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New Drugs Declining, Research Costs Increasing, GAO Says

By Christopher Lee
Washington Post Staff Writer
Wednesday, December 20, 2006

Drug companies are becoming less innovative, with the number of new drugs being developed failing to keep pace with the substantial increases in spending on research and development, according to congressional investigators.

A report released yesterday by the Government Accountability Office, the investigative arm of Congress, found that annual research and development spending by the pharmaceutical industry increased 147 percent, to $60 billion, between 1993 and 2004. At the same time, the number of new drug applications to the Food and Drug Administration grew by only 38 percent, and it generally has declined since 1999.

What is more, about two-thirds of the new applications were for drugs that simply represent modifications to existing medicines, while 32 percent were for potentially innovative new drugs.

"Over the past several years it has become widely recognized throughout the industry that the productivity of its research and development expenditures has been declining," investigators wrote in the 52-page report. "That is, the number of new drugs being produced has generally declined while research and development expenditures have been steadily increasing."

There are several reasons for the decline, investigators said, including a growing difficulty in translating basic research into effective medicines; a shortage of physician-scientists who have both medical and research expertise; and a bigger emphasis on developing "blockbuster" drugs that bring in the most money, which has reduced the numbers and types of new drugs. The industry also increasingly has been trying to develop treatments for complex diseases such as cancer, resulting in higher failure rates.

Three Democratic lawmakers who requested the report -- Rep. Henry A. Waxman (Calif.) and Sens. Richard J. Durbin (Ill.) and Edward M. Kennedy (Mass.) -- said it shows that the drug development system should be reexamined.

"The findings . . . raise serious questions about the pharmaceutical industry claims that there is a connection between new drug development and the soaring price of drugs already on the market," Durbin said in a statement. "Most troubling is the notion that pharmaceutical industry profits are coming at the expense of consumers in the form of higher prices and fewer new drugs."

Ken Johnson, senior vice president of the Pharmaceutical Research and Manufacturers of America, said the report merely confirms that creating effective new drugs is harder and more expensive than ever. Even so, more than 300 new medicines have hit the market in the past decade and 2,000 others are in development, he said.

"There should be no doubt that recent biopharmaceutical advances mean new hope for patients suffering from life-threatening diseases so that they can live longer, healthier lives," he said in a statement.

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