Cancer drugs, which can bring in billions of dollars in a matter of years, may not be nearly as costly to develop as previously assumed, according to a new study in JAMA Internal Medicine.
Ten cancer drugs launched between 2006 and 2015 brought in $67 billion since launch, compared with total research and development spending of $7.2 billion, with a median development cost of $648 million, the researchers found.
The 10 drugs included Alexion Pharmaceuticals Inc.'s Soliris, a rare blood disorder treatment, and Incyte Corp.'s chemotherapy Jakafi, marketed outside the U.S. as Jakavi by Novartis AG after a licensing deal. Imbruvica, marketed by AbbVie Inc. and Johnson & Johnson, was also in the set, as was Xtandi, a prostate cancer drug now owned by Pfizer Inc. and Astellas Pharma Inc. but originally developed by Pfizer-acquired Medivation.
The median time for development was 7.3 years, and the products in the set have been on the market a median of four years.
The 10 companies that developed these drugs averaged $6.7 billion in revenue for this year, according to the researchers. Their billions in profits include potential sell-offs and acquisitions during that time.
Imbruvica and Xtandi have reaped the most revenue since approval, according to the research.
Imbruvica is one of the world's top-selling drugs, with $2.2 billion in 2016 sales and forecasts of $7.5 billion in 2022, according to a report from market intelligence firm Evaluate. The researchers calculated that it took $328.1 million to develop but has brought in more than $22 billion since its November 2013 approval.
Xtandi has made $21 billion since its August 2012 approval and took about $473 million to develop, according to the research. It is also projected to be one of the world's top-selling drugs by 2022, with an estimated $4.9 billion in sales that year. It is also the only drug on the list that did not gain orphan drug approval from the U.S. Food and Drug Administration.
Alexion's Soliris shows that even very rare conditions can reap big profits, the researchers said. The company has been able to pull in almost $13 billion in revenue on the drug since its 2007 launch, a more than 15-fold increase on its R&D expenditure. Evaluate expects Soliris to make $4.7 billion in 2022.
Only one of the 10 drugs, Exelixis Inc.'s Cabometyx, has not made back its R&D expenditure yet, with only about 17.5% of that cost returned in sales so far. The researchers said Exelixis had met some challenges with earlier indications for the product, but with a more recent kidney cancer focus it is ensured a profit down the line.
The analysis has implications for the current debate on drug pricing, said researchers Sham Mailankody, an oncologist at the Memorial Sloan Kettering Cancer Center, and Vinay Prasad, an oncologist at Oregon Health and Science University.
Previous estimates had ranged from $320 million to $2.7 billion to develop one new drug, according to research cited in the article. Drugmakers have historically been opaque about the costs to develop new therapies, leading to some criticism over pricing strategies.
The study has also earned its share of criticism from drugmakers and lobby groups that said it does not factor in failed trials and drug tests. However, Mailankody and Prasad said in the study that their analysis includes the cost of pursuing a portfolio of candidate compounds to yield one drug, or in other words, incorporates the cost of development failure.
FDA Commissioner Scott Gottlieb said Sept. 11 that his agency was taking new steps to ease drugmakers' clinical development burden and lower their costs, which he said, in turn, would reduce the prices Americans pay for their medicines.