Breakthrough drugs cost a lot to develop and improve lives

As politicians and pundits continue to decry the high cost of prescription drugs, one important fact is missing: Breakthrough biopharmaceuticals improve millions of peoples’ lives every year and reduce costs for the health care system as a whole.

Here in California, more than 2,800 biopharmaceutical companies are advancing nearly 1,200 investigational therapies. Every day I learn something new about a potential treatment and the hope it brings for patients and their families.

These are therapies that target and eradicate cancerous cells with extreme precision, boost the immune system and treat inflammatory disorders such as emphysema, lupus and Crohn’s disease.

The novel drugs that ultimately reach patients do so because of an enormous amount of risk taken on by investors and entrepreneurs – and the dedicated efforts of a life sciences workforce that exceeds 200,000 statewide. Each new product requires an average of 15 years of work from discovery to market; it’s not uncommon for scientists to devote an entire career to one potential cure.

As you could guess, 15 years of work is expensive. Resulting therapies come at a cost of more than $2.5 billion per approved product, according to the Tufts Center for the Study of Drug Development. The biopharmaceutical industry invests $48.5 billion in research a year, according to the Pharmaceutical Research and Manufacturers of America. Even so, most therapies don’t make it past the Food and Drug Administration, and more than 80 percent fail in clinical trials.

So, is it worth the cost? As a person like any other who may need innovative medical treatment in my lifetime, I would say so.

But even beyond self-interest, there’s a sound case to be made. The cost of drug development is more than justified when you consider the even higher costs of disease. Patients who take their medication don’t go to the emergency room and are hospitalized less often.

I’m surprised that the concept of value is hardly, if ever, part of the debate. Perhaps this is because drug costs are the most visible part of the health care dollar, mainly in out-of-pocket pharmacy fees and rising co-pays.

But there is more nuance to drug pricing than people realize. These charges do not originate solely from biopharmaceutical companies; they’re also determined by health insurance providers, HMOs and hospitals.

The reality is that prescription medicines account for about 10 percent of total health care spending – the same as in 1960, according to the Centers for Medicare and Medicaid Services. This share is expected to remain stable for at least the next decade. (During that same period, we will spend more than three times on hospital care than on prescription medicines.)

Some politicians argue that overpriced specialty drugs are the main driver of health care costs, but this is misleading. The vast majority – 86 percent – of prescriptions are for low-cost generic medicine, according to IMS Health. Less than 5 percent of patients, typically those with severe or rare health conditions, use higher-price “specialty medications.”

Last year, FDA’s Center for Drug Evaluation and Research approved 45 new drugs, many of them supported by advocacy groups for patients with diseases with few effective therapies or none. Among these drugs was Orkambi, a cystic fibrosis treatment 17 years in the making from San Diego’s Vertex Pharmaceuticals. It is the first therapy to correct mutated genes that are the root cause rather than just treat symptoms. For patients who otherwise would face repeated battles of lung infections and hospitalization, the treatment is beyond life changing.

Hundreds more transformational therapies are in development throughout our state. The biopharmaceutical industry encourages a more thoughtful consideration of the efforts involved in bringing life-changing drugs to market, where they improve patients’ lives in remarkable, priceless ways.

Joe Panetta is chairman of the California Biotechnology Foundation, an advocacy group for the life sciences industry. He can be contacted at