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Concentrated Returns, Distributed Costs

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Date and Time

Wednesday, October 28, 2026, 5:30 PM until 6:30 PM

Event Contact(s)

ORCA Admin

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Note: This is a complimentary free event to the ORCA community, and no CME credits will be offered.

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About this event

TOPIC: Economic Concentration and Capture in US Clinical Innovation

TOPIC DESCRIPTION: Concentrated Returns, Distributed Costs Economic Concentration and Capture in US Clinical Innovation In 2025 two molecules earned about $71 billion - roughly $194 million a day. The median new drug's best year ever is $462 million. A newly cleared device holds the market to itself for a median of seventeen months. Those numbers describe one industry, and this session is about the distance between them. The cost of producing new medicines, devices and diagnostics is spread widely: hundreds of small companies, tens of thousands of investigators, thousands of sites, and the patients who enroll. The return concentrates in three places - a few products, the intermediaries between a product and a patient, and the services layer between a sponsor and its trial. That mismatch, not a shortage of money or of science, is what makes building here difficult. Where the return lands. The top 1% of drugs take 41% of Medicare Part D spending, up from 31%, while the odds of a new drug reaching $100 million in sales fell from about one in five to one in ten. We trace $100 spent at a pharmacy counter: what it costs to make, what the manufacturer keeps, what goes to parties that developed nothing, and how much funds research. Then we follow that research dollar into the trial, where spending on CROs and technology vendors grew 7.6-fold between 2000 and 2020 while spending on the sites running the studies grew 2.6-fold. Partnering models. At the organizers' suggestion: the nine contracting archetypes used between innovators, CROs and consulting firms and how each allocates risk, including where risk quietly returns to the sponsor; why preferred-provider pricing is unavailable to smaller sponsors; and what development-funding structures have cost the companies that used them. Why devices and diagnostics create value they cannot capture. A drug gets five to twelve years of exclusivity on top of its patents; a device gets none, and the 510(k) pathway hands competitors a route to follow a winner. The buyer is usually a hospital paid a fixed sum for the procedure, so the implant is a cost against that payment, not a revenue line. Prices fall over a product's life rather than rising. Device companies spend less than half as much of every revenue dollar on research as pharmaceutical companies - and still earn roughly seventeen fewer points of operating margin. Diagnostics show it sharpest: a test deciding whether a $200,000-a-year therapy is given is paid about $120. Where the cost falls. Two thirds of new medicines originate with emerging biopharma, nearly 40% of which held under twelve months of cash entering 2025. Half of sites run on three months or less of working capital. Participation is narrower than most figures suggest: eligibility criteria exclude a median of 77% of patients across 31 conditions, only about 9% of US adults have ever been invited into a study, and 55% say yes when asked. The constraint is the offer, not the patient. Whether the selection is any good. Among accelerated-approval cancer drugs with more than five years of follow-up, 57% did not show clinical benefit in confirmatory trials - and 63% of those converted to regular approval anyway. Across 2008-2022 cancer launches, published analysis finds no consistent relationship between net launch price and clinical benefit. The session closes on three outliers - COVID vaccines, GLP-1s and hepatitis C - each made possible by something that does not repeat, and on the part of the system that does work as designed. Data-heavy, US-focused, sources shown. For anyone making capital, partnering or development decisions. Deliberately not a regulatory-policy session.

SPEAKER: Tony Gottschalk

SPEAKER BIOGRAPHY: Tony Gottschalk is Founder and Principal of TG Advisory Group. He advises small and mid-size biotechs on commercialization strategy, patient access, and putting AI to work across their organizations. His work draws on more than 20 years in the industry on the sponsor, technology, and consulting sides, and much of it has focused on the question of how new therapies actually reach the patients who need them. Before founding TG Advisory Group, Tony was a vice president at CoverMyMeds/McKesson, where he ran a specialty access technology business. At IQVIA, Tony built the Medical Affairs Center of Excellence and advised emerging biopharma companies on medical and commercial build-outs. For a decade at Gilead Sciences, he built and led the rare disease patient support, reimbursement, and distribution organization through more than $1B in revenue growth, multiple launches, and FDA-mandated REMS programs. Earlier in his career he held roles at Actelion, Quintiles, Abbott, and Roche. Tony holds an Executive MBA from Columbia Business School and the Haas School of Business at UC Berkeley, and a BA in Molecular, Cellular, and Developmental Biology from the University of Colorado Boulder.

WHO: Clinical, regulatory, quality, manufacturing and legal