The economics of follow-on drug research and development

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The development of so-called ‘me-too’ or ‘follow-on’ drugs by the pharmaceutical industry has been viewed by some as duplicative and wasteful, while others have argued that these drugs often provide needed therapeutic options and inject some price competition into the marketplace.

In a study by Mr Joseph A DiMasi and Ms Cherie Paquette of the Tufts Center for the Study of Drug Development at Boston, Massachusetts, USA, data on the trends in the speed with which competitive entry has occurred in the pharmaceutical marketplace and the competitive nature of the industry’s development of these drugs were examined.

They examined data on the entry rates of drugs in a large number of therapeutic classes over time, as well as detailed survey information on the relative timing of the development of drugs in the classes. Classes were defined according to chemical structure or pharmacologic mode of action and similarity of clinical use. They determined average times to initial and subsequent entry in drug classes by period and examined the timing of development milestones achieved by what have turned out to be follow-on drugs in relation to the development and approval of the first drug in a class to be approved.

The researchers found that the period of marketing exclusivity that the breakthrough drug in a new class enjoys has fallen dramatically over time (a median of 10.2 years in the 1970s to 1.2 years for the late 1990s). Approximately one-third of follow-on new drugs received a priority rating from the US FDA. The vast majority of the follow-on drugs for drug classes that were created in the last decade were in clinical development prior to the approval of the class breakthrough drug.

According to them, the data suggest that entry barriers have fallen over time for new drug introductions. The increased competitiveness of the pharmaceutical marketplace was likely fuelled by changes over time on both the supply and demand sides. The development histories of entrants to new drug classes suggest that development races better characterise new drug development than does a model of post hoc imitation. Thus, the usual distinctions drawn between breakthrough and ‘me-too’ drugs may not be very meaningful.

Source: Pharmacoeconomics. 2004;22(Suppl 2):1-14.

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