Innovation is king, copycats be damned

Alright the title is a bit harsh, but it's true. Regulators and payers have had it up to here with incremental advances. I fully understand that what seems like "me too" drugs aren't as devious and underhanded as they seem. Innovation really pays big for companies like Biogen Idec (NASDAQ: BIIB). Here's a snip:

The financial risks associated with getting a drug out of the lab and into the market are astronomical. It's easy to understand the tendency for the Drug Majors to play it safe and funnel their limited resources toward programs likely to win approval. Sadly, with the string of big expiring patents over the past few years, this has been happening far too often.

Consider sodium glucose co-transporter 2 (SGLT2) inhibitors for treatment of type 2 diabetes. There are at least half-a-dozen late stage programs all trying to fit in this space. During the latest annual meeting of the American Diabetes Association,Boehringer Ingelheim clinical development director, Dr. Maximilian von Eynatten, said "I think probably from a clinical perspective, there is no big difference between the SGLT2 compounds so far, at least from everything we have seen." His employer is partnered with Eli Lilly to develop these compounds, and even he admits the program isn't accomplishing anything significant.

Government and private payers are getting fed up with the lack of innovation coming out of Big Pharma. During Q3 2013, Express Scripts Holding Company implemented a far more aggressive design of its National Preferred Formulary. Government payers in the Eurozone have long been austere, but are increasingly flexing their muscles. Demanding heavy discounts for non-breakthrough therapies in return for reimbursement approvals is on the rise.

Read the whole piece only at The Motley Fool.