Anti-Obesity Drug Development Risks and Expectations

Despite a large and growing unmet need, anti-obesity drug product launches slowed in the 1990s and early 2000s following a series of withdrawals, failures, and significant litigation settlements. 

Litigation risk affects expected net present value of anti-obesity drugs in light of evolving regulations and development costs. Direct litigation costs and lost revenues from early withdrawal can both have a meaningful effect on the anticipated value of a new treatment. Managing Principal Edward Tuttle notes that “these concerns, coupled with a more risk-averse regulatory policy environment, contributed to the limited investment and relatively few launches in this therapeutic area.”

To better understand manufacturers’ investment decisions, Senior Advisor Anita Chawla explains that in a recently published study, “We modeled a range of scenarios representing evolving expectations of development costs, revenue, and litigation risk over the past 25 years, drawing on data from published estimates, historical data, and analogs from other therapeutic areas.”

This research found that when prospective weight management drugs were both safe and highly effective, revenue expectations could be powerful motivators for development, outweighing lingering regulatory and litigation fears. ■

Adapted from “The Expected Net Present Value of Developing Weight Management Drugs in the Context of Drug Safety Litigation” by Anita Chawla, Ginger Carls, Edmund Deng, and Edward Tuttle, published in PharmacoEconomics, July 2015.