Caroline “came out” last month. After 30 years fighting clinical depression, she told friends and colleagues at KPMG, the accountancy firm where she works, that she wanted “to battle this illness openly and help others fight it too”.

“People at work were absolutely amazed – and totally supportive,” says the 47-year-old tax manager. “They couldn’t believe I was suffering from depression. But I had devoted a lot of energy to hiding it, and I decided I didn’t have energy to waste.”

Caroline has joined the small band of people willing to risk what is widely seen as the stigma attached to depression and similar mood disorders. Another recent example is the writer Allison Pearson. They are the visible tip of a growing pandemic of what the biologist Lewis Wolpert memorably called “malignant sadness”. According to the World Health Organisation, depression causes more disability than any other disease, affecting more than 120m worldwide. The cost of all this is thought to exceed $100bn (£68bn, €82bn) a year.

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On the face of it, then, depression presents a classic “unmet medical need” with a vast potential market that should be a priority for increased pharmaceutical research and development. In reality, quite the opposite is happening. Several of the largest drugmakers have recently decided to curb or cease research in the field, reducing the funding and expertise available to find better treatments.

The withdrawal reflects growing financial pressures on the industry to cut spending on high-risk low-profit areas such as mental health, where there are few new scientific leads in the laboratory and many cheap generic drugs are coming on to the market. Yet neuroscientists say research into the biology of depression, funded by public agencies and smaller biotechnology companies, is on the brink of breakthroughs.

In February Andrew Witty, chief executive of GlaxoSmithKline, said his company would stop work on antidepressants, bringing an end to research by the developer of drugs such as Wellbutrin and Seroxat. GSK denied that its decision was related to the public criticism, regulatory scrutiny and litigation over suicidal feelings and other alleged side-effects generated by Seroxat in recent years.

Rather, Mr Witty said there were more promising and productive areas of research in its portfolio, while antidepressants were “among the most expensive, high-risk” drugs to develop, with weak “endpoints” that made it difficult to measure likely success until late in the development process. AstraZeneca took a similar view a few weeks later, winding down its discovery work on depression and other mental disorders as it pared back in-house research spending.

At the heart of the problem is the difficulty in first identifying appropriate patients to take part in clinical trials and then proving that they do better on the new drug candidate than on placebo (dummy pills). “That is the number one reason why we as an industry are moving away from an area that has an incredible burden of disease,” says Frank Yocca, AstraZeneca’s head of discovery for central nervous system drugs.

Clinical trials are particularly hard to organise for antidepressants because, for a start, medical definitions of depression and its severity are not as clear-cut as for most other diseases. In addition, reliable “bio­markers”, objective measurements of disease progress such as brain scans or blood tests, are unavailable.

Then there is the large – and mysteriously growing – placebo effect, which makes it hard to demonstrate statistically that patients taking the active drug are doing better than those on dummy pills. Psychiatrists have long recognised that patients with depression and other mood disorders are susceptible to the suggestion that they will get better. But it is not clear why placebo power should have increased, as analysis of clinical trials over the past 30 years shows it has.

“It would be like invoking magic to suggest that people are becoming more suggestible,” says John Geddes, professor of psychiatry at Oxford University. “The change is more likely to be an artefact of the way patients are recruited to clinical trials.”

Finding trial volunteers – who are depressed, not taking an existing drug and willing to try an experimental one – has become harder over the years, says Chris Thompson, chief medical officer for the UK’s Priory hospital group. In response, investigators have been (unconsciously) upgrading the level of depression of potential subjects, so that they meet the criteria for inclusion.

But once the trial is under way, researchers no longer have a motive to exaggerate the volunteers’ symptoms. Everyone, whether on drug or placebo, seems to get better – “which is catastrophic if you are trying to discover how effective the drug is”, says Prof Geddes, who chaired the depression and anxiety part of the UK Medical Research Council’s recent mental health research review. “Everyone in the field knows that this happens.” So researchers are discussing ways to reduce the problem – for example, dropping placebo-controlled trials and comparing new drugs with the best existing treatments.

Yet even if clinical trials were easy to organise, drug companies might not have a great incentive to innovate, given the downward trend in the antidepressant market. Although prescriptions are rising, their value is falling as the new generation of antidepressants introduced during the 1980s and 1990s, such as Eli Lilly’s Prozac and Wyeth’s Effexor, lose their patent protection and cheaper generic versions appear.

IMS, a provider of healthcare data,says global antidepressant sales peaked in 2006 at $20.2bn. Last year the market was worth $19.2bn and Datamonitor projections show a 4 per cent annual fall until 2014, when slow growth may resume. With the overall pharmaceutical market growing more than 5 per cent a year, the share taken by antidepressants is shrinking.

Existing classes of antidepressant – known as “selective serotonin reuptake inhibitors” (SSRIs) and “serotonin norepinephrine reuptake inhibitors” (SNRIs) because of the way they function in the brain – work reasonably well for 60-70 per cent of people. Their side-effects are less serious than the previous generation.

Caroline says Prozac helps to keep her depression under control, though occasionally she has to take spells off work – most recently three days in January when “I just couldn’t answer my phone, or have someone ask ‘how are you?’ without my bursting into tears”. She adds that cognitive behavioural therapy, a form of counselling, has helped her avoid incipient bouts.

Ms Pearson meanwhile took sertraline (Zoloft) for a few months. “It seemed to help control the anxiety but it also appeared to muffle my mind – everything felt as though it was on the other side of a piece of Perspex,” the British author says. “I was trying to finish a novel, which requires maximum clarity, so I stopped taking the medication. I got the novel finished but the anxiety returned.”

Some smaller pharmaceutical and biotech companies are still looking for better antidepressants. “I’m almost encouraged by big competitors pulling out,” says Jacques Servier, founder of France’s privately owned Servier Laboratories. “They are often dominated by financial pressures. We are independent, have more liberty and can afford to be more daring.”

Mr Servier’s commitment to antidepressants was inspired by his background in psychiatry: “I saw depression was a real hell, with people waking up at 3 or 4am in atrocious discomfort, feeling a loss of activity and sometimes suicide.”

Mr Servier’s research led to the launch of Valdoxan (agomelatine), a new class of antidepressant that claims improved sleep and fewer side-effects. Though the drug has been used by about 100,000 patients, he concedes it is not easy to compete with low-cost generic alternatives: “Generics are very good for those who respond to them but the price is very low and the companies don’t contribute to research.”

Another company committed to depression research – and shielded by a non-profit foundation from short-term financial pressures – is Lundbeck of Denmark. Lundbeck sells Cipralex, which it also argues has fewer side-effects than generic alternatives. Two other compounds in late-stage trials have a new mechanism of action.

Ulf Wiinberg, chief executive, hopes that within a decade, more targeted therapies for different subgroups of patients, “just like we have for cancers”, will emerge. “The first time patients present with depression, they will definitely receive a generic,” he says. “But after the first or second failure, they need new drugs. We should be treating with the best available therapy.”

Two US companies with promising candidates are Clinical Data Inc (CDI) and Targacept. CDI has applied for Food and Drug Administration approval of vilazodone, which could reach the market next year. Targacept is about to start the final trial of TC-5214 in collaboration with AstraZeneca, which agreed in December to pay $200m up front for rights to the drug – demonstrating that, while big pharma companies are winding down their research into antidepressants, they are prepared to pay for promising candidates developed elsewhere.

Many mental health experts are less concerned with the pharmaceutical industry than with what Dr Thompson calls the “scandal of how little public money there is for research into the biology of depression”. A better understanding of what happens in the brain when people feel seriously depressed would give researchers a lead to develop better drugs. One promising avenue, says Prof Geddes, is to use powerful new brain imaging techniques to probe the neural processing of emotion.

Like all complex disorders, depression results from many genes and environmental factors working together. The genes remain largely unknown and so do the environmental triggers that might explain the rise. “There is evidence that the incidence of depression is increasing and that this is over and above better recognition,” says Prof Geddes. Its onset may on average be earlier in life than it used to be, adds Dr Thompson. Possible causes range from the stresses of modern life – if anything exacerbated by recession – to excessive eating.

Psychiatrists say the worst thing people can do is to suffer in silence. Even if they cannot bring themselves to be as open as Caroline, they should approach a self-help charity, such as the UK Depression Alliance where she has begun to work as a volunteer.

“Depression has often wreaked complete havoc with my very existence,” she says. “With no cure on the horizon, you cannot battle this disease on your own.”

Hope lies in cells that spring eternal in the neurone zone

The bleakest dogma of 20th-century neuroscience held that the adult brain never grows: we can only lose neurones (brain cells) as we get older.

But research led from the Salk Institute in California and Columbia University in New York has overthrown the dogma. New neurones do form in parts of the brain – and the process, known as neurogenesis, offers a promising way of fighting depression.

Scientists showed in 2003 that existing antidepressants achieve some of their effect by stimulating growth in the hippocampus, a brain area involved in learning and memory. The discovery seems to solve a pharmacological puzzle.

Antidepressants such as Prozac are supposed to work by increasing the level of certain brain chemicals (such as serotonin) that transmit signals between neurones. But the drugs raise neurotransmitter levels very quickly, so why do they take several weeks to lift the sufferer’s mood?

The explanation for the delay – that it reflects the time taken for new cells to grow in the hippocampus – has been confirmed by brain imaging, animal studies and post-mortem examinations of human brains. It is now possible to track neurogenesis through scans that show increased blood flow in the living human brain.

So the hunt is on for new antidepressants designed specifically to maximise neurogenesis. Leader of the pack is a San Diego company, Brain Cells Inc, founded by academics from Salk and Columbia. After screening more than 1,000 chemicals for their neurogenic effect on brain cell cultures, BCI has discovered two drug candidates that are giving encouraging results in early clinical trials. One of them is a combination of two chemicals, melatonin and buspirone, which have little effect individually on depression or neurogenesis but work well together.

Although the first application of neurogenesis will be depression, it may be useful for treating other brain conditions.

NeuroNova, a Swedish company, is testing two protein drugs that stimulate neural growth in patients with Parkinson’s and motor neurone disease. Syngis Pharma of Germany has started a trial of a growth-stimulating factor that is injected into the brain following a stroke. Animal experiments show that it might both reduce cell death immediately after the stroke and then help blood vessels and neurones to grow, reducing the patients’ long-term disability.

Another intriguing possibility, says Carrolee Barlow, chief scientist at BCI, is that stimulated growth of the hippocampus will improve memory and cognition in diseases such as Alzheimer’s.

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