Where does the high cost of some drugs come from, as in the case of the SMA drug Zolgensma, and why are pharmaceutical companies not interested in anti-aging remedies?
Hanna Kastsikava. Video screenshot: Osetinskaia / YouTube
This was explained in an interview with the YouTube project "Esto Osetinskaia" by Hanna Kastsikava, Head of Data Analysis at biotech company Monte Rosa Therapeutics and co-founder of the startup Asylia Diagnostics. She previously worked at the large pharmaceutical company Novartis, which owns Zolgensma, for example.
As Kastsikava explains, for pharmaceutical companies, the number of patients is primarily the size of the market. For example, melanoma, which affects about 200,000 people in the US and the same number in Europe, is considered a relatively small segment. At the same time, the market for non-small cell lung cancer, prostate cancer, or colon cancer covers millions of people, making them priorities for investment.
However, this is not the only factor influencing pharmaceutical companies' decisions to develop a particular drug:
"It's not just the number of patients, but also the willingness to pay for this disease, which means how truly serious the disease is, how much it affects the quality of life, how we can explain to insurance companies how much we extend a person's life, how this translates into money the economy loses, and so on."
According to Hanna, insurance companies in different countries have their own estimates for the cost of a person's life-year. In the UK, it is 20-30 thousand pounds (27-40 thousand dollars), while in the US it is 50-70 thousand dollars. This math also explains the astronomical price tag of the drug for spinal muscular atrophy (SMA) "Zolgensma" at $2 million. Since it is a one-time injection that cures a child and allows them to live a full life, the cost of the drug effectively sums up the value of all saved years.
How much does a new drug cost?
At the same time, as Kastsikava explains, the high cost of drugs is due to the fact that the pharmaceutical industry is one of the most knowledge-intensive in the world. To create a new drug, it is necessary to combine the efforts of a huge number of scientists from various specialties: chemists, biologists, pharmacologists, doctors, as well as experts in biomarkers and clinical development. This complex array of specialists works on a single product over a very long cycle, which includes many intermediate stages.
Hanna explains: when we talk about billions in expenses, we are not talking about the cost of producing a specific successful molecule. The true price includes the cost of all cumulative failures: dozens and hundreds of other molecules that were screened out at various stages and did not reach the market.
As a result, if only one out of a hundred potential drugs reaches the finish line, all the losses incurred by the company during unsuccessful developments are "loaded" onto this single successful pill.
Why are diseases without a billion-dollar market not interesting to pharma?
"When the potential market for a certain molecule that we want to use for a specific disease is calculated, pharma always aims for peak sales of at least a billion for that molecule. If it's less than a billion a year, then you don't want to bring that molecule to market, because the cost of development and the risks you bear won't be recouped," the expert states.
This model leads to a situation where a number of diseases with small markets remain unattractive for scientific research. Moreover, such an approach contradicts the idea of personalized medicine.
If scientists decide to focus not on all patients (e.g., with atherosclerosis), but only on 10% of those for whom a specific molecule will be most effective, they automatically reduce the potential market tenfold. If, after such segmentation, profits fall below a billion, development stops. It is simpler and more profitable for companies to produce universal drugs for everyone.
A particularly complex situation arises with rare diseases. If, for example, only 10,000 people worldwide suffer from a particular disease, the price of drugs for them becomes astronomical. This is how drugs costing $2 million appear: it is the only way for the manufacturer to recoup investments in science with a small number of buyers, Kastsikava explains.
Under these conditions, drug development for narrow patient groups often occurs thanks to philanthropists and patient communities.
Why don't insurance companies want to invest in longevity?
Similar logic creates a dead end for the topic of longevity. Scientists are ready to look for ways to slow down aging, but the business model does not allow for it.
The first fundamental problem lies in the insurance system itself. Insurance companies simply do not have so-called "reimbursement codes" for concepts such as "health" or "longevity." The insurance model is built on paying for the treatment of specific diagnoses.
The second significant factor is the duration and scale of research. To scientifically prove that a drug prolongs life, for example, by 5 or 10 years, trials need to be conducted on a huge sample of people over decades. This requires colossal expenses that cannot be accommodated within the existing pharmaceutical business model.
For these reasons, aging is not yet considered a separate type of disease that would be profitable to research from a commercial point of view. As a result, many companies that initially dreamed of focusing on longevity are forced to concentrate on chronic diseases. For such cases, it is easier to obtain insurance payments, find funding, and prove effectiveness.
Is it possible to conduct drug trials without human subjects?
According to Kastsikava, many startups in pharmacology have failed because they tried to operate on the model of IT companies, where a product can be created for relatively little money. In biotechnology, however, the need for capital constantly grows.
The process begins with preclinical development, where scientists select a specific "target" (protein) and look for a molecule capable of interacting with it. Testing proceeds from simple to complex: first, the molecule is tested on cell cultures, then on mice, dogs, and sometimes primates. When the body of knowledge becomes sufficient, it's time to move on to human trials.
At this stage, the company must apply to regulatory bodies (e.g., the European Medicines Agency EMA) with a special dossier application (IND filing). The expert emphasizes an important detail: at the initial stage, regulators are only interested in safety. They do not look at how effective the drugs will be; the main thing required from the developer is to prove the non-toxicity of the drug.
As Hanna states, it is currently impossible to completely transfer trials to a virtual space. Firstly, science lacks models capable of predicting the reaction of a living organism with absolute accuracy. Secondly, few healthy volunteers would agree to test on themselves a molecule that has only been tested on a computer and has not undergone tests on living beings.
The preclinical research stage, according to the expert's estimates, requires capital investments of up to $5 million. However, further stages involve different figures. For example, the first phase of clinical trials costs around $10 million, the second - $40-50 million, and the final - $150-200 million.
As Kastsikava explains, the biotechnology market consists of so-called "inflection points." A company's valuation here grows not due to profits, which may not materialize for years, but through successfully completed trial stages. The key model for many startups is to license their molecule to a large pharmaceutical company, which becomes the exit point for investors.
Hanna notes that many investors who invested in biotech as if they were ordinary IT companies are left disappointed, as creating a promising drug requires significantly more time and colossal expenses than they expected.
Comments