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Breaking Eroom’s law

Moore’s law, the expectation that as computer speed and capabilities double every few years their cost should be halved, has long proved flawed in drug development, where despite decades of technological and scientific advancement, R&D costs have risen exponentially. 

Researchers at Sanford Bernstein in 2012, dubbed the inverse trend relative to drug development “Eroom’s Law” and cited progressively higher expectations of approval bodies and lower risk tolerance by regulatory agencies as underlying factors in declining output. However, concurrent to publishing, as the authors predicted, their newly christened law was already being broken. Now, a recent Nature review article postulates the reasons why finally, after decades of decline, R&D efficiency appears to be on the up.

The four primary causes proposed by Scannell et al., in 2012, for declining R&D efficiency (measured as the number of drugs brought to market per billion US dollar spend) were the following:

  1. The “better than the Beatles” problem describes the increasing complexity of drug development because of an ever-improving back catalogue of predecessor drugs. Likened to trying to achieve commercial success with a new record that must out-compete the entirety of Beatles catalogue, which has been offered for free, to a never tiring audience. Implications include an increased evidential standard for approval, adoption and reimbursement. By deterring R&D into some areas and concentrating efforts into hard-to-treat diseases, the economic value of resulting drugs is reduced. The authors explain that in contrast to the often cited ‘low-hanging fruit’ problem which argues that the easy-to-reach fruit has gone, the ‘better than the Beatles’ problem “argues that the fruit that has been picked reduces the value of the fruit that is left in the tree.”
  2. The “cautious regulator” problem claims a “progressive lowering of risk tolerance” of regulatory bodies is an increasingly tightening value on approval, that is unlikely to be loosened.
  3. The “throw money at it” tendency is one that whilst generally successful in most industries, doesn’t appear to apply to the pharmaceutical. Factors underlying the poor returns seen on R&D investment are numerous: long pay-off periods, intense competition between marketed drugs and a bias in pharma to equate professional success with budget.
  4. The “basic research-brute force” bias is the tendency to overestimate molecular biology advances and brute force screening methods, particularly in preclinical development, to increase the probability that the candidate molecule will be safe and efficacious in later trials. This shift from conventional, methodologies for candidate identification, may be less productive in small molecule discovery.

Now Ringel et al., propose three factors possibly behind the changing trend breaking Eroom’s law, beginning in 2010, which saw an additional 0.7 new molecular entity (NME) launches per billion US dollar spend per year, by 2018. In short, they explain that one or more of the three factors have spurred greater success rates that have reduced the costs from failed NMEs.

The first is better information for decisions, whereby greater understanding of disease biology, allows the “better than the Beatles’” problem to be side-stepped as pharma companies invest more in diseases that lack effective therapies. Better use of this information available, in influencing decision making is the second factor behind the turnaround they say. And finally, the problem of the “cautious regulator” has been eased somewhat, as the threshold for approval has been lowered along with a shift in overall regulatory philosophy.

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Pharma Industry / R&D Efficiency

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