This is really informative and interesting.
The Pharmaceutical Industry and the Future of Drug Development
1.1 Historical Background
1.2 What is a Pharmaceutical?
1.3 Environmental Impact
2 The Pharmaceutical Industries
3 Research, Discovery and Development
3.1 Pre-clinical Trials
3.2 Clinical Trials
3.3 Environmental Issues
4 Commercial Realities
4.1 Problems with Patents
4.2 Maintaining a Viable Business
4.3 Access to Medicines
5 The Pharmaceutical Industry in the Future
5.1 Commercial Pressures
5.2 Environmental Challenges
The pharmaceutical industry has a number of unusual characteristics, both in its structure and in the nature of its business operations, which are little known outside the industry but which materially affect the process of bringing new pharmaceuticals to the patient. The development of a new pharmaceutical is very time consuming, extremely costly and high risk, with very little chance of a successful outcome. The process of research and development is described, together with all its challenges, including environmental ones. The commercial realities and constraints of the business, together with its current problems, are discussed, followed by an exploration of some of the likely future commercial and technical developments in the business, including the development of a greener pharmacy.
The pharmaceutical industry has a number of unusual characteristics that make it very different from what people normally think of as industry. It is also an industry replete with contradictions; for example, despite the undisputed fact that for over a century the industry has made a major contribution to human wellbeing and the reduction of ill health and suffering, it is still regularly identified by the public in opinion surveys as one of the least trusted industries, often being compared unfavourably to the nuclear industry. It is undoubtedly one of the riskiest businesses in which to invest money, yet it is perceived by the general public to be excessively profitable. The major pharma companies rightly promote themselves as being research-based organisations, yet most people believe that they spend more on marketing than on research.1,2 Despite the acknowledged risks and costs associated with pharmaceutical development, many citizens still believe that pharmaceuticals should be being developed to meet all human needs and that when developed they should be given away to everyone on the basis of need.
This opening chapter aims to provide a basic understanding of how the industry works and attempts to provide an explanation for some of its contradictions. The objective is to provide a backdrop to the business so that the challenges of the issue of pharmaceuticals in the environment can be better understood.
Note that the words “medicine,” “pharmaceutical” and “drug” are often used interchangeably and the word “drug” can also mean both a medicine and an illegal substance, depending on the context. In this chapter the word “pharmaceutical” is arbitrarily assigned to the end-products of the pharmaceutical industry that are used by patients. The word “drug” is mainly used for potential pharmaceuticals whilst under development by the industry.
1.1 Historical Background
Human beings have been using “drugs” to treat illness and disease for more than 3000 years. A few dozen drugs of plant and animal origin were already recorded in China around 1100 BCE and by the end of the 16th century the Chinese were using at least 1900 different remedies.3 Today Traditional Chinese Medicine recognises more than 13[thin space (1/6-em)]000 drugs.
Outside China, the first known pharmacopeia, the five volumes of De Material Medica, were written in the first century CE by Dioscorides, a Greek botanist.4 Herbal practitioners of this early period have been identified in many indigenous populations across the globe, such as North and South America,5 India6 and Australia.7 In the later mediaeval period, herbalism flourished in both the Islamic8 and Christian parts of the world.9 This tradition continued up to the 17th century, encompassing the work of Paracelsus10 in Switzerland and Culpepper11 in England. Culpepper's work, The English Physician, published in 1652, was one of the first English language pharmacopeias.12
Until the 18th century the use of herbal medicines had been entirely based on empiricism: practitioners knew what worked but not why or how. However, in the late 18th century the foundations of pharmacology, the study of the actions of drugs and how they exert their effects, began to emerge. William Withering13 in the 1780s was one of the first people to study and isolate the active ingredient in a herbal remedy. He isolated digitalis from the foxglove, describing its extraction from various parts of the plant, its subsequent effects and the optimum way of using it to treat patients. The science of pharmacology developed slowly during the next century and Oswald Schmiedeberg (1838–1921) is now generally recognised as the founder of modern pharmacology.14 In 1872 he became professor of pharmacology at the University of Strassburg in Austria where he studied the pharmacology of chloroform and chloral hydrate and in 1878 published the classic text, Outline of Pharmacology.
Coincidentally, modern organic chemistry also began to emerge at around the same time as pharmacology. Before the 19th century, chemists had generally believed that compounds obtained from living organisms were endowed with a “vital force” that distinguished them from inorganic compounds. However, in 1828 Friedrich Wöhler produced the organic chemical urea, a constituent of urine, from the entirely inorganic compound, ammonium cyanate. Although Wöhler was always cautious about claiming that he had disproved the theory of vital force, this event has often been thought of as the starting point of organic chemistry.15 These two scientific developments in pharmacology and organic chemistry led, amongst other developments, to the foundation of the pharmaceutical industry in the last decade of the 19th century.
The modern pharmaceutical industry can trace its origin to two main sources: companies such as Merck, Eli Lilly and Roche that had previously supplied natural products such as morphine, quinine and strychnine, moved into large-scale production of drugs in the middle of the 19th century, whilst newly established dyestuff and chemical companies, such as Bayer, ICI, Pfizer & Sandoz, established research labs and discovered medical applications for their products. Nevertheless, growth was relatively modest and at the start of the 1930s most medicines were still sold without a prescription. Almost half of them were compounded locally by pharmacists and in many cases physicians themselves dispensed medicines directly to their patients.
However, a number of major advances were made in the early part of the 20th century. Salicylic acid, a natural constituent of willow bark, had been recorded by Hippocrates as having analgesic properties. In 1897, scientists at Bayer demonstrated that a chemically modified version of salicylic acid had much improved efficacy and the product, aspirin, is still in widespread use today.16 In the 1920s and 1930s both penicillin and insulin were identified and manufactured, albeit at a modest scale. The Second World War provided a major stimulus to the developing industry, with requirements for the large-scale manufacture of analgesics and antibiotics and increasing demands from governments to undertake research to identify treatments for a wide range of conditions. After the war, the implementation of state healthcare systems in Europe, such as the UK's National Health Service (NHS),17 created a much more stable market, both for the prescription of drugs and, much more importantly, their reimbursement. This produced a major incentive for further commercial investment in research, development and manufacture. This greater role for the state was paralleled on both sides of the Atlantic, with increasing government regulation of medicine production.
The post-war period from the 1950s to the 1990s saw major advances in drug development with the introduction of new antibiotics, new analgesics, such as acetaminophen and ibuprofen, and complete new classes of pharmaceuticals such as oral contraceptives, ßig;-blockers, ACE inhibitors, benzodiazepines and a wide range of novel anti-cancer medicines.
The thalidomide scandal of 196118 triggered a complete reassessment of state controls on the industry. New regulations now demanded proof of efficacy, purity and safety, with the latter leading to a massive increase in the requirements and costs of research and development, particularly in the clinical testing of new drugs.19 As the barriers to entry in drug production were raised, a great deal of consolidation occurred in the industry. Likewise, the processes of globalisation, which had begun before the war, increased. This resulted in new drug development being dominated by a small number of very large multi-national companies and the beginning of the era of the “blockbuster” drug.
In 1977, Tagamet, an ulcer medication, became the first ever blockbuster pharmaceutical, earning its manufacturers, GSK, more than US$ 1[thin space (1/6-em)]billion a year and its creators the Nobel Prize. This was followed by a succession of products, each seemingly more successful than its predecessors. Prozac, the first selective serotonin re-uptake inhibitor (SSRI) was launched by Eli Lilly in 1987 and omeprazole, the first proton pump inhibitor (PPI), was introduced by Astra in 1989. Atorvastatin, marketed as Lipitor in 1996, became the world's best-selling drug of all time, with more than US$ 125[thin space (1/6-em)]billion in sales over approximately 15 years.
This was probably the golden age for the industry, with research producing an apparently endless stream of increasingly successful and profitable products; since then, the industry has been beset by a series of major problems, many of which have yet to be solved.
1.2 What is a Pharmaceutical?
This may seem an odd question since we all surely know what a pharmaceutical is. However, there is no straightforward scientific answer to this apparently simple question. Pharmaceuticals are not a class of substances like phthalates or PCBs. They have no chemical, physical, structural or biological similarities. There is thus no scientific justification for treating pharmaceuticals collectively as a coherent set of chemical substances.
Pharmaceuticals are often thought of as being complex chemical structures but they can also be simple aromatic molecules like the anaesthetic, propofol (2,6-diisopropylphenol), simple aliphatic molecules like the vasodilator, nitroglycerine (1,2,3-trinitroxypropane), or more complex but still relatively low molecular weight molecules like the statin, atorvastatin (MW 558.6) ((3R, 5R)-7-[2-(4-fluorophenyl)-3-phenyl-4-(phenylcarbamoyl)-5-propan-2-ylpyrrol-1-yl]-3,5-dihydroxyheptanoic acid). Increasingly, new pharmaceuticals are likely to be very high molecular weight biopharmaceuticals such as insulin (MW 5800 Da).
In fact, the only common factor which unites pharmaceuticals is their use; substances that we identify as pharmaceuticals are simply those substances that we use as human (or animal) medicines. This means that, in principle, any substance might be identified, at some point, as a pharmaceutical.
Not surprisingly therefore, many pharmaceuticals are also used for non-pharmaceutical purposes. For example, the vasodilation properties of nitroglycerine were only discovered by William Murrell20 after its invention by Alfred Nobel as the active constituent of dynamite. Similarly, the discoverers of warfarin ((R,S)-4-hydroxy-3-(3-oxo-1-phenylbutyl)-2H-chromen-2-one) at the University of Wisconsin in 194821 would be amazed that at the beginning of the 21st century this rat poison is still the most frequently prescribed anticoagulant in the world. This is not just a historical oddity. The most recent example is dimethylfumarate, which has widely been used as a mould inhibitor. It is interesting to note that a year after the European Union applied the new REACH regulation to impose severe restrictions on its use as a mould inhibitor,22 dimethylfumarate under its trade name, Tecfidera, was granted a pharmaceutical marketing authorisation in 2013 for use against multiple sclerosis.23 In other words, the global inventory of chemical substances can be divided into two groups: pharmaceuticals and those substances for which no pharmaceutical use has yet been identified, e.g. before 2013 dimethylfumarate was not a pharmaceutical, however, after 2013 it was.
Many commentators seem to believe that pharmaceuticals should be subjected to different regulatory treatment because they are “designed to be biologically active”,24 with the implication that this criterion is sufficient to differentiate pharmaceuticals from other substances. However, this is incorrect, being derived from a misunderstanding about pharmaceutical development and it wrongly implies that pharmaceuticals are uniquely biologically active by design. It would be more appropriate to say that pharmaceuticals are selected from the many substances that produce a specific effect in animals, including humans, based on their overall safety.
The majority of pharmaceuticals are initially discovered using high-throughput screening techniques capable of screening >100[thin space (1/6-em)]000 compounds day−1, applied to chemical “libraries” containing several million compounds.25 The vast majority of chemicals are known to exhibit some biological activity, so the screening assay is designed to identify only those substances that exhibit the specific biological activity of interest. It is not unusual for this initial screening step to generate several hundred potential leads which then need to be refined down to 1 or 2 candidates for further investigation. All these initial potential leads exhibit the relevant biological activity but this may be accompanied by other less-welcome toxicological properties which must be ruthlessly screened out of the selected set during the refining period. Thus the final candidate(s) will have the desired biological activity, but few or no undesirable properties; the purpose of the refining process is to eliminate those compounds with worse toxicological profiles, many of which may already exist in the environment.
Thus, from an environmental risk assessment perspective, pharmaceuticals are indistinguishable from any other chemical. They are but one class of the myriad numbers of micro contaminants that emerged at the end of the 20th century due to major improvements in analytical science. However, from a risk-management point of view, pharmaceuticals as a group do need to be treated differently due to their major direct impact on human health and wellbeing.26 Pharmaceuticals do not pose any more risks to man and the environment than other chemicals, but the risk/benefit calculations may be very different.
Finally, it is worth mentioning the way in which pharmaceuticals are named, as this can be a source of confusion. Pharmaceuticals, as chemical substances, all have systematic IUPAC chemical names to describe their molecular structure. However, although useful to the synthetic chemist, these long and cumbersome names are poorly suited to either the description of experimental work or for use in a marketing context. For example, it is clearly much simpler to describe something as warfarin rather than use its systematic name (R,S)-4-hydroxy-3-(3-oxo-1-phenylbutyl)-2H-chromen-2-one. Consequently, during its life cycle the same drug will be described in several different ways. Initially, as it makes its way down the development pathway, the substance will be given a unique reference code, e.g. Sanofi has a series of codes such as SAR391786 and SAR438037 to identify substances in their R&D pipeline.27 This convention is primarily for simplicity, but it also has the advantage of hiding any structural information about the compound from competitors.
As the drug progresses through clinical trials it will acquire a generic name, which describes the active ingredient. Initially such names were often simple contractions of the systematic name, but in 1953 the World Health Organisation (WHO) created the international non-proprietary name (INN) system28 to bring some order into the nomenclature. Although there has been a major improvement in generic naming, there are, however, still instances where an active ingredient has acquired more than one generic name from different parts of the world. For example, N-(4-hydroxyphenyl)-ethanamide is known as acetaminophen in the USA and Japan but as paracetamol in the rest of the world. Today, the generic name of a drug will be created from descriptors that classify the drugs into different categories and also separate drugs within categories. The generic name is widely used in the scientific literature and the medical profession since it represents the specific active ingredient whereas the “common” name, by which the drug will usually be known to the public, is the company trade name.
A drug is usually given a trade name during the later stages of its clinical trials as the marketing strategy for the product begins to be developed. The trade name will be protected as a trademark, it relates only to the specific company product and will have been designed with marketing of the drug in mind. For example, Novartis market the ßig;-blocker, metoprolol, as Lopressor since it is effective at lowering blood pressure. Once a drug is out of patent the same active ingredient may acquire a large number of different trade names, which can cause additional confusion, e.g. acetaminophen (paracetamol) is marketed as both panadol and tylenol (and has >100 other trade names in different parts of the world).
1.3 Environmental Impact
Until the late 1990s the environmental impact of the pharmaceutical industry was universally considered to be insignificant. Any environmental impact was considered to arise solely from manufacturing facilities and, since these were relatively small in size with well-controlled emissions, environmental impacts were not considered to be a problem. It was appreciated that the pharmaceutical products themselves were biologically active, but in view of the small quantities being manufactured and the high cost of production, releases of the active product to the environment from manufacturing were expected to be very small.
However, the discovery of pharmaceutical residues in surface waters from 1994 onwards led to this view being revised. Although the presence of pharmaceutical residues in surface waters had been predicted by Richardson and Bowron in the mid-1980s,29 it was not for another decade until such residues began to be routinely measured following the identification in 1994 of clofibric acid in German rivers by Stan and his colleagues.30 Residues have now been found in ground waters, estuarine and coastal waters and rivers, and some compounds have also been detected in drinking water. Low concentrations of pharmaceuticals in surface waters are now thought to be ubiquitous, although they are rarely found >0.1 µg l−1 and are frequently <0.01 µg l−1.31 Concentrations in wastewaters are usually in the few µg l−1 range but in some cases much higher values have been reported.32–35
We now know that pharmaceuticals can enter the environment in three different ways: in effluents discharged from manufacturing sites, from the disposal of unused and life-expired medicines, and via excretion from patients undergoing treatment. Detailed quantification for any individual pharmaceutical is difficult, but there is general agreement that the latter source dominates the global environmental input, with effluent discharges and the disposal of unused medicines making relatively small contributions.36,37 Relatively high local concentrations can occur adjacent to discharges from industry, particularly in developing countries,32,35 and from hospitals.34
Most scientists, in academia, governments, regulatory bodies and industry, that have evaluated the published data have concluded that there appear to be no appreciable acute aquatic life effects due to pharmaceuticals in the environment.38 In other words, short-term immediate damage to the environment is very unlikely. However, work continues on evaluating potential chronic effects in order to refine these assessments. This emphatically does not mean that all pharmaceuticals are benign as far as their environmental impact is concerned. The devastating impact of diclofenac on the Asian vulture39 and the implication of EE2 in the feminisation of fish40 are clear examples that this is not the case. However, pharmaceuticals should be considered on a case-by-case basis according to their individual properties, not as a coherent group of substances.
One area of focused effort concerns certain hormones because they are potentially a class of compounds with observable effects at environmentally relevant concentrations. However, as research accumulates it is becoming clear that hormonally active compounds do not all have similar properties and this confirms the view that such medicines need to be considered on a case-by-case basis rather than as a single class. Scientific knowledge of the potential long-term effects of pharmaceuticals in the environment on plants and wildlife is still in the early stages of development and is an area of active research.
The other area of major concern is that of antibiotic resistance.41 Antibiotic resistance is a serious and growing phenomenon in contemporary medicine and has emerged as one of the pre-eminent public health concerns of the 21st century. An increasing number of pathogenic bacteria have developed resistance to commonly used antibiotics, e.g. MRSA (methicillin-resistant staphylococcus aureus) which has now produced an epidemic of community-acquired MRSA.42 There continues to be concern that the release of antibiotics into the environment might be contributing to the growth of antibiotic resistance. However, there is, at present, relatively little empirical evidence to support this hypothesis, 43,44 although this remains a very active area of research.45
2 The Pharmaceutical Industries
As far as most people are concerned, the Pharmaceutical Industry consists of a small number of very large multinational corporations with household names such as AstraZeneca, GlaxoSmithKline (GSK), Eli Lilly, Merck, Novartis, Roche and Pfizer. These companies are collectively known as Big Pharma, a phrase that is intended to be prejudicial.46 However, this is very misleading. If you ask a member of the public if they have heard of Teva or Mylan there is a high probability that they will have never heard of either of them, despite the fact that Teva is the 11th largest pharmaceutical company in the world47 and may very well be supplying the medicine that they are currently taking.
The pharmaceutical industry in some ways resembles an iceberg. These very well-known companies, which are loosely defined as research-based pharma companies, represent ca. 40% of the market in terms of finance;47 however, they correspond to only a small fraction of the industry as a whole, with >90% of pharmaceutical companies, known as generic companies, being largely invisible to the general public. In turn, these generic companies produce the vast majority of all pharmaceuticals sold. In 2013 84% of the 4000[thin space (1/6-em)]million prescriptions issued in the USA were filled by generics.48
This asymmetric situation is caused by the patents system: the large research pharmaceutical companies invest many billions of dollars searching for new drugs.49,50 The majority of the candidate drugs never make it to the market place because, during development, the drug is found not to work or to have serious side effects that mean it can never be used in patients. However, a small number of new pharmaceuticals do enter the market each year and the patent system ensures that for a limited period of time the innovating company retains exclusive rights to sell the pharmaceutical. When the patent expires anyone is free to manufacture and sell what is now termed a “generic pharmaceutical”. The majority of pharmaceuticals, i.e. all those that are out of patent, are therefore manufactured and sold by the generic pharmaceutical companies. Generic pharmaceutical companies never have an unsuccessful product, whereas the research pharmaceutical companies rarely have a successful one. This has a major effect on the profile of the business, the way in which companies are structured and the way in which they operate.
Generic pharmaceutical companies are low-cost, low-margin and low-risk businesses. The products that they choose to manufacture and sell have already been shown to be valuable and commercially successful in the market place. Generic companies do not need to incur any research and development costs, although some of the larger companies do undertake process-orientated R&D in order to introduce more efficient, and lower cost, manufacturing. Although manufacturing in the industry is highly regulated, product volumes are small and manufacturing costs are relatively low. Marketing costs are also very low since the products are already well established in the marketplace and the demand is well understood. In many ways, generic pharmaceutical companies are in commodity markets where competitive differentiation is based on cost of goods and profitability is determined by market share.
The research pharmaceutical companies operate under a completely different business model. It is these innovative companies that bring the new pharmaceuticals to the market. This is very expensive, time consuming, and involves extremely high risks. Research and development in the pharmaceutical industry is very expensive, but it is the development activity that dominates the costs, particularly in the clinical trials which follow the pre-clinical development.
Research into ill health and disease can sometimes identify targets where chemical intervention could generate positive outcomes. High-throughput screening and other techniques can then be used to identify possible substances that might be suitable candidate drugs. The most likely candidate(s) then move from research into development. This not only involves the major issues of determining whether the candidate drug works satisfactorily (efficacy) but also whether it causes any significant side effects (safety). It is also necessary to investigate whether the active substance can be delivered to the patient satisfactorily, i.e. can the substance be turned into a useable drug?
The success rate though this development phase is extremely low: <1% of candidate drugs eventually end up in the pharmacy. This rate is continuing to deteriorate as regulatory requirements increase and people, both inside and outside the industry, become increasingly risk averse.
3 Research, Discovery and Development
We saw in Section 1.2 that almost any substance has the potential to find use as a pharmaceutical, but how do we know which ones to use? In the days of the herbalist and apothecaries, knowledge was derived from simple empiricism, substances were used when they had been shown to work, and such valuable information was passed on in oral tradition until documentation became available. However, although at the beginning of the 21st century we have far more knowledge than the first century herbalists had, the process of identifying new drugs is, at least in principle, very similar. The following recent quote from a medicinal chemist† is apposite:51“In medicinal chemistry we’re still fundamentally an observational science. (That should have been obvious given how little math any of us need to know). We have broad theories, trends, rules of thumb – but none of it is enough to help us very much, and we’re constantly surprised by our data. That can be enjoyable, if you have the right personality type, but it sure isn’t restful, and a lot of the time it isn’t very profitable, either”.
The following section provides a simplified overview of the process involved in developing a new pharmaceutical. In view of the low success rate, the R&D departments of research pharmaceutical companies will not just be investigating one drug but, at any one time, will be looking at many different substances at varying points in the development cycle. A large company may have 100–200 substances going through its development pipeline at any one time.52
3.1 Pre-clinical Trials
Identifying a new drug starts with research into the particular illness or disease of interest. This can be being undertaken within the research laboratories of the pharmaceutical company but may also be being carried out in academia, government research organisations, small “boutique” pharmaceutical companies or any combination of these. Medical research is now so complex that large pharmaceutical companies currently undertake most of their research in combination with partners.
In those situations where the research identifies a specific receptor or target within the body which could deliver beneficial effects, the search can begin for a potential drug. The target can be a wide variety of things: a particular cell type, enzyme, gene, pathway or process. It is estimated that more than 500 targets are currently under investigation in the research pharmaceutical companies.
Once a target has been selected, the next step is to identify any substances that might have some sort of regulating effect on it. Advances in automated chemical synthesis techniques, such as combinatorial chemistry, have enabled chemical libraries to expand rapidly. Aurora Fine Chemicals,53 for example, has a compound library containing >18[thin space (1/6-em)]million substances and a compound library for a pharmaceutical company will now typically contain samples of 1–2[thin space (1/6-em)]million different substances.
The search for a likely candidate drug within these vast chemical libraries has been simplified in the 20th century by the introduction of high-throughput screening techniques (HTS) which use advances in robotics, automation, miniaturisation and data handling.54 In these techniques automated equipment can be used to apply simple biochemical assays to very large numbers of chemicals in a short period of time: throughput can range from 50[thin space (1/6-em)]000 to 100[thin space (1/6-em)]000 samples a day. Developments in ultra-high-throughput screening (UHTS) since 2010 now make assay rates of 1[thin space (1/6-em)]000[thin space (1/6-em)]000 samples a day possible. Screening usually takes place in several stages. Initially a simple assay is used to pre-screen a very large number of samples, potentially the complete library, although a more clearly defined sub-set is often used. Subsequently a more complex assay will be used to refine the initial group, which might contain several hundred compounds, down to a more manageable number, usually <10. HTS/UHTS techniques can also now be used to provide initial pharmacokinetic information on absorption, distribution, metabolism and excretion (ADME). Guiguemde and colleagues have provided a useful review of the application of these techniques in the search for candidate drugs to cure or alleviate malaria.55 The outcome of this activity is the identification of a small number of substances that might lead to a candidate drug and eventually to a useable pharmaceutical.
This “Lead Identification” is the second major stage of the R&D process, following “Target Selection”, and marks the transition from research into development. Although there is probably a further 10 years of development work needed before a drug could be submitted for marketing authorisation, it is at this point that the drug is likely to be patented. The R&D costs up to this point will have been relatively modest at a few million US$, but beyond this point costs escalate rapidly and the business needs to protect its investment.
The next step in the process, “Lead Optimisation”, endeavours to reduce the number of potential leads from ca. 10–15 down to 3–4 substances. At the same time, attempts will be made to modify the molecular structure in various ways in the hope of increasing the efficacy whilst simultaneously decreasing any potential side effects. This sounds simple but will usually take 2–3 years of detailed pre-clinical experimentation using in silico, in vitro and in vivo techniques. During this period, work will also have commenced on the design of the process chemistry that will initially be used to manufacture trial batches of the substances (the active ingredients) for use in the subsequent clinical trials and eventually for full-scale manufacture.
In parallel, work will begin on the potential “druggability”56 of these substances, i.e. can the active ingredient be converted into a form that could be taken by a patient such that the substance can interact with the target. This is by no means a straightforward task. The ideal pharmaceutical from the perspective of the patient is a tablet taken once a day. Any departure from this ideal has an adverse impact on adherence, i.e. the likelihood that the patent will actually adhere to the treatment regime. However, if, for example, you need the pharmaceutical to be absorbed in the intestine, you have to ensure that it is able to pass though the highly acidic conditions in the stomach without being degraded, which can be a challenging problem.57
At the end of all this activity it is possible that a candidate drug, and potentially a reserve candidate, will have emerged. The reserve candidate is usually the second best candidate to emerge at this point and is the one that can be taken forward rapidly to replace the lead candidate should any unexpected problems arise during the clinical trials.
3.2 Clinical Trials
At this point a decision is needed as to whether to take the candidate forward into clinical development, where the costs will again rapidly escalate still further. Although informed by advice from the scientific team, this is primarily a commercial decision. In parallel with the scientific activities, a considerable amount of additional work will have been undertaken to assess the commercial potential of the candidate. Have any negative indications appeared during the pre-clinical development? How good is the drug at meeting the medical criteria? Are there any significant remaining challenges in formulation or manufacturing? How secure is the intellectual property? What is the current competitive situation? What is known about future competition? How large is the target market? And crucially, what is the likely sale price, etc. etc.? Provided that these questions can be answered satisfactorily, the candidate then moves on to the first phase of clinical trials.
Clinical trials take place in four distinct phases, the first three before the drug is marketed and the fourth phase begins when the pharmaceutical is prescribed for the first time and continues for the lifetime of the product.
Clinical trials are intended to provide answers to two essential questions in the development of a new drug: (a) does the drug work? and (b) if it does, is it safe for the patent to take? However, in many cases, even at the large scale that some of these trials are undertaken, the answer to these questions may not be clear-cut. Many people assume that in a clinical trial all (or at least a majority) of the patients given the treatment will get better, but this is a rare occurrence. We know that not all patients react in the same way to a drug, although we rarely know precisely why. One example where we do know the reason is the breast cancer drug trastuzumab (marketed as herceptin),58 which only has beneficial effects in those patients with a specific gene; it is of no benefit to all the others. Fortunately, this fact is known and there is a diagnostic test to identify those patients who will benefit. Otherwise we would be in the situation that pertains for many pharmaceuticals that they only work in some patients. For this reason, amongst many others, the results of a clinical trial usually require advanced statistical techniques for their interpretation.
Clinical trials are also beset with a wide range of practical59 and ethical60 problems. Every trial must be approved by an ethics committee and all patients must give their prior informed consent to participate. In order to eliminate observer bias, in patients, administrators and doctors, all trials will be blinded (i.e. the patients receiving medication will be unaware of whether they are part of the trial group or the control group) and many trials are now double blind (i.e. neither patient, nurse nor physician will be aware of this information). All clinical trials undertaken for the purpose of drug registration must be subject to good clinical practice (GCP) guidelines.61
A candidate drug will take from six to ten years to complete the first three phases of clinical trials. The time taken is determined by the duration of the disease that is being treated and by the extended time that it can sometimes take to assemble sufficient patients for the trial.
Phase 1 trials are to confirm that the results derived from the in silico, in vitro and in vivo trials in experimental animals are replicated in human subjects. Small numbers (10–15) of healthy human volunteers are exposed to very low amounts of the candidate drug for short periods under carefully controlled and monitored conditions. Data from the trial are compared with data from the pre-clinical studies to ensure that the drug is working as anticipated. These studies are “first time in man” experiments and, despite the care and preparation taken, the unexpected can happen. One of the best-known examples is the recognition that sildenafil, a drug under development by Pfizer to treat hypertension, subsequently marketed as viagra, had a notable impact on male erectile dysfunction.62 However, in some rare cases the consequences can also be severely adverse.63
If all has gone according to plan in Phase 1, Phase 2 trials can begin, the primary purpose of which is to establish whether the drug works, i.e. is it effective against the target disease? In addition, further information on pharmacodynamics and safety is collected. These trials are larger (100–300) and now involve patients with the illness concerned.
In Phase 3 trials, the treatment is then given to much larger groups of patients (1000–3000) in order to confirm its effectiveness, monitor any side effects, compare it to commonly used treatments and collect information that will allow it to be used safely. Despite the vast amount of information that has been generated on the candidate drug before it enters its Phase 3 trials, many drugs fail at this point, with some analysts estimating the failure rate to be as high as 30%.
This is the first time that the drug will have been given to a large number of patients and only now will low-frequency side effects begin to appear. Even a serious, potentially life-threatening, side effect that appears in less than 1 in 100 people will not have been identified previously.64 In addition, the higher level of statistical power in the Phase 3 trial may also demonstrate that the drug has, in fact, little if any efficacy.65 In fact, frequently the drug doesn’t work or works much less effectively than originally predicted or only works on a sub-set of the population. This information is itself immensely valuable in furthering our knowledge and without this detailed empirical evidence pharmacology would revert to merely anecdotal observation which, in turn, would ensure that future developments in pharmacology would be delayed.
Failures of drug candidates at this late stage in the process are, of course, bad news for the business; by this point a very large amount of money, time and research effort will have been invested, all of which will have been to no avail. The impact on the morale of the research team should also not be forgotten; it is not unusual for a medicinal chemist, for example, to have spent his/her whole career in the industry and to have never worked on a successful product. As a consequence, the industry has devoted considerable efforts in the last few decades to address this problem of late-stage attrition.66 The result is that more and more promising drug candidates are terminated early in the process, at the first sign of any potential problem, which history tells us may have led to the unnecessary elimination of many potentially successful drugs. For example, neither aspirin nor penicillin would have made it to the market under today's industry drug-development regimes.
People are frequently surprised that drug development takes such a long time. Approximately 10 years is likely to elapse between the news media articles that “scientists have discovered a cure for X” and patients actually receiving the medication, even if the development is successful. The reason is that it actually takes this amount of time and the extensive clinical trial procedures involved to discover if the treatment will actually work. However, this raises ethical issues, particularly with life-threatening diseases where patients and their doctors are desperate to try any new treatment as soon as possible. This becomes a challenge when it seems clear from early trial data that the drug may have significant beneficial outcomes, but by the time a marketing authorisation is approved many potential patients will be dead. Consequently a number of regulatory programmes67 now exist to provide “expanded access” or “compassionate access” to patients with serious or life-threatening conditions who do not meet the enrolment criteria for the clinical trial in progress when it is clear that patients may benefit from the treatment, that the therapy can be given safely outside the clinical trial setting, that no other alternative therapy is available, and the drug developer agrees to provide access to the drug. These programmes are, however, carefully managed so that the body of clinical trial data itself is not compromised. However, there is increasing demand for wider and more rapid access to unproven therapies where the need is severe.68
A successful conclusion of the phase 3 trials enables the innovating company to assemble all the relevant data on the candidate drug for submission as an application for a marketing authorisation to the appropriate regulatory body, e.g. the Federal Drug Administration (FDA) in the United States and the European Medicines Agency (EMA) in the European Union. Assuming that the application is successful, the pharmaceutical, with its trade name, will be launched on the market and start to be prescribed to patients. It is at this point that phase 4 of the clinical trial process begins.
Phase 4 relates to the on-going safety surveillance and technical support of the pharmaceutical. The safety surveillance, usually known as pharmacovigilance, is designed to detect any rare or long-term adverse effects over a much larger patient population and longer time period than was possible during the phase 1–3 clinical trials. In some instances pharmacovigilance regimes will be required by the regulator as part of the marketing authorisation; in other cases they will be being undertaken by the innovating company for further research into new applications for the pharmaceutical. It is relatively unusual for serious harmful effects to be discovered during these phase 4 trials but in some cases the data may result in a pharmaceutical being no longer sold, or restricted to certain uses.69
The product will then continue to be sold at a high price until the innovator's patent expires, usually somewhere between 5 and 10 years after initial launch. Subsequently, generic product will begin to appear in the marketplace and the price will drop significantly.
3.3 Environmental Issues
The overwhelming majority of the R&D effort expended in the design of a new drug is concerned with its effects in humans. As we saw in Section 1.3, the environmental impact of the pharmaceutical industry in general and its products in particular were not considered to be significant until the end of the last century. However, work is now undertaken in the R&D process in two specific areas related to the environment. One is the move towards more sustainable manufacturing and the other towards improving understanding of any potential environmental impacts that might arise from the use of a new pharmaceutical.70
The manufacture of most pharmaceuticals is undertaken at a relatively small scale, i.e. 0.1 to 10 tonnes year−1 compared to commodity chemicals such as terephthalic acid which are produced in plants capable of making >500[thin space (1/6-em)]000 tonnes year−1. Unlike the majority of ‘bulk’ chemicals, most pharmaceuticals are very complex organic molecules that have to be constructed using multiple synthetic steps, often involving the isolation and purification of intermediate products. As a consequence, process efficiency has historically been very low71 and, despite the small volumes of the pharmaceutical produced, the waste-to-product ratio has been extremely high.
In recent years, driven by both cost and sustainability issues, the research pharmaceutical companies have become industry leaders in the introduction of green chemistry and technology techniques into their process design. The twelve principles of green chemistry were first formulated by Anastas and Warner in 1998.72 Since then they have been actively taken up by the pharmaceutical sector in the process design area and are now reaching further upstream, influencing medicinal chemists in research and development laboratories.
Work on process design will begin at some point during phase 1 trials. Until this point medicinal chemists will have been able to meet the demand for experimental material from laboratory-scale synthesis; however, the phase 2 and particularly phase 3 trials demand significant amounts of material, often at pilot-plant scale. Although speed is still a major criterion in process development research, increased attention is now given to ensuring that the process is efficient in energy, water, solvents and raw materials. It is also necessary to ensure that any residual waste produced is minimised and that it can be satisfactorily and efficiently treated.
Despite the growing concern about the presence of pharmaceutical residues in the environment, there are still but few regulatory requirements to assess the potential environmental impact of a new drug, apart from in the European Union.73 Other countries such as Canada and Japan have been considering legislation for several years but as yet the only substantive regulations are those in the EU. Nevertheless, the research pharmaceutical industry is aware of its producer responsibilities and most of the companies have been voluntarily undertaking environmental risk assessments of their new products for many years. In addition, some companies, e.g. AstraZeneca, have been going further, making their data public74 and introducing ecopharmacovigilance programmes, mirroring to some extent the pharmacovigilance activities undertaken for the human population.75
4 Commercial Realities
4.1 Problems with Patents
A successful pharmaceutical, once approved by medicines regulators such as the FDA in the United States and the EMA in the European Community, can then be sold. The innovating company will have already patented the drug and thus has exclusive rights to sell the product until the patent expires. However, although patents in developed countries are usually granted for 20 years, the window of sales exclusivity will be significantly less, in most cases no more than 10 years. This is because the innovating company needs to patent the drug well before its first launch in order to protect its intellectual property. During this short period, of ten years or less, the innovating company has to recoup all the R&D costs of both the drug(s) being sold and of all the other drugs that failed during development, together with the manufacturing and marketing costs. The instant that the patent expires, generic competition will lead to a dramatic reduction in price and major loss of market share.
Since patent life is one of the key determinants of the income that can be generated from a product it is not surprising that research companies try to extend patent life as much as possible.76 This “patent evergreening”48 can sometimes be done simply by patenting the manufacturing process or the drug formulation or, in some cases, the drug delivery system, all of which can be implemented much closer to the launch date. Generic companies, on the other hand, endeavour to have patents set aside or to find ingenious ways to get around the patents.
There has also been an increase in recent years in “pay for delay” agreements between patent holders and generic manufacturers. Table 1 shows an example of how these work. If the patent holder pays the generic company not to manufacture then both the patent holder and the generic company benefit, but the price remains higher after patent expiry than it would have done. However, the legality of these deals is under question.77
Table 1 Example of “pay for delay” mechanism.
Patent Status Cost Price Scrip Price Annual Profit/1000 Scrips
Patent Holder Generic Company
In patent $1 $10 $9000 $0
Expired $2 $1000 $1000
Patent holder pays generic company $2000/1000 prescriptions to delay manufacture and sale $7000 $2000
It is not only the inevitable loss of market share from generic companies that the innovating company must be concerned about. Once a candidate drug is patented, many years before product launch, the concept and principle on which the drug is based will become public knowledge. All research pharmaceutical companies are keenly aware that everyone else is keeping a close watch on their patents. Companies can be expected to begin investigating interesting patents for areas of research in which they already have major interests and it is, therefore, quite common for several drugs with the same or similar modes of action to be simultaneously under development in different companies, each one being carefully designed to avoid infringing existing patents. Indeed, one of these follow-on drugs might make it into the market first, which could have serious consequences for the original innovator's sales.
These drugs are often given the derogatory term “me-toos” and frequently dismissed as being unnecessary and wasteful products of competition. However, these drugs, which may only show incremental improvements on the original, are nonetheless important to patients. It is frequently found that a patient who cannot tolerate or fails to respond to one drug may benefit from one of the “me-toos”.78
This short and increasingly diminished patent life available after pharmaceutical launch has consequences throughout the business. This has been recognised by legislators and a number of mechanisms have been introduced to provide extensions to marketing exclusivity in order to promote the development of certain drugs, e.g. paediatric medicines with low commercial value. For example, under certain circumstances a manufacturer in the European Union can be granted a supplementary protection certificate,79 which grants continued sales exclusivity for a limited period, normally 5 years, after patent expiry.
The short useful patent life is the reason why research pharmaceutical companies spend such large amounts of money on marketing. When the patent expires and generic competition begins, marketing is largely unnecessary because by then everyone is well aware that the “new” pharmaceutical exists and understands its potential benefits for patients. However, at product launch, the patent holder does not have the time to wait for this information to slowly spread across the medical community. If the investment is to be recovered, the new pharmaceutical has to be used immediately by as many patients as possible. This requires intensive marketing efforts leading up to the launch of the pharmaceutical to ensure that all those who might benefit know of its existence.
It is often said that research pharmaceutical companies spend more on marketing than on R&D1 but this is largely a myth, arising from the way in which companies display their expenditure in their annual accounts. All companies clearly display their R&D expenditures because these often qualify for tax rebates. However, sales and marketing expenditure is usually incorporated into an expenditure category called “sales, general and administrative expenses” (SGA) in which the marketing budget is only a relatively small proportion. Nevertheless, industry critics persist in comparing R&D with SGA expenditure and coming to false conclusions. A more realistic estimate suggests that the pharma industry spends approximately twice as much on R&D as it does on marketing.80
The short useful patent life also results in other consequences with substantially greater risks. In the early days of the industry, drug development was a linear process; a pharmaceutical would be approved, manufacturing would begin, distribution would occur and patients treated. This was possible because the regulatory and testing procedures were simpler and shorter, thus leaving sufficient patent life, after product launch, to generate a satisfactory return on investment (ROI). Today, development timescales are much longer, with a corresponding reduction in the potential sales window. This is leading to much riskier parallel processing, with development and testing work, such as drug delivery system design, running in parallel with the clinical development. Manufacturing process design may also now begin as soon as a candidate drug is approved for development; the manufacturing plant might be constructed during Phase 2 or 3 clinical trials and the product might be manufactured and distributed to pharmacies before the FDA or EMA has given final marketing approval. This would enable doctors to write prescriptions for the new pharmaceutical the day after marketing approval was given. However, should marketing approval not be granted, all this investment will, of course, be wasted. I have personal experience of a world-scale chemical plant for a pharmaceutical active ingredient being constructed, commissioned, mothballed and then demolished without ever making any saleable product when the candidate drug was refused its market authorisation.
Why would companies take such risks? The aim is to reduce the time taken to bring a candidate drug to the patient; speed to market is one of the key metrics in this industry and weeks are important. A “blockbuster” pharmaceutical is defined as one that generates US$ 1[thin space (1/6-em)]billion revenue a year,76 which translates to almost $20[thin space (1/6-em)]million loss in revenue to the business for every week the product launch is delayed.
The increased risk involved in manufacturing also leads to major structural changes in the business model. The pharmaceutical industry developed as a set of fully integrated and self-sufficient businesses. In-house research scientists produced candidate drugs, which were then developed into saleable products; these were in turn manufactured, marketed and distributed. However, the risks associated with blockbuster drugs have led to a considerable reshaping of the business, particularly in terms of manufacturing.
The telescoping of the development process leads to an increased risk of building manufacturing plant that you might never use. However, if your new drug is successfully launched and then turns out to be a blockbuster you may need to rapidly scale up your manufacture to meet the unexpected demand which may subsequently increase still further, requiring even more manufacturing capacity. However, when the patent expires sales will nose dive and all this manufacturing capacity will be surplus to requirements.
The initial response to this challenge was to attempt to design and build modular in-house multi-use manufacturing facilities that could be used to produce any active ingredient. However, a more economical solution has been to outsource manufacturing to one or more toll-manufacturers, a practice which is now commonplace in the research companies. The innovating company will use a pilot plant to manufacture trial batches of active ingredient for clinical trials and to test out process design options. The bulk active ingredient used for product sales will, however, be manufactured by contractor(s) who is(are) much more able to match production with demand.81 In addition to the fact that the research company does not have to invest capital in expensive manufacturing plant for products with relatively short life expectancies, outsource contracting has a number of additional advantages. The use of toll-manufacturing increases flexibility, making it easier to scale production up or down to meet fluctuating demands. It also provides business resilience by enabling production to be divided between different locations and, finally, modern toll-manufacturers are often more knowledgeable about efficient process chemistry and have much lower operating costs, especially in India and China.
Outsourcing benefits in manufacturing have encouraged industry to extend it into most other areas of the business. Services such as security, catering, facilities management and IT have commonly been outsourced, but this is now extending to what would traditionally have been seen as core business competencies such as pre-clinical R&D. For example, in 2012 AstraZeneca outsourced substantial amounts of safety assessment, development drug metabolism and pharmacokinetics to a contract research organisation.82
Despite the obvious benefits, outsourcing is itself not without risk and the US$ 1.4[thin space (1/6-em)]billion outsourcing agreement between AstraZeneca and IBM in 2007 for telecommunications and IT was widely seen as a failure and needed to be renegotiated five years later.83
4.2 Maintaining a Viable Business
The pharmaceutical industry consists of a set of businesses in which shareholders can be persuaded to invest money with the expectation of receiving a return on their investment. However, this industry is a high-risk business and thus the value proposition presented to potential investors is a little unusual, as is illustrated by the following case study:Company A has identified research that suggests that regulation of target B in human beings shows promise in producing a beneficial outcome for disease C. Company A has also established that, at least in vitro, its candidate drug X has the potential to regulate target B. It wishes to attract shareholders to invest between US$ 500[thin space (1/6-em)]million and US$ 800[thin space (1/6-em)]million over the next 12–15 years to develop the candidate into a marketable drug.
Investors should be aware that there is no certainty that drug X is actually able to regulate target B safely in vivo, or that any such regulation of the target will actually significantly influence the course of the disease concerned. The company estimates that the odds of success are <100[thin space (1/6-em)]:[thin space (1/6-em)]1 against, but that if successful the drug would generate substantial annual profits in the region of US$ 1–5[thin space (1/6-em)]billion for up to 10 years.
As this example demonstrates, since the investment required is very large, long term and has a very high risk of failure, the potential return on investment must be very high if the necessary funds are to be forthcoming. It is also worth repeating that, unlike many types of business investment where some saleable assets will be created by the investment, failure in this context is absolute; when a candidate drug fails, even in late stage development, there are zero assets available to offset the losses.
Although this business model has many drawbacks, it has been sufficiently attractive to enough investors for a very successful industry to be developed over the last century, with a stream of new therapies appearing in the marketplace. Alternative funding models continue to be proposed but to date none of these have been applied successfully.84,85
There are a number of people who believe that it is fundamentally unethical to make very large profits out of essential medicines and that either the state or non-profit organisations should undertake this task. However, the risk is simply too great for governments or non-profit companies to consider. For example, imagine the response that you would get from a finance minister presented with the value proposition in the case study above for the development of a single drug!
This then has a direct impact on research priorities. It is clear that despite their size, pharmaceutical companies do not have sufficient resources to work in all areas of medical need; however, because of development timescales and the need to spread their investment risk, they must work on several candidate drugs simultaneously. In choosing which areas to work in, a company must address the following question: assuming that our potential candidate drugs in this area can be successfully marketed, will they generate sufficient income during their patent life to cover their development costs, a portion of the development costs of previously unsuccessful candidates and, in addition, make an adequate return for the shareholders?
In other words, there needs to be a sufficiently large number of patients who require the drugs and also these patients must be able to pay for them, either directly or via insurance or taxation. It should, therefore, be no surprise that pharmaceutical companies heavily invest in research into chronic illnesses in the developed world, e.g. cancer, dementia, diabetes, hypertension, etc., whilst paying scant attention to diseases that only affect small numbers of patients.
4.3 Access to Medicines
This inevitably produces a substantial number of “orphan diseases”: life-threatening conditions that affect only a small fraction of the population, usually defined as between 1/1000 and 1/5000, which no commercial organisation can afford to investigate, simply because there are insufficient patients from which to recoup the investment cost. As the time and cost of development increases and the useful patent life shrinks, the number of commercially unviable areas also increases. Consequently, a number of separate pieces of legislation86,87 have been enacted which modify the rules on patents, taxation and subsidies to make R&D investment financially viable for these orphan diseases. Pharmaceutical companies are frequently accused of not investing in some areas because they will make too little profit. A recent example was the public outrage that the pharmaceutical industry had not already invested in a vaccine active against Ebola. However, the reality is that investing in areas such as this would inevitably lead to bankruptcy since in such areas the costs are certain to exceed the income, even if a successful product could be invented.
In recent years another problem has emerged. Antibiotics are used to treat infections in the majority of the population so would not normally be considered as “orphan drugs”. However, we have now reached the stage where new drug development in this area has dwindled. One reason is the inherent difficulty of the research challenges; identifying compounds that will rapidly kill infectious cells in short timescales whilst being harmless to every other cell is somewhat difficult; however, the principal reason is economic. Antibiotics are used by patients for very short periods and sales volumes are now insufficient to justify the necessary development costs. This is exacerbated by the fact that any new antibiotic would now be prescribed sparingly to ensure that antibiotic resistance was minimised. This problem was identified as early as 200388 but only recently have serious attempts been made to find a funding solution.89
The other requirement, in addition to having enough potential patients, is “ability to pay” or, more specifically, “ability to pay enough”. This is a major ethical dilemma for the pharmaceutical industry. It has two parts, one less visible than the other. The less obvious issue is that it is a determinant of which diseases receive attention. There may be a large number of potential patients, but if none of them could afford to buy a newly developed drug then such diseases are unlikely to be a research priority. The second issue concerns access to medicines that have already been developed. Both issues are now described as the access to medicines issue90 and every major pharma company has a public policy relating to it, e.g. Pfizer.91
The first issue is being addressed by most of the major research pharmaceutical companies who are now involved, often with philanthropic partners, in altruistic drug-development programmes for diseases that predominantly affect the developing world. For example, GSK has a major drug development programme on malaria, jointly with the Gates Foundation.92 None of these drug developments will be profitable; indeed, most will cost money, leading to an overall reduction in profits, but the major pharma companies accept that they have a social responsibility in this area. Recently some pharmaceutical companies have begun to share their entire libraries of chemical compounds, allowing other researchers to look through them for promising drug candidates which the companies themselves are unable to take into commercial development.93 This enables charitable foundations, government agencies and academics to pursue developments in these areas.
The second issue, “ability to pay”, also has two components. It is primarily a problem with pharmaceuticals that are still in patent, since the price of the subsequent generic pharmaceuticals, which is available after patent expiry, is much reduced. Traditionally this issue related solely to the developing world and came to a climax in 1997 during the AIDS epidemic, where millions of sufferers from the disease in Africa were unable to afford the new retroviral pharmaceuticals that had been developed.94 Arguments over the tension between international rights to patent protection and health emergencies were eventually resolved and led to the Doha Declaration on trade-related aspects of intellectual property rights (TRIPS Agreement) and public health.95 In fact, many patented pharmaceuticals are now supplied to developing countries at a fraction of the price that they are sold at in the developed world.
However, this exacerbates the problem of parallel imports. Differential prices for pharmaceuticals between developed and developing countries, especially where the price difference is substantial, provide opportunities for significant arbitrage: buying a product in the developing country at the low price, exporting it to the developed country and then selling it at an intermediate but highly profitable price. During the AIDS crisis in Africa, GSK became so concerned at this possibility that they set up some clinics where the pharmaceuticals could be administered to the patient without the risk of the material being exported. This type of legal but unethical arbitrage has recently been happening so frequently within the European Union that artificial pharmaceutical shortages have ensued, leading to manufacturers trying to impose a quota system.96
However, it is not only patients in developing countries that have difficulties arising from pharmaceutical pricing. In most countries pharmaceutical pricing is at least partially controlled by the state. Pressure on national health services and private health insurance companies is leading to increased downward pressure on prices and, in some cases, complete refusal to allow a new pharmaceutical to be prescribed.97 This market information then feeds back into the commercial decisions made by the industry as to what areas of research should be pursued, which in turn leads to more orphan diseases to the overall detriment of patients.
5 The Pharmaceutical Industry in the Future
5.1 Commercial Pressures
The research pharmaceutical part of the industry is currently going through a major crisis as a number of issues come to the surface simultaneously.
Since the first blockbuster pharmaceutical, cimetidine, was launched by GSK in the 1970s, both industry and regulators have been convinced that the “blockbuster model” for the industry was the long-term way forward: drug discovery and development was known to be high risk, expensive and time consuming, and that after patent expiry, generic manufacture would dramatically reduce the price of novel pharmaceuticals. However, new ‘blockbuster’ pharmaceuticals would continue to be invented at regular intervals and the profits made during their patent life would be more than sufficient to fund the necessary R&D for future products. Thus, the industry as a whole would continue to deliver innovative pharmaceuticals which would be available to all at low prices after a short patent life.
For the next few years it looked as if this analysis was going to be correct as a series of new “blockbuster” pharmaceuticals arrived regularly on the market from the R&D organisations of many of the major research pharmaceutical companies. Unfortunately, this didn’t last and it turned out that simply “turning the handle” of the R&D machinery did not guarantee that any new products at all would emerge, let alone a stream of novel “blockbusters”. In fact, R&D efficiency in the pharmaceutical industry has suffered a long-term decline. The number of new pharmaceuticals approved per billion US dollars spent on R&D has halved roughly every 9 years since 1950, falling around 80-fold in inflation-adjusted terms.98
The initial response to these problems by the industry was consolidation, with a number of large and sequential mergers and acquisitions followed by a number of very large ones. The 30 research pharmaceutical companies that existed in 1989 had by 2010 successively merged to become only 9 companies. Pfizer alone had absorbed American Cyanamid, American Home Products, Pharmacia, Upjohn, Warner-Lambert and Wyeth, as well as the pharmaceutical interests of Monsanto.
The rationale driving this activity was to take advantage of synergy between the partners to enable staff and cost reductions to be made whilst the innovation and R&D effort in the two drug pipelines could be maximised. This activity was very popular with the financial markets but, with hindsight, the benefits to shareholder value were difficult to realise.99 Much more importantly, substantially increasing the R&D effort did not result in any commensurate increase in new products. In 2008, J. P. Garnier, the chief executive of GSK, finally admitted this publically:100“The leaders of the major corporations including pharmaceuticals have incorrectly assumed that R&D was scalable, could be industrialized & could be driven by detailed metrics and automation. The grand result: a loss of personal accountability, transparency and the passion of scientists in discovery and development”
A year later, in 2009, Bernard Munos said in print101 what had been obvious to many in the industry for some time:“Success in the pharmaceutical industry depends on the random occurrence of a few “black swan” products”.
The fact that the “blockbuster” drug model doesn’t work has dramatic consequences for the future of the industry. Profits from successful pharmaceuticals are necessary to maintain the R&D effort, but unless new pharmaceuticals replace successful pharmaceuticals when their patent expires it becomes increasingly difficult to maintain the R&D. The scale of the problem can be seen in Table 2.102
Table 2 Loss of revenue due to patent expiry.
Company % Revenue loss in 2010–12 solely due to patent expiry
Sanofi - Aventis 34
Bristol Myers Squib 30
Eli Lilly 22
Faced with this “patent cliff”, the industry has adopted two different strategies: firstly, seeking to improve its record of innovation by acquisitions of biotechnology companies, e.g. the acquisition of Medimmune by AstraZeneca in 2007 for US$ 16[thin space (1/6-em)]billion103 and the acquisition of Human Genome Science by GSK in 2012 for $ 3.6[thin space (1/6-em)]billion,104 together with a host of other smaller “boutique” companies.
The second strategy has been to drastically reduce operating costs using a combination of direct cost savings from improved efficiency coupled with portfolio rationalisation, increased collaboration and extensive outsourcing. As a result, the number of jobs in the global research pharmaceutical sector fell by ca. 300[thin space (1/6-em)]000 from 2000 to 2010.105 Despite these actions, innovation rates have not yet improved.
5.2 Environmental Challenges
In recent years there have been many suggestions that, in the light of the discovery of residues of pharmaceuticals in water, the pharmaceutical industry should begin to produce “green” pharmaceuticals.106–108 This then raises the question of what do we mean by “green” and how green is the present generation of pharmaceuticals?
The most comprehensive data that currently exist come from the Swedish environmental classification system.109 This categorises pharmaceuticals into five classes based on their risk to the environment, which has been calculated from their intrinsic hazard data and predicted environmental exposure. Although work is still underway, it is already clear that the majority of pharmaceuticals (>97%) fall into the “insignificant” risk category. Another recent study, carried out under the European Union Framework 6 research programme, has produced a similar outcome.31 This reported that a large body of literature is now available on the ecotoxicity of pharmaceuticals and that analysis of the data, together with an increasing amount of monitoring and modelling data, indicates that the environmental risks of the majority of pharmaceuticals are low.
Although the environmental risk can be shown to be very low, residues of many pharmaceuticals can still be detected in the aquatic environment using modern analytical techniques. Consequently, many people, invoking the precautionary principle, continue to put pressure on the industry to develop “greener drugs”. The objective of “greener” drug design is to produce pharmaceuticals which leave lower residues in the environment.108
A number of environmental scientists continue to make the assumption that this means that all new pharmaceuticals should be biodegradable. However, this somewhat simplistic approach, even if it were possible to realise, would not be a panacea and is certainly not simple to accomplish given our current state of knowledge. There are a number of pharmaceuticals that are biodegradable,109 but this has happened by chance and none of our current pharmaceuticals has been designed with this in mind. Pharmaceuticals, like most products, do not need to be 100% persistent throughout their life-cycle, but they do need to be functionally persistent. In other words they have to be stable enough to remain unchanged during a realistic shelf-life and to be able to be transported, unchanged, though various pathways in the body to reach the site where their effect will be exerted. Since most pharmaceuticals are taken orally, this means being able to transit through the highly acidic stomach. Not only is stability needed for the treatment to be effective, but instability can result in side effects caused by the toxicity of breakdown products, particularly in the liver. The ideal pharmaceutical would therefore be a substance which only began to break down after it had been excreted by the patient.
However, producing pharmaceuticals that are more degradable in the environment will not necessarily eliminate environmental residues. The very low environmental residues that are currently being detected represent the equilibrium concentration reached between a constant input from wastewater treatment plants and the degradation rate in the environment. The data from the Swedish environmental classification scheme109 demonstrate that although very few existing pharmaceuticals are rapidly degraded in the environment, relatively few of them are highly persistent either, and most pharmaceuticals appear to degrade, albeit slowly.110 Increasing the degradation rate of new pharmaceuticals would undoubtedly reduce the current residue levels found in the environment but, even with existing analytical methodology, it is highly likely that residues at lower levels would still be detectable.
However, our objective, taking this precautionary approach, is not to produce degradable pharmaceuticals but to reduce residue levels in the environment as far as possible without compromising the health of patients. Increased degradability of pharmaceuticals is one way that this might be achieved but there are many other ways to achieve the same endpoint.
One of the drivers of research in the pharmaceutical industry is to improve the effectiveness of human pharmaceuticals. Consequently, research teams are always trying to make drugs work better in the patient and most of the improvements being continuously targeted in drug discovery and development teams will also produce a lower environmental footprint. Table 3 shows several of the pharmacological objectives that would deliver improved patient benefit, alongside the environmental improvements that would ensue if that objective were reached.70
Table 3 Comparison of criteria for drug design and environmental significance.
Drug Design Criteria Environmental Significance
100% Oral absorption Reduced emissions from patients to drains
Metabolised in patient to inert substances Releases only inert substances
Effective in all patients treated Produce lower overall drug use
Disease receptor specific No impact on healthy receptors
No effects other than therapeutic ones. No non-target effects
The first three of the criteria listed in the table would lead to lower residues of active substances entering the environment; in other words, reduction at source. The last two would lead to even lower potential impact of the residual active material on ecosystems.
Current developments are already leading to candidate drugs with a lower potential for environmental impact. For example, a better understanding of drug metabolism and pharmacokinetics can result in lower doses being administered to achieve the same therapeutic effect. Similarly, shorter duration of therapy, better targeting and improved drug delivery combined with increased specificity all lead directly to smaller emissions from the patient to the environment and thus lower environmental residues.
As we have seen above, the industry continues to struggle with the legacy problems of the “blockbuster” approach and is also suffering from a decline in the rate of invention. However, two technical revolutions are underway which may improve this situation and may also reduce the overall environmental impact of the industry.
The first of these is the advance of biopharmaceuticals.111 The vast majority of our existing pharmaceuticals consist of relatively small molecules produced by chemical synthesis. However, advances in our understanding of genomics and proteomics, coupled with our increasing technological capability to manufacture very large molecules, are leading to a rapidly growing interest in the use of biological as opposed to chemical-based therapies. The first biopharmaceutical, synthetic insulin, developed by Genentech and marketed by Eli Lilly, was approved for sale in 1982 and by 2013 there were 300 biological pharmaceuticals that had been approved by the US FDA with a further 5400 under development in the USA alone. In 2012, based on worldwide sales, 7 of the top 10 drugs were biopharmaceuticals112 and it is estimated that this area now accounts for more than 40% of all drugs in development.
The fastest growth is in the area of monoclonal antibodies, which are components of the human immune system and are considered by some to be the perfect human medicines. They have major therapeutic advantages. Their high potency means that patient doses can be small, which subsequently then requires only small-scale manufacture. They have exquisite specificity and can be targeted to human receptor sub-types responsible for pathology or disease; thus they have substantially less potential for side effects. These proteins are then rapidly metabolised by the human body to produce fragments with no mammalian biological activity, thus avoiding the possibility of producing metabolites with undesirable pharmacological activity. From an environmental perspective these substances appear to offer major advantages; most of these compounds produce little if any residues of the active substance, which is in any case much less likely to exert any adverse impact on the ecosystem, since it is specifically designed to interact only with a diseased human receptor. However, the full environmental relevance of these substances is not yet clear. Biopharmaceuticals are not all easily biodegraded, and modified natural compounds even less so. Structurally related compounds such as plasmids have already been detected in the environment and it is known that the protein structures known as prions are very environmentally stable.113
The second therapeutic revolution also stems from our improved understanding of genomics, although it is still in its infancy. This is the area of “personalised medicine”.114 It has been known for many years that most pharmaceuticals do not work successfully in all patients. It was suspected that this was due to the slightly different genetic make-up of individual patients, but lack of appropriate experimental techniques meant that this could not be further investigated. However, the recent rapid advances in the mapping of the human genome and subsequent development of the scientific disciplines of genomics, proteomics and metabolomics is leading us to a better understanding of the molecular signals of many diseases. The expectation is that molecular screens combined with clinical data will point to more precise treatment options for each patient sub-group. This should enable much more precise and effective prescribing to occur which will, in turn, mean less overall drug use, since every prescribed dose will be effective first time.
The research pharmaceutical industry remains beset with problems, for most of which there do not appear to be obvious solutions.
Although it has exclusive rights to the sale of a new drug during its patent life:
increasing regulation is leading to additional costs and longer development times with consequently reduced times to patent expiry;
increasing risk aversion by executive management teams is contributing to a slowdown in the appearance of novel pharmaceuticals;
reducing risk tolerance in patient populations and regulatory bodies is leading to a lower success rate for marketing authorisation approvals;
cost pressures within national health services are leading to progressive downward pressure on prices;
market penetration by generics is increasing rapidly; and
many people consider that the current research pharmaceutical business model is no longer sustainable, but no-one has yet come up with a better one.
However, because of the increasing domination of drug-development pipelines by biopharmaceuticals, we can be certain that the next generation of human pharmaceuticals will leave significantly smaller residues in the environment than those that result from the use of current medicines.
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