The Price of Failure

November 8, 2019 3:18 pm

Back in 2015, the podcast Science Friday observed, “Stories of science are filled with eureka moments—from Archimedes’ bath to Newton’s apple—but the scientific process entails false starts and mistakes that are essential to success.”


That statement is clarifying, but it is hard to talk about the failures. It is harder still to explain how those failures lead to eventual success—or how they impact the prices of drugs that do make it from experimentation to market. But it is important to understand, particularly in the current political climate and national debate on drug prices.          


As we have noted many times before, only one in 10 new treatments make it to Phase 1 Food and Drug Administration (FDA) testing. To put that statistic more starkly: 90 percent of attempts to develop a new medicine fail. According to Dr. Zaven Khachaturia, the failure rate for new treatments aimed at addressing neurogenerative diseases is even higher: 99.6 percent compared to 80 percent for new cancer treatments.


What Khachaturia’s insight means is researchers have been working more than 40 years to find a treatment for Alzheimer’s disease.


And, yet, they are still working. Without profit, but with hope.


The researchers and companies that have suffered failures never will fully recover the costs of their attempted innovations. That is why only 8 percent of publicly traded biopharmaceutical companies ever make a profit. And it is why the sector as a whole has lagged other industries for years in terms of profits.


There are other costs to failure, of course, and these are deeply personal.


This week, a U.S.-based biotech company announced that a hoped-for treatment for pancreatic cancer had failed to meet an important milestone. The company said it was going to have to lay off more than half of its workforce as a result. Last year, a Massachusetts-based company, also hoping to develop a new cancer treatment, cut 60 percent of its workforce after one of its trials failed to meet its benchmarks.


There is more: in 2017, one company shed half its workforce after a disappointing trial for a colorectal cancer treatment, and another firm cut 60 percent of its staff when its research for an ovarian cancer treatment did not work as predicted. Another company cut four in five workers after a Phase 3 trial failed to meet its goal.


The biggest blow from a failed trial, though, is to patients who are hoping for a new treatment that might help them live longer, improve their quality of life, or even save their life.


We do not know what value pancreatic cancer patients, or those trying to beat colorectal or ovarian cancer would have placed on the treatments outlined above if they had been successful. But we do know that failure comes with costs, and that the cost of these missed attempts must be built into the cost of treatments and cures that do successfully make it to market. They have to be—otherwise a workforce would be permanently lost and innovation would grind to a halt.


Here is the bottom line: as Axios’ Mike Allen has said “drug companies generally spend more money on research than they keep in profits.”


That’s science.