This week’s news that the NIH is going to take up drug discovery where industry well, sort of left off, is big.  The proposed drug development hub, the National Center for Advancing Translational Studies, would move beyond the NIH’s current basic science research mode and usher drugs through clinical trials in an effort to jumpstart a long dried-up (or frozen) industry pipeline.

“Under the plan,” the New York Times reports, “more than $700 million in research projects already under way at various institutes and centers would be brought together at the new center. But officials hope that the prospect of finding new drugs will lure Congress into increasing the center’s financing well beyond $1 billion.”

For those of us who like innovation–and we do–this is good news, since there are plenty of important therapies that have stalled or been left by industry to tackle, as many companies have seemed to grow more risk-averse in recent years.

It’s also funny timing: We’re on the eve of the new House of Representatives’ Symbolic Move No. 3 to cut spending ahead of the State of the Union address today, and deficit concerns and suspicions of government-anything run deep (at least as deep as the 24-hour news cycle.) The Times suggests the agency will pay for it in part by melting down some of the National Center for Research Resources.

Pharma’s pipeline problems are far from new, and neither are the explanations and defenses. Industry tends to point to a slow FDA approval process and the low rate (estimated 3-5%) of phase 1 drugs that ever make it to the phase 3 finish line. And indeed, that process can cost a company a billion dollars.

$1 billion to bring a drug to market sounds expensive until you hear what companies have regularly spent on marketing. In 2007, when just 19 drugs were approved, the industry spent $11.8 billion marketing the drugs it already had – and that’s close to a mean between 2005-2009 (source: IMS Health.)

Companies often use the phase 1-3 fall-off and the steep bench-to-bedside cost to justify exorbitant costs of some brand-name drugs, and to defend their enthusiastic legal pursuits for patent extension and pricing protection (like pay-for-delay). But how much longer can their apologists use innovation as a shield (and sometimes sword) when lately they’ve had so little to show in the way of new cures, and NIH has taken the innovation reins?

Skeptics might ask why the federal government should take up the risks that companies and their shareholder obligations haven’t taken. Or whether this move simply frees up Big Pharma to devote even more of its resources to figuring out how to market the drugs NIH will sell back to them in the brave new world of pen-free physician practices.

As always, Merill Goozner over at Gooznews has a thoughtful take, and we like the historical perspective he brings, offering a cautionary tale in the form of taxol, a tumor-blocking therapy that was discovered in a government program and then handed to Bristol-Myers Squibb, “which in turn proceeded to charge the public exorbitant sums” for the public-backed drug.

But Goozner says he’s all for this drug discovery center, with this request:

All I ask is that on the front end of this program, Congress include in the appropriations bill a clause that states plainly that any products delivered by this program to the private sector be sold to taxpayers and the health care system at a reasonable price. And further the appropriations bill should state plainly that “reasonable” be determined by a carefully audited accounting of what exactly industry put into the drug’s development.
It will be interesting to see whether President Obama mentions the new center in the State of the Union address and if so, how he talks about the decision to take the drug discovery baton and run. And to see, in the longer term, who sees the gains and bears the cost of handing it back.

–Kate Petersen, PostScript blogger