A Better Balance Between Accelerated Access And High-Priced New Drugs: A New Conditional Approval Option

This entry is reposted from Health Affairs Blog on March 20, 2017.

There are two different storms brewing in the pharmaceutical world. On the one hand there is increasing opposition to the very high prices of drugs. On the other hand there is ever more pressure to accelerate access to drugs for seriously-ill patients. President Trump expressed both of these very different concerns in his January 31st meeting with pharmaceutical executives, during which he called drug prices “astronomical” while also vowing to “streamline” the process of drug approval. It is vital that the cost of new drugs not overwhelm patients and the health care system. It is also important to get drugs to desperate patients as quickly as possible.

However, accelerated access allows a drug to reach the market quickly, based on clinical trials that measure surrogate endpoints, for instance time to cancer progression or observed tumor response rates, rather than survival rates. These surrogate endpoints frequently fail to predict whether patients will actually live longer or have a better quality of life, but are used because they can be measured within a relatively short period of time, while evidence as to the real effectiveness of a drug can take years to collect. At the same time, any reasonable approach to drug pricing requires substantial knowledge of a drug’s effectiveness for its value to be considered when evaluating the drug’s price and that knowledge simply is not available when a drug is approved before its performance is known on truly meaningful endpoints such as overall survival (in cancer) or long-term ability to function (in diseases such as Parkinson’s or Muscular Dystrophy. With Congress and the President both seeking to change the current system, there may be an opportunity to pursue a different approach to accelerated approval and, at the same time, take at least a small step towards reducing the costs of new, potentially life-saving drugs. One way to strike a better balance between accelerated access and limiting drug prices until their value is known might be a new form of “conditional approval” with prices discounted until full approval is warranted.

The Issues with Accelerated Approval

            The FDA’s accelerated approval of eteplirsen, a new antisense drug for Duchenne Muscular Dystrophy (DMD), is a clear example of both problems——“astronomical prices” and accelerated access. DMD is a devastating illness that affects children and causes muscle weakness and eventual death. There are no effective treatments. Understandably there was enormous pressure from patient groups to approve the drug despite the lack of evidence that the drug actually works, beyond a change in a surrogate marker.

The drug is now available at a price of $300,000 per patient per year, but it may be years before the data from additional clinical trials can provide substantial evidence of whether or not the drug is effective. If the drug turns out not to provide meaningful clinical benefit, then the $300,000 per year cost of providing patients the drug is a terrible waste of our health care dollars. However, if insurers do not pay for the drug and it actually would provide significant therapeutic benefit to Duchenne’s patients, then there would be even more terrible unnecessary suffering and death among DMD patients.

            Eteplirsen is not by any means the only drug approved before the real risks were known or, in some cases, a lack of real efficacy was demonstrated. One useful model for accelerated access and controlled pricing was developed in response to an earlier era of crisis in pharmaceutical policy when the HIV epidemic first caused a public outcry for accelerated access. Prior to the AIDS crisis of the 1980s, major patient advocacy groups, such as the American Cancer Society and the American Heart Association, focused their efforts on raising money for research and paid virtually no attention to the FDA. With AIDS, and particularly with ACT UP (AIDS Coalition to Unleash Power), the world changed. For the first time there was enormous pressure on the FDA to do something—anything—to get drugs out to patients before all of the safety and efficacy data was in.

            The FDA responded to the AIDS crisis with a number of efforts to expand early access. One that has the most relevance for today was the 1992 parallel track initiative. The parallel track initiative, was used only once for stavudine, a still-experimental drug that was made widely available to physicians treating AIDS patients.  The drug sponsor could seek to charge for the drug but only in an amount sufficient to recover its costs for the trial, which required financial disclosures to the FDA. Treating physicians providing the parallel track drug were required to provide the sponsor with basic data on their patients and patients’ responses to treatment.

How Conditional Approval Could Work

            A more balanced approach to the current cry for accelerated access and lower prices could adapt and build on the 1992 HIV-only parallel track approach. The two key components that could be revised for today’s use are: first, an accelerated approval that permits wide distribution before final approval; and, second, a mechanism that limits the price of the conditionally-approved drugs while more data is collected. Conditional approval based on surrogate endpoints would allow a drug’s sponsor to distribute the drug to all of the desperately ill patients who have no alternative, while maintaining the price restrictions until additional data on actual clinical benefit and risk is provided. This would provide a 21^st Century update of the 1992 HIV-only Parallel Track.

            Under the conditional approval proposed here any physician treating a patient with the targeted indication could prescribe the drug and would agree to collect and report basic data on the duration of treatment, responses to the drug, and any other changes in their patients’ conditions. Such longer-term single arm trials are likely to provide evidence of real effectiveness and safety when the target is an untreatable serious disease. While the drug is being widely used and the data collected, the sponsor could charge for the drug based on a set price formula until the sponsor provides further data and the FDA completes its review. There would be no need for case-by-case negotiations over costs and pricing as was required by the 1992 Parallel Track policy. This differs from other accelerated access programs that use the term “conditional approval” (such as that used by the European Medicines Evaluation Agency, which does not limit prices and must be reviewed annually).

Determining Prices for Conditionally Approved Drugs

            How might the predetermined discounted price provision work? One possible mechanism would require a pharmaceutical company seeking conditional approval to specify its intended initial market price for the new drug. The conditional approval distribution price could be limited to 25 percent of the specified initial market price. Alternatively, the conditional approval price formula might be a predetermined percentage of the average introductory price of breakthrough drugs approved during the prior two years. Unlike the prior Parallel Track provisions, either price formula would avoid the need for the sponsor to disclose its costs and negotiate with the FDA to justify charging during the conditional approval period. Given the strong demand by patients for a potentially life-saving drug when there is no effective alternative, marketing expenses should be low.

With the very low cost of small molecule manufacture or even the higher costs of manufacturing biologic drugs, the 25 percent pricing formula should cover the costs of manufacture, distribution, a limited marketing outreach, and the process of data collection and still provide a modest profit. This conditional approval update of Parallel Track would provide the needed balance between access to potential breakthrough drugs and substantial evidence to support their unrestricted entry into the marketplace. Limiting profits would motivate drug companies to distribute the drug widely enough to provide the needed evidence as expeditiously as possible. And in an era of skyrocketing prices for new drugs it would avoid imposing even greater costs to consumers and insurers for what are actually experimental drugs such as eteplirsen.

A Way Forward with Conditional Approval

            New proposals are being discussed that would even further accelerate access to new drugs and members of both parties in the House and Senate are moving forward with a variety of approaches to the high cost of new drugs. Now is the time to take a new approach to accelerating access and limiting drug prices. Of course, it would also be necessary to require insurers and government payers to cover the drugs during the conditional approval period in the same way that they currently cover drugs approved under the accelerated access and breakthrough drug procedures. If the data confirms the benefit of the treatment, full approval would be granted and the drug sponsor could charge whatever price it can justify in the marketplace, but with much better evidence as to what the drug’s real worth actually is. Patients desperate for treatment would get access to drugs, insurers would be paying less than under the current system, and patients, providers and insurers would get the data they need on the drug’s efficacy. It is time for a new approach to accelerated access that is good for patients and good for us all.

The 2st Century Cures Act: Patient Experience in Drug Approval

On Thursday, May 19, 2015, the Energy and Commerce Committee of the House of Representatives voted 51 to 0 to approve the 21^st Century Cures Act (“the Cures Act”) which would, if passed by the full House and Senate and signed by the President bring about a number of significant changes in NIH research funding, the process of drug development, and the FDA review of New Drug Applications (“NDAs”). Because the current draft is 300 double-spaced pages in length the focus in this post will be on just six of those pages--“Sec. 2001. Development And Use Of Patient Experience Data To Enhance Structured Risk-Benefit Assessment Framework.” While there are likely to be some changes to the current draft, given the overwhelming bipartisan support in the House, it seems that much, if not all, of the current draft will become law.

Section 2001 of the Curs Act consists of two subsections, currently denominated (x) and (y).  Section 2001 would appear to require very little change to the current approach of the FDA to drug approval.  Section 2001 Subsection x (1) states that “The Secretary shall implement a structured risk-benefit assessment framework in the new drug approval process [A] to facilitate the balanced consideration of benefits and risks; and [B] to develop a consistent and systematic approach to the discussion of…the benefits and risks of new drugs.” The current draft of Sec. 2001 Subsection (x) 2 contains the proviso that “Nothing in Paragraph (1) “shall alter the criteria for evaluating an application for premarket approval of a drug.” The apparent focus of this subsection (x) is to bring greater clarity and consistency to the FDA’s weighing of risks versus benefits. This is an unobjectionable goal, if somewhat difficult to implement. For example, one cancer drug may cause severe skin reactions while increasing overall survival by one month, while another drug for the same form of cancer may cause severe gastric effects while increasing overall survival by 1.2 months. Comparing the risks and benefits of those two drugs is obviously difficult to do.  It is that difficulty that may be the objective of the much more interesting Subsection (y).

Subsection (y) is entitled “Development And Use Of Patient Experience Data To Enhance Structured Risk-Benefit Assessment Framework.”  Subsection (y) 1 requires the Secretary of HHS, over a period of 2 to 3 years, to a promulgate a number of guidances and establish procedures by which non-NDA sponsor entities may submit patient experience research proposals for feedback from the Secretary as well as patient experience data and data analyses.  Patient experience data, or, as it is also known, patient-reported outcomes data has been a field of interest in clinical research for a number of years. Patient-reported outcomes was the subject of an FDA Guidance issued in 2009 (“2009 Guidance”).  The 2009 Guidance recognized the value of assessing patient experience endpoints in clinical trials and encouraged patient input in developing the instruments to be used in assessing patient reported outcomes or experience:

Item generation should include input from the target patient population to establish the items that reflect the concept of interest and contribute to its evaluation. The population will help generate item wording, evaluate the completeness of item coverage, and perform initial assessment of clarity and readability.

However, the approach to patient experience data in the Cures Act goes well beyond the 2009 Guidance.  Subsection (y) provides the Cures Act definition of patient experience data:

In this subsection, the term ‘patient experience data’ means 
data collected by patients, parents, caregivers, patient advocacy organizations, disease research foundations, medical researchers, research sponsors or 
other parties determined appropriate by the Secretary that is intended to facilitate or enhance the 
Secretary’s risk-benefit assessments, including information about the impact of a disease or a therapy on patients’ lives.

The statutory inclusion of data collected by “patients, parents, caregivers, patient advocacy organizations, [and] disease research foundations” is radically different from the drug-sponsor driven approach that was addressed in the 2009 Guidance. Bringing data collected by persons or entities other than the drug sponsor into the New Drug Approval process (or the sNDA process of approving additional indications or major label changes) would be a fundamental change in the concept of data to be used by the FDA in new drug review and would significantly increase the role of patients and patient organizations in the drug approval process itself.  If so, the 21^st Century Cures Act’s effect on drug development might be as dramatic as the title of the Cures Act suggests.

What Is Pharmaceutical Policy and What Is Its Goal?

Pharmaceutical policy is the role that government plays in determining the rate at which new drugs are developed, what drugs are developed, who has access to the drugs that are developed, and the choice of drugs by doctors and their patients. The goal of pharmaceutical policy is to provide the maximum benefit to health for whatever amount is spent on pharmaceuticals.  A good policy in any area of health care will produce the most health at the least cost. This first premise, although it may be new to some of you, is a generally accepted premise of public policy analysis: more of a good thing is better than less (whether it be educational levels, health, or economic production) and getting more of a good thing at the least cost is better, as that leaves the surplus to be allocated to obtaining more of other good things (so getting more health for less dollars would allow us to spend more on schools, for example).

The Need For Publicly Funded Trials To Get Unbiased Comparative Effectiveness Data

By Bob Bohrer

Originally Posted on Health Affairs by Robert Bohrer On February 20, 2015 http://healthaffairs.org/blog/2015/02/20/the-need-for-publicly-funded-trials-to-get-unbiased-comparative-effectiveness-data/

Comparative effectiveness research was one of the hotly debated components [1] of the Affordable Care Act. The pharmaceutical industry is marketing driven, with pharmaceutical companies spending more on marketing [2] than they do on research and development. The need for a marketing edge can also drive drug development.

As illustrated by the discussion below of Gazyva and Nexium, drugs can be developed at higher doses than the drugs they are intended to replace. When the newer, higher-dose drugs are tested against the older, lower-dose drugs, the trials are intended to show that the newer, higher dose drugs are superior to the older drugs that will soon be available as a biosimilar or generic.

It can be very difficult to tell whether the results of such trials reflect the differences between the active ingredients or simply the difference in doses, but such trials are almost certain to lead to increased use of the newer, higher-priced drugs. Because the money at stake creates such an incentive for companies to stack the deck, publicly funded trials are the only way to make sure that evidence-based medicine is based on the best possible evidence.               PDF of this post

Interesting Developments in November

 I will be commenting soon on developments related to pharmaceutical patents and their significance for personalized medicine, but in this post I am briefly describing several interesting news items and articles from various media sources, and I am attaching links to the stories and articles.

1.  Jonathan Darrow has written a great article entitled Pharmaceutical Gatekeepers in the Indiana Law Review.  Darrow looks at the variety of actors in the drug-use decision-making process and their roles in the continued consumption of ineffective drugs.

http://mckinneylaw.iu.edu/ilr/pdf/vol47p363.pdf

2.  The Tufts Center for the Study of Drug Development has released its latest estimate of the cost of developing a new drug and, as always, the estimate, $2.6 billion, is a stunning one that has attracted widespread media attention.  I think the most nuanced mass media report on the study was written by Aaron E. Carroll and published in The New York Times on November 19th.

http://www.nytimes.com/2014/11/19/upshot/calculating-the-real-costs-of-developing-a-new-drug.html

3. The issue of clinical trial data sharing has been the focus of significant attention over the past several years.  In the November 27^th issue of The New England Journal of Medicine, Brian L. Strom et al published a report of the results of GlaxoSmithKline providing full access to its clinical trial data as of May 2013, and the NIH has proposed a new rule requiring increased access to clinical trial data summaries for all clinical trials.

            The Strom article is here:

            http://www.nejm.org/doi/pdf/10.1056/NEJMp1411794

            The NIH’s notice of its proposed rule is here:

            http://www.regulations.gov/#!documentDetail;D=NIH-2011-0003-0003

4.   Finally, the issue of pharmaceutical pricing continues to be in the news and on November 25th Robert Langreth of Bloomberg/BNA published an interesting article on pushback by Express Scripts and other pharmaceutical benefit managers (PBMs).  The PBMs are revising their formularies and their access requirements for specialty drugs in an effort to hold down costs. 

http://www.bloomberg.com/news/print/2014-11-25/more-medicine-goes-off-limits-in-drug-price-showdown.html

Pricing has been the biggest story in the pharmaceutical world in 2014, I expect that to continue in 2015.  The PBMs’ efforts to hold down prices and the soon to emerge marketplace for biosimilars in the U.S. will certainly be an interesting part of the pricing story.

Update on Generics, Labeling, and Liability

                           

I began this blog back in February of 2014 with two posts on the FDA’s proposed changes to the rules for generic labeling and the issue of potential liability of generic drug manufacturers for failing to strengthen their warnings when it would be appropriate to do so. Recent events related to generic labeling and liability warrant a brief update on the issue. In litigation over injuries allegedly attributable to Reglan and its generic form, metoclopramide, a New Jersey appellate court has ruled that generic manufacturers could be liable for failure to warn when they had failed to update the label for their drugs even after the brand name manufacturer had added a new warning.  In other words, the New Jersey court held that actions for failure to warn were not preempted under the rule in Pliva v. Mensing, because in Pliva the defendants were required to adhere to the brand name drug’s label and in the case of metoclopramide the problem was the failure of some generic manufacturers to update their labels when changes were made to the brand name label.   

The second development on this issue is the news that the FDA is postponing action to finalize the proposed rule.  The FDA’s postponement of its final action on the rule comes in the wake of an interview with Regulatory Focus in which Ralph Neas, the President of the Generic Pharmaceutical Manufacturers’ Association, said that the Association was readying a lawsuit if the FDA adopted the proposed rule. The FDA has only said that it had received a very large number of comments on the proposed rule and that the Agency is committed to giving all comments serious consideration. This issue remains a hot one and the recent change in the balance of power in Washington only raises the temperature further.   

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Profits, Ebola, and Biodefense-- Common Ground for the New Congress

In my post of November 6, 2014, I linked to an interesting BBC story that pointed out that pharmaceutical companies are highly profitable in comparison with other industries and that pharmaceutical companies generally spend more on marketing than on research and development (in the case of Pfizer 72% more and in the case of Novartis 47% more).  This is unfortunate, but inevitable when companies with very similar drugs and relatively little data that support a physician’s preference for one drug over another are fighting for market share.  At the same time, pharmaceutical companies are being criticized for their high prices and for their slow pace of investment in developing drugs and vaccines for Ebola.  The New York Times on October 24, 2014, provided extensive coverage of a number of Ebola issues, including a story on a vaccine that had shown great effectiveness in a primate study but then had gone undeveloped for ten years.  The New York Times story pinned the blame for the delay in development on the lack of a significant commercial market for the vaccine.  The Director-General of the World Health Organization (WHO), Dr. Margaret Chan, had this to say in her November 3^rd address to the WHO Regional Committee to Africa:

The second argument is this. Ebola emerged nearly four decades ago. Why are clinicians still empty-handed, with no vaccines and no cure?

Because Ebola has historically been confined to poor African nations. The R&D incentive is virtually non-existent. A profit-driven industry does not invest in products for markets that cannot pay. WHO has been trying to make this issue visible for ages. Now people can see for themselves.

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Interesting BBC News Story on Pharma Profit Margins and Marketing Expenditures

The story link is here.  As I have often said on the subjects of profits, companies charge prices calculated to maximize their profits.  And, as to the high marketing costs, when there isn't solid data to support a choice among similar drugs, marketing costs will inevitably rise.

Personalized Medicine Update

Personalized medicine uses an individual patient’s variations with respect to one or more biomarkers or combination of biomarkers to determine which is the most appropriate pharmaceutical or medical intervention.   Such biomarkers can be genetic variations or other variations.  In Mayo Collaborative Services v. Prometheus Laboratories (Mayo v. Prometheus) the “biomarker” was the level of the metabolite in a patient who had been given a thiopurine drug, and the Supreme Court held that a patent that taught how to adjust the drug dosage after measuring the metabolite was invalid as an attempt to patent a natural phenomenon.  After one of Myriad Genetics’ patent claims related to gene sequences used in its genetic test for breast cancer risk was similarly invalidated as a natural phenomenon or product of nature, the biotech and diagnostic industries were understandably concerned.  Personalized medicine is clearly a vitally important area for future healthcare and the extent to which the difficulty of obtaining intellectual property protection for pharmacogenomic testing or other personalized medicine assays could delay or undermine progress in the area is a question of great importance.  The North Carolina Journal of Law and Technology recently devoted a symposium to the question of the significance of the decision in the Myriad case and Chris Holman’s contribution to that symposium, in which he considers the potential impact of Mayo and Myriad on personalized medicine is particularly worth reading.