BOSTON - The head of science and technology at Eli Lilly & Co. warned that the cost of producing a successful drug could top $2 billion by 2010 unless the pharma industry can identify new and better ways to improve efficiency and effectiveness of drug discovery and clinical trials.

Steven Paul, executive vice president at Lilly, issued his dire warning in the final keynote at the 2006 Drug Discovery Technology conference in Boston on Wednesday.

Paul said that multiple forces were conspiring against the pharma industry, including soaring R&D costs, lowered drug approvals, increased development times, the loss of patent protection on several blockbusters, safety issues, and pricing pressures. The sole positive in this scenario is the flow of biological breakthroughs.

Current Lilly estimates put the cost of a new medical entity at $1.2 billion. Extrapolating that figure, the cost will reach $2 billion by 2010, Paul warned. “This business model will become fundamentally untenable if we don’t do something about it.”

In the next five years, Paul noted that more than 80 successful drugs will lose patent protection, including Zocor, Ambien, and Lipitor. The effective patent life of blockbuster drugs is approaching 10 years, said Paul, who contrasted that short lifespan with the 50 years of copyright protection enjoyed by Mickey Mouse! “We should start the clock when the drug reaches market,” Paul suggested.

Critical Path Praise
Paul praised the FDA for its Critical Path initiative. “Things have gotten so bad, even the FDA has sympathy for us,” Paul joked. But Lilly has itself “dissected and deconvoluted the drug discovery process,” said Paul, with the goal of improving R&D efficiency and the effectiveness of clinical research.

Two of the major points Lilly is focusing on are the rate of attrition in Phase II trials (only one in five drugs passes along to Phase III) and reducing the cost of new medical entities from $1.2 billion to $800 million. “We have targets up the wazoo,” said Paul. “Finding leads, small molecules … that’s another order of magnitude [harder].” Biomarkers will be “useful all across the value chain,” aided by the Biomarker Consortium.

Paul identified the gap between lead discovery and the clinic as the “sweet spot for drug discovery.” Paul’s goal is to reduce that timeline to 1,000 days.

Ultimately, however, all drugs carry some risk. Paul said the “public must understand the benefit-risk equation.” He compared the adverse events associated with statins with the fatalities of driving. One million auto drivers give rise to some 220 fatalities each year. By contrast, of one million patients taking statins, only two deaths are associated as a result of serious side effects.