BIOSILICO: Pharma at a crossroads

A subtext of BIOSILICO was the business conditions of Big Pharma, the giant corporations that produce the , Zocors, Celebrexs, and Gleevecs of the health system. The pharmaceutical companies are the direct customers for many of the tools and research approaches of bioinformatics and in silico biology. Many speakers represented companies that are producing hardware and/or software for which the drug industry is the intended customer.

Ordinarily the business problems of multi-billion dollar outfits like Pfizer and Merck wouldn’t be my focus, but the reality is that, in a market-driven economic system, the pharmas play a key role in bringing cancer treatments into the world. University researchers don’t make drugs (though these days they get a piece of the financial action), government doesn’t do it nor does the ACS. Drug companies play a central role in our health care system and their success or failure in doing that affects us all.


Right now the outlook isn’t terrific. After hearing about the hurdles they face I almost felt sorry for billion-dollar companies. Almost. The fact is that “rational drug design,” the use of computer analysis and drug modeling to develop new drugs have been a disappointment to the pharmaceutical companies, so far. They counted on the promise of genomics and, now, proteomics to find low-cost shortcuts to developing new drugs. Instead pharmaceuticals are seeing less productivity out of their labs (drugs put on the market) than they saw a decade ago. The fire-hose of data, the less than clear results of mining genetic data have not enabled them to put enough drugs in the so-called “pipeline” to assure them of sustainable profits in the years ahead. The drug industry is a complex business system with many factors involved, but the dilemmas of bioinformatics, (e.g., data overload) mentioned at this conference are an important factor.

George Whitesides, PhD, a Harvard chemist specializing in large-scale systems integration, expressed the opinion that the pharmaceutical industry as we have known it the last decade or so is not sustainable. He doesn’t think that the use of bioinformatics in the research labs of huge corporations is going to produce much. Instead, the more productive model is small biotech companies focusing on innovative, specific approaches until they get a breakthrough and then licensing their results or being bought out by the big companies. Some said “portfolio management” instead of research is the solution for Big Pharma.

The other factor is one coming to the attention of the American public. John Murphy, a VP at Curagen, says the US in about the only sizable unregulated market for drug development in the world. The US allows drug manufacturers to charge what the traffic will bear for drugs. In Canada, Europe and elsewhere they regulate prices of drugs in their health care system. Drug makers charge the cost of development off in the price of drugs in the US so they can sell the drugs elsewhere at minimal prices. In essence, the US consumer is subsidizing the cost of development for the rest of the world.

But something has to give. US consumers are screaming for relief and politicians are beginning to hear them, especially with an election-year coming up. If regulators allow re-import of drugs from Canada at lower, regulated prices, the industry loses its cash-cow and runs low on money to develop drugs. If the US were to regulate prices (unlikely) a similar scenario of cash dry-up might occur. A similarly unlikely scenario is that other countries will stop regulating prices.

So about any way you look at it the business model of the pharmaceutical companies of the past may not be viable much longer. Price regulation is one whole kettle of fish. Rational drug design, productive as desired of not, is another. The future may see a much more heterogeneous set of companies achieving the breakthroughs and the big companies managing the production and mass-marketing of drugs.

Another bind that drug developers are in is that their old “one size fits all” model is falling apart. The flood of genetic profiling that is now possible indicates that drugs may not work or they may have serious side effects depending on specific genetic factors of individuals. This is certainly likely true of cancer drugs. George Poste, DVM, Dir. Institute for Biodesign at Arizona State U, said in the near future there will no doubt be lawsuits alleging malpractice for doctors and perhaps for pharmaceutical companies because a drug was administered to someone who could be identified by genetic tests as an unsuitable candidate for the drug. The differentiation of drug administration according to genetic indicators will narrow the currently broad markets for drugs.

We will be able to use genetics to say someone probably shouldn’t get a drug before we will know enough biology to figure out how to tailor a drug for that person at a reasonable price. Gotcha!

Next theme: Paradigms a poppin’

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