Chapter 6 Reproductive Research and Contraceptive Development

Chapter 6

Reproductive Research andContraceptive Development

.

Contents

LIST OF TABLES

LIST OF FIGURES

Figure No. Page

20. Worldwide Expenditures for Reproductive Research, 1965-79. ....................10721. Worldwide Expenditures for Fundamental Reproductive Studies and Training of

Scientists, Contraceptive Development and Evaluation of Contraceptive Safety,1965-78 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .........109

chapter 6

Reproductive Research andContraceptive Development

Abstract —– ——

Reproductive research and contraceptive development are carried out by academic in-stitutions, the pharmaceutical industry, private foundations, U.S. and foreign governments,and international agencies. U.S. Government support for contraceptive development beganin the late 1960’s when the National Institutes of Health’s (NIH) Center for Population Re-search and the Agency for International Development’s (AID) Office of Population were cre-ated. Although worldwide expenditures for reproductive research and contraceptive devel-opment rose from $31 million to $155 million between 1966 and 1979, when adjusted for in-flation there has been a decline of 20 percent since 1973. Public sector expenditures (bygovernments and philanthropic and nonprofit organizations) constitute about 85 to 90 per-cent of these worldwide expenditures. In 1979, the U.S. Government’s share of this totalwas 72 percent or $111.6 million. Government research agencies stimulate private sectorinitiatives in contraceptive development in two ways. First, they support basic researchprojects in academic and other nonprofit research institutions. Private firms can then buildon these findings to develop new products. Second, Federal agencies can directly financeprojects (e.g., clinical trials) that might otherwise require industry financing in order tostimulate industry to develop and market new products.

Before U.S. manufactured drugs and medical devices can be marketed, they must meetthe safety and efficacy standards of the laws passed by Congress and administered by theU.S. Food and Drug Administration (FDA). Testing requirements for contraceptives aremore stringent than for other drugs because they are used for long periods by healthy indi-viduals rather than by individuals with disease. Drugs not approved for marketing in theUnited States cannot be exported for use abroad. Medical devices not approved for market-ing in the United States can be exported under limited conditions. These export provisionswill become more important as pharmaceutical manufacturers shift their marketing effortsfrom the United States, where population growth is close to replacement level, to the lessdeveloped countries (LDCs), where the number of people entering the reproductive ages isincreasing. FDA’s market approval process has been criticized as shortening effective pat-ent life, leaving manufacturers too little time to recoup their investments. Drug patents runfor 17 years, and the market approval process averages 7½ years-8½ years for hormonalcontraceptives. However, for the oral contraceptives, patent holders have been able to in-crease prices and retain a dominant share of the market even after their patents have ex-pired. Liability insurance costs have risen, and, in some cases, pharmaceutical manufac-turers have had difficulty in obtaining satisfactory insurance coverage. These product lia-bility problems may be deterring some pharmaceutical manufacturers from the contracep-tive products line as well as affecting the kinds of future contraceptives to be developed.Liability problems have also affected the clinical testing that new contraceptives mustundergo, as insurance is more difficult to obtain and its cost is substantially higher.

105

106 . World Population and Fertility Planning Technologies: The Next 20 Years

Introduction

As in other areas of pharmaceutical investiga-tion, reproductive research and contraceptivedevelopment are comprised of the following ac-tivities:

●

●

●

●

basic research (in both the reproductiveprocess and in related fields; e.g., immunol-ogy);training of scientists;applied research (i.e., goal-oriented R&D);andevaluation of the safety and effectiveness ofmethods already in use.

These activities and, in some cases, the in-troduction and marketing of contraceptives, are

carried out in varying degrees by the followingentities:

. academic institutions;● the pharmaceutical industry;● private foundations;● the U.S. Government;● foreign governments; and• international agencies.

In the following analysis, recent trends in thefinancing of reproductive research and contra-ceptive development are discussed. The majorpublic sector organizations involved are de-scribed, and selected factors that affect repro-ductive research and contraceptive develop-ment are examined.

Support of reproductive research andcontraceptive development

Trends in financial support

Throughout the 1940’s and 1950’s, contracep-tive development was not directly supported bythe U.S. Government. Oral contraceptives, forexample, were developed with the support ofprivate philanthropy (particularly the Rocke-feller Foundation) and the pharmaceutical in-dustry,

In the late 1960’s, the U.S. Government cre-ated agencies that eventually began allocatingrelatively small amounts of research funds tocontraceptive development. In 1967 the Officeof Population was created within AID, and in1968 the Center for Population Research was es-tablished in the National Institute of ChildHealth and Human Development within NIH. Onthe international level, the United Nations Fundfor Population Activities (UNFPA) was created in1969, and in 1972 the Special Programme forResearch, Development and Research Trainingin Human Reproduction was established withinthe World Health Organization (WHO).

In 1979, worldwide funding for reproductiveresearch and contraceptive development to-taled approximately $155 million, an increasefrom $31 million in 1965. However, expressed inconstant (1970) dollars, this $155 million wasequal to $82.6 million, and the high point infunding was 1972-73 (fig. 20). There has thusbeen a decline in these funds of about 20 per-cent since 1973 (table 22).

During the 1970’s, the U.S. contribution re-mained at approximately 70 percent of theworldwide total; the remaining 30 percent wasprovided largely by other industrialized nationsand by the LDCs (table 22). The U.S. contribu-tion in 1979 was $111.6 million (actual dollars),or 72 percent of worldwide expenditures.

U.S. contributions consist of funds from theU.S. Government, philanthropic and nonprofitorganizations, and industry, and there has beena shift in relative contributions among thesesources. In the 1960’s, these three sources pro-vided roughly equal percentages of the total.

Ch. 6—Reproductive Research and Contraceptive Development ● 107

Figure 20.—Worldwide Expenditures forReproductive Research, 1965-79

150

140

130

120

110

100

90

80

70

2010

0

SOURCE: L. Atkinson, et. al., “Prospects for Improved Contraception,” familyP/arming Perspectives, 12(4), pp 173-192, 1900.

U.S. contribution, but by the late 1970’s, the U.S.Government was by far the major contributor,providing 70 to 80 percent of the total U.S. con-tribution (table 23). The U.S. Government isthus the major current contributor to reproduc-tive research and contraceptive development,providing more than 50 percent of total world-wide expenditures.

The components of worldwide total expendi-tures for reproductive research and contracep-tive development are summarized in table 24and figure 21. Worldwide public sector expend-itures, by governments and philanthropic andnonprofit organizations, constitute about 85 to90 percent of total expenditures (table 23). Thecomponents of these public sector expendituresare summarized in table 25. Approximately 70

percent of total funds go to basic research andtraining, 20 to 25 percent to contraceptive de-velopment, and less than 10 percent to safetyassessments. In contrast, about 80 percent ofpublic sector funds are spent on basic researchand training, 10 to 15 percent on contraceptivedevelopment, and 10 percent on evaluation ofcurrent methods (compare tables 24 and 25).The public sector thus allocates proportionatelymore funding to basic research and less to con-traceptive development than does the privatesector.

The proportionate distribution of public sec-tor expenditures in 1978 for contraceptive de-velopment (approximately 15 percent of totalpublic sector expenditures) is summarized intable 26. Approximately 71 percent was spenton contraceptive methods for women, 6 percenton methods for men, and 23 percent on meth-ods (such as sterilization) for female or maleuse. Of the 71 percent of expenditures on meth-ods for women, 37 percent was spent on newapproaches to use of steroids, including subder-mal implants, improved oral products, inject-able, and vaginal rings. Another 10 percentwas spent on vaccines against pregnancy. Theremaining 24 percent was spent on sterilizationmethods, antifertility and anti-implantationagents, intracervical and intrauterine devices,menses-inducing and abortifacient drugs, andbarrier methods.

Major agencies involved inreproductive research andcontraceptive development

The following organizations or scientific in-stitutions currently either finance or conductreproductive research and contraceptive devel-opment, largely for LDCs:

The Center for Population Research (CPR)was established in 1968 within the NationalInstitute of Child Health and Human Devel-opment at NIH. In turn, CPR established itsContraceptive Development Branch, which

in 1979 spent about $7 million.The International Fertility Research Pro-gram (IFRP) was founded in 1971. It con-

108 ● World Population and Fertility Planning Technologies: The Next 20 Years

Table 22.—Total Expenditures for Research in the Reproductive Sciences and Contraceptive Development,by Country of Origin, 1965 and 1969-79 (In thousands of current and constant [1970] U.S. dollars)

NOTE: Totals may not add because of rounding.

SOURCE: L. Atkinson, et al., “Prospects for Improved Contraception,” Family Planning Perspectives, 12(4), pp. 173-192, 1980.

Table 23.—Estimated Worldwide Funding for Reproductive Biology and Contraceptive Development,1965 and 1969-79, by Sector (in millions of constant 1970 dollars and by percent distribution)

Sector 1965 1969 1970 1971 1972 1973 1974 1975 1976 1977 1978 1979

InternationalConstant dollars:

Governments. . . . . .$6.2 $13.7 $16.3 $21.2 $24.7 $24.4 $23.3 $24.8 $25.8 $24.3a $ 2 2 . 6a $20.3a

SOURCE: L. Atkinson, et al., “Prospects for Improved Contraception,” Family Planning perspectives 12(4), pp. 173-192, 1960.


Table 24.—Percentage Distribution of Expenditures in the Reproductive Sciencesand Contraceptive Development, by Purpose, 1965 and 1979-78

Purpose 1965 1989 1970 1971 1972 1973 1974 1975 1976 1977 1978

Fundamentalstudie/training . . . . 62.0 65.0 68.0 65.4 62.6 66.6 61.8 71.8a 73.8a 68.0 70.1

Contraceptivedevelopment. . . . . . . 35.3 30.0 24.7 27.1 28.3 26.2 29.5 20.5 19.4 22.0 22.8

Safety . . . . . . . . . . . . . . 2.7 5.0 7.3 7.5 9.1 7.2 8.7 7.7 6.8 10.0 7.1

Total . . . . . . . . . . . . . 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0alncludes unclassified expenditures.

SOURCE: L. Atkinson, et al., “Prospects for Improved Contraception,” Family Planrrhrg Perspectives, 12(4), pp. 173-192,1980

110 • World Population and Fertility Planning Technologies: The Next 20 Years

Table 25.—Public-Sector Funding for Research inReproduction and Contraception,” 1969.79

Year Total

1969 . . . . . .1970 . . . . . .1971 . . . . . .1972 . . . . . .1973 . . . . . .1974 . . . . . .1975 . . . . . .1976 . . . . . .1977 . . . . . .1978 . . . . . .1979 . . . . . .

Research toevaluatecurrent

methods

ducts clinical trials, mainly in LDCs, to de- also promotes the building of local researchvelop and adapt new and existing methods skills and the introduction and use of con-of contraception and to evaluate long and traceptive methods. About $3.7 million ofshort-term risks and benefits of use, IFRP IFRP’s $5.8 million annual budget is devoted

Ch. 6—Reprocfuctive Research and Contraceptive Development • 111

to contraceptive development. IFRP is sup-ported by AID, NIH, and private donors (pri-marily the Hewlett Foundation).

● The Program for Applied Research on Fer-tility Regulation was established in 1972and, through subcontracts, has establishedits own clinical testing network for newcontraceptives. Its annual budget is about$1.9 million, approximately 90 percent ofwhich is provided by AID.

● The International Committee for Contra-ception Research was founded in 1971 bythe Population Council for contraceptiveproduct development. Its $2.7 million an-nual budget is funded in roughly equal por-tions by the Rockefeller Foundation, theFord Foundation, the International Devel-opment Research Centre (IDRC) (a CanadianGovernment agency), and AID.

● The Special Programme of Research, Devel-opment, and Research Training in HumanReproduction was established by WHO, aU.N. agency, in 1972. A little over $4 millionof its 1979 budget of $16.9 million wasallocated to applied contraceptive R&D.Other activities include developing scien-tific institutions and manpower in LDCs,

setting scientific and technical standards,providing supplies and equipment for re-search, and providing information aboutthe performance of existing family planningprograms.

● The Program for the Introduction andAdaptation of Contraceptive Technology(PIACT) was founded in 1976 to serve as abridge between the clinical researcher andthe family planning program manager, anda significant part of its program effort isdirected toward introducing new and im-proved contraceptive technologies into pub-lic sector family planning programs. It iscurrently helping several countries, includ-ing the People’s Republic of China, establishthe local capability to produce the contra-ceptives they require. PIACT was initiallyfinanced largely by the Ford Foundation.About 50 percent of its 1981 budget of over$4 million is provided by UNFPA, approxi-mately 15 percent by IDRC, approximately30 percent by American private founda-tions (primarily the Ford Foundation, theAndrew W. Mellon Foundation, and theHewlett Foundation), and the remainderfrom other sources.

Factors affecting reproductive research andcontraceptive development

Availability of R&D funds frompublic sector sources

Government agencies now provide most ofthe funds for reproductive research and con-traceptive development. The U.S. Governmentprovides over 50 percent of worldwide funds;other nations contribute about 25 percent (table27). Philanthropic institutions, nonprofit orga-nizations, and industry provide the remaining25 percent in roughly equal proportions. Sup-port from U.S.-based philanthropic and non-profit organizations peaked in 1971-72, whilenonprofit organizations in other countries haveincreased their contributions since that time(table 23). Industry’s contributions have re-

mained fairly stable, but its share of total fund-ing has decreased from about 20 to 10 percent(table 27) while government contributions haveincreased.

Public sector funding has historically beenlargely devoted to basic research and training.Because funds from these sources increasedfrom about two-thirds of the worldwide total in1965 to about 90 percent in the late 1970’s,funds for this purpose were adequate to keeppace with inflation. However, funds for contra-ceptive development did not increase enough tooffset inflation. Funds for research on safetyand other evaluations of current methods roseto about 10 percent of expenditures by 1972


Table 27.—Estimated Worldwide Funding for Reproductive Biology and Contraceptive Development,1965 and 1969=79, by Sector (in millions of constant dollars and by percent distribution)

Sector 1965 1969 1970 1971 1972 1973 1974 1975 1976 1977 1978 1979

and have remained(see fig. 21).

Basic research is

at approximately that level

primarily investigator-initi-ated and administered through grants. The re-search enterprise has historically emphasizedinvestigator-initiated research, and this empha-sis is likely to continue. Contraceptive devel-opment and safety and other evaluations of cur-rent methods are goal-oriented and usually ad-ministered through contracts. In addition, con-cerns over the safety of drugs and medical de-vices—concerns that are especially acute in thecontraceptive field—translate to pressures to in-crease safety testing. Contraceptive develop-ment thus faces competition for funds not onlyfrom basic research activities but also from theburgeoning field of safety assessment.

Government research agencies stimulate pri-vate sector initiatives in contraceptive devel-opment in two ways. First, they support basicresearch projects in academic and other non-profit research institutions. Private firms canthen incorporate these research findings intotheir product development activities. This ave-nue has recently been enhanced by a new pat-ent law (Public Law 96-517), which containsmore liberal provisions for the transfer of pat-ent rights arising from inventions sponsored bythe Government. This law creates a uniform setof procedures by which small businesses cangain licenses to develop federally sponsored in-

ventions to which the Government retains titlebut that were previously left undeveloped. Thenew law seeks to: 1) use the patent system topromote the utilization of inventions arisingfrom federally sponsored research; 2) encour-age maximum participation of small businessfirms; 3) promote collaboration between com-mercial concerns and nonprofit organizations(including universities); 4) ensure that inven-tions made by nonprofit organizations are usedto promote competition and free enterprise; (5)promote the commercialization and public avail-ability of inventions made in the United Statesby U.S. industries and labor; 6) retain by theGovernment sufficient rights to protect the pub-lic against nonuse or nonreasonable use of in-ventions; and 7) minimize the cost of administer-ing policies in this area.

Second, Federal agencies can directly financeselected research projects that normally wouldbe financed by the industry itself. For example,the National Cancer Institute will conduct ani-mal toxicity tests and clinical trials of anticancerdrugs developed by the industry. This is alsotrue for vaccines. The National Institute ofAllergy and Infectious Diseases will financebasic and epidemiologic research, as well asclinical trials, to stimulate vaccine manufac-turers to develop and market new vaccines (10).

The agency within NIH that finances con-traceptive development is CPR in the National


Institute of Child Health and Human Develop-ment. In 1979, CPR's Contraceptive Develop-ment Branch (CDB) spent about $7 million,about 14 percent of CPR’s research budget. Cur-rently, CDB is helping the industry developthree contraceptives (3). For the past 6 years,CDB has jointly financed long-term animal tox-icity tests and clinical trials of norethindroneenanthate with Schering A. G., a German phar-maceutical company. CDB will probably con-tinue to help finance clinical testing of this drugthrough completion of the new drug application(NDA) process. For 3 years, CDB, Alza Phar-maceutical, and WHO have jointly financed thedevelopment of a biodegradable implant of aprogestin-type contraceptive. CDB began financ-ing a joint effort with Syntex pharmaceuticalcompany in June 1980 to conduct early animaltoxicity tests and clinical trials with a lutein-izing-releasing factor agonist.

The market approval process

Before U.S.-manufactured drugs and medicaldevices can be marketed, they must meet theminimum standards of safety and effectivenessestablished by Congress through a series of leg-islative actions. The principal laws are:

● The 1906 Food and Drug Act;● The 1938 Food, Drug, and Cosmetic Act;● The 1962 Drug Amendments; and● The 1976 Medical Devices Amendment.

The interpretation of these laws and the en-forcement of the standards set are the respon-sibility of the FDA.

Although postmarketing surveillance is alsoconducted, U.S. laws are designed to screendrugs and medical devices before they are usedby the public, so premarket testing is used topredict whether or not significant harm couldoccur with human use. FDA regulations thusemphasize the use of predictive methods which,given the state of current scientific knowledge,depend heavily on tests in laboratory animals.

The issues concerning the market approvalprocess and its effect on contraceptive develop-ment are generic to FDA’s role in the regulationof drugs and medical devices in general, but

these issues are especially sensitive in the con-traceptive area.

TESTING METHODSFDA regulations specify the kind and length of

tests that must be completed for market ap-proval. Testing requirements for oral contra-ceptives are more stringent than for other typesof drugs because they are used for long periodsby healthy individuals rather than by individ-uals with disease. Table 28 summarizes the ani-mal tests that must be completed before testingin humans can take place and an NDA is sub-mitted. In each phase of testing, the regulationsrequire longer testing periods and more animalspecies for oral contraceptives than for otherdrugs: 90-day studies in rats, dogs, and mon-keys, v. 2- to 4-week studies in two animalspecies prior to Phase I; l-year studies in rats,dogs, and monkeys v. 90-day studies in two ani-mal species prior to Phase II; 2-year studies inrats, dogs, and monkeys, and initiating 7-year

Table 28.—Preclinical and Clinical Requirementsfor Oral Contraceptives in the United States

Phase 1:

Phase 11:

Phase Ill:

Market ingapproval:

Ninety-day studies in rats, dogs, and monkeysmust be completed prior to Phase I studies,which involve 10-20 individuals for up to 10days. (For other drugs, Phase I studies can beinitiated after 2-4 week studies in two animalspecies.)One-year studies in rats, dogs, and monkeysmust be completed prior to Phase II studies,which involve approximately 50 women forthree menstrual cycles. (For other drugs,Phase II studies can be initiated after W-daystudies in two animal species.)Two-year studies in rats, dogs, and monkeysmust be completed and 7-year dog and10-year monkey studies must be initiatedbefore Phase Ill testing may begin.

Progress reports on long-term studies in dogsand monkeys are required at the time of newdrug application (NDA) submission. (For otherdrugs, chronic toxicity studies—includingl-year dog, 18-month mouse, and 2-year ratstudies—must be completed by the time ofNDA submission.)

SOURCES: M. Finkel: “Contraceptive Regulation in the U.S.,” paper presentedat the PIACT Workshop on Developing Countries and the Regula-tion of Contraceptive Drugs and Devices, Seattle, Wash., July 24,1978; E. 1. Goldenthal, “Current Views on Safety Evaluation ofDrugs,” FDA Papers, May 1988, pp. 13-18; E. 1. Goldenthal, “Contra-ceptives, Estrogens, and Progestogens: A New FDA Policy on Ani-mal Studies,” FDA Papers, November 1969, p. 15.


dog and 10-year monkey studies v. l-year dog,18-month mouse, and 2-year rat studies beforean NDA can be submitted.

FDA regulations also require that the beaglebe the breed of dog used to test oral contracep-tives for safety. This requirement has raised themost controversy, because the appearance ofbreast tumors in beagles when given depot med-roxyprogesterone acetate (Depo-Provera) wasone of the reasons why the FDA denied UpjohnCo.’s supplemental NDA in 1978.

The reasons given for FDA’s nonapprovalincluded more than the appearance of breasttumors in beagle dogs. The complete list ofreasons was:

●

●

●

●

●

malignant breast tumors in beagle dogs;estrogen may be administered to women re-ceiving Depo-Provera in order to controlthe irregular bleeding disturbances oftencaused by this drug. In FDA’s opinion, theadded risk of cancer from the simultaneoususe limited the benefits that might be asso-ciated with a progestin-only contraceptive;the patient population originally targetedfor Depo-Provera had diminished substan-tially as other methods of contraceptionand sterilization became increasingly avail-able and accepted;doubts that the proposed postmarketingstudies on breast and cervical carcinomaswould yield meaningful data; andprogestin and estrogen-progestin drugs in-crease the risk of congenital abnormalitiesin the fetus. Depo-Provera is a progestin,and a failure of contraception or an errormade by injecting a woman already preg-nant would result in exposure of the fetusto this hormone (9).

Depo-Provera is currently approved for use inthe United States only for inoperable cancer ofthe uterus and renal cancer, a use approvedsince 1972. It is manufactured and used as an in-jectable contraceptive in other countries. Drugsproduced abroad for use abroad are beyondFDA’s regulatory reach.

Contraceptive drugs are given to young,healthy individuals and can potentially be ad-

ministered over a period of 30 years. FDA re-quires testing in both the beagle and the mon-key because the beagle is highly susceptible tospontaneous breast tumors, the monkey is rela-tively resistant, and the human female falls be-tween the beagle and the monkey in the in-cidence of spontaneous breast tumors. FDA alsopoints out that no contraceptive currently ap-proved for marketing has shown a carcinogenicpotential in the beagle dog assay similar toDepo-Provera (14).

In contrast, other internationally recognizedagencies have taken the position that the beagledog is not predictive of any risk of breast cancerin women using steroid hormones. These agen-cies include the Special Programme of Research,Development, and Research Training in HumanReproduction of WHO (october 1978); the Com-mittee on the Safety of Medicines in the UnitedKingdom (February 1979); and the InternationalPlanned Parenthood Federation (IPPF) (Novem-ber 1980). In addition, a recent review of Depo-Provera concluded that “a great deal of humandata have been collected and these show noevidence of human risk at present” (7).

The Depo-Provera issue has focused much at-tention on the beagle dog, but this specific con-troversy should be viewed in its broader con-text. Safety testing for contraceptives is under-standably more stringent than for other drugsin both the length of testing required and in thekinds of laboratory animals subjected to testing.Both requirements increase the time and ex-pense incurred in contraceptive product devel-opment compared with product developmentfor drugs in general.

EXPORT OF DRUGS AND MEDICAL DEVICESA large, expanding market for contraceptives

no longer exists in the United States but does inthe LDCs, where large percentages of peopleare either in their reproductive years or aboutto enter them.

In general, the U.S. Food, Drug, and CosmeticAct prohibits U.S. pharmaceutical manufac-turers from exporting drugs not approved formarketing in the United States. Two categories


of drugs are at issue: 1) drugs unevaluated foruse; and 2) drugs evaluated but found unaccept-able for use. A few exceptions to this provisionexist; e.g., investigational drugs can be exportedfor investigational purposes, provided that animporting country’s government has approvedsuch imports.

Medical devices that are not approved formarketing in the United States can be exported,provided: 1) they conform to the laws and speci-fications of the importing country; and 2) theirexport is not considered by the Secretary ofHealth and Human Services to be contrary tothe public health and safety of the importingcountry.

Changes in the export provision of non-FDAapproved drugs have been considered by Con-gress. In the 96th Congress, a bill adopting themedical devices export law for drugs passed theSenate but died in the House of Representatives.

The U.S. Government’s policy of prohibitingthe export of non-FDA approved drugs is basedon safety and efficacy concerns. FDA recognizesthat different standards may exist elsewherebut does not know which ones to apply whenU.S. standards are not met, Some importingcountries also do not have mechanisms to eitherevaluate or regulate the quality of drugs theyimport (18), so the United States is unable todefer to or apply these standards. There arealso documented episodes of “drug dumping;”i.e., situations in which drug companies pro-mote products in LDCs deemed unsafe or inef-fective in more developed countries (MDCs),The analgesic drug Dipyrone, for example, wasremoved from the U.S. market because of itsdocumented toxicity, yet it is marketed over-the-counter in several Central and SouthAmerican countries (4). In addition, substantialdifferences in product labeling—e,g., indicationsfor use and precautions—have been noted forselected products marketed in different coun-tries (15), but attempts to develop internationaluniform labeling standards have been only par-tially successful.

Those who advocate exportation of drugs un-approved in the United States base their argu-ments on the right of a country to make its own

risk/benefit analyses, differing risk/benefit ra-tios in other countries, and economic concerns.

The belief that an importing country has aright to assess the risk/benefit ratio for a drug’suse among its people is consistent with the in-ternational legal principle of comity, whichstates that countries have a duty to respect thesovereign rights of other nations. Further, be-cause of international variatio~s in life expect-ancy, standards of living, prevalence of diseases,and availability of health care, the relative risksand benefits of a given drug are differentamong different populations.

In order to market products unapproved inthe United States, several American pharma-ceutical companies have either established, pur-chased, or used manufacturing facilities inforeign countries, where their products areeither approved for use or where laws permitthe export of unapproved products. Some U.S.manufacturers argue that if they were able toexport their nonapproved products from theUnited States, they would manufacture suchproducts in this country rather than abroad.They further argue that such manufacturingwould contribute to the U.S. economy (in termsof capital formation and employment) and thushelp improve the United States’ internationalbalance of payments.

The Depo-Provera controversy has also con-tributed to this debate over current law on theexportation of drugs not approved for use in theUnited States. Because it is approved for U.S.use for the treatment of endometrial and renalcancer but not for use as a contraceptive, Depo-Provera manufactured in the United States can-not be exported as a contraceptive. But it ismanufactured abroad, and in 1977 was in use in42 countries (13).

AID has received requests from LDCs forfinancial assistance to purchase Depo-Proverafor contraceptive purposes. But AID’s usualposition has been to refrain from providingother countries with drugs not approved by theFDA for use in the United States. A panel of ex-ternal advisors to AID recommended in 1980that the agency make Depo-Provera available tothose nations that request it for contraceptive

——


use, despite FDA’s nonapproval (17). In October1981, FDA had chosen the members of a PublicBoard of Inquiry to evaluate the findings onDepo-Provera; AID is awaiting the Board’s rec-ommendations. However, AID does help financeUNFPA and IPPF, both of which purchase Depo-Provera. Because UNFPA commingles its funds,money from a particular donor cannot be ear-marked for specific uses. IPPF, however, item-izes its expenditures by donor so that AID isassured that its funds are not used for purchas-ing Depo-Provera.

Here again, as with the case of the beagle dogfindings for Depo-Provera’s carcinogenic poten-tial, the specific controversy surrounding theban on export of U.S.-manufactured Depo-Pro-vera for contraceptive use should be viewed inits broader context. That is, it should be taken asillustrating, and not controlling, the difficultissues surrounding current U.S. policy on theexportation of U.S.-manufactured drugs.

Patent life

Drug patents run for 17 years, but the in-dustry has expressed concern that the FDA mar-ket approval process takes so long–an aver-age of 71/2 years— that effective patent life isshortened and too little time is left for them torecoup their investments (6). Patent life could belegislatively extended beyond the current 17-year limit, or effective patent life could belengthened if the FDA approval process wereshortened. How significantly does the short-ening of effective patent life diminish incentivesto research and develop new contraceptives?

The first company that puts a product on themarket has the advantage of capturing a largerproportion of potential users than a companyentering the market later. Its initial investmentis also greater, since it must underwrite the re-search costs. Once its patent runs out, if othercompanies then enter the market and manageto cut into its sales, its return on investment isdiminished.

In the field of oral contraceptives, Wyeth Lab-oratories and Ortho Pharmaceutical share ap-proximately 70 to 80 percent of the market inthe United States. Wyeth’s patent on norgestrel

is still in effect, but the patent on norethindrone(the progestin in the products marketed by Or-tho, Syntex, Parke-Davis, and Mead-Johnson) ex-pired in 1973. After the expiration of the patenton norethindrone, only Mead-Johnson and Le-derle entered the market with oral contracep-tives. Even though competitive pricing was uti-lized by these companies, they did not capture asubstantial share of the market, and Lederlesubsequently withdrew. No generic pharmaceu-tical house has entered the market.

The Pharmaceutical Manufacturers Associa-tion (PMA) reported in August 1980 that of allclasses of pharmaceuticals, oral contraceptivesexperienced the greatest increases in price forthe reporting periods 1969-79 (187 percent) and1978-79 (23.7 percent). In contrast, for over1,000 ethical drugs, PMA reports only a 37.4-percent average increase in price for the period1969-79 and a 6.5-percent increase for 1978-79.Attractive profits would be expected from suchprice increases and would be expected to lead toprice competition or the entry of new competi-tors. But these price increases occurred primar-ily after the patents on norethindrone and nor-ethynodrel (Searle’s progestin) had expired andduring Mead-Johnson’s and Lederle’s entriesinto the oral contraceptive market.

PMA estimates that between 8 and 9 millionwomen in the United States now use oral con-traceptives, and a substantial number of women(between 500,000 and 1 million) currently initi-ate use of oral contraceptives each year. But be-cause the U.S. birth rate is close to replacementlevel, the U.S. market is relatively static as newusers of oral contraceptives replace those agingbeyond the reproductive years and those whodiscontinue use for other reasons. Thus, phar-maceutical companies that seek to market ge-neric versions of brand name contraceptivesafter patents expire must compete in a limitedmarket, with high advertising costs the prob-able entry price.

Oral contraceptives have also had difficultproduct liability problems. These contribute touncertainties in business profit/loss projectionsand project a negative image that may affect thepublic’s confidence in a pharmaceutical com-

Ch. 6—Reproductive Research and Contraceptive Development “ 117

pany’s other products as well as in its contracep-tive products. The ability of the original oralcontraceptive manufacturers to retain theirmarket share and raise prices significantlydespite expired patents may not be completelyexplained by a limited U.S. market and thenegative image that may be keeping other phar-maceutical companies out of the field. However,this ability to keep the market captive in theface of patent expiration and rising prices doeslead to the conclusion that, at least for the oralcontraceptive market, initial entry into themarket seems to be the determining factor, notthe length of patent life as affected by the FDAmarket approval process.

Product liability

Product liability, its costs to business, andpossible inhibition of new product developmenthave been prominent issues in recent years.While not limited to the pharmaceutical andmedical devices industries, its most visible im-pacts have been through the national swine fluimmunization program of 1976 and in lawsuitsinvolving the hormone diethylstilbestrol (DES),oral contraceptives, and intrauterine devices(IUDs).

Product liability problems, and the ability ofmanufacturers to pass on their insurance andlitigation costs to purchasers, may affect thekinds of future contraceptives developed. Prod-ucts that involve a single sale or limited repur-chase, such as IUDs, provide little means to ad-just for increasing liability exposure once thedevice is sold. Oral contraceptives, on the otherhand, require periodic purchases. A. H. Robinsceased selling its Dalkon Shield IUD in 1974, andin 1980 some of the devices were still in place,so some users maintained the device in place forat least 6 years. An oral contraceptive wouldhave required repeated purchases during thatperiod of time, and the price of the monthlydose package could have been adjusted to re-flect changing product liability risks. Or if thesale of the contraceptive had been terminated,existing supplies of the contraceptive wouldhave been disposed of or consumed.

Although oral contraceptives represent onlyabout 4 percent of the total ethical pharma-ceutical market, more suits are filed on oral con-traceptives per year than on any other class ofethical pharmaceutical products. Several man-ufacturers of oral contraceptives reported toOTA that they have more product liabilityclaims for contraceptives than for all of theirother pharmaceutical products combined.

Injuries from these causes do not usuallyresult from negligence in their manufacture,distribution, or administration, but rather arestatistically rare injuries that will inevitably oc-cur in a few people. In legal parlance, these are“unavoidably dangerous” though socially usefulproducts, and the U.S. courts have developedmany legal doctrines as possible avenuesthrough which the injured person might obtaincompensation for the injuries suffered. That is,rather than leaving the economic burden of theinjury on the injured persons, courts have triedto shift the economic loss to the “deep pockets”of the product manufacturers; for example, byimposing a “duty to warn” of serious side effectson the manufacturer and developing a test ofwhether the product user had given his/her “in-formed consent” to use the product after beingwarned of the possible side effects that couldoccur with use. But legally adequate “duty towarn” and “informed consent” do not avoid in-jury. Successfully meeting both tests simplymeans that the already injured plaintiff will failin the lawsuit.

Product liability is part of business costs formanufacturers and has traditionally been cov-ered by insurance. Expansion of product liabil-ity has led to uncertainties in pricing such in-surance, which in turn has led insurance com-panies to treat such products as special risks orto move out of the market, leaving manufac-turers to self-insure such losses by poolingfunds among several manufacturers or by es-tablishing “captive” insurance companies. Theseproduct liability and insurance problems havebeen examined in a previous OTA report, “AReview of Selected Federal Vaccine and Immu-nization Policies” (11). One result of that report


was a request by Congress to enumerate the ele-ments that would constitute a Federal compen-sation program for injuries caused by vaccines.That report, “Compensation for Vaccine-RelatedInjuries, ” was released in November 1980.

Does product liability have an inhibitory ef-fect on the propensity of the pharmaceutical in-dustry to research and develop new contracep-tives, to continue to produce proven contracep-tives, and to enter established markets after thedeveloper’s patent has expired? These are dif-ficult questions to answer for the contraceptiveproducts field in isolation from what is happen-ing in product liability in general (e.g., footballhelmet manufacturers) and in liability per se(e.g., professional malpractice, whether in med-icine, law, engineering, the clergy, etc.), but theevidence does point to an inhibitory effect.Whether product liability does or will funda-mentally affect the contraceptive field is specu-lative, but the following findings indicate that itis a significant problem.

product liability and the adverse publicity thatattaches to a specific product can affect con-traceptive development and use in two ways.First, product liability affects the predictabilityof business expenses and what profit marginscan be expected. If these costs are predictable,the product’s price can be adjusted. If not, themanufacturer cannot limit its exposure exceptby taking the product off the market. In addi-tion, however, such costs may become so largethat they affect the price to the extent that de-mand may be depressed. And adverse publicityabout a specific contraceptive may: 1) turn con-sumers to other contraceptives (which would bejustified if the information is correct; i.e.,market forces and “informed consent” would beworking appropriately); and 2) affect the man-ufacturer’s decision on what kinds of contracep-tives to develop and continue to sell (e.g., oral v.injectable contraceptives, IUDs v. oral contra-ceptives).

Predictability and the spreading of costs arefundamental insurance tenets. But two develop-ments have affected their stability in recentyears. Lawsuits are usually filed and contestedin State courts, whose supreme courts develop

and follow their own legal doctrines. However,a State’s supreme court may adopt the doctrineof another State, and it is difficult to predictwhen and if this will happen.

Recently, the California Supreme Court (16)decided that an injured party who does notknow which manufacturer made the productthat led to the injury can sue any of those whoact in ‘(conscious parallelism” and who may haveproduced the drug used by the patient. Theplaintiff had developed cancer alleged to becaused by the hormone DES, taken by hermother 26 years earlier to prevent a miscar-riage. No evidence existed as to which of thedefendant companies manufactured the DESused by the mother. More than 200 companiesmanufactured DES at that time. Michigan hasreached a similar result but on different legalreasons (l).

The variance in damages for a successful law-suit may literally be millions of dollars. Spokes-persons for manufacturers of oral contracep-tives estimate that most jury verdicts for deathor severe injury range from $100,000 to $4 mil-lion, and a suit involving its Dalkon Shield IUDresulted in a $6.2 million verdict against A. H.Robins.

In addition to judgment costs, there are ad-ministrative costs of handling claims, the greatmajority of which never reach the courtroomstage. For instance, A. H. Robins marketed itsDalkon Shield IUD from 1970 to 1974 and soldapproximately 2 million. According to Robins,the first reports of problems (septic abortions)occurred in late 1973. As of September 30, 1980,there had been 4,660 claims filed againstRobins, with 1,482 pending and 3,178 closed.Total settlements and judgments paid were $69million, and Robins estimates its legal fees andexpenses to be about $20 million, or a total ofabout $45 (and still growing) for each IUD sold.Robins was receiving 100 claims per month atthe end of 1980, Robins’ insurer increased pre-miums and deductibles for IUD coverage to theextent that Robins rejected the policy in 1978.Robins found that its loss record on the DalkonShield prejudiced its ability to obtain coverageon other pharmaceutical products. In order to

Ch. 6—Reproductive Research and Contraceptive Development • 119

obtain product liability insurance on otherpharmaceutical products, Robins had to pay a$1.4 million surcharge (8).

These escalations in the scope of liability costshave had two effects: raising the price of con-traceptives that have remained on the market,and leading insurers to treat contraceptives asspecial risks. For example, one oral contracep-tive manufacturer estimated that product liabil-ity expenses for a 20- to 30-percent share of themarket have totaled about $15 million for thepast 10 years and have been escalating at about$3 million to $4 million per year. Another oralcontraceptive manufacturer estimates that 10percent of its sale price is earmarked for prod-uct liability claims (10).

As for contraceptives as special risks, stand-ard product liability policies for pharmaceuti-cals now specifically exclude only four types ofproducts—swine flu vaccines, DES, oral contra-ceptives, and IUDs. Also, insurance usuallycomes in a trifurcated form—a deductible, thestandard policy, and excess insurance—andthese components have changed. For example,the deductible may have been several hundredthousand dollars, the basic policy for the next$5 million to $15 million, and the excess in-surance up to a specific limit; e.g., $25 million to$30 million. This excess insurance would beprovided at a separate premium, either througha pool of several insurance companies to spreadthe risk, or through a high-risk insurer such asLloyd’s of London. Today, the self-insurance re-quirement may be up to $5 million, the premi-um itself for the standard policy in the millions,and the excess insurance either not available orwith a premium in the million-dollar range.

Organizations supporting R&D of contracep-tive products are not immune to liability. For in-stance, the Ford Foundation and the PopulationCouncil both carry liability insurance. Eventhough such organizations may not manufac-ture or sell contraceptives in the United States,the fact that a contraceptive product that causes

harm was developed under their support couldsubject them to liability.

The developer of a new contraceptive productalso bears the risk of liability during clinicaltrials. The standards for liability are in generalmore varied with respect to clinical trials andoften the doctrine of product liability does notapply. Uncertainties nevertheless exist. Whilemany developers of pharmaceuticals and med-ical devices have asserted in an OTA telephonesurvey that they have had no liability problemsin clinical trials, there have been reports of dif-ficulties for contractors and developers in ob-taining affordable and meaningful insurance.

Liability problems arise when the research issponsored at institutions that do not belong tothe pharmaceutical industry (3). The cost ofliability insurance is included in contracts whennecessary, but it is expensive and difficult to ob-tain. WHO has reported difficulty in securingcontractors for clinical trials because insurancewas not available to the contractor. In at leastone instance, a potential NIH contractor couldnot procure adequate liability insurance for aphase I clinical trial. In another NIH-fundedphase I clinical trial, the insurance for a 1-month, 12-woman study was in the neighbor-hood of $30,000, and the policy required consid-erable amounts of time and effort to procure.

There are clear indications that current prod-uct liability in the contraceptive field is moresevere than for other classes of products, hasraised costs, and is severe enough in cost escala-tion and unpredictability to have affected the in-surance companies’ way of doing business withpharmaceutical manufacturers. This situation isconducive to diminished interest in future con-traceptive research by profitmaking companies.In addition, liability insurance in the clinicaltrial phase of development has become expen-sive and sometimes hard to obtain, thereby add-ing to developmental costs and, because of dif-ficulty in purchasing such insurance, imposinganother impediment to the developmentalprocess.

120 ● Wor/d Population and Fertility Planning Technologies: The Next 20 Years

Chapter 6 references1. Abel v. Eli Lilly & Co., 94 Mich. App 59, 289 N.W.

2d 20 (1980) (Michigan Court of Appeals).2. Atkinson, L., et al., “Prospects for Improved Con-

traception,” Familwv P/anrzing Perspectives, 12(4):173-192, 1980.

3. Bialy, G., Chief, Contraceptive DevelopmentBranch, Center for Population Research, NationalInstitute of Child Health and Human Develop-ment, National Institutes of Health, U.S. Depart-ment of Health and Human Services, personalcommunication to the Office of Technology As-sessment, 1981.

4. Bueding, E., Professor of Pharmacology and ofPathohiology, School of Hygiene and PublicHealth, The Johns Hopkins [University, letter toDr. Donald Kennedy, Commissioner, Food andDrug Administration, dated Feb. 5, 1979.

5. Cook, R., “U.S. Drug and Devices Regulation andContraceptive Innovation, ” and “Laws Regulatingthe LJ.S. Export of Drugs and Devices: Options forthe Future, ” OTA working papers, 1981.

6. Demkovich, L. E., “Drug Companies Plead WithCongress: Don’t Shortchange LJs on Patents, ” Na-tional Journal, 12(47): 1980-83, 1980.

7. Fraser, I. S., and Weisberg, E., “A ComprehensiveReview of Injectable Contraception with SpecialEmphasis on Depot Medroxyprogesterone Ace-tate, ” “l%e A4edica/ Journal of Ausfraiia, 1(1) (spe-cial supplement): 3-19, 1981.

8. Grayson, G. S., A. H. Robins Co., personal com-munication with the Office of Technology Assess-ment, 1980.

9. Hubbard, W. N., Jr., President of the Upjohn Co.,testimony before the U.S. House of Representa-tives, Select Committee on Population, in SelectCommittee on Population, U.S. House of Repre-sentatives, hearings on The Depo-Provera Debate,95th Cong., 2d sess. (Washington, D. C.: U.S.Government Printing Office, 1978).

10. Huff, S., G. D. Searle and Co., personal com-

munication with the Office of Technology Assess-ment, 1980.

11. Office of Technology Assessment, U.S. Congress,A Review of Selected Federal Vaccine and immuni-zation Policies (Washington, D. C.: U.S. Govern-ment Printing Office, 1979).

12. Office of Technology Assessment, U.S. Congress,Compensation for Vaccine-Related Injuries: A Tech-nical Memorandum (Washington, D. C.: LJ. S. Print-ing Office, 1980.)

13. Sai, F. T., former Assistant Secretary General ofthe International Planneci Parenthood Federationbefore the [J.S. House of Representatives, SelectCommittee on Population, in Select Committee onPopulation, [J.S. House of Representatives, hear-ings on 7’he Depo-Provera Debare, 95th Cong., 2dsess. (Washington, D. C.: U.S. Go\~ernment Print-ing Office, 1978).

14. Select Committee on Population, U.S. House ofRepresentatives, hearings on The Depo-ProveraDebate, 95th Cong., 2d sess. (Washington, D. C.:U.S. Government Printing Office, 1978).

15. Silverman, M., The Drugging of the Americas (Ber-keley and Los Angeles, Calif.: University of Cali-fornia Press, 1976).

16. Sinde// v. Abbott Laboratories, 26 Cal. 3d 588, 607P. 2d 924 (1980) cert. denied, 49 USLW 3270(198,0).

17. U.S. Agency for International Development, f?e-port to USAID of the Ad Hoc Consultative Panel onDepot Medro~+vprogesterone Acetate, 1980.

18. Wegman, M. E,, Professor of Public Health, Uni-versity of Michigan, testimony before the U.S.Senate, Select Committee on Small Business, Sub-committee on Monopoly, hearings on the PresentStatus of Competition in the Pharmaceutical Indus-try; Pharmaceutical Company Practices in Labelingand Promoting Prescription Drugs Sold in LatinAmerica, 94th Cong., 2d sess. (Washington, D. C.:U.S. Government Printing Office, 1976).

Chapter 6 Reproductive Research and Contraceptive Development

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