Life After Eroom’s Law

Why do you think that cheaper development costs will ultimately lead to lower drug prices?

I think we would both agree that drugs are not priced based on cost. Even if R&D were 10X cheaper - all else equal - prices are not coming down.

So what is the mechanism you think will lead to lower prices given lower costs of R&D?

Another question: Maybe as a patient (or a doctor), I like the better than the beetles problem. I don't need a thousand drugs on the market to treat every indication. Especially ones that have not passed a high bar for efficacy. I need a few drugs, preferably outside of patent protection, with enough diversity in structure to avoid specific toxicity effects.

If lowering the efficacy standards doesn't get me treatment for new indications, why would I want it? It's not clear to me that solving better than the beetles gets me to new indications. Presumably if I'm in a regime where BTTB applies, I've got a drug for that.

If the cost of drug development were to drop by a factor of 100-1000, say from the $3B it costs today to the $3-30M range, that would likely unleash a massive wave of decentralization in the industry that would make it very hard to justify outrageously high drug prices for long.

However, short of a large drop of that magnitude, I agree that we'll probably continue to see Pharma companies charging as much as they can get away with and the political climate allows.

> I don't need a thousand drugs on the market to treat every indication. [...] If lowering the efficacy standards doesn't get me treatment for new indications, why would I want it?

It's true that the Better than the Beatles problem rewards consumers with cheaper drugs, but on the flipside, it robs them of the benefit of newer drugs.

As a result, all the technical capabilities that the Pharma industry gained into developing drugs that are less toxic or better targeted do not get translated into consumer benefit when the BTTB problem is in the way.

Moreover, once an area of drug development stops seeing new commercial success in decades, hysteresis sets in and can drive Pharma companies out of such areas, which has largely been the case with anti-infectives since the 1980s. (See Question 11 in the interview)

I just want to offer a few of my thoughts because you've been so generous with yours. So you know, I work in the industry. More on the biz side than the scientific. And I am intensely interested in this issue.

100-1000 times cheaper I don't think is achievable in the medium term, if ever. As long as we're running clinical trials I think costs will stay constrained to about a 5x decrease. A 100-1000x reduction, I think, implies a world where we can largely simulate the impact of drugs without resort to in vivo testing. A future I believe in, but one that has a lot big unknown technical obstacles to overcome - like entirely new fields of science and engineering. I'm thinking here on a 50-100 year horizon.

This would also entail a huge change for the regulatory environment, but I think we're so far in the future in this scenario that it's hard to predict what that will look like.

I think a 2x reduction is possible in the near-medium term. If we can change the probability of technical success for trials through better tox models - not testing - that creates an enormous amount of value. The stuff people are doing to design better molecules pales in comparison to doing this. I think the math and know-how exists to do it now - the challenges are more institutional - Who pays? Who provides data? Lot's of coordination problems between actors who are in economic knife fights with each other, though people are trying.

Data problems too. Pharma companies are terrible at databases. It's a mess.

Also, it's better to solve tox because it's not disease specific. The effort invested in building the model (or models) will be distributed over many development life-cycles and would remain valuable after a good drug for an indication is invented.

This is a huge win for the world because it makes diseases that are important but not economic easier to justify. The phrase 'important but not economic' churns my stomach, but there it is.

None of this will fix pricing. Not as long as the patent structure stays the same. If you can legally do it, people will do it. Doesn't matter what it costs. Coke is still charging you two bucks for something that costs them cents to produce, and they don't have a patent.

If you want a near term future with lower drug prices (as I do), I fear your route lies through congress. I think it can happen, but I'm an optimist.

Thanks again for your thoughts and your work. It's good to see other people pulling in the same direction.