The cancer drug-bubble: A bad diagnosis for shareholders and patients
The pharmaceutical industry is facing a rough couple of years: The "patent-expiration cliff" slated for 2012-2013, in which lucrative brand-name drugs will lose exclusivity and face cheaper generics. To offset the losses they're anticipating, many pharmaceuticals looking for profits have turned to oncology and creating cancer drugs.
This may sound like good news. But current incentives and market conditions may actually work to the detriment of pharmaceuticals and patients alike, as Andrew Pollack of The New York Times explains.
The Times's report focuses on Pfizer (PFE), which has made its fortune producing blockbuster drugs like Lipitor, Norvasc, and Viagra -- and mostly shunning cancer research. Today, with cancer the next promising revenue source, New York–based Pfizer employs 1,000 researchers developing cancer treatments, spends 20 percent of its $7-billion-plus research and development budget on cancer, and has roughly 22 cancer drugs in clinical trials.
But that's just Pfizer. Together, the Times notes, pharmaceutical "companies are pouring billions of dollars into developing cancer drugs." Recent scientific discoveries allowing for new targets in cancer research have generated about 860 drugs in clinical trials -- far more than for any other ailments, including heart disease and stroke. Some critics call the glut a "cancer bubble."
Still, with hundreds of new potentials and billions of dollars poured into cancer research, a cure should be imminent, right? Unfortunately, few drugs have actually made it to the market -- just one this year. And many of these drugs aren't revolutionary treatments, but medicines that extend life by days or months -- or, in some cases, that merely stabilize the patient, and at a very high cost.
One problem is that while pharmaceutical companies can choose from many targets to attack, they can't determine which would be most helpful. Even when one anomaly is targeted successfully, the cancer usually creates other anomalies, and variations and complications so vast that finding the right combination for a given patient's physiology is nearly impossible.
Then there's the issue of financial interest. Insurance companies and governments tend to shell out the sums needed for cancer care with relative ease, so drug companies find they can charge high prices for drugs that barely work, on the off-chance that a given drug might save a life.Are drug companies really trying to find a cure? Or are they simply satisfied with developing less dramatic treatments that fill their coffers? They may not have the incentive necessary to develop cures or vastly improved treatments, when they can make enough money creating stopgap drugs.
Of course, pharma executives deny such a cynical conclusion. They would gladly make better drugs that would offer bigger gains, they say. But this is likely tempered by the companies' and shareholders' needs.
The current "cancer bubble," with so many competitors, so many drugs, and not enough room in the market for all, begs the question of whether today's big investments in cancer drugs will ever bear fruit, or if some companies and their shareholders will get burned. Pfizer, for one, aims for $11 billion in cancer-drug sales by 2018, more than quadrupling last year's sales in the entire category.