Developing drugs is a costly business

It's an idea that helped build the biotechnology industry: By understanding diseases well and attacking them with smarter, targeted therapies, biotech companies can actually reduce the huge risk of failed drug tests that make the drug business so expensive.

So does it work?

Not exactly. In a seminar yesterday, Henry Grabowski from Duke University, reported finding that biotech drugs are slightly more successful in early-phase clinical trials than traditional pharmaceutical s -- but more likely to fail in the big Phase 3 trials, the last stage before the FDA approval process. On average, 24.2 percent of biotech drugs are scrapped after Phase 3 trials vs. 12.6 percent of traditional drugs.

But working with Joseph DiMasi at Tufts University (yes, the brother of the speaker of the Massachusetts House), Grabowski found that the total cost of developing a biotech drug, including the price of failures , is pretty close to the cost of producing a pill -- more than $1 billion per product introduced. (Stephen Heuser)

A good reason to be glad you live here

The biotech industry has had a lot of impact on healthcare in the United States and other wealthy countries, but what about the rest of the world? Yesterday , two seminars offered two pictures.

In one room, the industry's chief lobbying group disclosed a new program that would bring together experts from biotech companies with global-health groups to help fight malaria, tuberculosis, and other problems rampant in poor countries.

Two doors down, a handful of economists were injecting a dose of realism about why people in those countries don't see many new medicines. The simple answer: Drug development is a for-profit business, so companies go where the money is.

In other words: Be glad you live in America, where drug prices are growing faster than inflation. Your copayment may be moving skyward, but companies have more incentive here than anywhere else in the world to develop and sell new drugs. (Stephen Heuser)

Lawyers predicting busy year for deals

A survey out yesterday suggests that 2007 will be an "active" year for the patent license agreements popular with biotech firms.

Boston law firm Foley Hoag LLP said it surveyed biotechnology companies, universities, and other research institutions to identify trends and gauge the market for specific terms in license agreements.

"Many biotechnology companies, especially start-ups, enter into license negotiations with universities and other research institutions and do not know what to expect," Jeffrey L. Quillen, a partner in the life sciences practice at Foley Hoag, said in a statement. " As long time counselors to the biotechnology community, we wanted to fill that information gap and balance the playing field."

According to Foley Hoag, survey respondents expect to enter into more patent license agreements this year than they did in 2006 or 2005 . (Chris Reidy)

Making their cash talk in Washington

In the shadow of an escalator at the BIO convention, a trio of young aides from the Biotechnology Industry Organization's federal policy office were giving away little foam images of the Capitol and pamphlets about BIO's "grass-roots network."

They are promoting BIO's political action committee, which moves money from industry boosters to federal candidates.

According to the Center for Responsive Politics, a nonprofit group that provides access to Federal Elections Commission reports, BIOPAC, as the committee is known, raised $163,000 from its industry members during 2005 and 2006 and donated $114,000 to federal candidates.

It may seem like an impressive sum. But consider this: Amgen Inc., the largest biotechnology corporation in the United States, used its own political action committee to raise $1.1 million in 2005 and 2006, and contributed $727,000 to candidates. (Christopher Rowland)