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Cancer pharmaceutical manufacturers are making profits that more than cover their research and development costs, calling into question the need for these products to carry a high price tag, limiting access.
“Based on a risk-adjusted R&D cost of $794 million [$219 million to $2.8 billion], by the end of 2017, $1 (risk-adjusted) invested for R&D of the 99 drugs had generated a median of $14.50 (range, $3.30-$55.10) in sales income for the originator companies” wrote Kiu Tay-Teo, PhD, of the World Health Organization, Geneva, Switzerland, and colleagues. The report is in JAMA Network Open.
“Assuming the upper threshold R&D cost of [$2.8 billion], rituximab, trastuzumab, bevacizumab, pegfilgrastim, and imatinib have brought in for the originator companies, $33.20, $31.20, $29.50, $22.60, and $22.60, respectively, for every risk adjusted dollar that went into their R&D.”
The study authors looked at all cancer drugs approved by the Food and Drug Administration from 1989 to 2017 (156 total) and narrowed the analysis down to the 99 products that had sales data on more than half of the years since being approved.
The analysis shows that compared with the risk-adjusted R&D cost of $794 million (with a range of $219 million to $2.8 billion) per medicine, by the end of 2017, the median cumulative sales income was $14.50 (range, $3.30-$55.10) per dollar invested for R&D. “Median time to fully recover the maximum possible risk-adjusted cost of R&D [$2.8 billion] was 5 years (range, 2-10 years; n = 56),” the authors stated.
“By the end of 2017, the cumulative sales of 73 cancer drugs (73.7%) included in the analysis had fully recovered the median R&D costs of $794 million,” Dr. Tay-Teo and colleagues reported.
The authors argue that such high prices and high profits, while far exceeding even the upper bound of R&D costs, could also be hindering access to drugs.
“The high incomes and supernormal returns would be less worrying if patients were able to access cancer drugs at affordable prices,” Dr. Tay-Teo and colleagues stated. “However, the existing evidence suggests otherwise: Access to cancer drugs globally remains low and the number of cancer drugs with annual costs at least in the tens of thousands is increasing fast. The resulting expenditure effects have compelled insurance schemes to exclude patients from coverage, restrict access, or impose high out-of-pocket costs.”
They suggest that for these reasons, the high price tags on cancer drugs is reducing patient access worldwide.
The analysis was limited to the information on sales and R&D costs that was made public by manufacturers in annual reports and did not estimate cumulative profits due to lack of information on year-over-year variations on production costs of cancer drugs.
SOURCE: Kiu Tay-Teo, PhD, et al. JAMA Netw Open. doi: 10.1001/jamanetworkopen.2018.6875.
Cancer pharmaceutical manufacturers are making profits that more than cover their research and development costs, calling into question the need for these products to carry a high price tag, limiting access.
“Based on a risk-adjusted R&D cost of $794 million [$219 million to $2.8 billion], by the end of 2017, $1 (risk-adjusted) invested for R&D of the 99 drugs had generated a median of $14.50 (range, $3.30-$55.10) in sales income for the originator companies” wrote Kiu Tay-Teo, PhD, of the World Health Organization, Geneva, Switzerland, and colleagues. The report is in JAMA Network Open.
“Assuming the upper threshold R&D cost of [$2.8 billion], rituximab, trastuzumab, bevacizumab, pegfilgrastim, and imatinib have brought in for the originator companies, $33.20, $31.20, $29.50, $22.60, and $22.60, respectively, for every risk adjusted dollar that went into their R&D.”
The study authors looked at all cancer drugs approved by the Food and Drug Administration from 1989 to 2017 (156 total) and narrowed the analysis down to the 99 products that had sales data on more than half of the years since being approved.
The analysis shows that compared with the risk-adjusted R&D cost of $794 million (with a range of $219 million to $2.8 billion) per medicine, by the end of 2017, the median cumulative sales income was $14.50 (range, $3.30-$55.10) per dollar invested for R&D. “Median time to fully recover the maximum possible risk-adjusted cost of R&D [$2.8 billion] was 5 years (range, 2-10 years; n = 56),” the authors stated.
“By the end of 2017, the cumulative sales of 73 cancer drugs (73.7%) included in the analysis had fully recovered the median R&D costs of $794 million,” Dr. Tay-Teo and colleagues reported.
The authors argue that such high prices and high profits, while far exceeding even the upper bound of R&D costs, could also be hindering access to drugs.
“The high incomes and supernormal returns would be less worrying if patients were able to access cancer drugs at affordable prices,” Dr. Tay-Teo and colleagues stated. “However, the existing evidence suggests otherwise: Access to cancer drugs globally remains low and the number of cancer drugs with annual costs at least in the tens of thousands is increasing fast. The resulting expenditure effects have compelled insurance schemes to exclude patients from coverage, restrict access, or impose high out-of-pocket costs.”
They suggest that for these reasons, the high price tags on cancer drugs is reducing patient access worldwide.
The analysis was limited to the information on sales and R&D costs that was made public by manufacturers in annual reports and did not estimate cumulative profits due to lack of information on year-over-year variations on production costs of cancer drugs.
SOURCE: Kiu Tay-Teo, PhD, et al. JAMA Netw Open. doi: 10.1001/jamanetworkopen.2018.6875.
Cancer pharmaceutical manufacturers are making profits that more than cover their research and development costs, calling into question the need for these products to carry a high price tag, limiting access.
“Based on a risk-adjusted R&D cost of $794 million [$219 million to $2.8 billion], by the end of 2017, $1 (risk-adjusted) invested for R&D of the 99 drugs had generated a median of $14.50 (range, $3.30-$55.10) in sales income for the originator companies” wrote Kiu Tay-Teo, PhD, of the World Health Organization, Geneva, Switzerland, and colleagues. The report is in JAMA Network Open.
“Assuming the upper threshold R&D cost of [$2.8 billion], rituximab, trastuzumab, bevacizumab, pegfilgrastim, and imatinib have brought in for the originator companies, $33.20, $31.20, $29.50, $22.60, and $22.60, respectively, for every risk adjusted dollar that went into their R&D.”
The study authors looked at all cancer drugs approved by the Food and Drug Administration from 1989 to 2017 (156 total) and narrowed the analysis down to the 99 products that had sales data on more than half of the years since being approved.
The analysis shows that compared with the risk-adjusted R&D cost of $794 million (with a range of $219 million to $2.8 billion) per medicine, by the end of 2017, the median cumulative sales income was $14.50 (range, $3.30-$55.10) per dollar invested for R&D. “Median time to fully recover the maximum possible risk-adjusted cost of R&D [$2.8 billion] was 5 years (range, 2-10 years; n = 56),” the authors stated.
“By the end of 2017, the cumulative sales of 73 cancer drugs (73.7%) included in the analysis had fully recovered the median R&D costs of $794 million,” Dr. Tay-Teo and colleagues reported.
The authors argue that such high prices and high profits, while far exceeding even the upper bound of R&D costs, could also be hindering access to drugs.
“The high incomes and supernormal returns would be less worrying if patients were able to access cancer drugs at affordable prices,” Dr. Tay-Teo and colleagues stated. “However, the existing evidence suggests otherwise: Access to cancer drugs globally remains low and the number of cancer drugs with annual costs at least in the tens of thousands is increasing fast. The resulting expenditure effects have compelled insurance schemes to exclude patients from coverage, restrict access, or impose high out-of-pocket costs.”
They suggest that for these reasons, the high price tags on cancer drugs is reducing patient access worldwide.
The analysis was limited to the information on sales and R&D costs that was made public by manufacturers in annual reports and did not estimate cumulative profits due to lack of information on year-over-year variations on production costs of cancer drugs.
SOURCE: Kiu Tay-Teo, PhD, et al. JAMA Netw Open. doi: 10.1001/jamanetworkopen.2018.6875.
FROM JAMA NETWORK OPEN
Key clinical point: Profits from cancer drugs far exceed R&D costs.
Major finding: $1 of R&D investment generated a median $14.50 in sales income for originator companies.
Study details: Researchers did an analysis of 99 cancer drugs approved by the FDA between 1989 and 2017 that had sales data for more than half of the years the drugs were approved.
Disclosures: The researchers reported no conflicts of interest.
Source: Kiu Tay-Teo, PhD, et al. JAMA Netw Open. 2019 Jan 4. doi: 10.1001/jamanetworkopen.2018.6875.