Pharmaceutical firms underinvest in long-term research to develop new cancer-fighting drugs due to the greater time and cost required to conduct such research, according to a study newly published in American Economic Review (2015; doi:10.1257/aer.20131176).

Specifically, drugs to treat late-stage cancers are less costly to develop than drugs for earlier-stage cancers, partly because the late-stage drugs extend people’s lives for shorter durations of time. This means that the clinical trials for such drugs get wrapped up more quickly, providing drug manufacturers more time to control patented drugs in the marketplace.

“There is a pattern where we get more investment in drugs that take a short time to complete, and less investment in drugs that take a longer time to complete,” said co-author and economist Heidi Williams, PhD, of the Massachusetts Institute of Technology in Cambridge.

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The social cost is significant: The researchers estimate that the lack of investment in longer-term drugs resulted in a loss of 890,000 life-years among people with cancer diagnoses in the year 2003 alone. The paper also suggests three policy adjustments that might produce more long-term research on anticancer drugs.

The finding “doesn’t mean that the private firms are doing anything wrong,” Williams added, given the incentives they face. However, she observed, “The public sector is more willing to invest in these long-term projects than is the private sector,” suggesting that new policies could produce more types of drugs for patients.

To conduct the study, the researchers analyzed four decades of data from a variety of comprehensive sources, including the National Cancer Institute (NCI), which has a registry of clinical trials and data on cancer incidence and survival in the United States, as well as data from the Food and Drug Administration (FDA), which approves anticancer drugs. In all, the study encompassed more than 200 subcategories of cancers detected at different stages of development.

Before reaching their conclusions, however, the researchers had to establish that the tendency toward short-term drug research was due significantly to the shorter duration of clinical trials. They concluded this, in part, by studying what happens when clinical trials do not use mortality to establish effectiveness, but instead use surrogate endpoints, which are biomarkers that stand as proxies for eventual outcomes and help estimate how effective the drugs will be.

By examining the historical data, the authors found that in some cases where surrogate endpoints are allowed in cancer research clinical trials, including many types of leukemias, there were relatively more trials and money poured into research, other things being equal.

“When you have good surrogate endpoints, you see a dramatic increase in R&D investment, which means lives saved,” said Benjamin Roin, PhD, also of MIT.

A second possible policy change is more public funding of research and development for anticancer drugs, since such funding is free of short-term, private-sector shareholder pressure to produce returns. There are only six cancer drugs in existence that are preventive in nature, and all six have been developed because of public funding, or relied on surrogate endpoints.

A third potential new policy, suggest the researchers, would be changing the terms of drug patents, which typically run from the time of patent filing, to run from the time when the drug hits the market. That said, the FDA can currently grant exemptions that lengthen drug patents to account for the time R&D takes.