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In this issue: • Research & Development • Drug Advertising • Claritin & Prilosec Arxcel, Inc. 4390 Quinby Dr. Suite D Hamburg, NY 14075 (716) 646-9292 (716) 646-6985 Fax www.arxcel.com info@arxcel.com ARXCEL can help with: Plan Design Proposals Clinical Analysis Sales & Marketing |
| Summer 2002 |
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DRUG RESEARCH & DEVELOPMENT
The development of a prescription drug in the United States is a long and costly process. According to the Tufts Center for the Study of Drug Development, on average it costs over $800 million dollars and 10-15 years to develop a new drug. This development cost is up from an estimate of $231 million a decade ago.
These costs include facilities, research on compounds abandoned during development, as well as out of pocket costs, pre-development, clinical costs and capital. The Tufts study attributed a majority of the costs of development of a new drug to the clinical drug trials.
FDA's Role
The FDA's role in drug development is to approve drugs for use by the public. The current laws state that all new drugs need proof that they are "safe and effective" before they can be approved for marketing.
This approval process requires the manufacturer to document all information about the drug including clinical trials, composition, results of animal studies, how the drug works in the body, how it is manufactured, processed and labeled. This demonstration of '"effectiveness" is only shown through the clinical trials. The new drug approval process has been shortened in the past few years because of additional staff and updated equipment.
Manufacturers
The manufacturers are faced with the rising cost of research and development that will make the development of new drugs more challenging. They will need to control their costs, develop efficiencies and possibly narrow their scope of research.
In 2001, 24 new drugs were added to the mix. The new drugs approved in 2001 included treatments for AIDS, arthritis, caner, glaucoma, heart disease, infectious diseases, Alzheimer's, and migraine. It took an average of 16.4 months for the drug to go through the entire FDA-approval process from application to approval of those drugs. 1
DRUG ADVERTISING
Once a drug is approved, a manufacturer can begin to market the drug to the public. This is an area that has increased significantly since the FDA relaxed their rules regarding pharmaceutical advertising in 1997.
Today, seven drugs with the biggest consumer advertising budgets are in the top 10 of sales. In 1994, manufactures spent around $250 million on advertising; in 2001 it was almost $3 billion. Despite the size of the budget for advertising, according to the Pharmacy Benefit Management Institute, manufacturers spent only 13% of their entire promotional budget on advertising, the balance was spent on physician detailing and education. 2
| TOP DRUGS ADVERTISED Drug, Amount of Advertising |
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| Celebrex | Vioxx | Allegra | Claritin | Viagra |
| $136.4 mil | $135.0 mil | $95.8 mil | $87.0 mil | $85.4 mil |
Source: NDC Health |
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Managing the affects of advertising can be handled in several ways:
- Patient education on all drugs available in a class
- Concentrating on the disease class or therapeutic category rather than a particular medication when physicians and patients communicate
- Step therapy programs
GOVERNMENT NEWS
PRILOSEC Over-the-Counter
During June 2002, an FDA committee voted in favor (16-2) of the over-the-counter (OTC) version of Prilosec. The FDA usually follows the panels' advice. The FDA has six months to act on the committee's recommendation.
Once Prilosec is moved to OTC, it will compete with other heartburn remedies such as Pepcid , Zantac and Tagamet. If you have questions on how this may affect your pharmacy benefit plan, please contact Chris at Arxcel at (716) 646-9292.
1 www.phrma.org
2 www.pbmi.com
© Arxcel, Inc.
