One of the most urgent challenges facing the American healthcare system is the complex and multifaceted issue of drug pricing. Like addressing a chronic disease, where treatment must go beyond alleviating symptoms to targeting the underlying cause, drug pricing reform requires a deep dive into the structural factors influencing the costs that burden patients.
Officials in Washington, or those hoping to get there, often say price controls will make drugs cheaper. But the high development costs, low success rates, and limited patent life that characterize the pharmaceutical industry are at the heart of today’s pricing crisis. Addressing these core issues is essential for any meaningful, long-term benefit for both patients and drug developers.
With the presidential election rapidly approaching, both candidates should be expanding their approach. Vice President Kamala Harris has emphasized the need for greater government intervention in drug pricing, capping prices and increasing transparency. Former President Donald Trump’s campaign, with its focus on deregulation, aims to reduce bureaucratic red tape to expedite drug approvals and foster competition as a strategy to lower costs.
Both perspectives recognize the critical need to make essential medications and therapies affordable for all Americans. Neither address the need to extend the patent life of drugs.
The journey from the laboratory to the bedside is arduous and expensive, with the cost of developing a new drug averaging over $2 billion. This immense financial burden stems from the extensive research, manufacturing, safety testing, clinical trials, and regulatory hurdles each drug must navigate. While these processes certainly have value and ensure greater patient safety and drug efficacy, the immense costs are passed on to patients and their insurance companies, leading essential medications and treatments becoming increasingly unaffordable.
Biotechnology, by its nature, is a high-risk industry. Substantial upfront costs paired with low success rates demand a high return to make it a sustainable innovative business model and attract investors in the early stage of development. On average only about one in ten drugs that enter clinical trials ever make it to market. As a result, the few drugs that do succeed must cover their own development costs and subsidize the many that fail, driving prices even higher.
Compounding these challenges is the narrow window in which companies can see a return on their investment. Although patents provide 20 years of protection, the average drug takes 12-13 years to develop, leaving only seven years for companies to generate returns before generics enter the market. This compressed timeframe often forces companies to set higher prices to ensure profitability.
Streamlining the drug development process is another avenue for reducing costs. By harnessing technology and data analytics, including the use of AI, rigid translational research, and meaningful collaboration with academia, researchers can identify promising drug candidates earlier, minimizing the costly trial-and-error approach that currently dominates. Regulatory agencies must also implement more flexible approval pathways, share knowledge and advices particularly for drugs that address critical unmet needs. This could help bring drugs to market faster and at a lower cost.
Reducing the risks associated with biotech innovation also requires stronger public-private partnerships that share the financial burden of early-stage research. Government grants, tax incentives, and other forms of support can help de-risk drug development, encouraging the private sector to invest in new therapies for otherwise unaddressed ailments.
Lamassu Biotech’s SA53 and RABI-767, experimental treatments are a model in this regard, being developed with domestic and international partners as well as the Mayo Clinic and Cleveland Clinic. These efforts to address unmet needs for cancer and pancreatitis respectively have advanced, in part, thanks to support from federal funding from the NIH.
However, modifying the 20-year patent should be a top priority for a Trump or Harris administration. Congress could extend the 20-year patent protection period, and the government could also provide more extensions, given delays in the approval process.
Certainly, shortening the time it takes to bring drugs to market could also effectively extend the period during which a drug remains under patent after being brought to market. This would provide companies with a longer window to recoup their investments, easing the pressure to set exorbitant prices from the outset.
Addressing the root causes of high drug prices demands a comprehensive approach. Lowering development costs, de-risking innovation, and extending the effective patent life of new drugs are critical steps in this process. It will take more than a line in a campaign speech.
A concerted effort from industry, government, and the scientific community can create a more sustainable and affordable model for drug pricing—one that benefits patients while continuing to support the innovation that drives the pharmaceutical industry forward.
Dr. Gabi Hanna is the CEO of Lamassu Biotech and an internationally recognized leader in the biotech field.
