Eroom’s Law and the decline in the productivity of biopharmaceutical R&D

There is a historical case for describing biomedical innovation from around 1940 to 1970 as a “golden age”, which followed the maturation of medicinal chemistry and the application of physiological science to people. Levels of innovation have since fallen for several reasons. Arguably of greatest importance is the progressive accumulation of an excellent and inexpensive pharmacopoeia of generic drugs. When drugs’ patents expire, they become much cheaper but no less effective. The ever-expanding catalogue of cheap generic drugs progressively raises the evidential, regulatory and competitive bar for new drugs in the same therapy area, eroding incentives for research and development (R&D). Such therapy areas hold meagre returns for investment in “new ideas”, even if the ideas themselves have not become harder to find.