PHP133 - Taking In Account Research And Development Expenditures To Determine Prices Of Medicines In France: A Realistic Alternative Choice?

Abstract

The objective is to determine advantages and limits of an analytic determination of the price of medicines exclusively based on research and development (R&D) spending in order to reconcile objectives of pharmaceutical companies, patients and health authorities. These costs can be divided into two aggregates : research (fundamental and applied) and development (clinical trials). These expenditures (generally spread on 10 years) come from a mixed funding between public and private sectors. Fixing the price of a drug according to its clinical benefit is a strong signal for pharmaceutical industries to innovate. However this value isn’t really objective. According to expert opinion 900M$ are spent in R&D for a new drug. On an upgrading rate of 11% : the amount of capitalized expenditures is about 1.5B$ per molecule. Development costs vary between therapeutic areas : 1.5B$ in pulmonology and 616M$ in virology. They are very different according to the size of the company (between 350M$ and 5.5B$ per molecule). R&D costs have been multiplied by 10 in 30 years whereas its productivity decreases since the 90’s. Costs and earnings are not correlated in the time. We are not able to individualize the price of the investment by molecule, neither by country. Furthermore, with the externalization of research, biotechnology, open innovation, the R&D's model tend to disappear. Verifications of these expenses by the state is almost impossible. Moreover from the patient point of view, it can be difficult to accept the price difference between incremental innovations or disruptive innovations. A price analyse might look interesting but would have différents limits. The will of the society to remunerate a clinic benefit over a clinic investment, could take in consideration its expenses, without making them the main characteristics when fixing a price. This model could allow new perspectives, especially with evolution about R&D.