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Gary Pattison

Group Managing Director

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Australia

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Expensive medicines and where it’s all going?

November 26, 2014

​The Australian Commonwealth spending on PBS drugs is currently around $9 billion AUD per annum.  It is forecast to be over $15 billion by 2023. We are seeing this upward trend due to the increasing incidence of chronic illnesses and conditions, the ageing population of Australia and the cost of new PBS medications. 

We know the hurdle to getting drugs listed on the PBS is higher than ever.  But when they get listed why are these medications so expensive for governments and should we listen to those criticising the Pharmaceutical Companies who discover, commercialise and manufacturer these medications?

Bruce Booth wrote an interesting article this week on Forbes.com where he looked at two very different calculations around the total cost of drug development.  All things equal, and dipping into a Tufts Centre for the Study for Drug Development, it looks like the cost is now upwards on $2 billion USD per drug.  That’s huge by anyones standards.  But consider the journey to approval. 

  • It takes an average of 10 years to bring a discovery to the approval stage. 
  • Only 8% of drug candidates make it from discovery to the market – and that’s regulatory approval not reimbursement.  Reimbursement is a further stumbling block.
  • The cost of failures is the largest part of the overall cost in this analysis.  

70% of the calculated cost of developing a new drug is that cost associated with the failures along the way. In a good article, Booth suggests we need to do things better, faster and cheaper.  

I tend to agree. New technologies and the digital world we live in should mean we can share new information, new clinical data and new treatments more rapidly. Most products in the drug-pipeline are now complex, highly technical and often target new pathways and therefor HCPs will need to have a more in-depth understanding of the mechanism of action and science behind these innovative compounds and classes of drugs.

The other question is how can the ‘Big Data’ we keep reading about help us develop the right products for the right patients in a healthcare landscape that is constantly changing and evolving?  A load of patient, HCP and product data itself won’t help us.  We need to be able to analyse and sift through it to find meaningful truths and insights that change the way we develop and commercialise new medicines.  This will make a difference.

 

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