Featured Research

from universities, journals, and other organizations

Authors dispute 'innovation crisis' among pharmaceutical companies

Date:
August 8, 2012
Source:
University of Medicine and Dentistry of New Jersey (UMDNJ)
Summary:
Researchers dispute widely held belief that pharma companies face a "patent cliff" and argue that a "hidden business model" provides a solid cushion of steady profits from patent-protected minor variations to existing drugs.

A newly published article in the British Medical Journal disputes the widely held belief that profits at large pharmaceutical companies will plummet as the companies face a "patent cliff" when their exclusive rights expire on several blockbuster drugs. Co-authors Donald Light, PhD, of the University of Medicine and Dentistry of New Jersey-School of Osteopathic Medicine, and Dr. Joel Lexchin of the University of York (Toronto) argue that a "hidden business model" provides major pharmaceutical companies with a solid cushion of steady profits from patent-protected minor variations to their existing drugs.

"Most research and development at large pharmaceutical companies is directed at developing clinically minor drugs rather than finding better drugs for unmet needs," said Light, who is also a Fellow at the Safra Center for Ethics at Harvard University. "Independent assessments indicate that 80 percent of increased costs paid by employers and insurers for pharmaceuticals is wasted on these 'new' drugs that can command higher prices under government patent protections even though they provide little or no benefit over existing medications."

The authors say claims of an "innovation crisis" in the pharmaceutical industry are a myth arising from media reports of a roughly decade-long decline in the discovery of new molecular entities (NMEs). They cite industry studies to support that conclusion. The Food and Drug Administration defines an NME as "an active ingredient that has never before been marketed in the United States in any form." According to the article by Light and Lexchin, the "crisis" simply represents a return from an unusual spike during the mid-1990s to the long term average of 15 to 25 NMEs per year.

"Companies are, of course, delighted when research breakthroughs occur, but don't depend on them," Light explained. "Instead they focus on promoting minor variations, spending 19 times as much on their marketing efforts as they do on basic research to discover new molecules."

The resultant sales of these "minor" drugs -- some of which become market blockbusters -- offset the ups and downs of drugs coming off patents, the authors note. They point to the example of Pfizer, which lost market exclusivity for Lipitor and other major sellers in 2011, but still maintained steady revenues and saw net income increase by 21 percent over the previous year.


Story Source:

The above story is based on materials provided by University of Medicine and Dentistry of New Jersey (UMDNJ). Note: Materials may be edited for content and length.


Journal Reference:

  1. D. W. Light, J. R. Lexchin. Pharmaceutical research and development: what do we get for all that money? BMJ, 2012; 345 (aug07 1): e4348 DOI: 10.1136/bmj.e4348

Cite This Page:

University of Medicine and Dentistry of New Jersey (UMDNJ). "Authors dispute 'innovation crisis' among pharmaceutical companies." ScienceDaily. ScienceDaily, 8 August 2012. <www.sciencedaily.com/releases/2012/08/120808132452.htm>.
University of Medicine and Dentistry of New Jersey (UMDNJ). (2012, August 8). Authors dispute 'innovation crisis' among pharmaceutical companies. ScienceDaily. Retrieved July 31, 2014 from www.sciencedaily.com/releases/2012/08/120808132452.htm
University of Medicine and Dentistry of New Jersey (UMDNJ). "Authors dispute 'innovation crisis' among pharmaceutical companies." ScienceDaily. www.sciencedaily.com/releases/2012/08/120808132452.htm (accessed July 31, 2014).

Share This




More Health & Medicine News

Thursday, July 31, 2014

Featured Research

from universities, journals, and other organizations


Featured Videos

from AP, Reuters, AFP, and other news services

Health Insurers' Profits Slide

Health Insurers' Profits Slide

Reuters - Business Video Online (July 30, 2014) Obamacare-related costs were said to be behind the profit plunge at Wellpoint and Humana, but Wellpoint sees the new exchanges boosting its earnings for the full year. Fred Katayama reports. Video provided by Reuters
Powered by NewsLook.com
Concern Grows Over Worsening Ebola Crisis

Concern Grows Over Worsening Ebola Crisis

AFP (July 30, 2014) Pan-African airline ASKY has suspended all flights to and from the capitals of Liberia and Sierra Leone amid the worsening Ebola health crisis, which has so far caused 672 deaths in Guinea, Liberia and Sierra Leone. Duration: 00:43 Video provided by AFP
Powered by NewsLook.com
At Least 20 Chikungunya Cases in New Jersey

At Least 20 Chikungunya Cases in New Jersey

AP (July 30, 2014) At least 20 New Jersey residents have tested positive for chikungunya, a mosquito-borne virus that has spread through the Caribbean. (July 30) Video provided by AP
Powered by NewsLook.com
Xtreme Eating: Your Daily Caloric Intake All On One Plate

Xtreme Eating: Your Daily Caloric Intake All On One Plate

Newsy (July 30, 2014) The Center for Science in the Public Interest released its 2014 list of single meals with whopping calorie counts. Video provided by Newsy
Powered by NewsLook.com

Search ScienceDaily

Number of stories in archives: 140,361

Find with keyword(s):
Enter a keyword or phrase to search ScienceDaily for related topics and research stories.

Save/Print:
Share:

Breaking News:
from the past week

In Other News

... from NewsDaily.com

Science News

Health News

    Environment News

    Technology News



      Save/Print:
      Share:

      Free Subscriptions


      Get the latest science news with ScienceDaily's free email newsletters, updated daily and weekly. Or view hourly updated newsfeeds in your RSS reader:

      Get Social & Mobile


      Keep up to date with the latest news from ScienceDaily via social networks and mobile apps:

      Have Feedback?


      Tell us what you think of ScienceDaily -- we welcome both positive and negative comments. Have any problems using the site? Questions?
      Mobile: iPhone Android Web
      Follow: Facebook Twitter Google+
      Subscribe: RSS Feeds Email Newsletters
      Latest Headlines Health & Medicine Mind & Brain Space & Time Matter & Energy Computers & Math Plants & Animals Earth & Climate Fossils & Ruins