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  • Brendan Shaw

Don't forget the future: Alzheimer's disease and the economics of drug development

The story of the pharmaceutical industry’s efforts to find a treatment for Alzheimer’s disease is a classic example of why a commercially successful industry is important for global health.

(NOTE: My bit of the story is that I am running for charity for Alzheimer’s research in September, which you can read about at the end of this blog).

The World Health Organization estimates that by 2030 Alzheimer’s and other dementias will enter the top 20 global causes of death with about a million people dying each year from it – more than will die from breast cancer. Alzheimer’s disease accounts for around 60%-70% of dementia cases.

While today there are around 50 million people in the world with dementia, by 2050 there will be over 130 million people on the planet with dementia.

To put this into perspective, if 'Dementia' were a country it would have the fourth fastest growing population in the world between now and 2050, behind only Niger, Angola and Uganda. The population of 'Dementia' will basically have the same size and growth pattern as Tanzania out to 2050.

Moreover, while today high-income countries account for over 40% of global dementia cases, by 2050 countries that today are low- and middle-income countries will account for more than two-thirds of global dementia cases by 2050. Growth rates for dementia cases over the next 30 years will be fastest in low- and middle-income countries. There is a gender dimension to this as well, as women will predominate among older people with dementia, given their longer life expectancy.

Source: Prince et al. 2015. World Alzheimer Report 2015: The Global Impact of Dementia, Alzheimer's Disease International, London, p. 23,, accessed 17/5/2018

The annual worldwide cost of dementia is currently estimated to be around US$1trillion, which is similar to the global costs of smoking or global warming each year. The emerging dementia crisis is so significant that last year the 194 member states of the WHO signed off on a Global Action Plan on the Public Health Response to Dementia at the World Health Assembly in Geneva.

So, whether you are talking about millions of people around the world or a loved one in your own family, it’s a big deal.

And yet, we have no cure for it.

There is no vaccine to prevent Alzheimer's and no drug that treats it. Instead, there a few older medicines that perhaps moderate the symptoms in some people but do not treat the disease.

But this is not for want of trying. One study found that between 2002 and 2012 there were 244 compounds that underwent clinical trials for Alzheimer’s disease but only one was approved by regulators. This means that Alzheimer’s drug research has a 99.6% failure rate.

That one approval of a drug happened 15 years ago. Since then various clinical trials have failed and billions of dollars spent in what the Financial Times earlier this year called “one of the longest and most expensive losing streaks for Big Pharma”.

As the industry points out, not all is lost, as even the failures in medical research help us understand the disease better and contribute to the search for a cure. One count identifies 85 medicines that companies are currently researching and developing to treat Alzheimer’s disease, although there are still questions about whether we really even understand the disease properly.

This is an expensive exercise that is being significantly funded by the pharmaceutical industry. Trials in Alzheimer’s disease treatments are long and expensive due to the complexity of the science and because of the time required to demonstrate efficacy. Pharmaceutical companies are taking the commercial and scientific risk in trying to develop a treatment for Alzheimer’s disease.

And it shows. Even just in the last few years we have had announcements of clinical trial disappointments from larger companies like Lilly and Merck Sharp and Dohme, and smaller companies such as vTv Therapeutics and Axovant. But the corporate history of Alzheimer’s research over the last few decades is littered with stories of plunging share prices and collapsing companies when bad clinical trial outcomes are released. Moreover, one of the biggest pharmaceutical companies, Pfizer, earlier this year indicated it itself was getting out of neurological research, including Alzheimer’s research, although it plans to establish a venture capital fund in this area.

So why and how can companies carry such losses in researching new drugs and how do they keep doing it?

The why is to help the current 50 million patients worldwide find a cure and, through that, to be commercially successful. Given the growing patient population, there's a large potential market for companies. One estimate for the US alone predicts total potential healthcare spend in the order of US$ 30 billion to US$ 55 billion.

The potential financial return will be influenced by what payers - government reimbursement funds, private health funds and the like - are prepared to pay in the future to overcome that annual US$ 1 trillion cost.

The how - how companies have been able to carry such losses up until now - comes down to the returns companies make on previous successful drugs for things like reducing cholesterol, reducing blood pressure and fighting cancer. For established pharma companies, it's returns on their past drugs that fund future drugs. For smaller start-up biotechs, it's their ability to attract funds from venture capitalists, financiers and the capital markets.

It’s an obvious point that is often forgotten in the heated debates about global health and drug pricing. But those who argue that companies shouldn’t receive commercial benefit from developing new drugs should remember diseases like Alzheimer’s. Both established pharma companies and start-up biotechs can only continue developing such treatments on the promise of future returns.

A pharmaceutical or biotech company that makes no money doesn’t have much left to spend on Alzheimer’s research.

There are some interesting new partnership models in funding Alzheimer’s research, such as the Dementia Discovery Fund which is a specialist venture capital fund launched last year by the UK Government, seven pharmaceutical companies and Alzheimer’s Research UK. The DDF has also attracted support from the likes of Bill Gates, Woodfood investment managers and even the NFL Players Association.

While Alzheimer’s research is difficult, it isn’t alone. Typically, for every 5,000 molecules a company first looks at, only one will go all the way through the development process to be approved for use in treating illness in people. Different disease areas have different failure rates, although at 99.6% the failure rate in Alzheimer’s is pretty high.

The fact is that the development of the medicines of the future hinges on the commercial success of the medicines of today.

It’s a lesson we shouldn't forget, for the sake of future generations.

(To do his bit to help Alzheimer’s research, Brendan is running 25km along the River Thames in September to raise money for Alzheimer’s Research UK. If you’ve enjoyed reading this blog and would like to sponsor Brendan, you can do so here.)

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