Before its stock price sagged 40 percent and both litigators and regulators began circling overhead, Merck invited several journalists to its 415-acre research and development center 30 miles from Philadelphia. As other pharmaceutical investigators can attest, Merck's 10,000 scientists and support personnel here help explain why new drugs often cost so much. Standing in the middle of his $4 million lab, Dr. Graham Smith points to an LCMS Mass Spectrometer that atomizes test compounds and evaluates them for healing properties.
"Of the 1,200 molecules tested here last year," Dr. Smith says, "eight went on to the next step. And not all of those will go on to become drugs." Dr. Smith and his team of analytic chemists fail steadily, on average, for 6 weeks before discovering a potential therapy. Another 32 days usually pass before that happens again.
Merck is not alone in throwing most of its darts straight into the floor. According to John T. Kelly, M.D., of the Washington-based Pharmaceutical Research and Manufacturers of America, "Only 5 in 5,000 compounds that enter preclinical testing make it to human testing. And only 1 of these 5 tested in people is approved for sale.
Citing Tufts University data, Dr. Kelly added: "On average, it costs a company $802 million to get one new medicine from the laboratory to US patients. This process normally takes 10 to 15 years."
Eliav Bart, M.D., Merck's senior director for clinical research, works on a vaccine to prevent the Human Papillomavirus. Sooner or later, HPV afflicts 50 to 75 percent of sexually active adults. HPV causes genital warts, as well as cancers of the cervix, vulva and anus. So far, tests have found the vaccine 100 percent effective against HPV 16, one of the virus' particularly menacing strains.
None of this comes cheap, either.
"Several hundred people are working on this exclusively around the world for Merck," Dr. Barr says. Consequently, the company has built clinics in Iceland, Peru and Thailand. "Merck put equipment in, and we'll leave it in," Dr. Barr says. This will provide a steady stream of scientific data for obstetricians and gynecologists.
Merck also has built a $100 million structure specifically to manufacture the HPV vaccine. If approved, the drug's price will reflect, in part, this huge up-front investment. But if it fails to secure Food and Drug Administration approval, Merck will be the proud owner of a gleaming, $100 million white elephant. This sunk cost will have to be spread across the rest of Merck's product line. Alternatively, this money could be subtracted from shareholder dividends, employee salaries, or new research and development. These are lame long term strategies. That, and more, adds up.
The vaccine against this ailment is for pharmaceutical companies to teach Americans-starting with Washington's bipartisan political class—a simple but viral truth: Those little pills do not invent themselves.
What Dr. Smith says in the third paragraph indicates that

A. there are many molecules that need to be tested.
B. it will take a long time to invent a new drug.
C. scientists always waste time in discovering an effective cure.
D. researchers are too cautious of the compounds to go ahead faster.