2013: Fewer new drugs, and you will pay dearly for them

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Screen Shot 2013-11-15 at 2.20.17 PMAs of mid-November of this year the FDA had approved 27 new drugs. Seven more are expected to receive approval by the end of 2013. Assuming this is correct, the total will fall short of the 41 approvals in 2012. But the trend of what is being marketed and the pricing of the products continues.

Since the patent cliff struck the economic perfect storm during which virtually all of the biggest blockbuster drugs (e.g. Lipitor and Plavix) went off patent, mostly during 2010-2012 drug companies have done a 180 in research and marketing strategy. Even a quick look at the best selling new drugs of 2012 makes this apparent. In 2010, all of the top ten selling drugs were small molecules almost exclusively pills that are taken orally and absorbed from the gut. Almost all of these have lost patent protection, and can therefore be made and sold by generic companies.

But those who expected this to result in inexpensive drugs will be profoundly disappointed: although pills will cost less, new medicines cost much more.

ACSH s Dr. Josh Bloom explains, Since about 85 percent of pills many of them former blockbusters are now available as generics, the pharmaceutical industry changed its research and business plans. Almost all new drugs in development fall under three broad categories: 1) Biologics, injectable drugs (vaccines, proteins and antibodies), which are made from living organisms; 2) Orphan drugs for rare diseases and small patient populations; 3) New generation ( targeted therapy ) cancer drugs. Almost all of these are very expensive. And even new pills, such as long sought after cures for hepatitis C, are also quite pricey.

Although it is not possible to find all pricing information for all of the 2013 new drugs, many fall into the $50,000 to $100,000 range per year, and some will be more.

Dr. Bloom continues, Drug companies are clearly looking to sell fewer drugs, but at a much higher price. Whether this is sustainable or not remains to be seen and the effect this policy will have on health outcomes for Americans overall also is an unanswered question. The questions of who pays for this has been very prominent, and will only get more so.