New Drugs at Lower Costs--Investing in Growth
Business + Economy

New Drugs at Lower Costs--Investing in Growth

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Overall Grade: B-

In 1996, a patient In a North Carolina hospital was given antibiotics for an infection that had been treated successfully for years.  But this time, the drugs didn’t work.  Soon, the new superbug, CRKP, was targeting weak and vulnerable patients in hospitals from New York to Los Angeles.  Fifteen years later, there’s still no drug that can kill the invader. 

Nor is there an effective treatment for a long list of other maladies ranging from Alzheimer’s disease to certain cancers. This has not been for lack of trying, or spending. Over the past decade, the pharmaceutical industry has tested thousands of meds and other treatments and investigated millions of genetic and other biological targets in humans and animals associated with disease. Total spending for public and private investment in life science R&D has approached $1 trillion since 2000, twice what was spent in the 1990s.

Yet the number of drugs approved by the Food and Drug Administration has dropped from 56 in 1996 to only 23 in 2010. During this period, the time to develop new drugs has increased to at least a decade and costs have soared in the billions for each successful drug.

This widening disparity has added urgency to the long-standing criticism that big companies and big budgets in the life sciences may actually discourage the sort of creativity and risk taking that is vital to developing a successful drug. . It is also reviving an idea that early stage drug R&D should “get small”.
This is the thinking behind a recent initiative from Francis Collins, Director of the National Institutes of Health, to emulate a program in the Department of Defense that has long been a symbol of “small is beautiful”.

Called the Defense Advanced Research Projects Agency, “DARPA”, was created in 1958 as an alternative to massive spending by the DOD. DARPA's mission is to test big and often off the wall ideas that might have practical applications by spending small amounts of money on program directors and researchers given almost total autonomy from the DOD’s usual R&D process.  The result is a half-century of projects that have explored everything from using extrasensory perception in espionage to a crazy project in the late 1960s that set out to link networks of computers to more efficiently communicate and relay information.

“DARPA is not peer-reviewed, and you don’t need a committee overseeing everything,” a DARPA program manager told me recently. “We home in on ideas that are risky, but can further the science and the practical applications of the science.”

DARPA’s mandate is to provide small amounts of funding per project – usually a few million dollars, and no more than $100 million over a maximum of four years – for projects that are chosen by program directors and given a limited time span to prove themselves. Successful programs are turned over to the private sector to develop into products.

DARPA’s budget this year? A measly $3.8 billion. Compare this with the $30 billion at the National Institutes of Health – or the $45 billion that the pharmaceutical industry spent last year on R&D.

But will this approach work for drug R&D?

To find out, Congress created  Cures Acceleration Network (CAN) as part of Obama's health reform bill. CAN's flexible funding program allows the NIH to try out bold new ideas in biomedical research by speeding up the application of discoveries and ideas in biomedicine – an initiative that includes “DARPA-style” projects.

Congress, however, did not appropriate funds to actually pay for it, an oversight that has been taken care of in the President’s 2012 budget, which allocated $100 million for CAN. The fate of this allocation, however, is uncertain as Republicans and Democrats square off over next year’s budget.

Drug industry lobbying groups such as the Biotechnology Industry Organization and patient advocacy groups such as Faster Cures supported the creation of CAN.  Investors such as Brook Byers of Kleiner Perkins Caufield and Byers also have supported the idea  of DARPA-like entities playing a larger role in biotechnology.

DARPA itself has run a robust biomedical program since the mid 1990s focused not on drugs but on creating better methods for treating battlefield injuries. It developed advanced prosthetics for wounded soldiers, and identified ways to fend off attacks by new bioterror pathogens. Virtually all of this work could have civilian applications as well. Some examples:

• “Blood pharming”, a project that would create pouches of cell lines that could be activated on the battlefield to grow into fresh red blood cells for transfusions.

• “The Predicting Health and Disease” program that is developing next generation sensors and diagnostic software to continuously monitor soldiers in the field (and others) for 100 or more health data points in a short time period for low cost.

• “Deep Bleeder Acoustic Coagulation”, a system for locating internal bleeding from wounds using Doppler-based detection technologies and then zapping the wounds with high intensity, focused ultrasound beams that heat up targeted tissue and staunch bleeding.

DARPA has backed some clunkers and failures, too. In the 1970s it experimented with “psychic spies” to match a Soviet program that was trying to conduct remote “mental espionage” and tried to build a mechanical elephant in the Vietnam era to transport troops and equipment through jungles. These and others bombed out, though the per project cost of failure was low.

Just as no one knew that the Internet would emerge from a DARPA-funded project in the late 1960s, it’s anyone’s guess if a DARPA approach for pharmaceuticals at the NIH – or within DARPA itself - would lead to the bio-equivalent of a Google search engine or an Apple I-Pad. But betting on this process has one huge advantage: it’s not a big investment should it fail.