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Large pharmaceutical companies oppose legislation being considered by Congress to lower the prices of prescription drugs. Reducing their revenues, they contend, will reduce their investment in drug development and the discovery of new medicines, and thus lead to a decline in drug innovation.

If that argument is credible, there should be evidence to show that the large pharmaceutical companies are responsible for discovering innovative new drugs.

To test that claim, we examined the provenance of the highest-selling prescription medicines of Pfizer and Johnson & Johnson, the two largest pharmaceutical and biotechnology companies in 2018.

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We found that these large pharmaceutical companies did not actually invent most of the drugs they sell. Indeed, it appears they have already reduced their investment in the discovery of new medicines to the point where the threat of additional reductions rings hollow and is no longer a persuasive reason for opposing legislation to lower drug prices.

Pfizer’s and J&J’s annual reports identify the medications that account for most of each company’s sales of prescription drugs. We gathered information on the discovery and early development of these products from peer-reviewed publications, media reports, and company press releases.

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We scoured the companies’ 2017 annual reports. A total of 62 products — 44 from Pfizer and 18 from J&J — were listed in them. The discovery and early development work were conducted in house for just 10 of Pfizer’s 44 products (23%), as listed in Table 1. Only two of J&J’s 18 leading products (11%) were discovered in house, as shown in Table 2.

For example, sildenafil, the phosphodiesterase inhibitor that is the active compound in the erectile dysfunction drug Viagra and the pulmonary hypertension drug Revatio, was synthesized at Pfizer in the 1980s, originally as a cardiovascular medicine. Research leading to the development of risperidone (Risperdal), one of several newer-generation atypical antipsychotic drugs, began at J&J in the 1980s.

The majority (81%) of other products were discovered and initially developed by third parties. Some of them came to Pfizer and J&J from the acquisition of other pharmaceutical companies. For example, Pfizer’s highest-selling product, Prevnar 13, a vaccine for pneumococcal disease, was developed at Wyeth, which Pfizer acquired in 2009. Pfizer’s palbociclib (Ibrance), used to treat breast cancer, had its origins at Warner-Lambert and Onyx Pharmaceuticals. J&J’s rivaroxaban (Xarelto), an anticoagulant, originated at Bayer.

Research leading to the discovery and development of other Pfizer and J&J drugs originated in universities and academic centers. J&J’s highest-selling product, infliximab (Remicade), is a monoclonal antibody that was synthesized by researchers at New York University in 1989 in collaboration with the biotechnology company Centocor. The original work showing its efficacy in rheumatoid arthritis was led by Marc Feldmann and Ravinder Maini at Imperial College London.

Etanercept (Enbrel), tofacitinib (Xeljanz), darunavir (Prezista), and daratumumab (Darzalex) are other products for which key discovery or development steps occurred in academic settings.

The 34 Pfizer products discovered by third parties accounted for 86% of the $37.6 billion in revenue that its 44 leading products generated. The 16 J&J products invented elsewhere accounted for 89% of the $31.4 billion that its 18 leading products generated. Clearly, the existence of Pfizer and J&J as profitable pharmaceutical manufacturers is dependent on the acquisition of drugs invented by third parties.

Our finding that few of the top-selling drugs made by Pfizer and J&J had been discovered in-house complements a recent Government Accountability Office report examining where large pharmaceutical companies spend most of their research dollars. It is also consistent with the latest member survey conducted by PhRMA, which indicated that last year only $13 billion was spent on preclinical studies — the basic and translational science that is the foundation for the discovery of innovative drugs.

That is only a fraction of the $39.2 billion taxpayers spent to support the medical research conducted by the National Institutes of Health. More than 80% of the NIH’s funding is awarded through almost 50,000 competitive grants to more than 300,000 researchers at 2,500+ universities, medical schools, and other research institutions in every state and around the world. While it is important to give fair consideration to the cost and risk involved in the development of new drugs, Pfizer and J&J were mostly buying drugs that had already been shown to have efficacy.

The lack of in-house innovation at Pfizer and J&J is relevant to current efforts in the Senate (S. 2543) to limit annual drug price increases to the rate of inflation, and in the House of Representatives (H.R. 3) to cap drug price increases and limit prices based on what is charged for the same drug in other developed countries.

Large pharmaceutical manufacturers have claimed that enactment of this legislation would be an “innovation killer” and trigger a “nuclear winter for the U.S. biopharmaceutical ecosystem.” And President Trump tweeted late last month that the Pelosi drug pricing bill “doesn’t do the trick. FEWER cures! FEWER treatments!”

 

If our findings are representative of the level of innovation at other large pharmaceutical manufacturers, a reduction in pharmaceutical revenues would not have the supposed devastating impact on the level of biopharmaceutical innovation. Rather, a reduction in revenues as a result of lower drug prices may reduce the astronomical acquisition prices now being paid by the large manufacturers to acquire innovations made by others.

But the biopharmaceutical ecosystem will continue to thrive as long as those who actually innovate are provided with the resources to do so while those who play other roles in bringing new drugs to market are fairly compensated for their contributions to those aspects of the development process.

As a recent report from the National Academies of Medicine concluded, “drugs that are not affordable are of little value and drugs that do not exist are of no value.” The problem of affordability will not be solved if Congress continues to succumb to questionable assertions by lobbyists claiming that excessively high drug prices are essential to maintaining biopharmaceutical innovation.

Passage of legislation to curb ridiculously high medication prices and price increases will not only make medicines more accessible to patients but will also reduce government expenditures on drugs by more than $345 billion dollars over 10 years, according to the Congressional Budget Office. That will enable the government to make greater investments in NIH and produce an even more robust biomedical innovation ecosystem than now exists.

Emily H. Jung is a first-year medical student at Emory School of Medicine in Atlanta and a former research assistant at the Program On Regulation, Therapeutics, And Law (PORTAL) in the Division of Pharmacoepidemiology and Pharmacoeconomics at Brigham and Women’s Hospital. Alfred Engelberg, J.D., is a retired pharmaceutical intellectual property attorney and philanthropist. Aaron S. Kesselheim, M.D., is a professor of medicine at Harvard Medical School and director of PORTAL. Funding for this work was provided by the Engelberg Foundation, a charitable foundation that focuses on health policy research. Kesselheim’s work is also supported by the Harvard-MIT Center for Regulatory Science and Arnold Ventures.


Table 1. Origins of drug products manufactured by Pfizer in 2017*

Product 2017 Revenue Key origins
Pneumococcal 13-valent Conjugate Vaccine (Prevnar 13) $5.6 billion Wyeth Pharmaceuticals, acquired by Pfizer in 2009
Pregabalin (Lyrica) $5.1 billion Northwestern University in the 1980s; later entered into a licensing agreement with Warner-Lambert, which was acquired by Pfizer in 2000
Palbociclib (Ibrance) $3.1 billion Warner-Lambert and Onyx Pharmaceuticals in the 1990s; Warner-Lambert was acquired by Pfizer in 2000
Apixaban (Eliquis) $2.5 billion DuPont Pharmaceuticals in 1995; acquired by Bristol-Myers Squibb in 2001; Bristol-Myers Squibb and Pfizer entered into an agreement to jointly develop apixaban in 2007
Etanercept (Enbrel) $2.5 billion Etanercept synthesized at Massachusetts General Hospital in the 1980s, with private funding from Hoechst AG; entered into a licensing agreement with Immunex Corporation in the late 1990s; Immunex entered into a co-promotion agreement with Wyeth-Ayerst Laboratories; Immunex was acquired by Amgen in 2002; Wyeth Pharmaceuticals was acquired by Pfizer in 2009. Since the expiration of the co-promotion agreement in 2013, Pfizer and Amgen have held marketing rights outside of and in the US and Canada, respectively
Atorvastatin (Lipitor) $1.9 billion Warner-Lambert in the 1980s, acquired by Pfizer in 2000
Tofacitinib (Xeljanz) $1.3 billion National Institutes of Health in the 1990s, which later entered into a collaboration with Pfizer
Sildenafil (Viagra) $1.2 billion Sandwich laboratories of Pfizer (U.K.) in the late 1980s; Pfizer scientists originally tested sildenafil as a treatment for angina, but during clinical trials in the 1990s, saw sildenafil’s potential to treat erectile dysfunction; in the late 1990s and early 2000s, discovered evidence demonstrating sildenafil’s potential to treat pulmonary hypertension
Sunitinib (Sutent) $1.1 billion Sugen, a biotechnology company founded by kinase researchers at New York University and the Max Planck Institute for Biochemistry; Sugen was acquired by Pharmacia & Upjohn in 1999; which was acquired by Pfizer in 2003
Varenicline (Chantix) $997 million Pfizer in the 1990s
Conjugated estrogens (Premarin) $977 million Ayerst, McKenna & Harrison and McGill University in the 1920s; Ayerst, McKenna & Harrison was acquired by American Home Products in 1943, which acquired Wyeth in 1931 and changed the company name to Wyeth in 2002; Wyeth was acquired by Pfizer in 2009
Amlodipine (Norvasc) $926 million Pfizer in the 1980s
Celecoxib (Celebrex) $775 million G.D. Searle in the 1990s, the pharmaceutical division of Monsanto Company, acquired by Pharmacia & Upjohn in 2000; Pharmacia was acquired by Pfizer in 2003
Coagulation factor IX recombinant, nonacog alfa (BeneFIX) $604 million British Technology Group and Oxford University, which licensed Factor IX technology to Genetics Institute, a biotechnology company found by molecular biologists at Harvard University; the Genetics Institute was acquired by Wyeth in 1996; Wyeth was acquired by Pfizer in 2009
Crizotinib (Xalkori) $594 million Sugen in 1996, a biotechnology company founded by kinase researchers at New York University and the Max Planck Institute for Biochemistry; Sugen was acquired by Pharmacia & Upjohn in 1999; Pharmacia was acquired by Pfizer in 2003
Enzalutamide (Xtandi) $590 million University of California, Los Angeles, in the early 2000s, which later licensed the drug’s patent to Medivation, which entered into a global agreement with Astellas to jointly commercialize enzalutamide in 2009; Medivation was acquired by Pfizer in 2016
Antihemophilic factor recombinant, moroctocog alfa (Refacto AF/Xyntha) $551 million Dyax Corporation, which licensed phage display technology to Wyeth; Wyeth was acquired by Pfizer in 2009
Somatropin (Genotropin) $532 million Genentech developed the first recombinant version of pituitary growth hormone, which had been used in treatment for many decades based on research at multiple academic centers. This version originated with Pharmacia Corporation, which was acquired by Pfizer in 2003.
Methylprednisolone (Medrol) $483 million million Pharmacia Corporation, which was acquired by Pfizer in 2003.
Sulbactam/cefoperazone (Sulperazon) $471 million Pfizer in the 1970s
Voriconazole (Vfend) $421 million Pfizer in the 1980s
Infliximab (Inflectra/Remsima) $419 million Pfizer manufactures follow-on biologics to Johnson & Johnson’s infliximab (Remicade)
Axitinib (Inlyta) $339 million Pfizer in the 2000s
Latanoprost (Xalatan/Xalacom) $335 million Columbia University in the 1970s, which later entered into a collaboration with Pharmacia, which was acquired by Pfizer in 2003
Dalteparin (Fragmin) $306 million Fresenius Kabi, a pharmaceutical company, in the 1970s, which later entered into a collaboration with Pharmacia, which was acquired by Pfizer in 2003
Desvenlafaxine (Pristiq) $303 million Wyeth, acquired by Pfizer in 2009
Venlafaxine (Effexor) $297 million Wyeth, acquired by Pfizer in 2009
Sertraline (Zoloft) $291 million Pfizer in the 1970s
Epinephrine (EpiPen) $290 million Epinephrine was first marketed in the early 1900s by Parke, Davis & Company, which was acquired by Warner-Lambert in 1970; Warner-Lambert was acquired by Pfizer in 2000. The device was invented in 1970s at Survival Technology, which became Meridian Medical Technologies in 1996; Meridian was acquired by King Pharmaceuticals, which was later acquired by Pfizer in 2010. Pfizer manufactures the EpiPen, which Mylan markets and distributes.
Linezolid (Zyvox) $281 million DuPont in the 1980s, where oxazolidinones were first discovered; Pharmacia (formerly Pharmacia & Upjohn) in the 1990s, which was acquired by Pfizer in 2003
Azithromycin (Zithromax) $270 million Pliva (now a subsidiary of Teva) in the 1970s, a pharmaceutical company, which later entered into a licensing agreement with Pfizer in 1986
Dibotermin alfa (BMP-2) $261 million Genetics Institute, a biotechnology company found by molecular biologists at Harvard; Genetics Institute was acquired by Wyeth in 1996, which was acquired by Pfizer in 2009
Tigecycline (Tygacil) $260 million Lederle Laboratories, the pharmaceutical division of American Cyanamid Company, which was later acquired by American Home Products in 1994, which acquired Wyeth in 1931 and changed the company name to Wyeth in 2002; Wyeth was acquired by Pfizer in 2009
Fesoterodine (Toviaz) $257 million Schwarz BioSciences, a pharmaceutical company, which later licensed fesoterodine to Pfizer in 2006
Pegvisomant (Somavert) $254 million Ohio University in the 1990s, where molecular biologists helped found Sensus Drug Development Corporation and used technology from Genentech; Sensus was acquired by Pharmacia in 2001, which was acquired by Pfizer in 2003
Sildenafil (Revatio) $252 million See Viagra, above
Dexmedetomidine (Precedex) $243 million Orion Pharma in the 1990s, a pharmaceutical manufacturing company which later licensed dexmedetomidine to Hospira, a spin-off of Abbott Laboratories; Hospira was acquired by Pfizer in 2015
Eletriptan (Relpax) $236 million Pfizer
Bosutinib (Bosulif) $233 million Wyeth, which was acquired by Pfizer in 2009
Alprazolam (Xanax) $225 million Hoffman-La Roche in the 1950s, where the first benzodiazepines were discovered; Upjohn in the 1960s, which merged with Pharmacia Corporation in 1995; Pharmacia was acquired by Pfizer in 2003
Piperacillin; tazobactam (Zosyn/Tazocin) $194 million SynPhar Laboratories, a joint venture between a scientist at the University of Alberta (Canada) and Taiho Pharmaceuticals; SynPhar licensed tazobactam/piperacillin to Wyeth, which was acquired by Pfizer in 2009
FSME-IMMUN/TicoVac $134 million Hyland-Immuno in the 1980s, a division of Baxter International; Pfizer acquired Baxter’s portfolio of marketed vaccines in 2014
Crisaborole (Eucrisa)</td $67 million Anacor, a biopharmaceutical company founded by researchers at Stanford University and Penn State University; Anacor was acquired by Pfizer in 2016
Sildenafil $56 million Pfizer manufactures a generic version of Viagra

* Origins listed for each drug based on methods described in article and do not exclude the possibility of contributions from other scientists or organizations.


Table 2. Origins of drug products manufactured by J&J in 2017*

Product 2017 Revenue Key origins
Infliximab (Remicade) $6.3 billion Synthesized at New York University in the 1980s in collaboration with Centocor Ortho Biotech, which was acquired by J&J in 1999
Ustekinumab (Stelara) $4.0 billion Centocor, which licensed Medarex’s UltiMAb technology to generate ustekinumab in 1997; Centocor was acquired by J&J in 1999
Paliperidone (Invega Sustenna/Xeplion/Trinza/Trevicta) $2.6 billion J&J
Abiraterone (Zytiga) $2.5 billion UK Institute of Cancer Research in the 1990s, which later assigned rights for the development of abiraterone to British Technology Group International, which licensed abiraterone to Ortho Biotech Oncology Research & Development, a unit of Cougar Biotechnology, in 2004. Cougar was acquired by J&J in 2009
Rivaroxaban (Xarelto) $2.5 billion Bayer in the 1990s, which later entered into a collaboration with J&J to jointly develop rivaroxaban
Ibrutinib (Imbruvica) $1.9 billion Celera Genomics in 2005, a company founded by a geneticist as a unit of biotechnology company Applera. Pharmacyclis acquired some of Celera’s drug discovery programs, including ibrutinib, and entered into an agreement with J&J to jointly develop and market ibrutinib in 2011
Golimumab (Simponi/Simponi Aria) $1.8 billion Centocor, which licensed Medarex’s UltiMAb technology to develop golimumab; Centocor was acquired by J&J in 1999
Darunavir (Prezista/Prezcobix/Rezolsta/Symtuza) $1.8 billion University of Illinois at Chicago, in collaboration with the National Institutes of Health and Purdue University, which later licensed darunavir to Tibotec, a pharmaceutical company founded by researchers at the Rega Institute for Medical Research, which was acquired by J&J in 2002
Daratumumab (Darzalex) $1.2 billion Genmab, a European spinoff of U.S.-based Medarex, in collaboration with the University Hospital in Utrecht; Genmab licensed daratumumab to J&J in 2012
Bortezomib (Velcade) $1.1 billion ProScript, originally founded as MyoGenics by scientists at Harvard; ProScript later collaborated with the National Cancer Institute to further develop the drug. ProScript merged with LeukoSite, which was acquired by Millennium Pharmaceuticals in 1999. Millennium was acquired by Takeda in 2008, which entered into a co-promotion agreement in J&J in 2010
Canagliflozin (Invokana/Invokamet) $1.1 billion Mitsubishi Tanabe Pharm, which later licensed canagliflozin to J&J
Epoetin alfa (Procrit/Eprex) $972 million Amgen, which later assigned rights for non-dialysis indications in the U.S. and for all indications approved outside the U.S. to J&J
Risperidone (Risperdal Consta) $805 million J&J in the 1980s
Methylphenidate (Concerta) $791 million Ciba-Geigy in the 1940s. ALZA Corporation, which developed an alternative formulation of methylphenidate, was acquired by J&J in 2001
Rilpivirine (Edurant) $714 million Tibotec, which was acquired by J&J in 2002
Macitentan (Opsumit) $573 million Actelion in 2002, which was acquired by J&J in 2017
Bosentan (Tracleer) $403 million Hoffman-La Roche, which later licensed bosentan to Actelion, which was acquired by J&J in 2017
Selexipag (Uptravi) $263 million Nippon Shinyaku, which later entered into an agreement with Actelion to jointly develop selexipag in 2008, Actelion was acquired by J&J in 2017

* Origins listed for each drug based on methods described in article and do not exclude the possibility of contributions from other scientists or organizations.

  • Is this supposed to be a serious analysis of the issue? Of the many flaws in this argument, let me point out a couple.
    First, Pfizer and Janssen aren’t representative of the entire industry and not is your time-frame.
    Second, the revenues these and other large pharmas get allow then to buy smaller companies. These smaller companies only get the funds to do the research because of the projected payouts when they are acquired or go to market.
    This article seems to have been written by people who don’t even know the basics of the industry.

  • The companies make this argument about innovation because they want to show Americans what is in it for them, but this may be the wrong approach. This just turns into a debate over how much communism we will have. They could try making a universal and moral argument against state intervention and price controls. People in other industries can get behind that because they don’t want their industries destroyed either.

  • Good job you guys, you figured out that pharma companies outsource discovery, the cheapest part of making a drug! Do you think small companies and unis are going to keep cranking out leads if no one acquires them?

  • I fully agree with previous comments pointing out the glaring flaws in the article. STAT has an obligation to present accurate and balanced information and is doing a disservice by allowing articles like these to stand unchallenged. I urge STAT to publish the other side of this issue and clearly point out the investments and risks undertaken by Pharma (of all sizes) when bringing an idea to the medical marketplace.

  • p.s., one of the authors, Alfred Engelberg made enough money challenging pharma patents to have a $23,000,000 apartment in NYC (https://abovethelaw.com/2015/07/lawyerly-lairs-patent-litigator-leaves-the-pierre-selling-23-million-apartment/).

    I get it; people are paid for their expertise, and I have no issue with that. But isn’t there, then, a double standard in which lawyers cashing in on their expertise = good, but Pharma cashing in their expertise = bad?

    • Really? Because I seem to recall people getting positively skewered for not reporting they once received a textbook worth $50 from a drug rep.

      Shouldn’t this article disclose that he made MILLIONS of dollars suing pharma companies?

    • Thank you for the link. Gotta love the irony of a patent troll who contributes nothing to society criticizing the pharma industry which even with its faults, delivers products that save and improve the lives of millions.

  • the need for money stimulates innovation in a market system. pharma companies have money. this imbalance of needing money to having money is enough to move the needle forward. that, in and of itself, is valuable. then, there’s the concept of mass scalability. that some companies can do this and others can’t is enough to suggest that just on this facet alone pharma companies have the resources to stimulate innovation and scale it. innovation not accessible is has the net effect of 0.

  • This article wholly ignores the costs of toxicology, pivotal clinical trials, and pharamcovilgelence required to register and monitor new drugs which are the expertise of…. large scale pharmacy companies

    The suggestion that once a pivotal discovery is made in the lab all the heavy lifting the is done and clinical development is easy and guaranteed (or worse uncecssary) is both completely wrong and incredibly naive.

    Where do the authors think the resources and expertise to do large scale clinical trials is going to come from?

    Hardly surprising given the lead author is a first year medical student

  • There is no such thing as the “Government Accounting Office”. The correct name of that Congressional agency is Government Accountability Office.

  • Sweet Jeebus, what a horrible piece.

    Has it occurred to any of these authors that maybe–just maybe–larger Pharma companies are pretty much only entities capable of supporting large-scale clinical programs past Phase I (or even past pre-clinical stages), support a filing, produce drug in sufficient quantities, and continue to support it post-approval?

    Do any of these authors fathom the massive undertaking required for a filing? Literally millions of pages of documents and a labyrinth (and expensive) submission process. Then there’s all the postmarketing surveillance — you think the NIH or an academic institution is going to process the AE reports submitted every year to the FDA? Do you know how many have been reported so far in 2019? 1.6 MILLION.

    Not to mention, many smaller companies’ sole purpose is to develop a compound and sell it to a large company to, you know, make money. Not to further mention that, you know, the rate of success in development is, like 5%. I’m sure Emory’s and Harvard’s success rate for efficacious compounds is no better. If people never looked to work with partners, drug development would die.

    Then again, this is typical opinion by a typical sanctimonious medical student (and a first year at that!) who has zero idea of how drug development and pharma work, but has been indoctrinated by academics that Pharma=bad and that free pens are a threat to civilization.

  • This piece misses the mark. There is a brief moment where the authors address acquisitions, but only to suggest lower drug prices will reduce astronomical acquiring prices of new innovations. Why do those new innovations get to such a point in the first place? How many of those innovations will be brought through the biotech pipeline with reduced ROI? What we witness here is a fundamental example of missing the forest for the trees. Large pharmaceutical companies have – rightly – derisked themselves in large part by letting at-risk capital carry the heavy lifting of early stage clinical development. Then they fuel this segment of the industry by acquiring assets that have been shepherded through the riskiest of milestones.

    Reducing drug prices today will slow innovation tomorrow. That may be a worthwhile tradeoff but to suggest it doesn’t exist is just plain wrong.

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