Cost is proving a major factor in preventing scientists from finding a cure to diabetes. With more than 27 million diabetics in the U.S. – the majority of them with Type 2 – and an estimated 57 million people with pre diabetics, why is it taking so long to find a cure? Christoph Westphal, a biotech entrepreneur, recently penned a guest column in the Boston Globe on the barriers to finding cures for many chronic illnesses, such as diabetes and Alzheimer’s.
While the biggest obstacle is the science behind actually finding a cure, cost is a major factor. Developing a new drug in the U.S. costs more than $1 billion and usually takes more than 10 years to gain U.S. Food and Drug Administration (FDA) if it is approved. Westphal says that less than 1% of drug leads ever come to market.
Wall Street investors are not nearly as interest in large pharmaceutical as they were a decade ago and this is taking its toll. In fact, the price-to-earnings ratio of large pharmaceutical firms is about a third of what it was 10 years ago. The price-to-earnings ratio, or P/E ratio, is a statistic that measures the price paid for a share of stock of a company relative to that company’s annual profits. A higher P/E means investors are willing to pay more for the company compared to its actual earnings. Pharmaceutical firms are merging, cutting research and development spending, and diversifying away from drug discovery. Other biotech firms are cutting staff or shutting down altogether.
Westphal argues that easing regulatory restrictions on the drug market could yield some significant developments toward better treatments and possible cures for diabetes, Alzheimer’s and other chronic illnesses. For example, the FDA typically asks drug companies to undertake several studies involving large groups of patients over extended periods to ensure the drug’s safety and effectiveness. This is a costly, lengthy and slow process. Easing the restrictions could help bring important new drugs to market more quickly, he says, pointing to the way regulators sped up the clinical trial timelines and approval process for AIDS treatments.
Westphal also says increasing public support for drug discovery, as well as outsourcing some of the costly initial steps in the drug development process to India and China, may aid in the development of important future drugs.