Oleg S.

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Moloch's Toolbox (2/2)

  1. Omegaven® is manufactured by German pharmaceutical company Fresenius Kabi. For some reason, the company decided to stay away from US market and this raised questions when announced back in 2006. Until patents held by FK are expired, no one in USA can sell Omegaven without license from FK.
  2. Brief search in Clinical Trials registry gives 14 open clinical studies of Omegaven as Parenteral Nutrition in USA. I hope at least some of them don't just pursue scientific goal of replicating earlier, but are compassionate attempts to provide an access to Omegaven by an Expanded Access Use program from FDA.
  3. Several hundred saved children sadly is indeed too few for pharma to seriously care. The cost of clinical trial required for regulatory approval is ~ 100 M$ + about 100 M$ is required to set up manufacture, sales etc. With generous $ 100 000 per course of application (approx. a cost of life saved for pediatric anti-cancer drugs) and 200 patients/year, a company can generate $20 M revenue, so it has to wait 10 years just to cover the losses. And that without taking into account 30% IRR for VC, possible competitors undermining market share and so on.
An Equilibrium of No Free Energy

Here is another example of inadequacy / inefficiency in the pharmaceutical market.

Cancer X is very aggressive and even when it is diagnosed at very early stage and surgically removed, the recurrence rate is something around 70% in 5 years. When cancer returns or when a patient has advanced stage, the mean survival time is only 6 months.

Pharmaceutical company Y has recently discovered a new anticancer drug. According to state-of-art preclinical experiments, the drug inhibits spread of cancer and kills cancer cells very effectively. Top scientists at company Y expect that when applied in adjuvant settings for 4 months after the surgical operation, the drug would reduce the cancer recurrence rate to 30%. Even when the drug is given to patients with advanced stages of cancer, the drug is expected to prolong the life of patients twice.

Driven by the desire to bring the drug to the market as early as possible, executives at company Y initiate the fastest clinical trial. A study in the adjuvant setting (4 weeks after the operation) require several years to complete in order to show that drug has an advantage over the standard of care. A study in advanced stage cancer required much less time, so there is some benefit in getting to market for advanced cancer and to extend survival from 6 to 12 months.

However, once the drug is at the market against advanced disease, clinical trial and eventual approval of the drug as adjuvant would undermine total sales because of the two-fold reduction in the number of relapsed patients who need to take the drug every single day until the end of their life.

This is efficient (drug company gives the most profit per dollar invested) but inadequate (drug company could save way more patients by going into adjuvant therapy) market situation. I would say that the root of inadequacy is a conflict in what is a goal of a pharmaceutical company. I would expect pharmaceutical company to sell drugs and not mortgage derivatives, but as a company, its main objective is the maximization of the profits for investors. So, probably there should be a composite measure of QALY and profits that should be used to evaluate adequateness and effectiveness of the market.