What they are saying: Study on cancer R&D costs is not an accurate representation of marketplace

This post has been updated as of 10/2/2017

A recent study published in JAMA Internal Medicine provides flawed and inaccurate estimates of the significant research and development (R&D) investments made by biopharmaceutical companies to develop new cancer treatments and cures for patients. The study focuses on a selective sample of companies that have been successful, ignores significant investments in early stage R&D and relies on inaccurate assumptions regarding industry revenues.

Setbacks are an inevitable part of the R&D process and biopharmaceutical researchers use the knowledge gained to better understand and inform research on other medicines in development. Ignoring the R&D investments from the many companies that have not received approval indicates a lack of understanding of the significant scientific and regulatory risks companies’ face and the role of economic incentives in ensuring investment despite steep odds. The risk inherent in R&D is the key reason why 90 percent of publicly-traded biopharmaceutical companies in 2014 did not make a profit.

Many experts agree that the study is not an accurate representation of the cancer medicine marketplace. Here is what they are saying:

• “The study starts with a good intent, but suffers from severe flaws that invalidate its results. It’s unfortunate, but one must keep in mind that an informed debate on R&D costs and drug prices must rest on rigorous analyses. This one fails the test… The cost of developing so many drugs in parallel would be well beyond the resources of the small companies in the sample.” – Bernard Munos, senior fellow, FasterCures

• “There are a number of serious flaws with this study… Most importantly, it includes only a small set of companies that were relatively successful in development during the period they analyzed. As a result, it inadequately adjusts for risks across the industry and so under counts the costs of investigational cancer drug failures.” – Joseph DiMasi, Ph.D., director of economic analysis, Tufts Center for the Study of Drug Development

• "Ignoring cost of groceries, food is cheap.” – Amitabh Chandra, Ph.D., economist and professor of public policy and director of health policy research at the Harvard Kennedy School of Government, on the study's omission of pre-acquisition R&D costs.

• “There are a lot of different facets to this discussion, well beyond the single point of this paper." – J. Leonard Lichtenfeld, M.D., deputy chief medical officer, American Cancer Society
  
  
• “As far as I’m concerned, this paper sets a lower bound, and that’s all.” – Derek Lowe, Ph.D., Science Translational Medicine

• “This would be important news, if it were accurate… In fact, if they had used appropriate methods, their analysis would likely have confirmed rather than challenged the finding they criticize.” – Richard Manning, Ph.D., partner, Healthcare and Life Sciences Practice, Bates White