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The Impact of Incremental Innovation in Biopharmaceuticals

Ernst Berndt (), Iain Cockburn () and Karen Grépin

PharmacoEconomics, 2006, vol. 24, issue 2, 69-86

Abstract: Background: The apparent decrease in the rate of approval of new molecular entities has provoked extensive discussion and fears that the productivity of biopharmaceutical research and development has severely declined in recent years. Objective: To investigate the extent to which traditional measures of innovative output neglect important innovations that occur after a drug receives initial market approval. Methods and Results: Data on drug utilisation by diagnosis for the period 1999–2004 were combined with data on the approval histories of three important classes of drugs: ACE inhibitors, histamine H 2 -antagonists/proton-pump inhibitors, and selective serotonin/norepinephrine reuptake inhibitors. Counts of new drug approvals by the FDA were classified as new indications, new dosages, new combinations, new formulations, and labeling for expanded populations. Large numbers of such “supplemental” approvals were obtained. The share of drug utilisation in indications other than that specified in the initially approved labeling was computed, and found to be very substantial in two out of the three drug classes considered. Conclusions: Significant incremental innovation to existing pharmaceutical products has been occurring in the form of supplementary approvals for new dosages, formulations, and indications. These innovations account for a substantial share of drug utilisation and associated economic and medical benefits. Productivity trends for research and development based on counts of new molecular entities alone have therefore overlooked an important source of innovation in biopharmaceuticals. Copyright Adis Data Information BV 2006

Date: 2006
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DOI: 10.2165/00019053-200624002-00008

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