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Cost plays a big role in today’s innovation cycle
 Richard L. Lindstrom |
The many unmet needs in ophthalmology continue to attract investment. The magnitude of the impact these unmet needs have on society is well exemplified in the field of retina.
The impact of age-related diseases such as diabetic retinopathy, retinal vascular occlusion and especially age-related macular degeneration on the quality of life of our seniors is readily apparent to every eye doctor. Meaningful advances in our ability to prevent or treat these diseases require significant expenditure on research and development, and we are fortunate in America to have funding for the National Eye Institute and hundreds of publicly and privately funded institutions that every day advance our knowledge of the basic science of disease pathogenesis and potential therapies.
This quest for new knowledge is a passion for many, and every new discovery is rewarding and intellectually stimulating. But to provide true benefit to those suffering from diseases with no or inadequate therapy, research and development must be translated into reality through the creation of market-available treatments. Some call this chasm between basic science and clinically useful medications or devices the translational gap. The process of innovation, through what is called the innovation cycle, is what translates research to reality.
Today, the translational gap is crossed in most cases through the magic of capitalism, which combines the skills and ambitions of entrepreneurs and scientists with the money required to navigate the pathway to resolve an unmet need. Each unmet need has a price tag attached, and today that price tag is growing exponentially. The price tag involves the cost of the final applied research and development to achieve a market-available drug or device, clinical trials and, in America, a significant regulatory barrier.
There is a limited amount of money available for investment in medicine as a whole and in ophthalmology in particular. If each new device in ophthalmology costs $25 million to make its way to market, every $100 million of capital invested can generate four new devices that might potentially resolve four unmet needs. If each new device in ophthalmology costs $100 million to get to market, then $100 million can potentially resolve only one unmet need. For me, this argues for a less expensive innovation cycle in which more unmet needs can be resolved for every dollar invested.
Disease, including blindness, is expensive to society, and innovation is one of our best hopes to reduce the growth of health care costs. Today, in America, the costs to gain approval for a medical device are approaching $100 million and for a new drug $1 billion or more. Where can we save money? The costs of management, quality scientists and infrastructure are significant, but these have been inflating for the past two decades at approximately 3% per year and in actuality represent only a small barrier. The cost that has exploded in America is the cost to navigate the regulatory process and achieve approval to market a product. This now represents nearly 70% of the cost to bring a new device or drug to market, and the costs continue to escalate as ever-increasing demands for post-marketing surveillance are required.
Of course, we do not want a large number of ineffective or even outright dangerous products on the market, but many believe that the growing costs of regulatory approval in the U.S. are on the verge of crippling the innovation cycle by killing off further investment. Investment capital has many different opportunities, and when one area becomes too expensive or too risky, money gravitates elsewhere. As a physician who every day sees patients who are praying every night for a better treatment for their disease, I am frightened by the prospect that new drugs and devices in America will cease to be developed because the time required, costs involved and risks of failure are too high to attract further investment.
I believe we are at a tipping point. The number of truly new drugs and devices coming to market each year is declining, and many companies are simply creating incremental improvements, for example, a small change in formulation or delivery of currently approved drugs, rather than investing in disruptive new drugs or technology that can truly change the way we treat our patients and enhance their potential for a quality life. It is important for we physicians to be aware of these issues and to advocate with our elected representatives for a thoughtful analysis of the process that allows new drugs and devices to come to market in Europe, for example, as compared with America. Costs and time incurred to bring a new drug or device to market today are much lower in Europe, and there is little to no evidence that patients in Sweden, Germany, France or Switzerland are less well-protected than their American counterparts. In addition, if current trends continue, we may well experience the demise of one of America’s greatest success stories: the medical device and biopharmaceutical industry. As we have learned from past experience, once outsourced to friendlier nations, an industry, and the jobs and positive balance of trade it generates, is nearly impossible to recover.