Content by Keyword: Drugs, Medical Devices, and Pharmacy Services

In Scenario 4, the government has conducted preclinical R&D on a highly promising Product V that is designed to work as a vaccine with an annual booster.

In Scenario 3, a government research agency has taken a highly promising compound, Product G, into Phase III clinical trials. The government approaches a large pharmaceutical firm, Company G, that has a strong CNS product line. The government offers to turn over the rights to Product G in exchange for assistance in completing Phase III trials, sec

In this scenario, a small biotechnology firm, Company B, takes on the full product development cycle with a new class of compounds based on a recent scientific breakthrough that is highly specific to cocaine receptor neuropharmacology. The company anticipates that a new Product B from this class of compounds will have excellent compliance in the u

In this scenario, a large pharmaceutical company takes on the full product development cycle, i.e., a "cold start" with preclinical discovery and research. The new Product A will require about $150 million in uncapitalized expenditures to develop and will be ready for launch following FDA approval in 13 years. The company anticipates securing a pa

This report presents several scenarios of pharmaceutical company decision making regarding undertaking projects to develop pharmacotherapies for substance abuse (e.g., cocaine) under various sets of market conditions. Using a quantitative model developed by The Lewin Group, the market conditions are translated into financial and other parameters t

The final approach taken to assessing the financial attractiveness to commercial firms is to estimate the affordable level of R&D cost, given the expected peak annual revenue to the company. The base conditions for the model have been used to develop the estimates in Figure 21 (below). In particular, this set of calculations assumes that a com

Another important investment criterion used by some companies is the internal rate of return (IRR). The IRR is the rate of interest at which the present value of all net cash flows into and out of a project over a specified time interval equals zero. A higher IRR makes an investment opportunity more favorable.

Figure 18 (below) shows expected peak annual revenue to a pharmaceutical company under the nine combinations of market penetration and wholesale price. Under the most optimistic combination of these, the PAR to the pharmaceutical company would be $455 million, well above most companies' acceptable PAR thresholds. However, achieving this PAR would

In order to demonstrate basic relationships between market penetration, price, and annual revenue, the following analysis poses three levels of market penetration and three price levels for a new cocaine medication. The market penetration levels are "doubling," "saturation," and "half entry," as follows.

The level of interest on the part of industry in developing a new drug abuse medication depends primarily on financial criteria. Factors that may not appear to have direct financial import, such as social stigma associated with a product, inclination of caregivers to consider pharmacological as opposed to behavioral interventions, or corporate com

As described in this report, pharmaceutical companies' decisions to pursue new products is based largely on financial considerations inherent in risk-reward tradeoffs. Despite the great diversity of market barriers, most can be interpreted as having a direct effect on one or more financial parameters that are factored into these decisions. Similar

As described above, on any given day there are 250,000 cocaine patients enrolled in treatment, out of an estimated 2 million cocaine addicts in the U.S. If a new medication were used by every current patient in treatment, the medication would have to sell at just over $2.00 per daily dose wholesale ($2.20 to 4.00 per day retail) in order to genera

Since no approved pharmacotherapy for cocaine abuse has been tested on the market, it is not possible to know how sensitive the market would be to such a medication. However, indirect available evidence from other substance abuse medications and the current nature of cocaine abuse treatment and its financing would appear to indicate that the marke

The proportion of the entire population of heavy substance abusers that is considered to be a realistic target market for pharmacotherapy is small relative to the effective target market of pharmacotherapy for other diseases. Although there are other clinical conditions for which the market penetration of pharmacotherapy is proportionately low, th

Substance abuse treatment generally follows a psychosocial, rather than medical, model. The most recent surveys that have examined staffing patterns confirm that the substance abuse treatment system involves little or no physician time in the treatment of patients (Office of Applied Studies, 1993; Brandeis University, 1993). Even when on staff, ph

One of the major questions in developing a new cocaine medication is whether there will be sufficient and reliable payment for the medication. Payment for substance abuse treatment, including for cocaine abuse, remains heavily dependent upon government sources. Government provided almost 80 percent of the financing for substance abuse treatment in

National expenditures for specialized alcohol and drug treatment were about $6.5 billion in 1993, or $19.71 per-patient-per-day for all treatment (Figure 9 below). Approximately $2.6 billion of this amount was spent on outpatient care (i.e., $1.94 billion and $0.65 billion for outpatient-standard and outpatient-intensive care, respectively), or on

The following paragraph provides a summary of some plausible estimates of cocaine use in the United States. The remainder of this section describes the national surveys on drug abuse from which the estimates of cocaine use are derived.

Figure 4: Summary of Estimates of Need for Drug Abuse Treatment in U.S Several studies conducted since 1990 have estimated the need for drug abuse treatment in the U.S. These estimates provide points of reference for the overall magnitude of potential markets for drug abuse medications.  The primary findings of these studies are summari

The market analysis estimates how costs and revenues accrue over time in the development and commercialization of a prospective cocaine medication, and presents plausible scenarios of prospective pharmaceutical companies and their drug development decisionmaking process. For pharmaceutical companies, the risk associated with developing and marketi