Innovative drug development to reduce costs

Scientific innovation and growth in transformative treatments have been accompanied by ever-increasing costs, which raises the question of how the accessibility of these life-saving drugs to patients is affected. UK-based Baillie Gifford says that as drug development becomes faster, more predictable, and repeatable, it should also become cheaper.

“For the first time, not only can we pinpoint the molecular and genetic causes of disease, but we also have the technologies to access them. On the back of this, prevention and cures are becoming possible. Can we afford them?” asks Marina Record, Investment Manager at Baillie Gifford.

The investment management firm says that as there is innovation in the model of drug discovery, there needs to be innovation in other allied areas too, instead of just relying on regulation. Baillie Gifford takes the example of the cost of gene sequencing, whose cost has been reduced to $500 from $100 million per genome two decades ago.

While most drugs fail in the testing phase, the use of innovative technology has made drug development more predictable. Record says that as most drugs fail, the one which is successful is used by pharmaceutical companies to recover their costs, but innovation in drug discovery can change that and dramatically reduce retail prices.

Prevention is better than cure, but currently, our healthcare systems are more focused on curing diseases than preventing them. This is where innovation in treatment approaches comes in, where Baillie Gifford says earlier diagnosis and treatment of diseases can slow down and prevent diseases from progressing, making it cheaper for healthcare systems.

As for the innovation in payment models, Baillie Gifford takes the example of EQRx, a biotechnology company, which delivers medicines to patients on a subscription basis.

Additionally, higher competition in drug development may cause prices to come lower, and this coupled with better supply chains and manufacturing facilities will allow reducing overall costs for patients.

“Investors can play a critical role in the incentive systems of life science companies. Short-term investors may encourage management to set high prices with frequent increases to maximise near-term profits. In contrast, supportive long-term, patient capital encourages companies to expand opportunities by investing in teams, technology and science,” writes Record from Baillie Gifford.

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