that the top prospects in your pipeline do not end up on the list of drug launch disasters. Whether it’s in-depth qualitative market research or comprehensive quantitative market research, feedback is crucial to your success. Spend a little money testing the market and your customer’s perceptions before it’s too late to make changes to your clinical plan and your marketing direction. Clinical and commercial success is rare – make sure that you are well positioned to do well in both areas. Don’t assume that if you build it, they will come.