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8.3: Benefit, Risk and Innovation in Pharmaceutical Research and Development: Opportunities and Issues

Priority Medicines for Europe and the World"A Public Health Approach to Innovation"

Background Paper

Benefit, Risk and Innovation in Pharmaceutical Research and

Development:Opportunities and Issues

By Warren Kaplan, Ph.D., JD, MPH

7 October 2004

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Table of Contents

Executive Summary................................................................................48.3.1 Introduction..................................................................................5

8.3.1.1 What is Pharmaceutical “Innovation”?..................................................58.3.1.2 What Drives Pharmaceutical Innovation?.............................................78.3.1.3 Trends in Pharmaceutical Innovation...................................................88.3.1.4 Pharmaceutical Innovation and so-called “me too” Drugs: A Public

Health Viewpoint................................................................................118.3.2 Benefit, Risk and Pharmaceutical R&D: Aspects of the "Demand" Side......................................................................................13

8.3.2.1 The Pharmaceutical Industry..............................................................148.3.2.2 National Governments........................................................................158.3.2.3 Regulatory Authorities........................................................................158.3.2.4 Patients...............................................................................................168.3.2.5 Payers.................................................................................................16

8.3.3 Risk, Benefit and Pharmaceutical R&D: Recent Ways of Thinking About the Problem................................................................17

8.3.3.1 U.S. FDA: Critical Path Research........................................................178.3.3.2 Coping with an Expanded EU (EMEA Road Map to 2010)..................188.3.3.3 European Union Perspective...............................................................188.3.3.4 Industry and Regulatory Perspectives (Middleton and Rawlins)........19

A. Middleton......................................................................................19B. Rawlins..........................................................................................20

8.3.4 Pharmaceutical Innovation: The European Situation.................218.3.5 Other Selected Barriers to Innovation........................................24

8.3.5.1 Unpredictable Nature of Pricing and Reimbursement (P&R).............248.3.5.2 Unpredictability During Regulatory Review.......................................268.3.5.3 Cost Effectiveness Analysis.................................................................268.3.5.4 Intellectual Property Issues................................................................278.3.5.5 Managerial Risk Aversion...................................................................278.3.5.6 Perceptions of Other Stakeholders.....................................................28

8.3.6 Solutions......................................................................................298.3.6.1 Pre-Clinical..........................................................................................298.3.6.2 Clinical................................................................................................298.3.6.3 Post Marketing....................................................................................308.3.6.4 Reimbursement...................................................................................31

8.3.7 Conclusions.................................................................................32References............................................................................................33

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List of Figures

Figure 8.3.1: Schematic of the Drug Development Process..................................6Figure 8.3.2.........................................................................................................10Figure 8.3.3.........................................................................................................10Figure 8.3.4.........................................................................................................22

List of Tables

Table 8.3.1: Average time from pricing and/or reimbursement application to actual paymentTable 8.3.2: Overcoming Barriers to Innovation for Infectious Disease

Annex

Appendices

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Executive Summary Pharmaceutical research and development is expensive and time

consuming, costing by latest estimates nearly 1 billion US dollars for each new chemical entity and taking 10 to 15 years on average from discovery to market authorization.

In recent years, despite increasing expenditure on pharmaceutical innovation, the number of new medicines being authorized is disappointingly low.

The factors that can act as barriers to pharmaceutical innovation are complex interrelations between the scientific, clinical, regulatory and financial considerations

Although different stakeholders have divergent points of view with regard to what the barriers are, and how to overcome them, recently, however, a series of documents by different stakeholders in drug development have appeared that discuss barriers to pharmaceutical innovation. The congruence of the factors identified and the policy conclusions among these documents are encouraging.

Barriers to innovation, in broad outline, may includeo Inadequate understanding of basic science for certain diseases and

the identification of targets amenable to manipulation.o Regulatory authority "rituals" with regard to preclinical and clinical

testing procedures that may, or may not, have basis in empirical evidence

o Differences in perception of risk among different stakeholderso Uncertainty about the timing and level of reimbursement decisions

leading to uncertainty among stakeholderso General business uncertainties in drug developmento Potential increases in the cost of doing business due to intellectual

property concernsi

The EU Commission has recently called within its 6th Framework Work Program for Thematic Priority 1 (life sciences, genomics and biotechnology), for research proposals that include new approaches for accelerated development of new, safe and more effective medicines.

As part of this call for proposals, the EU should create and support a broad research agenda so that every requirement within the drug development process is questioned for its relevance, costing, and predictive value.

8.3.1 IntroductionBiomedical technology companies seek to conduct research and commercialize products in a stable, predictable operating environment that encourages and i This document is not concerned with IP but we note the issue regarding barriers to technology transfer due to the presence of large numbers of potential "blocking" patents on basic research tools. See Eisenberg MA and Eisenberg RS, 1998. Can Patents Deter Innovation? The Anticommons in Biomedical Research, Science, 280: 698-701

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rewards innovation. These companies are accountable to the shareholders and customers they serve. The pressures being placed on pharmaceutical companies, from within and without, can negatively impact innovation. The resources required for drug development have risen markedly in the past 30 years, so that these costs may threaten to make the development of new drugs increasingly unaffordable for both companies and consumers. From a business viewpoint, this ever-increasing cost of drug development 1 is an incentive for companies to invest in new drug products likely to provide the highest rate of return on R&D investment. This incentive is often realized by developing drugs against proven targets using approaches that have already been clinically and financially successful, although some companies attempt the difficult task of having projects with higher success rate but a lower potential return as well as projects with a higher risk but potentially higher reward.

Notwithstanding, pharmaceutical research has a high failure rate. Of every 5,000 projects only one completes the drug development process and, of those that do, only one in five actually returns its R&D investment. 2 Regulators have progressively increased the requirements for product authorization in a quest to promote safety and efficacy. Reimbursement authorities have often been more interested in controlling drug costs rather than considering total healthcare benefit. If a drugs budget is a “stand-alone” line item, it is vulnerable to cutting as being politically acceptable. Providing appropriate incentives for developing new products targeted for important public health needs, less common diseases, prevalent third world diseases, prevention indications, or individualized therapy is becoming increasingly challenging.

This document aims to present the differing perspectives of the different actors that both supply and demand medicines. More specifically, we suggest how a comprehensive research program into the drug development and approval process could promote the presently flagging innovation of the pharmaceutical industry.

8.3.1.1 What is Pharmaceutical “Innovation”?

There is a rich and varied theoretical and empirical literature on innovation generally and on pharmaceutical innovation specifically.3, 4, 5, 6 The definition and even the existence of “pharmaceutical innovation” varies according to the viewpoint of the definer along the pharmaceutical value chain. Figure 8.3.1, taken from reference 3, is a schematic of the drug development process as detailed by the USA Food and Drug Administration.. Significantly, Figure 8.3.1 is lacking the so-called "phase IV" post marketing studies which, in our view, should take on increasing importance (See Section 6).

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Figure 8.3.1: Schematic of the Drug Development Process

Pharmaceutical innovation ranges from breakthrough treatments for life threatening diseases to minor modifications of drugs that have been on the market for some time. From the point of view of regulatory agencies and their largest “customer”, the pharmaceutical industry, it is worth noting that the U.S. FDA classifies innovation in two dimensions: by chemical type and therapeutic potential. This is a useful characterization. The FDA designates drugs relying on compounds that have never before been approved for the U.S. market as new molecular entities (NMEs).7 It also approves new medicines whose active ingredients are already available in a previously marketed product. Such altered, but pre-existing molecules, exist as a drug with different features, such as a new dosage form or route of administration. The FDA classifies these drugs as “incrementally modified drugs” (IMDs). The FDA also uses clinical improvement as a way of assigning marketing dossiers to a standard or a faster priority review track. New products, including IMDs, can qualify for a priority review by demonstrating one or more of: evidence of increased effectiveness; reduced side effects and interactions; enhanced compliance; or use in a new subpopulation.7

From a public health viewpoint, these latter four factors are important as even IMDs can be classified as “ priority”, as they are incrementally modified drugs with improved clinical performance.ii The FDA also uses clinical improvement as a way of assigning marketing dossiers to a standard or a faster priority review track. New products, including IMDs, can qualify for a priority review by demonstrating one or more of: evidence of increased effectiveness; reduced side effects and interactions; enhanced compliance; or use in a new subpopulation.7 However, it should be noted that because an application is subject to a standard review, it does not necessarily mean that the medicine lacks innovative aspects. FDA "priority review" is an administrative management tool, which is based on information available at the time application is filed.8 Nevertheless, the real value of any medicine emerges most clearly once it has been introduced into medical practice and it supports our view that the answer to "what is pharmaceutical innovation?" depends on who is asking the question.

ii For example, in 1999 the FDA gave priority reviews to two oral diabetes medicines, Actos®, and Avandia®, even though Rezulin®, a drug using the same mechanism of action, was already on the market. In 1999, the FDA approved Boehringer Ingelheim’s combination product Aggrenox® to reduce the risk of stroke in patients who have had a previous stroke or a transient ischemic attack (a TIA or mini-stroke). Aggrenox® combines aspirin, which has been on the market for many years, with dipyridamole, an NME.

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8.3.1.2 What Drives Pharmaceutical Innovation?

Key drivers of pharmaceutical innovation from both supply and demand perspectives can include:

a high level of public interest in health care issues; strong public support for increasing national, public sector research

funds; increasing private investment in medical R&D, although private sector

interest fluctuates depending on other business opportunities; size of the market and expected return on investment changing demographics such as an ever-aging population which alters

research priorities to other diseases (e.g. Alzheimer’s disease, diabetes, chronic diseases); and

public expectations about who performs high quality science.9 (See Textboxes)

. Gleevec ®: The role of basic scientists as engines for innovation

Chronic myelogenous leukemia (CML) is marked by explosive growth of white blood cells. People live in average 6 years after diagnosis. In the late 1960s and early 1970s, academic researchers in the United States discovered that the white blood cells of CML patients had a genetic translocation, where a small part of one chromosome had been switched to its neighboring chromosome- resulting in the so-called "Philadelphia chromosome". Another 10 years elapsed before scientists discovered that this translocation disrupted a gene and allowed it to produce a cell surface receptor involved in cell division (a tyrosine kinase protein) that was permanently switched "on". Thus, scientists were able to find a specific molecular target for a potential therapeutic against CML.

Source: Goozner M., 2004. The $800 million Pill, University of California Press

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Protease Inhibitors: The role of private research in discovering biological mechanisms

Pharmaceutical companies also play an active role in the discovery of key biological mechanisms that potentially lead to therapeutic targets. For example, Merck, a US pharmaceutical company, played such a role when at the end of the 1980s' Merck's scientists discovered and published in the peer-reviewed scientific literature how the HIV protease was an essential viral enzyme for the HIV replication cycle and then published the crystal structure of the protease.

See Manuel A. Navia, Paula M. D. Fitzgerald, Brian M. McKeever, Chih-Tai Leu, Jill C. Heimbach, Wayne K. Herber, Irving S. Sigal, Paul L. Darke & James P. Springer "Three-dimensional structure of aspartyl protease from human immunodeficiency virus HIV-1", , Nature, 337, 615 - 620 (1989) http://www.pnas.org/cgi/content/abstract/85/13/4686.

8.3.1.3 Trends in Pharmaceutical Innovation

Although the data can be subject to different interpretations, certain students of innovation3, 10, 11 have suggested that innovation in the pharmaceutical industry occurs in waves of activity, postulating the existence of several successive "generations" of medical (and other) technologies over the past two hundred years.

Very briefly (see reference 6 for more details), first generation innovations (1820-1880) were a consequence of the "Chemical Revolution" introduced by Antoine Lavoisier and the French School of Chemistry at the end of the 18th century. The development of chemical extraction and experimental methods allowed isolation and purification of "active principles" of medicinal plants e.g., morphine, quinine, curare, belladonna with known medicinal properties. Such methods also allowed for the synthesis or isolation from plants or coal tar of simple organic chemicals with medicinal properties e.g., ether as an anaesthetic, chloroform as a hypnotic, carbolic acid as an antiseptic, salicylic acid as an antipyretic.

Second generation innovation (1880-1930) was driven in large part by scientific and industrial responses to social conditions in the expanding cities of the Industrial Revolution. Overcrowding, poverty, malnutrition, lack of running water and public sanitation facilities caused the spread of infectious disease, such as smallpox, typhoid fever, tuberculosis, cholera and diphtheria. What developed during this time period were public medical research laboratories for sera and vaccines e.g., Pasteur Institute, Lister Institute, Rockefeller Institute, Berlin Institute for Contagious Diseases, Kitasato Institute and German, French and Swiss dyestuffs companies (Bayer and Hoechst, Ciba, Sandoz, Hoffman LaRoche, Poulenc Freres and Etablissements du Rhone), with increasing expertise in organic chemistry. This led to establishment of the modern pharmaceutical industry.

The third generation (1930-1960) included innovations in organic and natural products chemistry leading to the isolation and synthesis of vitamins, corticosteroids, sex hormones and antibiotics. Laboratory analytical methods for composition and structure determination requiring very small samples e.g.,

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infrared, ultra-violet and nuclear magnetic resonance spectroscopy, X-ray crystallography and paper chromatography were developed as well as various in vitro and in vivo screening assays for evaluation biological and medicinal properties of compounds. A major development during the third generation, together with research intensity, was the adoption of intensive marketing methods aimed at physicians, hospitals and drugstores.

Innovations of the fourth generation (1960- about 1980) resulted from a marked shift in the scientific basis of the industry from chemistry and pharmacology to the life sciences.. The most important drugs of the 1960s and beyond were used for the treatment of chronic diseases such as cardiovascular, central nervous system and cancers. Their development necessitated the understanding of the mechanisms of biological and physiological processes at the molecular and cellular level. Due to the proliferation of drugs, the increasing competition among companies for the same patient populations, and of the thalidomide incident in 1961, governments imposed strict regulatory measures for the conduct of clinical trials, and the approval of new medicines, which required the provision on the part of innovating companies of substantial evidence for the effectiveness and efficacy of candidate drugs.

The latest "generation" (since 1980) is based on advances in discovery and application of biotechnology (recombinant DNA and monoclonal antibody methods) in the production of physiological proteins used in therapy or diagnosis of many diseases. See references 3, 6, 9, 10 for further details.

Figure 8.3.2 (taken directly as Figure 8 from reference 6) is a very telling description of innovation in the pharmaceutical industry. The successive "waves" of innovation are clear but we note the precipitous downward trend over the last ten years. This is a powerful reminder of the changing nature of the pharmaceutical industry and that, in the face of ever increasing R&D costs, the output of innovative pharmaceuticals from the "pipeline" is sluggish. See also Figure 8.3.2 which provides supporting data showing the inverse relationship between rising pharmaceutical R&D spending and FDA approvals for new molecular entities. 12 To be sure, Figure 3 connects two very different timelines. The number of NCEs approved by the FDA is occurring at least a decade after initial investment in R&D. This emphasizes the need to understand how the present R&D spending is being translated into new medicines going forward .

We further note Figure 8.3.3 in Section 4, showing that even FDA new molecular entity submissions for marketing approvals have been declining. We note in this regard that although the number of new medical entities securing marketing approval from regulatory authorities has been on the decline in recent years, the number of drugs in active development (i.e., all drugs in the pharmaceutical companies' pipeline, pre-clinical and clinical) apparently has not. 13 The important point in this regard is that while the number of projects in phases I and II is constantly increasing, the number of projects in phase III has stalled. There is a need to more efficiently translate these early stage projects into approved medicines.

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Figure 8.3.2

Figure 8.3.3

0

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1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001*0

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ApprovalsR&D Spending

No. o

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*NME (new molecular entity) total is through August 22, 2001. R&D spend for 2000 and 2001 are estimates. Source: Washington Analysis, LLC and PhRMA

R&D spending has increased but new molecular entity approvals haR&D spending has increased but new molecular entity approvals have not ve not

Why has pharmaceutical "supply side" innovation seemingly been on the wane? The present paper is not intended to review the pharmaceutical business model but several reasons have been proposed:

• The industry is now tackling chronic diseases with complex etiologies that are harder to treat

• Demands for safety and tolerability by the regulatory authorities are higher

• The proliferation of drug targets (at the genomic and protein levels) may be diluting the focus of the industry.

• Translating genomics into day-to-day drug discovery has proved much more challenging than first assumed

• The many mergers and acquisitions in the pharmaceutical industry has driven "niche market" players out of the business

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8.3.1.4 Pharmaceutical Innovation and so-called “me too”iii

Drugs: A Public Health Viewpoint

Large drug companies still aim to produce a “blockbuster”, or a product with annual sales of at least $1 billion).14 Whether individual sales actually reach that target or not, the commercial developer of a drug needs to recoup the R&D costs, recover the losses from those products abandoned during development (either due to inefficacy or adverse safety findings) and make a profit so to reward investors and continue to attract funds to finance future research. It is estimated that only 3 out of 10 drugs brought to the market generate enough revenue to recover the average cost of its development .15 Although there appears to be no evidence to support this claim, one often hears that in the pharmaceutical industry, sales of $500 million per year are needed to recoup R&D investment.16 In the face of rising R&D costs (Figure 8.3.3), and lower expectations for “supply side” innovation13, then it is rational for companies to also try and develop as many new drugs as possible against proven targets using known approaches. Thus, different companies will have very different strategies to balance their portfolio and their long term risk. Pharmaceutical companies are intensely connected with their R&D history and related successes so most of the largest companies are constantly trying to balance both known therapeutic routes and novel routes based on their internal strength and expertise.

Although large brand manufacturers have reached a scale at which they must generate several billion dollars in additional revenue each year in order to meet investor expectations, few pharmaceutical firms have brought more than one drug with new active ingredients to market per year over the past decade.7

Companies can improve their profits by adding IMDs as a different class of drug with a similar therapeutic effect to an already marketed drug (e.g. different types of anti-hypertensive) or as “line extensions”, i.e., new products using the same active ingredient, but differing from the original in some way, such as more convenient dosing forms. Such enhancements can enable manufacturers to develop their existing franchise and potentially attract new patients.

IMDs may also provide a higher return on investment as the development of a medicine using an active ingredient whose safety and efficacy have already been established may be less time consuming, expensive, and risky than that of one using a compound about which little is known. The combination of high pricing potential for IMDs with a streamlined development effort would at first blush make modifying older products more attractive although we note that as the market potential for another new drug in an overcrowded class is likely to be limited, so a higher return on investment is not assured.

Standard-rated IMDs (in the FDA, those incrementally modified medicines lacking sufficient clinical advance to have them be a “priority”) surged from 168 approvals between 1989-1994 to 304 between 1995-2000, an increase of 136 products having the same chemical entity as an already marketed product.7

As a result, 62% of the increase in NDA approvals came from product line extensions that, in the FDA’s view, did not provide significant clinical

iii In the context of this report, the definition of a “me too” medicine is one that is in the same chemical class (structurally similar) and has a similar therapeutic profile as existing treatments in the same class. We do not consider one medicine that has an improved side effect profile, improved efficacy, or improved delivery mechanism compared to another in its class as a “me too.” These latter products , although incrementally improved products, are in accordance with the FDAs " priority IMD" classification.

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improvements over existing medications.7 We refer the reader to our prior comments regarding use of this FDA administrative classification to make assumptions about innovation. On the other hand, priority IMDs (in the U.S. regulatory lexicon) are of public health interest as they, in principle, are existing chemical entities that have been modified in some way to provide enhanced clinical effectiveness. In 1995–2000, the FDA approved 53 priority IMDs, versus 33 in 1989–1994.7 This suggests that real clinical improvements can, in principle, derive from technologies focused on refining older drugs or their delivery systems.

Incremental innovation of pharmaceuticals from a public health point of view can respond to the needs of broader conditions of safety, efficacy, selectivity, and utility . Fifty percent of the drugs on the WHO Essential Drugs List are compounds introduced subsequent to the first in a therapeutic class, and 25% of these essential drugs are in the WHO list for therapeutic uses approved after the initially approved indications and after additional clinical research. The point, which we re-emphasize with regard to the underutilization of Phase IV activities (See Section 8.3.6) is that the future utility of medicines cannot be determined at time of drug approval.17

Plausible arguments can be put forth supporting the view that incremental innovation of pharmaceuticals offers advantages in terms of improved efficacy, better patient satisfaction and compliance, and in some cases greater cost-effectiveness. There are several potential advantages to having multiple agents within a class, including the following:

Provision of backup in case an agent is withdrawn from the market; Differing dose delivery systems and dosage forms that enable extended

uses with a variety of patient populations; Availability of choice when patient response to and tolerance of a

particular agent is subject to great individual variation; The ability to tailor therapy to the needs and preferences of patients Cost containment due to increased efficacy and, as a result, decreased

use of other services (e.g. hospital, office visits).18, 19

Competition may put downward pressure on prices;

It is said that this ”pharmacodiversity” in the evolutionary sense allows products with varying features in a drug class to compete for patients. Products that are best “fit” for their environment dominate the marketplace while others may become "extinct" and still others will maintain positions in “niche markets.” 18

It is clear that pharmaceutical innovation from a public health viewpoint should entail new delivery systems and medicines with improved side effect profiles. It is not obvious, however, that this so called “pharmacodiversity”, results in incremental, clinical improvements over existing medicines. It may also result in the existence of many similar drugs due to many companies are working in a similar area that are promoted with expensive marketing methods developed by the pharmaceutical industry.

We believe the real value of multiple members of a class (e.g., the multiplicity of statins and antihypertensives) can only be determined by looking at the ‘value added’ in terms of clinical outcomes when comparing members of the class among each other, something that is all to infrequently performed. See Background Chapter 8.4 Further, arguments praising incremental innovation still beg the question of the need for entirely new, innovative medicines to treat emerging chronic and infectious diseases, including “neglected diseases” affecting millions of people in other countries. See Background Chapter 6.9 .

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8.3.2 Benefit, Risk and Pharmaceutical R&D: Aspects of the "Demand" Side

Industry-sponsored pharmaceutical research creates immediate reactions from certain stakeholders. With regard to the drug development process, there is almost invariably a tension set up between the viewpoints of different stakeholders with regard to benefit and risk.20 Some argue that industry-sponsored research is inherently innovative, while others point to the plethora of “me-too” drugs aimed at a risk averse strategy of increasing market share rather than creating beneficial improvements in health. On the other hand, to tar the industry with the brush of “pure profit motive” is to ignore, for example, HIV/AIDS where industry-sponsored development of new classes of antiretroviral compounds during the 1990s has significantly improved both survival times and quality of life.21

We can illustrate the problem or risk and benefit at another level with examples from antimicrobial drugs. From the viewpoint of the community that may have a choice among many safe and effective antimicrobials, a high priority does not need to be set on using a particular medicine that has adverse side effects. In an intensive care unit, on the other hand, with mortalities upwards of 25 to 40%, the risk of poor outcomes because of antimicrobial resistance and the severity of the medical condition may be so high that adverse events from a new antimicrobial may be tolerated.

Drug regulatory authorities need to consider benefit and risk of medicines. Some regulations allow certain authorities to restrict distribution of a product if there is reason to think that it should be made widely available only after confirmatory studies have been implemented. Recent EU legislation with respect to the EMEA22, allows for circumstances where " … following consultation with the applicant, the authorisation may be granted subject to a requirement for the applicant to meet certain conditions, in particular concerning the safety of the medicinal product, notification to the competent authorities of any incident relating to its use, and action to be taken." Such post-marketing restrictions either limit distribution to certain facilities or physicians with special training or experience, or make distribution conditional on performance of specified medical procedures.

Would restricted distribution preserve the viable life span of new antimicrobial drugs for resistant isolates? Controlling the evolution of antimicrobial resistance is important but at the same time it is reasonable to expect private sector investments to provide return for their indications for some period of time. So while restricting the distribution of new antimicrobials might well serve to extend their viability, it would also constrain the size of their market and, therefore, curb potential returns on R&D investment for the drug and potentially curb the amount of R&D industry considers worth investing. In effect, the drug regulatory authorities’ desire to conserve the viability of new antimicrobials is at odds with the need to stimulate development of those very products. However, if the product could be brought to market years earlier, the economies for the industry would be more favorable.

During the last fifty years of the pharmaceutical industry, with its successive "generations" of chemical, analytical and biotechnological innovation, the regulatory mechanism for ensuring safety and efficacy has imposed absolute standards that, by and large, have not taken relative benefits and risks of

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medicines into account Indeed, all medicines carry some risk of side effects. We believe that the regulatory apparatus needs to become more flexible to accord with the changing nature of pharmaceutical innovation, there being cases where regulatory standards may become an unnecessary barrier to innovation.

For instance, safety issues should be detected as early as possible, and ways to distinguish potential from actual safety problems should be available, but they are not. Safety problems are often uncovered only during clinical trials or after marketing. Companies could save many millions of dollars if they could know much earlier that clinical failures are likely. The obverse situation is also a problem, as early tests can suggest the possibility of safety problems that never materialize, potentially eliminating candidates unnecessarily.

The issue of whether, and to what extent, pharmaceutical innovation is being thwarted by inappropriate or even non-existent benefit/risk evaluations with interrelated clinical, regulatory and legal constraints is complex and challenging. It is often difficult to separate fact from rhetoric. The issue, of course, is that there are differences between how risk is perceived between the public and private sectors and between different members of the healthcare “ecosystem” and in different countries with very different disease patterns. Regulatory procedures should be flexible enough to take these different perceptions into account.

8.3.2.1 The Pharmaceutical Industry

For the pharmaceutical industry, the assessment of risk is an important determinant in how they allocate resources and conduct their R&D projects. Industry wants as much predictability and consistency as possible when it makes its R&D investment decisions, especially when profit margins are likely to be narrow. Thus, lack of sufficient, reliable, and decisive consensus about future markets, disease burdens, raw material supply, public-sector needs, priorities, and policies (and a host of other factors including potential for product liability or intellectual property litigation) may well dampen prospects for private-sector innovation or collaboration with the public sector. During the drug development cycle, industry does factor drug risk/adverse events into account when making decisions about going forward with any particular R&D project. However, from this perspective, the present regulatory process is inadequate to deal with the collection and analysis of post-market authorization data on adverse events.

8.3.2.2 National Governments

For national governments, national pharmaceutical regulation is reflective of national attitudes towards the risks involved in providing the proper mix of services and financing mechanisms. For example, countries that control the price of medicines have a tradition of direct government involvement in economic activity, including, that of controlling prices in a wide range of sectors.23 This can lead to the governmental dilemma of whether to promote health or industrial policy. Nonetheless, as a way of controlling costs, some European governments delay the pricing of innovative drugs which neither promotes health nor industrial policy. Clearly, governments can promote both but in practice, this is not always the case, and there is much dispute about how the tension between the two can best be resolved This dispute is often manifest as the tension between valuing real pharmaceutical innovation, which will occur as increased costs now but improved health outcomes in the future, and

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short-term thinking about budgetary pressures. Frequently, evidence of the true “value” of a pharmaceutical innovation can only be delivered long after the launch of the product and it is not obvious that national governments will allow price increases once value is determined. See Background Chapter 8.2.

8.3.2.3 Regulatory Authorities

The present regimen of Phase I through Phase III clinical trials cannot wholly guarantee safety of medicines. The perception of risk and the calculus involved in pharmaceutical regulatory authorities is complex as it is often related to the industries’ views that high costs and long lead times make drug development an uncertain and expensive process with little room to make mistakes) . As time to market has increased, industry perceives that there is less room for failure in securing regulatory approval.16 Notwithstanding this perception, in many cases, medicines fail regulatory approval precisely because of inadequate design and conduct of clinical trials.24 From a policy perspective, the regulatory authority sets the risk to the population of serious or even life-threatening side effects against the societal cost of slowing the advent of new drugs to the market. Thus, if a regulatory agency believes risk minimization is a priority, there should in principle be an incentive for increased pre-market testing and post-market surveillance.

In general, the evidence required to evaluate new drugs is consistent with the acceptance of greater risk for greater gain. For example, if a new drug offers little potential advantage over existing drugs for an illness that is not life-threatening, but is relatively common, a fairly large data base would be needed to provide acceptable evidence of safety. On the other hand, if a new drug offers an important benefit for the previously unmet treatment of a serious illness, even in light of some enhanced adverse event risk, approval should require significantly less data. We believe the present regulatory regime is not sufficiently attuned to these shifting benefit/risk calculations and, in some cases, is itself acting as a barrier to pharmaceutical innovation. We note, however, that the recent EU legislation on the EMEA 22 (Article 116) makes such a risk/benefit calculation explicit:

"The competent authorities shall suspend, revoke, withdraw or vary a marketing authorisation if the view is taken that the product is harmful under normal conditions of use, or that it lacks therapeutic efficacy, or that the risk-benefit balance is not positive under the normal conditions of use, or that its qualitative and quantitative composition is not as declared…"

In this regard, suggestions for improving drug safety are in Section 8.3.6.2.

We further note that costs by themselves (i.e., cost of the medicine and/or costs incurred by the sponsor during drug development) are not part of the formal risk calculus of most drug regulatory agencies but most understand that if they required more complete safety testing (and thus more exposed patients) early in clinical development, many pharmaceutical companies would find this unaffordable. (See Comment by EMEA)

8.3.2.4 Patients

Patients bring yet another range of perceptions regarding risk to the question of pharmaceutical innovation. Many patients/healthcare consumers, particularly

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those in the United States, have a penchant for new medical technology and might strongly support public investment in R&D, while being less than enthusiastic about paying for high up-front R&D costs for medical products.25

Individual patients, in everyday life, do fairly simple analytic assessments of benefits and risks all the time. This will vary with the patient and disease. A patient with a life threatening disease may very well accept the risk of a new medicine with harmful side effects if there are few therapeutic alternatives. In such circumstances, cost will likely not enter into the assessment. When conditions are non-life threatening, other factors such as cost may come into play, although in developed countries this is less of a concern as the insurance/reimbursement system is paying most of the time. Benefit /risk is a sliding scale: if there are no alternatives, a patient might take on a higher risk of a new drug but if there are plenty of alternatives, a high risk is not acceptable.

8.3.2.5 Payers: Reimbursement Authorities, Insurance Companies, Governments

Pricing and reimbursement systems across Europe are varied and are likely to change in the future as governments try to contain costs. Payers are responsive to adverse drug events as they are looking for pharmaceutical "value" for the money, which may involve cost-effectiveness analyses. From the industries` viewpoint, if they cannot predict what price a new medicine is likely to achieve or how long the decision will take or even if it will be reimbursed at all, additional uncertainty is introduced into the pharmaceutical R&D calculus. Thus, from the industry viewpoint, reimbursement systems, such as the use of therapeutic reference pricing, disproportionately limit returns on incremental innovation, particularly if that innovation is a real advance on a generic product See Annex 8.3.3.4.. This is because the many payers use cost-containment mechanisms that focus on medicines thought to be ‘budget busters’, no matter what the clinical outcome their use achieves.26 Payers almost by definition react to pharmaceutical innovation by developing policies that contain costs. The demand for cost containment, manifest in large part through reimbursement policies, is coming into conflict with the commitment to medical innovation.26

Patients, payers, and the public all share the expectation that marketed medical products will have a well-understood safety profile and a positive benefit/risk analysis. Both the industry and the regulatory authorities do not really have the ability to confidently predict safety performance in a timely and efficient manner. There is too much uncertainty using present methods. The degree of uncertainty inherent in current techniques can result in conservative and inflexible standard setting.

8.3.3 Risk, Benefit and Pharmaceutical R&D: Recent Ways of Thinking About the Problem

These challenges have not gone unnoticed by stakeholders. Recently, several independent documents have been produced that deal in various ways with barriers to pharmaceutical innovation. Some of these provide novel suggestions for ways of overcoming these barriers. None of the documents reference the others. The congruence of these independent suggestions is encouraging. iv

iv We note the 1997 review of the FDA regulatory process in the Food and Drug Law Journal, volume 52. This contains several articles on improving the US drug regulatory process. We will identify where these proposals track those mentioned in the documents reviewed herein.

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8.3.3.1 U.S. FDA: Critical Path Research

In March 2004, the United States FDA produced a document summarizing the view that “… applied sciences needed for medical product development have not kept pace with the tremendous advances in the basic sciences.”27 (See Appendix 8.3.1) That is, basic scientific advances are not informing the development of new assessment technology, as opposed to the discovery of new technology so that there are too few analytic tools (e.g., analytical devices, assay systems, surrogate markers, cell culture methods and so on) to assist in providing drug safety and effectiveness studies more quickly, with more certainty and at lower cost.

The FDA suggested that new animal or computer-based predictive models, biomarkers for safety and effectiveness, and clinical evaluation techniques are needed to improve predictability and efficiency along the “critical path from laboratory concept to commercial product.” Significantly, this document emphasized the difficulty of " predicting ultimate success with a novel candidate…" at any point during the R&D development cycle. Thus, the document cites that fact that a new medicinal compound entering Phase 1 testing, after having gone through perhaps 10 years of preclinical screening and evaluation, is still estimated to have only an 8 percent chance of reaching the market. This means that, in reality, a drug entering Phase 1 trials in 2000 is not more likely to reach the market than one entering Phase 1 trials in 1985. 28 In this regard, the FDA suggested that it is working to facilitate earlier "proof-of-concept" trials that seek to confirm activity in humans before a commitment to full-scale development is made. They identified a need for new genomic, informatic, and imaging technologies that could provide tools to reliably detect safety problems early, identify patients likely to respond to therapy, and lead to new clinical endpoints.

The FDA document also identified a need to improve the efficiency and effectiveness of the clinical trial process, including trial design, endpoints, and analyses. The FDA acknowledges that "… most of the tools used for toxicology and human safety testing are decades old… and may fail to predict the specific safety problem that ultimately halts development…". Moreover, clinical trials may not uncover such issues as the safety issues may be uncommon, the trials may be run with too few patients or with patients that are not representative of the target population (i.e. trials lacking the elderly, women, ethnic groups). Predicting and subsequently demonstrating medical benefit is quite challenging as available pre-clinical animal models have limited predictive value in many diseases. In these cases, drug developers must rely on large-scale, expensive human trials to assess effectiveness in people but variability in human responses is not understood and thus cannot be controlled for. Thus, developing new clinical markers or surrogate endpoints for clinical effectiveness will become more and more important.

The paper emphasizes the importance of research into the regulatory process and highlight the value to such a research agenda that can be added by the scientists working in drug regulatory authorities and by the actual regulatory data itself.

8.3.3.2 Coping with an Expanded EU (EMEA Road Map to 2010)

The EU-wide counterpart of the FDA, the European Agency for the Evaluation of Medicinal Products (“EMEA”), launched a consultation exercise in April 2004 on

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a strategy to allow the EMEA to better facilitate drug regulation in an expanded Europe within a setting of increasing innovation and research. Pre-clinical and clinical scientific assessment, post-marketing issues and improving interactions with patients are important challenges faced by the EMEA. 29 See Appendix 8.3.2. This document recognizes that the legislative, institutional and scientific environment in Europe is undergoing changes brought about by the impact of new Community legislation and EU enlargement. Further, the impact of an ageing population, increased demands for medicines, the rise of antimicrobial resistance also is forcing the EMEA to take a fresh look at their role.

Although this document did not tackle the difficult issue of new and flexible approaches to drug regulation, as discussed in part by the FDA document (Section 3.1), the EMEA recognized the need to develop a more proactive approach to pharmacovigilance and risk management strategies as well as improving access by healthcare professionals and patients to information emanating from the EMEA.

8.3.3.3 European Union Perspective

In Europe generally, there is the sense that competitiveness depends on the ability of manufacturing and service sectors to meet fast-changing market conditions quickly and efficiently by way of new technology. Although new knowledge is not only created through R&D, the ability to assimilate and apply new knowledge in order to improve productivity and create new products and services relies on scientific inventiveness and entrepreneurship. More specifically from the point of view of the EU, improving innovation performance is central to the Lisbon goal for the EU to “become the most competitive and dynamic knowledge-based economy in the world by the end of the decade.” 30

Partly in response to this, the third main update to the 6th Framework Work Program for Thematic Priority 1 (life sciences, genomics and biotechnology), covers calls for proposals with closing dates in November 2004 that include, “New approaches for accelerated development of new, safe and more effective medicines”. 31 (See Appendix 8.3.3) The approach is to identify and overcome barriers to drug development using new ways to accelerate this development throughout the entire value chain of pharmaceutical development. In short, the EU proposes a new comprehensive approach to drug development that identifies "bottlenecks/barriers in the current drug development process" and solutions to overcome them. The project contains two components:

1. A " …comprehensive strategy with a detailed roadmap to reduce the drug development time, encompassing the whole path from discovery of a new drug target to the validation and approval stages of new drug compound, ensuring high levels of drug safety and efficacy as well as fast availability of innovative medicines to the patients. " and

2. A strategy to develop " … exploratory and demonstrative research activities within one or two of the major chronic progressive disorders, where novel concepts for accelerated drug development can be tested and evaluated. The research must address key areas, which are linked to the bottlenecks in drug development and include regulatory aspects. " (emphasis added)

We note that senior staff at the EMEA were unaware of the call for proposals and were not involved in setting the research agendas.32

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8.3.3.4 Industry and Regulatory Perspectives (Middleton and Rawlins)

A. Middleton

A recent submission by a GlaxoSmithKline representative (See Annex 8.3.1) is an attempt to review barriers to innovation that arise in the public’s perception of research, the regulatory process, the pre-clinical/clinical research process, and the pricing and reimbursement process. GSK’s position is that regulatory authorities are becoming more risk-averse. This lack of flexibility entrenches the existing regulatory requirements and perceptions. For instance, this can result in the requirement for expanded studies to quantify potential serious adverse events, a situation exacerbated by increased public and media scrutiny and a lack of robustness in post-marketing monitoring. This risk aversion also is manifest in requests for additional data after submission of a marketing application and an "increasing tendency for approval of more restricted indications (with requests for increased data for broader indications)…". This can lead to delays in gaining marketing authorization and patient access.

GSK points out, as have others, that the industry shift to focus on chronic diseases has made research more difficult because of the increasing costs associated with newer regulatory demands and difficulties in undertaking clinical trials. In this regard, GSK asserts that, since a clinical ‘event’ is not realised for many years in certain chronic diseases, validated surrogate endpoints and biomarkers for chronic diseases are urgently needed. New biomarkers in particular have the potential to speed the development process "… if they can also be used for regulatory decision making." Historically only a few biomarkers have gained acceptability as surrogate clinical end points (e.g. blood pressure or cholesterol levels in cardiovascular medicine). GSK proposes that other stakeholders such as patients be involved in the regulatory process, consistent with the approach taken by the National Institute for Clinical Excellence (NICE) in the UK in which patients are involved in creating treatment guidelines. GSK also argues that improved dialogue with Regulators in the EU would help to foster better data packages for Regulators on which to make risk benefit judgments and improve predictability for companies in relation to the approval process.

The lack of predictability in Europe in the environment, in pricing, reimbursement and in regulatory review, are all seen as obstacles to innovation. One of the primary requirements of investors in innovation is to operate in a predictable, stable environment. This is currently not the case for the pharmaceutical industry in Europe. With ever changing pricing and reimbursement systems across Europe as governments try to contain costs – companies can not predict what price a new medicine is likely to achieve or even if it will be reimbursed at all. Increasing unpredictability in the regulatory review process is also an issue; frequently, additional data is requested that either results in delayed approval or a sub-optimal label being agreed.

B. Rawlins

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Perhaps the most radical proposals have been published in April 2004 by Sir Michael Rawlins, 16 (Also as Appendix 8.3.4) . Professor Rawlins is chairman of NICE and past chairman of the Committee on Safety of Medicines in the UK. Rawlins would put all aspects of the pharmaceutical R&D process on a firm "evidence-base" and would scrutinize drug discovery and development (including the regulatory process) for potential cost savings- such as improving strategies for identifying likely failures as early as possible and looking at inefficiencies in the conduct of clinical trials. In short, each step in the drug development pathway should be tested against two separate criteria: is there a clear evidence-base to support the continuing inclusion of the measure in the requirements of regulatory authorities?; and does each regulatory requirement offer value for money? 16

A key point, one that others have noted as well, is that many requirements of drug regulatory authorities are based on the opinion of experts, rather than on a robust body of evidence to support the continuing inclusion of the measure as a regulatory requirement.33 This also applies to the chemical and pharmaceutical aspects of drug development. Rawlins would have each aspect of preclinical safety studies (pharmacological ‘screening’ for unintended effects ; pharmacokinetic investigations in species used for toxicology testing; single- and repeat-dose toxicity testing; and special toxicology testing (e.g., mutagenicity) be tested by a robust analysis of its predictive power and questions if there is any " … objective basis for the presumed safety margins that arise from such studies."16

With regard to clinical testing, Rawlins is convinced that the numbers of patients in premarketing clinical trials could be reduced without compromising knowledge of safety and efficacy. This would result in substantial cost savings if the time to conduct trials is diminished.34

Rawlins suggests that the " … randomized, controlled, blinded, parallel-group clinical trial is not the only possible approach to investigating the safety and efficacy of a new drug" and calls for new methodological research to critically evaluate alternatives, including actual experiments comparing novel and traditional (RCT) designs.

Specific proposals discussed in these four documents for overcoming barriers to innovation will be reviewed in a later section.

8.3.4 Pharmaceutical Innovation: The European Situation

Europe spends 60% less per capita on pharmaceuticals than does the US - a gap that has roughly doubled since 1992, when European governments spent about 30% less per capita than the US. 35 That trend has translated into major European savings in pharmaceutical expenditure: if Europe's pharmaceutical spending per capita had increased at the same rate as the US, Europe would have spent an additional $160 billion in 2002 and $840 billion cumulatively, over the preceding decade.35 European governments are largely responsible for these cost differences resulting from various marketplace interventions, including: fixed reimbursement prices in France; set reference prices in Germany; profit limits in the UK. (See Section 2.2).

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Clearly, governmental actions such as the ones above have helped create direct, visible benefits for Europe in the form of lower pharmaceutical spending per capita. However, these policies have costs of their own. The innovation performance of the EU remains relatively poor in comparison with that of major international competitors such as the US. In addition, the EU is concerned about tendencies to shift R&D activities outside the EU, this being true for pharmaceuticals among other industries. The 2003 European Innovation Scoreboard 36 shows the EU trailing the US on 10 of the 11 indicators available for both countries, particularly in patenting, but also in business and public expenditure on research and development (R&D), tertiary education, and the provision of early-stage venture capital.

We briefly summarize some key points but in this regard it should noted with caution that the largest pharmaceutical companies are truly global entities so that it is not entirely clear where pharmaceutical innovation is actually taking place. Although corporate headquarters of company X may be in New York City, the R&D center(s) may be in Europe and vice versa.

Less drug innovation emanating from Europe - there were 81 new molecular entities (NMEs) launched in Europe between 1993 and 1997 yet only 44 NMEs were launched between 1998 and 2002. Conversely, 48 NMEs were launched in the US between 1993 and 1997 and while 85 NMEs were launched between 1998 and 2002 - a 77% increase over the base period.26 We note, however, that, between 1989 and 2002 in the U.S., just 153 out of a total of 1,035 new drug approvals (or 15%) were for priority-rated NMEs (i.e., new molecular entities with significant clinical improvements over existing medicines). 7 Thus, there would appear to be less drug innovation emanating from both Europe and the U.S. By contrast, between 1989–2000, 472 new drugs or 46% of the total approved by the FDA were standard IMDs. 7 The NICHM report upon which these data were based (reference 7 and Appendix 8.3.5) generated some debate. The report was heavily rebutted by the industry (See Appendix 8.3.6). The NICHM responded almost immediately (Appendix 8.3.7) and the industry provided yet another rebuttal to this NICHM response (Appendix 8.3.8). Interested readers are requested to view the original documents. Briefly, the industry believed that the NIHCM study was flawed because it excluded all approvals of biologics from its calculations.v Further, as we have mentioned previously, the FDA priority review is performed before anyone really knows if a product is "innovative" or not.

Notwithstanding this debate, the total number of "pharmaceutical" industry drug dossier submissions for biotechnology products (Biologics Licensing Applications) and non-biotechnology products (New Chemical Entities) has clearly decreased in the U.S. See Figure 8.3.4 taken directly from Figure 8.3.2 of reference [7].

v This raises the question of the real differences, if any, between the biotechnology and pharmaceutical industries in terms of "innovation".

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Figure 8.3.4

Significantly, similar trends have been observed in the EMEA where it reported that only 31 new drugs were submitted for approval in 2002, compared with 58 in 2001 and 54 in 2000. 35

Fewer high value-added jobs - the US created 42% more high value-added pharmaceutical jobs than Europe from 1990 to 2001.37 Loss of corporate research centers - both US and European R&D expenditures were approximately $10 billion in 1992. From 1992 to 2002, US pharmaceutical R&D expenditures grew by 11% (compounded annually) while European expenditures grew by just 8%, resulting in a substantial shift to the US. 35

Delayed access to the most advanced drug treatments - the average delay from initial drug launch to market in Europe is 33% longer than in the US (the UK is shortest, while Greece is longest). One reason for this slow uptake of new medicines as compared to the U.S. may be the lengthy reimbursement negotiations that follow government approval in Europe of any new drug. Often in Europe, a single national system may be primarily responsible for cost containment. This leads to companies choosing to launch their products in the United States which, for better or worse, has no such single national system. See Table 8.3.1 from Annex 8.3.1 .

Table 8.3.1: Average time from pricing and/or reimbursement application to actual payment

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The EU believes that there has been a shift in pharmaceutical innovation from Europe to the United States. While a number of the reasons are mentioned above, the primary cause is that pharmaceutical companies are behaving in an economically rational way and pharmaceutical innovation has "followed the money." To get a return on the nearly $1B currently required to bring a new drug to market,1 pharmaceutical companies increasingly focus on the large US market, and on the high quality human resource and technical research facilities in the U.S. Pharmaceutical companies now depend on the US as their key source of returns on R&D investments.

In Section 8.3.5 we summarize some important barriers to pharmaceutical innovation, with particular regard to the situation in Europe. Section 8.3.6 summarizes some of the possible solutions to overcoming these barriers that have been proposed by others. Our conclusions are in Section 8.3.7.

8.3.5 Other Selected Barriers to InnovationWhile the EU provides central support for research through its Framework programmes, pricing and payment discussions and policies are national responsibilities. So while the G10 group and the European Commission can promote a strong European pharmaceutical industry (See Appendices 2.2A-C of Chapter 2 of the Background Document ), in the final analysis, pricing and reimbursement decisions made at national level will have the strongest influence on the industry.

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8.3.5.1 Unpredictable Nature of Pricing and Reimbursement (P&R)

We briefly summarize the P&R situation for several EU members from the point of view of the private sector. 38

Italy: The Italian pharmaceutical market is the fourth largest in Europe and the sixth largest in the world. The government exercises strict control over drug prices, uses a wide range of cost-containment measures to curb spending, and is now taking greater account of pharmacoeconomic data than in the past. Public expenditures on prescription drugs declined in 2003. The government has also

1 DiMasi, J., Hansen, R. W. & Grabowski, H. G. The price of innovation: new estimates of drug development costs. J. Health Econ. 22, 151–185 (2003).2 Institute of Medicine, 2002. Medical Innovation in the Changing Healthcare Marketplace: Conference Summary (2002)Institute of Medicine Board on Science, Technology, and Economic Policy, available online at http://www.nap.edu/catalog/10358.html, last accessed 2 August 2004.3 Achilladelis, B & Antonakis, N. 2001. The dynamics of technological innovation: the case of the pharmaceutical industry, Research Policy 30, 535–588.4 Schumpeter, J.A., 1943. Capitalism, Socialism and Democracy. Unwin Univ. Books, London.5 Schmookler, J., 1976. Innovation and Economic Growth. Harvard Univ. Press, Cambridge, MA.6 Achilladelis, B., 1999. Innovation in the pharmaceutical industry. In: Landau, R., Achilladelis, B., Scriabine, A. Eds. , Pharmaceutical Innovation. Chemical Heritage Press, Philadelphia.7 National Institute of Healthcare Management Research and Educational Foundation, 2002, Changing Patterns of Pharmaceutical Innovation, available at www.nihcm.org, last accessed 2 August 2004.8 FDA Manual of Policies and Procedures – MAPP 6020.3 – Priority Review Policy, p. 2 http://www.fda.gov/cder/mapp/6020-3.pdf]9 Orphans and Incentives: Developing Technology to Address Emerging Infections (1997)Institute of Medicine, available online at http://www.nap.edu/catalog/5948.html, last accessed 2 August 2004.10 Achilladelis, B., 1993. The dynamics of technological innovation: the sector of antibacterial medicines. Res. Policy 22, 279–308.11 Achilladelis, B., Cines, M., Schwarzkopf, A., 1987. A study of innovation in the pesticide industry: analysis of the innovation record of an industrial sector. Res. Policy 16, 175–212.12 Turner, MJ, Merck Research Laboratories, presentation given at the Royal Institute of International Affairs, "Developing New and Effective Medicines", London, September 13, 2003.13 Ian Lloyd, "The R&D Revolution Remains Elusive", SCRIP Magazine February 2004, Pages 52-53].14 IMS Health, “IMS HEALTH Data Reveal Dramatic Growth in Megabrands,” no date, accessed March 25, 2002 from http://www.imshealth.com.15 H. Grabowski, J. Vernon, and J. DiMasi, 2002. Returns on Research and Development for 1990s New Drug Introductions, Pharmacoeconomics 20: suppl. 3, 11-29.]16 Rawlins MD. April 2004. Cutting the Cost of Drug Development? Nature Drug Discovery 3: 360-364, available at www.nature.com/reviews/drugdisc, last accessed 2

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recently decentralized responsibility for the health care system, a development that has begun to fragment the Italian pharmaceutical market.

United Kingdom: The United Kingdom is the world's fifth-largest market for prescription drugs. Pharmaceutical prices are higher in the U.K. market than in most other European countries. The UK has a relatively liberal regulatory environment and it is one of the most accessible of all European markets in terms of product registration, price setting, and reimbursement. However, tough supply-side and demand-side restrictions, together with a flourishing generics market, severely limit the uptake of innovative new drugs. The United Kingdom therefore remains one of the most conservative pharmaceutical markets in Europe.

August 2004. 17 Wastila L, Elcickas M., and Lasagna L, 1989. The WHO Essential Drugs List. The Significance of Me-too and Follow-on Research, Journal of Clinical Research and Drug Development 3, 105-115.18 Wertheimer A, Levy R & O’Connor T. 2001. Too Many Drugs? The Clinical and Economic Value of Incremental Innovations, The Social and Economic Benefits of Health Care Innovation, 14: 77–118. 19 Wertheimer, A, O’Connor T & Levy R. 2001, The Value of Incremental Pharmaceutical Innovation for Older Americans, Temple University School of Pharmacy Center for Pharmaceutical Health Services Research, available at www. temple .edu/ pharmacy /cphsr/ , last accessed 2 August 2004.20 Montaner, JSG, O’Shaughnessy MV, Schechter T, 2001. Industry-sponsored clinical research: a double-edged sword, Lancet 358, 1893-1895.21 World Health Organization, Essential Drugs and Medicine Policy, 2003, Fixed Dose Combinations for HIV/AIDS, Tuberculosis and Malaria, available at http://www.who.int/medicines/organization/par/FDC/FDCmain.shtml, last accessed 2 August 2004. 22 Official Journal of the European Union, Volume 47, 30 April 2004, at http://europa.eu.int/eur-lex/en/archive/2004/l_13620040430en.html, last accessed 2 August 2004.23 Kanavos P. 2002. Overview of Pharmaceutical Pricing and Reimbursement Regulation in Europe, LSE Health and Social Care, available at http://pharmacos.eudra.org/F3/g10/docs/synthesis.pdf, last accessed 23 July 2004.24 Pignatti, F., Aronsson B, Gate N, et al. 2002. The review of drug applications submitted to the European medicines Evaluation Agency: frequently raised objections, and outcome. Eur. J. Clin. Pharmacol. 58: 573-580.25 Kane, NM. 1997. Pharmaceutical cost containment and innovation in the United States, Health Policy 41: S71-S89.26 Rettig, RA. 1994. Medical Innovation Duels Cost Containment, Health Affairs (Summer Issue): 1-21.28 Lloyd I,"New Technologies, Products in Development,and Attrition Rates: R&D Revolution Still Around the Corner," 2002/2003. in PARAXEL'S Pharmaceutical R&D Statistical Sourcebook..29 EMEA, 23 March 2004. Discussion Paper: The European Medicines Agency Road Map to 2010: Preparing the Ground for the Future. Public EMEA/H/34163/03, Executive Summary available at www.emea.eu.int/pdfs/general/ direct/directory/3416303en.pdf, last accessed 2 August 200430 European Commission, 2002. Innovation Policy Studies, available at CORDIS web site , http://www.cordis.lu/innovationsmes/

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France: The French pharmaceutical market presents both advantages and disadvantages to drug manufacturers. France has an outstanding universal health care system, its pharmaceutical consumption levels are among the highest in the world, and physicians’ and patients’ strongly support for branded medicines and new therapies. Notwithstanding this, the government places strict control over the price of reimbursable drugs, the pricing and reimbursement process is lengthy and bureaucratic (See Table 8.3.1). From the industry point of the, recent government efforts to stimulate greater use of generic drugs is not in their best interest.

Spain: The Spanish health care system has traditionally offered its beneficiaries generous reimbursement terms for prescription drugs, with the result that Spain has a high level of pharmaceutical consumption. Nevertheless, prices are among the lowest in Europe, and manufacturers face tough negotiations to set pricing and reimbursement terms for drugs that are covered by the national health care system. In addition, the Spanish government has implemented a wide range of cost-containment measures, including a negative list and a positive list of drugs, reference pricing, patient copayments, price cuts and freezes, dual pricing, and profit control. The government has also begun a series of reforms that include promoting the use of generics. The recent decentralization of health care in Spain will be a powerful influence on the evolution of the Spanish pharmaceutical market; manufacturers will need to develop regional marketing strategies and responses to regional cost-containment measures.

Germany: Germany has one of the highest levels of health care spending in the world and has the largest pharmaceutical market in Europe (and the third-largest in the world). Drug manufacturers also enjoy a great degree of freedom in setting pharmaceutical prices, which are among the highest in Europe. However, pharmaceutical companies seeking to do business in Germany must contend with many cost-containment measures. These include prescribing guidelines, patient copayments, reference pricing, a negative list of drugs 31 European Commission, Sixth Framework Programme, 2002-2006, Calls for Proposals, available at http://europa.eu.int/comm/research/fp6/calls_en.cfm, last accessed 2 August 2004.32 Anonymous personal communication to Richard Laing, July 2004.33 Vertseegh, LR. 1997. Science and regulatory rituals associated with the drug development process. Food Drug Law J. 52:155-16134 Peck, CC. 1997. Drug development: improving the process. Food Drug Law J. 52: 163-167.35 Gilbert J & Rosenberg P. 2004. Imbalanced Innovation: The High Cost of Europe’s “Free Ride’, In Vivo Business and Medicine Report 22: 1-9, available at www.winhover.com, last accessed 24 July 2004.36 European Innovation Scorecard, available at http://www.cordis.lu/innovation-smes/scoreboard/scoreboard_2001.htm, last accessed 20 July 2004. 26

37 Bain and Co. Europe's Pharmaceutical 'Free Ride' Might Not Be So Free after AllBusiness Wire 2/23/2004, http://www.bain.com/bainweb/publications/publications_detail.asp?id=15246&menu_url=publications_results.asp, last accessed 19 July 200438 Various Authors, 2002-2004. Decision Resources, Pharmaceuticals, Pricing and Reimbursement, http://www.dresources.com/stellent/groups/public/documents/abstract/dr_006928.hcsp.]

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excluded from reimbursement, generics substitution, and parallel import dispensing targets.

Australia: Australia operates a national Pharmaceutical Benefits Scheme (PBS) to provide access to pharmaceuticals. Considerable subsidies are paid for pharmaceuticals covered by the PBS, which means that the price to the consumer is lower than it might otherwise be. Products will be considered for listing after receiving marketing approval from the Therapeutic Goods Administration (TGA), which considers safety and efficacy issues.39 Applications for listing on the PBS are considered by the independent Pharmaceutical Benefits Advisory Committee. When recommending which marketed drugs and medicinal preparations should be subsidized through the PBS, the Committee must be assured that the drug is effective, safe and cost-effective in comparison with other available treatments. The majority of prescriptions in Australia are written for medications that are subsidized under the PBS. The price of all products listed on the PBS is reviewed annually by the Pharmaceutical Benefits Pricing Authority (PBPA). The price is agreed-to with suppliers.39

The PBS has been very creative in balancing competing demands for pricing structures and recently negotiated an agreement between themselves, the manufacturer, consumers, and prescribers by limiting prescribing rights and requiring a select group of patients to agree to a time-limited "stop" period if certain outcomes were not achieved.40 For new antimicrobials, such an agreement is worth further study.

United States: The United States manufacturers also enjoy a great degree of freedom in setting pharmaceutical prices, as there are no national governmental cost controls. In contrast to most other governments, the United States government has played a limited role in containing the costs of pharmaceuticals. There are also no national drug formularies, no universal cost-sharing policies, and no national coverage of prescription drugs In the USA, since the 1990s purchaser power has been consolidated at the level of the insurer, managed care companies, pharmacy benefit managers (PBMs) and certain federal programs like Medicaid. 25 These purchasers demand and receive deep price discounts and have also instituted formulary policies, utilization controls, and disease management programs as a means to contain cost.

The question of whether or not the industry can innovate (See Figures 2-4) is posed at the same time that purchasers of pharmaceutical products in the United States are demanding lower prices from the industry. Thus, even in the U.S., cost pressure is affecting the climate for the pharmaceutical industry.

Public biomedical research (primarily by the National Institutes for Health) is strongly supported by the federal government. In 2004, the proposed annual Congressional appropriation for the NIH was nearly $30 billion41 as compared to the nearly 3 billion Euros for the four years of the 6th Framework Program.42

However, we do not know the extent of government supported funding for biomedical research in each of the EU members.

39 Birkett DJ, Mitchell AS & McManus P. 2001. A Cost-Effectiveness Approach to Drug Subsidy and Pricing in Australia, Health Affairs 20: 104-114.40 Lu CY, Williams, RD, March L, Sansom L & Bertouch J. 2004. Access to high cost drugs in Australia (Editorial) BMJ 329: 415-416.41 American Association for the Advancement of Science R&D Website, NIH Budget Growth Slows to 2 Percent in 2004, available at http://www.aaas.org/spp/rd/nih04p.pdf, last accessed 2 August 2004.

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8.3.5.2 Unpredictability During Regulatory Review

We previously mentioned that additional data is often requested that results in delayed approval. The industry position is that this need to generate increasing amounts of data before and after the approval of a new medicine may be a barrier to innovation. Another relevant mechanism within this category is approval with restrictions on distribution so as to ensure safe use; however, while such restrictions may well be beneficial in public health terms, their meaning in market terms may act as a disincentive to industry R&D investment.

In April 2004, the European Union (EU) enacted legislation that will have an impact on pharmaceutical sector in this regard. 43 Changes coming into force in November 2005 include:

A fast-track procedure registration procedure for products of major therapeutic interest. . It is not clear how extensively this will be implemented at present but it is hoped it will be is in line with similar existing provisions in the US.

Conditional marketing authorizations. The authorization will be granted subject to annual review of certain conditions, these being the company undertaking to carry out additional monitoring, notification to the competent authorities of any incident and action to be taken, and in some cases clinical studies. Conditional marketing authorization could potentially shorten the clinical trials process by years for certain products.

EU-wide framework for making medicinal products available in advance of authorization for compassionate use.

In addition, a new definition of "generic medicinal product" will provide legal certainty and better application of the marketing authorization procedure for generic medicines. The legislation will allow companies to conduct tests in support of a generic marketing authorization application during the validity of the patent or supplementary protection certificate applied to the original product. This is modeled on the “Bolar” type provisions operational in the US.

8.3.5.3 Cost Effectiveness Analysis

From a general public health and equity viewpoint, and not necessarily limited to European issues, drugs are “merit goods” that should be distributed on the basis of need or ability to benefit rather than ability to pay. As a result, most regulatory authorities do not examine whether, under conditions of routine use, a product is better value for the money than alternatives (cost effectiveness) taking into account all costs and savings involved (both drug and non-drug related). From the industry viewpoint, it is hard for companies to justify further dollars and time in cost-effectiveness studies, particularly as there are no agreed-upon set of measures by the industry and payers. Additionally, the need for post-approval outcome studies drives up data requirements so that requiring cost-effectiveness analysis by drug authorities during regulatory review would likely slow down the drug approval process.

42 European Commission, Sixth Framework Programme, at http://europa.eu.int/comm/research, last accessed 2 August 2004.43 Official Journal of the European Union, Volume 47, 30 April 2004, at http://europa.eu.int/eur-lex/en/archive/2004/l_13620040430en.html, last accessed 2 August 2004.

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However, from the payer viewpoint, at some point in the development cycle, such analyses are essential in a time of ever-increasing healthcare costs. Governments do use cost-effectiveness evaluations through setting up bodies such as NICE and PBAC to assess value . More to the present point, costing concerns should be adopted by those in the drug development cycle as some manufacturing, preclinical and regulatory requirements, even if soundly based, should be eliminated because they offer so little value for money.16

8.3.5.4 Intellectual Property Issues

Another general issue is that there is an ongoing debate about whether weak IP protection is a barrier to innovation or is a boon to access. The viewpoint of the stakeholder is critical as there is a tension between industrial policy directed to improving market share and health policy directed to obtaining access to assured quality medicines for people, regardless of their ability to pay. For instance, in the case of emerging infections, lack of patent protection may be acting as a major disincentive to innovation. Among potential antibiotics left undeveloped, some compounds might, in theory, offer new product leads.7

Nonetheless, because they have gone off patent (or their structures have already otherwise been placed in the public domain) and are therefore unprotected in any prospective market, there would be little private sector justification for developing them further. A related matter is whether industry would consider it worthwhile to target and/or obtain IP protection for, a single resistant mechanism (e.g., methicillin-resistant Staphylococcus aureus or even vancomycin-resistant staphylococci) for which the markets are not seen as large enough to justify investment. A rational objective of the industry is to develop agents that have a wider spectrum and are therefore more likely to have a larger market and longer useful life.7

8.3.5.5 Managerial Risk Aversion

An influential view, still prevalent, is that management is too often dominated by risk-averse thinking. This view of corporate management that prizes analytical elegance over insight and experience, leading to emphasis on maximum short term returns, was first brought to wider attention over 20 years ago in the important article by Hayes and Abernathy in the Harvard Business Review.44

Part of the problem is that there is real pressure on senior management to meet earnings-per-share goals and quarterly forecasts. Further complicating the problem is that R&D leaders often lack a sufficient understanding of financial analysis and management.45 The challenge for R&D leaders is even greater in hard economic times, as short-term fixes are often rewarded and R&D budgets get tightened. These and other common business pressures force a short-term focus, while innovation naturally requires a longer-term view. We surmise that this “management” problem is most acute in smaller firms, particularly biotechnology companies, where budgets can dictate behavior and corporate strategy more than long term innovation. Indeed, one could argue that it is the venture capitalists who are driving innovation in the start-up stages of

44 Hayes, RH and Abernathy, W.J. 1980. Managing Our Way to Economic Decline, Harvard Business Review, July-August: 67-77.45 Corporate Courage: Breaking the Barrier to Innovation, Mel Perel, Research-Technology Management, Vol. 45, No. 3, May-June 2002, pp. 9-17.

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biotechnology, rather than the scientists. Larger companies have the financial means to face longer periods of research cycle to reach their discovery goals.

8.3.5.6 Perceptions of Other Stakeholders

There are many other perceived or actual barriers to innovation, depending upon who one asks. We note a recent World Bank survey (cited in reference 9) of high-level representatives from the pharmaceutical industry designed to ascertain industry involvement in developing products for infectious diseases. The survey identified certain barriers as well: (a) lack of adequate information about the basic research that is under way in universities, research councils, and biotechnology companies worldwide that could provide material for industry to screen to generate more product leads; (b) the costs and duration of clinical trials; and (c) limitations inherent in the developing country market for products that could deal with the diseases that primarily afflict those countries. The survey also elicited industry suggestions about ways to lower these barriers. These are incorporated into Table 8.3.2, which presents a categorized summary of ideas about incentives for increasing pharmaceutical research and development for infectious diseases

Table 8.3.2: Overcoming Barriers to Innovation for Infectious Disease8

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TABLE 8.3.2 Incentives for Increasing Pharmaceutical Research and Development for Infectious Diseases

What Is Needed Demand Side Supply Side: Basic Research Supply Side:Clinical Phases

More information

Market identification; • epidemiologic/burden of disease data; • ongoing, accessible, integrated, comprehensive surveillance data on disease trends and resistance patterns

Priority setting; • well articulated, consensus-based public health agendas; • clear portrayals of specific disease priorities; • product characterization

Disease-specific bioinformation system; • research data from universities, research councils, biotechnology companies on product leads for possible development by industry

Development of surrogate endpoints; • generic categories of endpoints for use with a range of infectious diseases; • alternatives to correlates of protection for vaccines for which clinical trials difficult or impossible

More predictability

Market assessment; • early forecasting of demand based on epidemiologic criteria from surveys, demographic analysis; • segmentation by size, ability to pay, disease profile; • cost-effectiveness analysis

International/regulatory harmonization/reinforcement of intellectual property rights

Restricted distribution/product labeling; • systematic exploration of tension between need to conserve usable life of antimicrobials while conserving market appeal for R&D investment


8.3.6 SolutionsWe summarize various solutions to overcome both supply and demand side- barriers to pharmaceutical innovation.

8.3.6.1 Pre-Clinical Preclinical regulatory requirements should be examined. Thus, to what

extent are the current regulatory requirements for repeat-dose studies based on biological plausibility, rather than formal evidence? 16 For instance, does target organ toxicity, as identified in relevant experimental animals ( rat or dog), accurately reflect likely toxicity in humans? Unfortunatley, the available evidence is limited, but a recent review suggests that the conventional approach using experimental pharmacology alongside toxicity studies of one month's duration reasonably predicts adverse events in the first human studies.46 More evidence is required in this regard. What, for example, is the real predictive power of repeat-dose studies lasting more than three months? Last, what is the evidence base for the ‘safety margins’ assumed by toxicologists? 16

The predictive value of these regulatory “rituals” should be assayed. For instance, it is possible to perform case-control studies on marketed drugs that have already caused damage to compare whether the preclinical toxicity profiles from the dossier actually had any predictive value.

Key enabling technologies involving the use of animals and the use of human tissue in biomedical research are subject to complex regulation. Any increase in complexity of regulation or indeed blocking of access to these technologies by public opinion pressures has the potential to seriously disrupt basic and applied biomedical research.

The pharmacoeconomic effect of ever-increasing quality standards should be analyzed. What are the marginal benefits, if any, of increased “purity” standards?

8.3.6.2 Clinical

Clinical research should be promoted and supported by the EU and EU Member States. Investment in infrastructure including training and creating posts for suitably qualified staff should be a priority.

Alternatives to randomized controlled trials should be investigated. This requires an experimental approach with formal comparisons of the results of studies comparing novel and traditional (RCT) designs. 16 They include various designs, including decision based and risk-based designs, observational studies, including historical controlled trials that confirm or refute the circumstances under which they might be useful.47 48 In this regard, historical controls might be used to good effect in phase III trials since one can create a large number of prospectively collected historical controls that follow the natural history of clinically important diseases.

46 Greaves P., Williams A & Eve M. 2004. First Dose of Potential New Medicines to Humans:How Animals Help. Nature Reviews Drug Discovery 3: 226 -236.47 Concato, J., Shah, N. & Horwitz, R. I. 2000. Randomised controlled trials, observational studies, and the hierarchy of research designs. N. Engl. J. Med. 342, 1887–1892.48 Barr, D. P. et al. Design considerations for AIDS trials. 1990. N. Engl. J. Med. 323, 1343–1348.

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It is possible to merge clinical phases. Indeed, once multiple dosing in phase I health volunteers starts, there is no reason not to go directly into perhaps 20-30 patients and merge this with a phase II trial.

To improve drug safety, phase III trial requirements could be altered to clearly demonstrate efficacy and phase IV monitoring be expanded to include active case detection (numerator) as well as reporting of all drugs dispensed (denominator).

Bayesian analytical approaches should be used as, in principle, they can allow clinical trials to be terminated sooner. vi Certainly it is possible to retrospectively analyze clinical trials using Bayesian and “frequentist” approaches.

Its flexibility makes the Bayesian approach ideal for analyzing data from clinical trials.49 In carrying out a Bayesian analysis for inferring treatment effect, information from the clinical trial and other sources can be combined and used explicitly in drawing conclusions. The ability to calculate predictive probabilities for future observations is a distinct advantage of the Bayesian approach to designing clinical trials and other decisions.

Increased use of biomarkers and surrogate clinical end points to improve “translational” research (e.g., new scanning methods, micro-array assay technologies and high throughput screening).

Review current technology opportunities and use of biomarkers/surrogate end-points in marketing authorization applications with a view to encouraging the use of bio-markers of drug effect (e.g. in dose ranging studies) or surrogate end-points likely to be predictive of clinical benefit.

Improving communication between the industry, physicians and regulators during drug development would help to reduce requests for additional data and regulatory questions following submission. This could increase predictability of outcomes for marketing authorisation applications. Industry should interact with payers at early stages in the development process in order to provide industry with sufficient information to know that payers would be looking for in order to reimburse a medicine. See Background Chapter 8.2.

Continue to improve regulatory procedures in Europe, including piloting new processes to speed up the system (e.g., rolling submissions, accelerated assessment for innovative products)

Increase the dialogue between patients and regulators. Patients have a different assessment of the risks and benefits of medicines, especially for products that are going to be released conditionally.

vi A definition of Bayesian methods in the present context might be: the explicit quantitative use of external evidence (prior judgments), in the design, monitoring, analysis, interpretation, and reporting of a health technology assessment. Bayes's theorem is a formula that shows how existing beliefs, formally expressed as probability distributions, are modified by new information. For instance, in diagnostic testing, the evaluation of a diagnostic test requires the prevalence of the disease to be specified, and a Bayesian analyst will specify a probability distribution expressing the relative plausibility for this unknown quantity, before taking into account any evidence from a study. This “prior” distribution can then be combined with actual evidence from the study.

49 Spiegelhalter DJ, Myles JP, Jones DR, & Abrams R. 1999. Methods in health service research: An introduction to bayesian methods in health technologyassessment, BMJ 319, 508-512.

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8.3.6.3 Post Marketing

The relatively scant attention paid to phase IV post-marketing studies needs to be re-evaluated. European regulatory agencies should push for shorter and smaller clinical trials, supplemented by computer-based registries of all patients and their clinical outcomes. Such registries will have data in both incidence and exposure to the medicine. Long term, post-marketing risks and benefits of medicines must be evaluated and this information can come from observational/epidemiological studies that use electronic patient-level data (e.g. administrative databases). See Background Chapter 8.4 (“Comparative Effectiveness of Medicines") for further details.

Most patient groups have little funding of their own, an unfortunate circumstance as they need public support and should be consulted on regulatory and pricing decisions. Indeed, the current method of dealing with medicines does not include the perspective of the individual patient, but deals with disease categories. Patients and patients’ organizations need to be involved in shaping the environment in which innovations and healthcare processes are designed to ensure that those processes take into account the patient-centred approach.

Patients should be involved in creating treatment guidelines as well-informed patients will improve the process.

Patients’ organizations have a role in advising on information, disseminating information and encouraging involvement. They should also be involve in ethics committees. Rather than just being involved as a passive recipient in clinical trials, patients and patients’ organizations have valuable opinions and experience which should be incorporated into the planning of clinical trials and the regulations that govern them.

Attention is directed to the recent draft guidelines set out by the International Conference on Harmonization of Technical Requirements for Registration of Pharmaceuticals for Human Use (ICH) on the "E2E" pharmacovigilance planning. The guideline describes a method for summarizing the identified risks of a drug, the potential for important unidentified risks, and the potentially at-risk populations and situations that have not been studied pre-approval. vii

8.3.6.4 Reimbursement

Prospective reimbursement may be able to contain rising costs. That is, payment for different diagnoses will be set in advance and will not be based on an individual physician or hospital's costs. This will give healthcare providers a strong incentive to hold down costs, since providers that hold costs below the payment rate can keep the difference, and those that do not must absorb the loss. To be fair, however, the situation is not so clear-cut since prospective reimbursement might mean that new innovations which are likely to more costly but provide added benefit would not be chosen. Further, since early reimbursement decisions set a price for an innovation at the beginning of a product’s life cycle, payers may not gain the benefit of learning about the product going forward or from changing demand for the product. Alternatively, perhaps reimbursement decisions should introduce conditional, time-limited coverage and a reviewable reimbursement rate.27 More flexibility to alter

vii Available at, http://www.ich.org/UrlGrpServer.jser?@_ID=276&@_TEMPLATE=254, last accessed 27 August 2004.

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prices once “value” is demonstrated after launch (See Chapter 8.2.) could help moderate pricing requests at launch. Companies would know that prices would drop only under defined circumstances.

More predictability terms in terms of improving the timing and payment level for reimbursement is required.

Conditional product release mechanisms set forth by the EMEA should be keyed to conditional, time limited and reviewable reimbursement coverage.

National levels of reimbursement should be related to the ability to pay (e.g., based on GDP per capita. See Background Chapter 8.2 (Determining Value for Innovation).

8.3.7 ConclusionsAt present, there appears to be a slowdown, at least in the short term, in the rate of new drugs approved despite increasing expenditures for drug development. The hurdles to increased successful pharmaceutical innovation are likely to change going forward as new technologies and pressures are brought to bear on all members of the pharmaceutical value chain. Nonetheless, rewards for a clinically effective and cost-effective drug need to remain significant for the innovator. The challenge to the industry is to better target its research and development money, which may well become more scarce. The challenge for regulators is to maintain safety while also stimulating or, at a minimum, maintaining the existing innovation advance. The challenge for governments is to stimulate innovation while dealing with risks and benefits associated with medicines, with pricing and reimbursement proposals, appropriate incentive mechanisms, and related issues. These policy decisions can have long-term consequences for the availability of breakthrough and incremental pharmaceutical innovations.

We commend the EU for their commitment to approaches for accelerated development of new, safe and more effective medicines in the latest call for proposals for the 6th Framework Program. The focus is to identify “…bottlenecks/barriers in the current drug development process … and solutions elaborated to overcome them.” We believe this focus is still too narrow. We would like to see, as part of this call for proposals, the EU create a research agenda so that every aspect of the drug development process is questioned for its relevance, costing, and predictive value. (See Appendix 8.3.9)

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