Friday, June 15, 2007

$1.2 Billion Gambles

This afternoon a few of us were talking about how Wisconsin really, really, really wants Madison to become a biotechnology center. It’s all about money and jobs for the bodies expected to fill up the expensive unsold downtown condos. The financial success of Silicon Valley simply captivates the urban planners.

The problem is that a good tech idea can be prototyped, tested and start generating earnings and creating jobs in a short period of time. An incubator biotech economy isn’t going to produce gangbuster employment growth for anyone outside of a couple PhD’s fortunate enough to land some venture capital millions, their clutch of graduate students and their contract janitorial service. Our civil servants are increasingly making it nearly impossible to bring anything new to the market.

Drug Regulation: Has the Worst Become the Norm? A sad litany of new examples suggests the FDA has lost its ability to reason about risk.

In spite of increasingly more powerful and precise technologies for drug discovery, purification and production during the past twenty years, development costs have skyrocketed. According to the latest data (2006) from the Tufts Center for the Study of Drug Development, on average it takes more than eight years and costs $1.2 billion to develop a biopharmaceutical. Of this amount, capitalized out-of-pocket preclinical costs are approximately $615 million, while clinical testing accounts for $626 million.

Why the huge costs and lengthy development times, which exceed even those for conventional drugs? Regulatory excesses, for the most part. Regulators are inflexible and inconsistent and keep raising the bar for approval, especially for innovative, high-tech products.

The legacy of the trial lawyers is the innovation process slowed and market economics distorted because the bureaucrats responsible for assuring that medicine for public sale actually works, are totally oriented towards covering their ass lest they sign off on anything with unforeseen risks. Tinkering with the process of life is inherently risky and the pursuit of risk free perfection is unobtainable and thus misguided. Golden egg, goose, slaughter house, oh well.