New drugs for osteoporosis. Comparison of the costs and required returns with those of other drugs intended for long-term use.

Specific regulatory guidelines dictate that developing a new drug for osteoporosis will be significantly more expensive and take at least 2 years longer in comparison with other long-term therapies developed using the International Committee on Harmonisation (ICH) general guidelines. Assuming similar attrition rates, the minimal additional uncapitalised cost is $US86 million for nonestrogen osteoporosis compounds following a minimum programme designed to gain indications for both treatment and prevention. The excess expenditure is created by the size requirements for phase III fracture trials in both the European Union (EU)/US and Japan. The after-tax cash flows to the point of launch discounted at 11% are $US102 million greater, reflecting the additional effect of delayed time to market. Assuming similar lifecycles, the peak sales required to return the investment on an osteoporosis drug will be a minimum of $US95 million greater per launched compound. Many ongoing osteoporosis programmes are substantially larger than the theoretical minimum. The costs of substantially increasing the sample size in phase III trials mean that blockbuster revenues will be required to break even. However, the potential cost of a delayed launch because of fracture efficacy being incompletely proved is so substantial that fracture trials need to be powered conservatively to decrease the chances of this eventuality.