Big Pharma: How Do Drugs Make It To The Market?

Rennett Stowe

Ever wondered how pharmaceuticals make it to the market? With Big Pharma facing a lot of criticism, we thought it would be handy for people to understand the work involved. And make no mistake - it’s a lot. On average, it takes around 12 years to get a drug through from a chemist’s lab to your local drugstore. But that isn’t half the problem.

Thousands of different drugs enter the system at early stages, yet only one in five thousand ever make it to the market. Those are depressing odds for anyone starting or trying to develop a business. Is it any wonder that the major pharmaceutical companies are keen to charge high prices so they can recapture some of that expenditure? Well, yes and no. But more on that later.

First of all, let’s start at the very beginning and discover the path that all new drugs must take before arriving in your medicine cabinet. All drugs must go through the same steps, outlined by the regulations from the Food and Drug Administration (FDA). The process is in place for one reason: to make sure all drugs in the United States are safe and effective.

It all starts with preclinical testing. Researchers put together a few ideas, test a few things out, and eventually decide to create a drug. The drug is then tested in a lab under lots of specific conditions to see what happens when put up against the targeted disease. It’s at this point when animal testing starts - and often it’s humanized animals that are put under test conditions. For example, the likes of Hera BioLabs might use humanized animals to test a drug’s toxicity. It’s a long process - as you can imagine - and it can take, on average, around 40 months.

If the drug gets the all clear here - and only 5 in 5,000 achieve it - the pharma company needs to file an Investigational New Drug Application. At this point, it’s down to the FDA to disapprove it, and it clears if they fail to do so within 30 days. The FDA will look at the evidence, and the IND must include a lot of information. It contains the chemical structure information and notice of any toxic reactions in the animal testing period. It should also show results of all previous experiments and an outline of who and where will be responsible for the next stage - testing on humans.

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Testing on humans starts in what is known as known as Phase I clinical trials. This step typically uses healthy human subjects to work out the range of safe dosage. It also helps researchers understand a little more about interactions. Researchers also find out how long the drug lasts for, as well as rates of absorption and metabolic rates. After about a year, the trials move onto the Phase II stage.

Phase II is when pharma companies start to ramp up their findings. While Phase I is restricted to 50-80 subjects, Phase II tests hundreds. Here, the drug companies will get a better feel for the effectiveness of the drug on a larger scale. It can take around three years to complete this step, by which time the pharma companies are aware of minimum and maximum dosage levels.

The next stage is Phase III clinical trials. The subjects are split into groups, with some taking the drug and some being given a placebo. The testing ramps up to thousands rather than hundreds. It’s at this point that pharmaceutical companies look for the definitive results to present to the FDA. Adverse effects are studied carefully, and close attention is given to side effects. Because of the larger scale of subjects, Phase III often throws up the odd problem area, and it can put a serious spanner in the works. Only half of all drugs that have made it this far get past Phase III, despite the process being designed to confirm Phase II’s results. It’s unfortunate not only for the drug companies but also for the test subjects. During Phase III, many people suffering from the conditions the drug is supposed to treat will pin their hopes on success. In the case of life-threatening illnesses, you can imagine the pain of all that wasted time.

However, the plus side is that half of all drugs pass Phase III. At this point, the drug company will take all the information they have gathered from the trials and analyze it. Once they do, they are entered for a New Drug Application (NDA), with all data and info intact. Again, this can take a long time to approve. A drug could be in this application period for around 2.5 years - again, a frustrating time if you are a patient who needs treatment now. And the bad news is that it still isn’t the end.

The final step is to pass Phase IV studies. Here, any patients that are taking an approved drug will fill out surveys to report the effect on systems and side effects. While the drug is on the market at this stage, it can still be pulled if any issue is uncovered.

But the story doesn’t quite end there. Take Retrovir as an example. Arriving on the market in the 1960s, there was hope that Retrovir could be one of the first anti-cancer drugs in the world. However, results were incredibly disappointing after a lot of hype, and the drug found itself shelved. Until the 1980s, at least. Researchers discovered that Retrovir was excellent for treating AIDS, and it won approval in 1987.

So, all this work must mean Big Pharma deserves to charge what they like, right? With only one in five thousand drugs being a success, they must spend a fortune on development. While this is true, the money they make from bringing a successful drug to the market dwarves their spend by a significant amount. There is also another sugar pill they can take - paid for by the public purse.


Government subsidies contribute a lot to the coffers. Tax breaks and grants offered to the big drug companies are at an astonishingly high level. And when the industry reports profits of over $800 billion, it’s clear that we shouldn’t be too upset to hear of the tribulations of Big Pharma.

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