A Billion Dollar Gamble: How Drugs are Developed

Pharmaceutical drugs undoubtedly save lives. Penicillin, given to a patient for the first time in 1941, was the first antibiotic developed and has saved millions of lives.

It’s no easy task, bringing a drug to market. It can take over a decade and more than a billion dollars. If an individual person wanted to fund development of a drug, only 800 people in the U.S. would be able to afford to do so—and statistically, they would likely go bankrupt in the process.

Drug discovery

The U.S. Food and Drug Administration (FDA) oversees and approves the entire drug development process. The first step is drug discovery—the screening of potential candidate treatments. Thousands, or sometimes millions, of different molecules are sifted for one specific target or disease. The select few molecules that make it through this process are chosen because they work solely on the target and for a reasonable period.

Pre-clinical trials

Pre-clinical trials, meaning before humans, are next. Using cells and small animals, the identified molecules are analyzed. Up to 90% of these drug candidates fail because they either don’t work at all or are toxic. If the candidate molecule shows promise, more research is performed.

Human clinical trials

Human clinical trials for drug development are separated into four phases.

• In Phase 1, the focus is safety and dosing. This is done in a relatively small group, usually between 20 and 100 people. Data is collected on how the drug is absorbed and broken down within the body. Phase 1 can take weeks to months and 70% of drugs move on to the next phase.
• Phase 2’s focus is on how effective the drug is, how it compares to an inactive placebo and the side effects that may occur. This is done in a larger group of people, up to several hundred. The volunteers for this phase often have a specific condition (e.g., diabetes or cardiovascular disease). Phase 2 can take years to complete. Only around one-third of the drugs in Phase 2 will make it to Phase 3.
• Phase 3 is the big leagues. These studies involve thousands of people, often across the globe. The focus in this stage is still efficacy but also monitoring of adverse reactions. This means the drug is still working well across a larger, more diverse population with minimal side effects. If it passes Phase 3, the drug almost always goes to market.
• Phase 4 is post-market surveillance. After the medication is on the market, new data about its safety and effectiveness might be published from ongoing research. In some cases, the FDA may recommend dosing and/or labeling of the drug change to reflect the most up-to-date information.

Market access

Patents for drugs last for 20 years. Once the patent expires, anybody can manufacture the drug, creating competitive pricing. Before then, the patent holder dictates the medication’s price—and makes up to $18 billion on their investment. This raises ethical questions about exploitative pricing and equitable access to drugs, with no easy answers. Substantial regulatory reform has been suggested, but progress remains elusive.  

With a high attrition of candidate treatments, heavy financial and time investment, bringing a drug to market is not for the faint of heart, but is very lucrative. Maintaining a balance between the profitability of drugs and ability of patients to financially access them is imperative to sustain innovation and ultimately alleviate human suffering.