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Better Decisions Require More Affordable Treatments: Part 2

25 May, 16 | by BMJ Clinical Evidence

Carl Heneghanby Carl Heneghan

This blog was originally written for Evidence Live blogs and posted on

Part 1 of this series pointed out we need better research to support better decisions. Market forces, though, may not be helping decision-making as new treatments – particularly drugs – are increasingly unaffordable and out of the reach of payers…

Estimates suggest the development of a newly approved drug currently costs around $2.6billion.  A high proportion of current costs are driven by high failure rates, the spiralling costs of clinical trials and competition with existing treatments that already have substantial effectiveness. As an example, Astra Zeneca’s five year drug development pipeline analysis reported only 2% of their products made it to market in this period: 59% of drugs completed Phase 1; only 15% completed Phase II, where most failures occurred and most improvement is required, and 60% completed Phase III. Whilst R&D costs have increased almost exponentially output has flatlined over the same time period.

As a consequence, in some diseases cost are prohibitive: the cost of MS drugs in the US has risen from $10,000 in the 90s to current costs of $60,000 per year: seven times higher than the inflationary rise in prescription drug costs over the same period. A recent analysis of 32 Cancer drugs reported that 2014 drug costs were on average six times higher than those in 2000: costing on average $11,325 compared to the $1,869 per month in 2000.

Analysis of the National Institute for Health and Care Excellence cost-effectiveness thresholds suggests that the QALY for existing NHS treatments are about £13,000. But, the QALY price for new medicines is much higher. The ramifications are that new drugs are potentially displacing cheaper more effective treatments. That is unless you have an unlimited pot of money: for every healthy year gained by the UK drug cancer fund up to five QALYs might have to be displaced from existing NHS activities.

Furthermore, manufacturers of orphan drugs are inflating prices massively – no wonder approvals are at record numbers.  A recent analysis of 74 orphan drugs, by our group, demonstrated annual costs of these drugs varied from  £726 to £378,000.  For the 10 drugs where generic alternatives were available, they  were 1.4 to 82,000 times more expensive. Branded intravenous ibuprofen (Pedea), for closure of patent ductus arteriosus in preterm infants, was a staggering 82 000 times more expensive than its generic oral equivalent.

As a consequence of market forces, serious distortions in the production of evidence are also happening. As an example, diseases in high-income countries are eight times more likely to be researched in clinical trials than those in low and middle-income countries.

Current estimates suggest 85% of research spending currently goes to  waste. This figure may be too conservative. If you take into account only 2% of drugs in the pipeline make it through to the approval stage, and, let’s say a half of these, are no better than existing treatments; we are also poor at implementing effective treatments, another half lost; and when  treatments are implemented into practice about half of all patients don’t take their treatments as prescribed. We are therefore left with a miserly 0.25% of all research funding delivering effective treatments and 99.75% of research funding goes to waste. Hence, in terms of the 40,000 trials published each year, about a hundred might make a difference to patient care. No wonder it costs so much for the few treatments that do make a difference.

Improving the Quality of Research Evidence  – The campaign starts at EvidenceLive 2016 – we will be holding an open meeting to prioritize and explore the potential solutions to better evidence and better decisions.

The next in the series will look at better decisions require better informed patients.

Carl Heneghan is professor of EBM at the University of Oxford, director of CEBM, which co-organizes the EvidenceLive conference with the BMJHis research interests span chronic diseases, diagnostics, use of new technologies, improving the quality of research and  investigative work with the BMJ on drugs and devices that you might stumble across in the media.


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