Consequences of Soaring Regulatory, Legal Costs
29 March 2016 Chemical companies are spending more on the approval and defense of chemical technologies than ever before. A 2010 CropLife America study cites a $256 million price tag for the discovery and development of a new active substance. That is a conservative number when figuring the total registration and marketing costs incurred around the world. While R&D budgets generally have increased commensurate with revenue, there has been a clear shift from discovery and development to marketing and regulatory approval.
“Both the analysis of historic data and future cost expectations indicate a shift toward product development at the expense of research … This study has shown that on average since 1995, fewer products are entering development from research, reducing the number of future market entrants,” the Phillips McDougall study states.
This isn’t huge news, but the trend continues to exacerbate the expense, time, and intensity it requires to develop and defend new AIs. The $256 million also excludes costs for re-evaluations, which are becoming more tedious and comprehensive in the wake of mounting public concerns.
But perhaps even more troubling of late are the random knee-jerk prohibitions and re-appraisals based on sentiment rather than science.
The WHO’s International Agency for Research on Cancer (IARC) assessment of glyphosate, which is classified with a 2A rating as “probably carcinogenic,” continues to send ripples through the world. A handful of countries have proposed banning glyphosate based simply on the IARC classification.
In February, news outlets continued the fearmongering by exploiting a study published in the journal of Environmental Sciences Europe that says worldwide applications of glyphosate have reached a cumulative 9.4 million tons since 1974. The purpose of the study is to shock people into thinking that applying 2,300 Olympic pools worth of any chemical must be a bad thing. That contradicts 40 years of scientific studies and real-field outcomes. The study asserts, “a growing body of literature points to possible, adverse environmental, ecological, and human health consequences following exposure to glyphosate and/or AMPA, both alone and in combination with ingestion of GE proteins.”
The implication is clear: The cost and responsibility of supporting technologies in the realms of legality, regulatory, and public opinion will continue to increase through time despite the lengthy health, safety, and efficacy studies already performed. Is it any wonder that Monsanto announced last year that it now considers itself a data company?
Is Monsanto’s move a direct response to heightened regulatory expenses and legal infrastructure needed to defend its already approved technologies? There is plenty of information and messaging through the years that indicates that the regulatory environment is at least a factor.
What about the recent string of consolidation — could it be driven by regulatory costs?
The world’s most widely used AI isn’t alone. Last month the EPA asked Bayer to suspend its flubendiamide products because computer modeling showed it could be harmful to benthic organisms. Bayer will instead opt for an administrative law hearing from the EPA’s Office of General Counsel to review the registration, an additional cost for the company despite the fact that “real-world monitoring shows no evidence of concern after seven years of safe use,” Bayer VP of Environmental Safety Peter Coody said in a statement.
The questions remain: How will unpredictable regulatory scrutiny affect the discovery and development of new AIs, and will other R&D companies abandon crop protection altogether?
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