The Pricing of Breakthrough Drugs: Theory and Policy Implications

Pharmaceutical sales exceed $850 billion a year, of which 84% are accounted for by brand drugs. Drug prices are the focus of an ongoing heated debate. While some argue that pharmaceutical companies exploit monopolistic power granted by patent protection to set prices that are “too high”, others claim that these prices are necessary to motivate the high R&D investments required in the pharmaceutical industry. This paper employs a recently documented utility function of health and wealth to derive the theoretically optimal pricing of monopolistic breakthrough drugs. This model provides a framework for a quantitative discussion of drug price regulation. We show that mild price regulation can substantially increase consumer surplus and the number of patients who purchase the drug, while having only a marginal effect on the revenues of the pharmaceutical company.     

How Much Does it Cost to Expand a Protected Area System? Some Critical Determining Factors and Ranges of Costs for Queensland

Many governments have recently gone on record promising large-scale expansions of protected areas to meet global commitments such as the Convention on Biological Diversity. As systems of protected areas are expanded to be more comprehensive, they are more likely to be implemented if planners have realistic budget estimates so that appropriate funding can be requested. Estimating financial budgets a priori must acknowledge the inherent uncertainties and assumptions associated with key parameters, so planners should recognize these uncertainties by estimating ranges of potential costs. We explore the challenge of budgeting a priori for protected area expansion in the face of uncertainty, specifically considering the future expansion of protected areas in Queensland, Australia. The government has committed to adding ～12 million ha to the reserve system, bringing the total area protected to 20 million ha by 2020. We used Marxan to estimate the costs of potential reserve designs with data on actual land value, market value, transaction costs, and land tenure. With scenarios, we explored three sources of budget variability: size of biodiversity objectives; subdivision of properties; and legal acquisition routes varying with tenure. Depending on the assumptions made, our budget estimates ranged from $214 million to $2.9 billion. Estimates were most sensitive to assumptions made about legal acquisition routes for leasehold land. Unexpected costs (costs encountered by planners when real-world costs deviate from assumed costs) responded non-linearly to inability to subdivide and percentage purchase of private land. A financially conservative approach--one that safeguards against large cost increases while allowing for potential financial windfalls--would involve less optimistic assumptions about acquisition and subdivision to allow Marxan to avoid expensive properties where possible while meeting conservation objectives. We demonstrate how a rigorous analysis can inform discussions about the expansion of systems of protected areas, including the identification of factors that influence budget variability.     

The Value of Forests to World Food Security

We assembled information on the contribution and value of forests to world food security. An assessment was made of the role of forests and non-timber products in the food system of developing countries. We estimated that upwards of 300 million people annually earn part or all of their livelihood and food from forests. A total of about $90 billion in non-timber products are harvested each year. Forests also help to protect land, water, and biological resources, and they play an important role in maintaining the productivity of agricultural and environmental systems.     

Straight talk with...Joseph Schwartz

On 17 May, Human Genome Sciences (HGS) formally rejected a $2.6 billion unsolicited takeover offer by GlaxoSmithKline. The Maryland-based biotech firm had long partnered with the UK drug giant to develop drugs including Benlysta (belimumab), HGS's first drug on the market and the first new medicine approved to fight lupus in 50 years. But, at $13 a share, GSK's bid was deemed "inadequate" by the HGS board. Recent history in the biotech sector shows how high the stakes are in such negotiations. Since last November, six biopharma buyouts have exceeded $1 billion each, with Gilead Sciences' purchase last year of the hepatitis C specialist Pharmasset topping the charts at a whopping $11.2 billion, the highest ever paid for a clinical-stage biotech and an 89% premium to its share price at the time. More recently, in April AstraZeneca paid $1.3 billion for Ardea Biosciences, a company with cancer and gout drugs in the pipeline but nothing on the market.One person watching the upward clime of such deals is biopharma analyst Joseph Schwartz, a managing director at Leerink Swann in Boston. Mark Ratner sought out Schwartz, who was named the top stock picker for pharmaceuticals in the last year's FT/StarMine Analyst Awards, for his views on what's behind the recent buyout spending.     

The value of wetlands for water quality improvement: an example from the St. Johns River watershed,Florida

Wetlands provide many valuable ecosystem functions such as sediment and nutrient retention, high biological productivity and biodiversity, flood control, and opportunities to recreate. Despite their importance, estimating the value of wetlands is difficult as the worth of these functions and services is not easily quantified. The overall objective of this study was to estimate the value of freshwater wetlands in the Saint Johns River (SJR) watershed, Florida based on their ability to remove nutrients, namely nitrogen (N) and phosphorus (P). We used a combination of literature review, geospatial analysis of land cover, and regression analysis to determine the total wetland area in the SJR watershed and the rates of nitrogen and phosphorus burial in the wetlands. We then estimated the economic value of these wetlands based on the replacement cost of nutrient removal by wastewater treatment plants. Nitrogen burial rates ranged from 27 g/m²/year to a background rate of 6.56 g/m²/year, and phosphorus burial rates range from 1.31 g/m²/year to a background of 0.11 g/m²/year. Using these rates, we calculate wetlands of the SJR catchment remove 79,873 MT of nitrogen annually just from burial in the soil, with a replacement cost of between $240 million to $150 billion per year. The amount of phosphorus buried yearly is more than 2400 MT with an annual replacement cost of $17 to $497 million. Though they are based on limited data and include a variety of watershed-scale research limitations, these findings highlight the significant potential value of conserving functional wetlands based solely on their nutrient retention functions. If we were to consider the benefits associated with other wetland functions such as flood control, biological productivity, and biodiversity in addition to their ability to retain nutrients, the value of the SJR wetlands would be even greater.     

Economic impact of dengue illness and the cost-effectiveness of future vaccination programs in Singapore

Background

Dengue illness causes 50–100 million infections worldwide and threatens 2.5 billion people in the tropical and subtropical regions. Little is known about the disease burden and economic impact of dengue in higher resourced countries or the cost-effectiveness of potential dengue vaccines in such settings.

Methods and Findings

We estimate the direct and indirect costs of dengue from hospitalized and ambulatory cases in Singapore. We consider inter alia the impacts of dengue on the economy using the human-capital and the friction cost methods. Disease burden was estimated using disability-adjusted life years (DALYs) and the cost-effectiveness of a potential vaccine program was evaluated. The average economic impact of dengue illness in Singapore from 2000 to 2009 in constant 2010 US$ ranged between $0.85 billion and $1.15 billion, of which control costs constitute 42%–59%. Using empirically derived disability weights, we estimated an annual average disease burden of 9–14 DALYs per 100 000 habitants, making it comparable to diseases such as hepatitis B or syphilis. The proportion of symptomatic dengue cases detected by the national surveillance system was estimated to be low, and to decrease with age. Under population projections by the United Nations, the price per dose threshold for which vaccines stop being more cost-effective than the current vector control program ranged from $50 for mass vaccination requiring 3 doses and only conferring 10 years of immunity to $300 for vaccination requiring 2 doses and conferring lifetime immunity. The thresholds for these vaccine programs to not be cost-effective for Singapore were $100 and $500 per dose respectively.

Conclusions

Dengue illness presents a serious economic and disease burden in Singapore. Dengue vaccines are expected to be cost-effective if reasonably low prices are adopted and will help to reduce the economic and disease burden of dengue in Singapore substantially.     

Could a bioenergy program stimulate electric vehicle market penetration? Potential impacts of biogas to electricity annual rebate program

The biogas‐to‐electricity pathway under the Renewable Fuel Standard (RFS) allows for Renewable Identification Number (RIN) credits to be generated when electricity produced from biogas is used in the transportation sector. Though approved as a general pathway, EPA has proposed multiple credit allocation methods to functionalize this pathway. This study describes and evaluates a potential credit allocation framework where vehicle manufacturers generate electricity RIN (E‐RIN) credits and use these credits to increase the sales of plug‐in electric vehicles (PEVs). Under this framework, manufacturers use part of the credit value to reimburse electricity generators, offsetting potential higher biogas electricity generation cost. The remaining credit value is passed on to consumers as an annual PEV rebate to stimulate PEV sales. An iterative simulation framework is developed to fulfill two tasks: (a) to estimate the annual rebate amounts and their upfront value to consumers based on various factors, such as vehicle mileage, E‐RIN equivalence value, and biogas capacity, and (b) to evaluate potential impacts of the E‐RIN program on electrification of the future light‐duty vehicles (LDVs) and energy use. The annual rebate amount varies by vehicle technology and could be up to $870/year for battery electric vehicles (BEVs) and range between $230 and 825/year for plug‐in hybrid electric vehicles (PHEVs) depending on the electric range. These per vehicle rebates decrease when demand for electricity exceeds biogas electricity availability. The effectiveness of the program as modeled here is subject to different factors, such as the E‐RIN equivalence value, biogas electricity generation cost, biogas electricity generation capacity, and consumers’ valuation of the E‐RIN rebate. Our modeling results indicate that an E‐RIN program has the potential to produce nearly $12 billion in E‐RIN credits annually and to significantly increase PEV annual sales by up to 2.3 million and the PEV population by about 19.7 million in 2030.     

Computer aided drug discovery review for infectious diseases with case study of anti-Chagas project

Neglected tropical diseases (NTDs) are parasitic and bacterial infections that are widespread, especially in the tropics, and cause health problems for about one billion people over 149 countries worldwide. However, in terms of therapeutic agents, for example, nifurtimox and benznidazole were developed in the 1960s to treat Chagas disease, but new drugs are desirable because of their side effects. Drug discovery takes 12 to 14 years and costs $2.6 billon dollars, and hence, computer aided drug discovery (CADD) technology is expected to reduce the time and cost. This paper describes our methods and results based on CADD, mainly for NTDs. An overview of databases, molecular simulation and pharmacophore modeling, contest-based drug discovery, and machine learning and their results are presented herein.     

Pest problems: The view of the New Zealand Forest Owners' Association

Abstract

Plantation forests are very important to the New Zealand economy. They cover 1.3 million hectares (5% of the total land area) of New Zealand; 72% of all planted production forests are in the North Island, 40% in the central North Island. The total log volume cut is 14.8 million m³/yr, and the foreign exchange earnings from plantation forestry is $1.9 billion.     

我国生物医药企业发展建议

近年来,国外生物医药产业发展迅速,在发达国家,生物医药产品在药品市场中已占有了重要地位,哺乳动物细胞表达的产品已经占据生物医药的主流地位。相比之下,我国生物医药品种主要采用简单的大肠杆菌、酵母表达技术,技术难度较高的哺乳动物细胞药品与国外差距显著,因此,哺乳动物表达的生物药品将成为国内生物医药企业的重要发展机会。多年来,鉴于我国从发达国家获得生物技术转让少,国内生物医药发展需立足于自主研发,建立高效的研发技术平台,选择合适的开发项目,促进企业的发展。     

Efficiency of antisense oligonucleotide drug discovery

The costs for discovering and developing new drugs continue to escalate, with current estimates that the average cost is more than $800 million for each new drug brought to the market. Pharmaceutical companies are under enormous pressure to increase their efficiency for bringing new drugs to the market by third-party payers, shareholders, and their patients, and at the same time regulators are placing increased demands on the industry. To be successful in the future, pharmaceutical companies must change how they discover and develop new drugs. So far, new technologies have done little to increase overall efficiency of the industry and have added additional costs. Platform technologies such as monoclonal antibodies and antisense oligonucleotides have the potential of reducing costs for discovery of new drugs, in that many of the steps required for traditional small molecules can be skipped or streamlined. Additionally the success of identifying a drug candidate is much higher with platform technologies compared to small molecule drugs. This review will highlight some of the efficiencies of antisense oligonucleotide drug discovery compared to traditional drugs and will point out some of the current limitations of the technology.     

Costs associated with gunshot wounds in Canada in 1991.

OBJECTIVE: To estimate the costs (in 1993 dollars) associated with gunshot wounds in Canada in 1991. DESIGN: Cost analysis using separate estimates of gunshot incidence rates and costs per incident for victims who died, those who survived and were admitted to hospital and those who survived and were treated and released from emergency departments. Estimates were based on costs for medical care, mental health care, public services (i.e., police investigation), productivity losses, funeral expenses, and individual and family pain, suffering and lost quality of life. SETTING: Canada. OUTCOME MEASURES: Costs per case, costs by type of incident (e.g., assault, suicide or unintentional shooting) and costs per capita. RESULTS: The total estimated cost associated with gunshot wounds was $6.6 billion. Of this, approximately $63 million was spent on medical and mental health care and $10 million on public services. Productivity losses exceeded $1.5 billion. The remaining cost represented the value attributed to pain, suffering and lost quality of life. Suicides and attempted suicides accounted for the bulk of the costs ($4.7 billion); homicides and assaults were the next most costly ($1.1 billion). The cost per survivor admitted to hospital was approximately $300,000; this amount included just over $29,000 for medical and mental health care. CONCLUSION: Costs associated with gunshot wounds were $235 per capita in Canada in 1991, as compared with $595 in the United States in 1992. The differences in these costs may be due to differences in gun availability in the two countries. This suggests that increased gun control may reduce Canada''s costs, especially those related to suicide.     

Thermodynamics of the Corn-Ethanol Biofuel Cycle

This article defines sustainability and sustainable cyclic processes, and quantifies the degree of non-renewability of a major biofuel: ethanol produced from industrially grown corn. It demonstrates that more fossil energy is used to produce ethanol from corn than the ethanol's calorific value. Analysis of the carbon cycle shows that all leftovers from ethanol production must be returned back to the fields to limit the irreversible mining of soil humus. Thus, production of ethanol from whole plants is unsustainable. In 2004, ethanol production from corn will generate 8 million tons of incremental CO₂, over and above the amount of CO₂ generated by burning gasoline with 115% of the calorific value of this ethanol. It next calculates the cumulative exergy (available free energy) consumed in corn farming and ethanol production, and estimates the minimum amount of work necessary to restore the key non-renewable resources consumed by the industrial corn-ethanol cycle. This amount of work is compared with the maximum useful work obtained from the industrial corn-ethanol cycle. It appears that if the corn-ethanol exergy is used to power a car engine, the minimum restoration work is about 6 times the maximum useful work from the cycle. This ratio drops down to 2 if an ideal fuel cell is used to process the ethanol. The article estimates the U.S. taxpayer subsidies of the industrial corn-ethanol cycle at $3.8 billion in 2004. The parallel subsidies by the environment are estimated at $1.8 billion in 2004. The latter estimate will increase manifold when the restoration costs of aquifers, streams, and rivers, and the Gulf of Mexico are also included. Finally, the article estimates that (per year and unit area) the inefficient solar cells produce ～ 100 times more electricity than corn ethanol. There is a need for more reliance on sunlight, the only source of renewable energy on the earth.     

The use of ecological integrity indicators within the natural capital index framework: The ecological and economic value of the remnant natural capital of México

In this paper, the ecological integrity hierarchy framework (EIHF) and the natural capital index framework (NCI) are integrated as decision-making tools for evaluating the natural capital of Mexico. Two hierarchy-levels of ecological integrity indicators are used to estimate the quality and quantity of the natural capital, the amount of ecological degradation and ecological sustainability. After human transformation, the extent still considered as “natural” in the country is ∼67%; while the amount of human transformed areas is ∼33%, which gives a total estimate of NCI = 0.334; i.e., only ∼33.4% of the national capital remains available, while ∼33% is ecologically degraded. Furthermore, the critical natural capital; i.e., the legacy for future generations that remains in the country is only ∼12%. The total estimated value of the current natural capital in Mexico is ∼$457.1 billion/yr, which is ∼435 times greater than the national GDP ($1.051 billion in 2010). The cost of maintaining the degradation of the natural capital is ∼$144.6 billion/yr (∼138 times greater than national GDP in 2010). The potential value of the natural capital after restoration would be ∼$602 billion/yr. Valuing the natural capital can be helpful for strategic environmental evaluations and useful for spatial decision support systems that evaluate natural capital as a decision-making tool.     

中国森林生态资产价值评估

森林资源是支撑人类社会发展的重要生态资产,探索森林生态资产价值的评估方法,对合理利用和有效保护森林资源具有重要意义。运用净现值法计算了中国森林生态资产总价值为698.5万亿元,其中直接价值为7.5万亿元,包括林木价值4.5万亿元和林下产品价值3.0万亿元;间接价值为691万亿元,其中,气候调节价值量最高,占间接价值的48%;水源涵养价值量次之,占间接价值的27%。从森林生态资产总价值的分布来看,广西省、广东省和云南省位于全国前列,分别占森林生态资产总价值的10%、9%和9%。单位面积森林生态资产价值表现为海南省、浙江省和广东省较高,分别为954万元/hm2,915万元/hm2和888万元/hm2。森林生态资产价值研究为我国编制自然资源资产负债表提供理论依据,因此全面的估算中国森林生态资产价值很有意义。     

Management of tropical soils as sinks or sources of atmospheric carbon

The prevailing paradigm for anticipating changes in soil organic carbon (SOC) with changes in land use postulates reductions in SOC in managed systems (agriculture and tree plantations) relative to mature tropical forests. Variations of this notion are used in carbon models to predict the role of tropical soils in the global carbon cycle. Invariably these models show tropical soils as sources of atmospheric carbon. We present data from a variety of studies that show that SOC in managed systems can be lower, the same as, or greater than mature tropical forests and that SOC can increase rapidly after the abandonment of agricultural fields. History of land use affects the comparison of SOC in managed and natural ecosystems. Our review of the literature also highlights the need for greater precautions when comparing SOC in mature tropical forests with that of managed ecosystems. Information on previous land use, bulk density, and consistency in sampling depth are some of the most common omissions in published studies. From comparable SOC data from a variety of tropical land uses we estimate that tropical soils can accumulate between 168 and 553 Tg C/yr. The greatest potential for carbon sequestration in tropical soils is in the forest fallows which cover some 250 million hectares. Increased attention to SOC by land managers can result in greater rates of carbon sequestration than predicted by current SOC models.