Pfailed

What a difference two days make. On Nov. 30, Pfizer gave an “R&D open house” event where it discussed its drug pipeline. The biggest drug in that pipeline is torcetrapib, a compound that raises “good” cholesterol. For years, Pfizer’s been developing it as a combo-drug with Lipitor (atorvastatin), which reduces “bad” cholesterol.

Prior to the meeting, Pfizer issued a press statement that included this passage about torcetrapib:

Commenting on torcetrapib/atorvastatin (T/A), Dr. LaMattina said, “We are first-in-class and we intend to remain best-in-class in a category that has the potential to change the face of cardiovascular medicine. T/A raises HDL and lowers LDL. We believe that the net benefits of the drug — characterized by significant HDL elevation and LDL lowering vs. the small elevation in blood pressure — will greatly benefit patients with CV risk.

“The development of T/A has required tremendous innovation on our part from the earliest stages of discovery through one of the most cutting-edge development programs ever carried out anywhere. At the end of this comprehensive program, we expect to have a medicine with unparalleled efficacy in raising HDL, lowering LDL and with an anti-atherosclerosis indication.

“We will learn of the top-line results of the three pivotal imaging trials during the first quarter of 2007. During this same period, we will also receive the results of some additional Phase III lipid studies. To obtain a reliable picture of the overall safety and efficacy profile of T/A, the results of all these studies will need to be analyzed and reviewed together, and this will happen in the context of the American College of Cardiology Meeting in March, 2007.”

Yesterday, Pfizer announced that its independent Drug Safety Monitoring Board discovered a significantly higher mortality rate in the torcetrapib wing of late-stage clinical trials. The results must have been overwhelming, because Pfizer said that it’s stopping the trials, canceling all development of the drug, and accelerating its restructuring plans. A few days earlier, the company announced that it would lay off 2,400 sales reps, as part of its reorganization. Torcetrapib’s failure means large numbers of people will be getting fired in the next few weeks.

If you follow the pharma industry, you already understand what a cataclysmic event this is for Pfizer. I don’t think it’s on the scale of a Vioxx, because there’s likely no legal liability issues, but the lost sales will be in the tens of billions. Beyond that, there’s the opportunity cost of the R&D that was performed on the product, as well as nearly $800 million in actual development costs.

I’m not trying to convey a “poor little Pfizer” impression here; I disagree with a bunch of the company’s practices (particularly its growth-by-acquisition model from the first half of this decade). What I’m trying to get across is that developing new drugs is a mighty risky proposition. I’m not sure that people who complain, “Drugs are too expensive; pharma companies are evil,” have much idea about the risks and the costs these companies incur.