When Moore’s law stopped working
Nearly fifty years ago, Gordon Moore, a director of R&D
at Fairchild semiconductors, wrote an internal paper about the progress of
integrated circuits. In his paper, Moore predicted, based on an extrapolation
from six previous years following the invention of the integrated circuit in
1959, that every year a computer chip will double the number of components
whilst halving in price.
Maybe it was a self-fulfilling prediction because Intel
employed Gordon Moore shortly after and used his prediction in their business
model. Nevertheless, the same rule applied to all types of technologies and was
branded the ‘Moore’s Law’. Technological improvement leads to an increase in
production which leads to a subsequent price reduction.
Progress in healthcare also follows the same law. Since the 1970s,
production has sped up and in a way got cheaper.
Working in the pharmaceutical industry for the last decade,
I have noticed that even with the economic downturn of the last three years,
there is still huge progress in medical research and the speed of change is
exponential. Technologies are developing and reaching larger audiences, however,
when one hears about the cost of treatments, one may start to wonder if Moore’s
Law could ever be applied to medicine.
Why should Moore’s
Law apply to medicine?
Moore’s law should apply to medicine because scientific
research is dependent on computing power. For example: efficiency of equipment
used for diagnostics has always been limited by computer memory and processor speeds.
The introduction of LED lasers instead of the cumbersome expensive noble gas
lasers, MRI, 3D ultrasound, computerised tomography (CT), DNA Sequencing, microscopy, flow cytometry, computer
associated drug design, robotics, high-throughput screening and automated
bioreactors in manufacturing, all advanced due to computing power in the last
10 years.
Therefore, scientific research that took 3 years to perform
in 2000 may take just 3 hours today.
Moreover, structural changes within the pharmaceutical industry
moved research and manufacturing to specialised contract partners (CROs and
CMOs), reducing R&D costs, and improving productivity. Very few companies
today are autonomously developing their pipelines from conception to
manufacturing. Many pharmaceutical brands have become virtual, macro managing entities
that employ specialist contractors to perform the different aspects of clinical
research.
Why Moore’s Law does
not apply medicine?
The pharmaceutical industry is cash dependent. Return on
investment takes over 10 years to achieve and in many cases does not happen at
all. In the meanwhile, biotech and pharmaceuticals survive on constant cash
flows, sometimes only from investors to pay for overheads and R&D. When a
drug finally makes it to the market it may have to pay for the total investment
of all conceived but undeveloped posterity.
In-order to attract investors’ interest, large
pharmaceuticals have to bring to the market at least one blockbuster drug a
year (a blockbuster achieves over $1B sales per annum).
Regulation has improved and therefore has become more
expensive. Today’s applications to the FDA, EMA and Japan are costlier than
ever. For example an average phase-I trial cost $7m-$10m, and a phase-III trial
may cost 10x that. New drug application consists of about 100,000 pages and
takes up to 2 years to approve, costing an additional $1M-$2M.
As a consequence healthcare costs are rising much faster
than GDP.
Figure 1 Healthcare
costs vs. GDP
Greed and money
If you have followed my trail of thought this far, you might
think that I am heading towards blaming the escalating costs of healthcare on pharmaceutical
companies’ ‘greed’. Well, I am not!
When I got my first job in a small biotech, based in Welwyn
Garden City, my friends warned me “Be prepared for disappointment. Don’t get
attached! Because projects that you live and breathe and become part of you
like a beloved pet, tend to die (or be sold off)”.
Unlike many other businesses (mining, banking and insurance),
the pharmaceutical industry is predominantly based on good intentions – finding
cures for diseases, helping humanity, prolonging life and curing cancer.
Nevertheless, good intentions come at expense, and the only way to fund them is
to run a business, attract investment and make a profit.
Moore’s law cannot apply to medicine because although drug
discovery has come a long way from the invention of penicillin, we are still
only at the beginning. When we achieve cures for many of our ailments, only
then, will we see healthcare costs come down.
Figure 2 Moores’
extrapolation (from Wikipedia)
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