A few different issues! I’ll preface my answer by saying that there is certainly some evidence that ‘good ideas are becoming harder to find’, meaning that the marginal effort required to discover a new drug is increasing. This isn’t an excuse for the pharmaceutical industry, but it is worth noting.
Structurally, large pharmaceutical companies take too few risks during drug development, meaning that the onus is on smaller companies and universities to develop novel products. Why so? Well in more recent times, large pharma companies have essentially offloaded a lot of their R&D in favor of simply acquiring smaller companies or the intellectual property rights to discoveries made at universities. This has been enabled by a variety of legislative changes, the most obvious one being the Bayh-Dole act in the United States (which allowed universities and institutions to acquire the rights for intellectual property generated from federal funding, which they could then sell on to companies). Of course, this seems like a logical strategy if it saves money, but from a broader drug discovery perspective, it slows the rate of progress.
A big issue with this set-up is smaller companies and universities don’t necessarily have the capital to try risk-taking, either. Universities are incentivized by a ‘publish or perish’ culture, where they are pressured to publish often, and aren’t funded to the extent that they can try out a wide range of potential drug candidates. Smaller biotech firms are also relatively cash-constrained, meaning that they might be able to focus on one (or maybe two) products simply because their cashflow is too small.
The result of this is that larger pharmaceutical companies have more liquidity and cashflow than smaller firms but aren’t willing to take risks (because they can simply acquire externally). On the flip side, smaller firms and academia are (relatively) more willing to try and develop novel products, but they are cash constrained. The overall consequence is stasis.
Other reasons could be over-regulation in certain settings (increasing the cost of getting drugs to market), broken drug markets (such as antibiotics, which I talk a lot more about in the book), and that the lowest hanging fruits have been picked (as mentioned at the start).
Some potential solutions? There are currently different drug payment models that are being tested (such as subscription models for antibiotics that is designed to make antibiotic production more lucrative), there are examples of early-stage incentives (such as Operation Warp-Speed to incentivise vaccine production during COVID-19) that might be effective, and different financing options for companies (i.e., pooling large sums together and constructing a diverse research portfolio of 50 drugs in the R&D pipeline, where only one or two need to succeed to make a profit overall). Some of the other solutions I’ll leave to be read in the book!
What is the problem of missing novelty in drug development, and what can be done to fix it?
A few different issues! I’ll preface my answer by saying that there is certainly some evidence that ‘good ideas are becoming harder to find’, meaning that the marginal effort required to discover a new drug is increasing. This isn’t an excuse for the pharmaceutical industry, but it is worth noting.
Structurally, large pharmaceutical companies take too few risks during drug development, meaning that the onus is on smaller companies and universities to develop novel products. Why so? Well in more recent times, large pharma companies have essentially offloaded a lot of their R&D in favor of simply acquiring smaller companies or the intellectual property rights to discoveries made at universities. This has been enabled by a variety of legislative changes, the most obvious one being the Bayh-Dole act in the United States (which allowed universities and institutions to acquire the rights for intellectual property generated from federal funding, which they could then sell on to companies). Of course, this seems like a logical strategy if it saves money, but from a broader drug discovery perspective, it slows the rate of progress.
A big issue with this set-up is smaller companies and universities don’t necessarily have the capital to try risk-taking, either. Universities are incentivized by a ‘publish or perish’ culture, where they are pressured to publish often, and aren’t funded to the extent that they can try out a wide range of potential drug candidates. Smaller biotech firms are also relatively cash-constrained, meaning that they might be able to focus on one (or maybe two) products simply because their cashflow is too small.
The result of this is that larger pharmaceutical companies have more liquidity and cashflow than smaller firms but aren’t willing to take risks (because they can simply acquire externally). On the flip side, smaller firms and academia are (relatively) more willing to try and develop novel products, but they are cash constrained. The overall consequence is stasis.
Other reasons could be over-regulation in certain settings (increasing the cost of getting drugs to market), broken drug markets (such as antibiotics, which I talk a lot more about in the book), and that the lowest hanging fruits have been picked (as mentioned at the start).
Some potential solutions? There are currently different drug payment models that are being tested (such as subscription models for antibiotics that is designed to make antibiotic production more lucrative), there are examples of early-stage incentives (such as Operation Warp-Speed to incentivise vaccine production during COVID-19) that might be effective, and different financing options for companies (i.e., pooling large sums together and constructing a diverse research portfolio of 50 drugs in the R&D pipeline, where only one or two need to succeed to make a profit overall). Some of the other solutions I’ll leave to be read in the book!