Transcript Challenges of regulation, research and technological

Challenges of regulation, research and
technological development related with access
to medicines.
James Love
Consumer Project on Technology
http://www.cptech.org
SEMINÁRIO INTERNACIONAL: OS DESAFIOS PARA
UMA ASSISTÊNCIA FARMACÊUTICA INTEGRAL
Brasilia, Brazil
2 de outubro de 2002
How much does it cost to develop a
new drug?
Different people have different
answers
Firms have incentives to exaggerate
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Investors are impressed in high R&D figures
R&D costs are used to justify high prices and
strong IPR levels
Some tax benefits are based upon R&D
expenditures
Few policy makers understand how
R&D cost estimates are constructed.
Different accounting systems can give a misleading
understanding of relative contributions by industry
and government.
● Industry accounting
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Start with actual expenditure of USD $30,000 on preclinical R&D.
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Adjusted for 5,000 to 1 risk, $30,000 is recalculated at
$150 million.
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Add inflation at 3 percent and 11 percent cost of
capital over 12 years. Cost is restated at $722 million.
Government accounting
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$30,000 is reported as $30,000.
A Tufts University study say the cost is
$802 million
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The full capitalized resource cost of new drug
development was estimated to be $802 million (2000
dollars). This estimate accounts for the cost of
failures, including research on compounds abandoned
during development, as well as opportunity costs of
incurring R&D expenditures before earning any
returns.
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Press release, Tufts Center for the Study of Drug Development
(CSDD), November 30, 2001.
Key points in the Tufts' study
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Tufts CSDD receives substantial support from
pharmaceutical companies.
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Data comes from large pharmaceutical companies.
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Tufts estimates approximately $300 million for
discovery and pre-clinical research (including
opportunity cost of capital).
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Tufts Study says the risk adjusted costs of clinical
trials is $282 million. The “opportunity cost” of
capital increases costs of clinical trials to around
$.5 billion.
The Global Alliance for TB Drug Development
October 2001 report, The Economics of TB Drug
Development, estimates a new TB drug can be
discovered and developed for $115 to $240 million.
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Includes cost of failures
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Total R&D costs estimated at $115 to $240 million
including:
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Discovery costs at $40 to $125 million
Development costs at $76 to 115 million
TB Alliance figures lower costs for
R&D conducted in developing
countries
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A full programme of clinical development (Phase I
through Phase III trials) for a new anti-TB drug is
estimated to cost about $26.6 million in a country with
an established economy. Comparable studies
conducted in a country with a developing economy
are estimated to cost approximately $9.9 million.
(before adjustments for costs of failures)
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The Economics of TB Drug Development, October 2001
Evidence on the costs of clinical trials from
the US Orphan drug Tax Credit
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The US government has a tax credit which reimburses
50 percent of the costs of clinical trials on products
that quality as “orphans” under US law.
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Orphan designation available for any indication that
affects 200,000 or less patients. There is no means
test.
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There are restrictions on the use of the credit for
foreign trials, and government funded research is
excluded.
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The US IRS releases aggregate data from company
tax returns
Per-Approval expenditures on clinical trials for
orphan drugs were fairly small
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From 1981 to 1993, the entire US pharma industry
only reported expenditures of $213,792 on clinical
trials for orphan products, or $2.3 million per
approved product.
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For 1997 through 1998, US private sector
expenditures on clinical testing for “orphan”
products, including the costs of failures, was $283
million, or $7.9 million per approved orphan
product.
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The tax credit reduced the private sector costs by
50 percent.
Joseph DiMasi on Orphan Tax Credit data
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“I find the numbers that you have on orphan tax credits to be irrelevant to
the question of what is the average resource cost of drug development for
the major research-based pharmaceutical firms. They do not tell us what
was spent on total clinical period costs prior to approval even just for drugs
that received an orphan drug designation. First, unless it can be
demonstrated that you cannot find enough patients in the U.S., you do not
get credits for foreign clinical testing. Second, and perhaps much more
importantly, these drugs can be tested for non-orphan indications, where the
trial sizes and costs can be substantial. Orphan drug credits are not given
for that testing, so those costs do not show up in the IRS data. Third, I
assume from what you put out that you included credits for all designations
for which you could obtain data. A good deal of those designations are for
indications on drugs that have already been approved for something else.
Testing costs on follow-on indications are likely, on average, to be much
lower than pre-original approval testing because a good deal is already
known about the drug at that point.”
–
4 December 2001, ip-health
Interesting facts about US orphan drug
program
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The credit is available both for new drugs and testing for
new uses of older products.
Companies claim the credit whether or not the product is
approved by the FDA.
From 1983 to 2000, there were 1063 orphan designations,
and 218 orphan marketing approvals -- 20.5 percent of
tested orphan products received FDA marketing approval.
In some years a significant number of new drugs quality as
orphans. For example, in 1998, of the 30 FDA approved
new molecular entities, 7 were classified as orphans, or 23
percent of the total.
Some orphan drugs are very
profitable
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What can qualify as an “orphan”? Here are a few
examples of profitable orphans:
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Initially, all HIV drugs
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Glivec
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Epogen
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Neupogen
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Humatrope
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Ceredase
What are per patient costs for clinical
trials?
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A 2000, CPTech survey of contract research
organizations indicated typical contractor costs of $2
to $7 thousand per patient, depending upon design
and location of trial.
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One large European pharmaceutical firm says the
complete costs of Phase III trials are $10 to $15
thousand per patient.
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The TB Alliance says per patient costs for phase III
trials in developed economies as high as $22,600,924.
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1999 NIH data on government funded cancer trials
put cost are $6,202 per patient.
NIH/NCI/DCP Cooperative Group Treatment Trials and
Funding: 1993 to 1999
Fiscal year
93
94
95
96
97
98
99
Patients
21,018
18,788
17,548
18,305
19,891
20,662
20,780
*in thousands of US dollars
Awards*
$81,159
$82,362
$82,327
$96,969
$97,846
$102,547
$128,884
Per patient
$3,861
$4,384
$4,692
$5,297
$4,919
$4,963
$6,202
Selected Phase I, II and III Clinical Trial Costs in Developing Countries.
(Source: The Economics of TB Drug Development, October 2001)
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India(a) Phase I bioequivalence study comparing two formulations of a new anti-TB agent. . Cross-over, single IM dose
with 7-day washout period between doses Subjects were hospitalized for 2 days. Assessments included 22 blood samples
per subject, CBC with differential, serum electrolytes, LFTs, audiometery, HIV screen, pregnancy test, urinalysis, physical
exam. Included costs for HPLC assay development and validation. 16 subjects, $29,000 cost, $1,812 per patient
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India(a) Multi-center, Phase III study of a new anti-visceral leishmaniasis compound versus a control. 30-day inpatient
treatment with a 6-month outpatient follow-up period. Investigator fees were $700 per subject and included all laboratory
assessments such as CDC with differential, blood chemistry, LFTs, urinalysis, HIV screen, audiometry, and ECG. Other
costs included CRF development, shipping, investigator meetings, data management, reports, and monitor fees. 500
subjects, $727,000 cost. $1,454 per patient.
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Africa (a) Multi-center, Phase III study of new antimalarial compound versus control. 3-day treatment with a 14-day
follow-up. Investigator fees were $320 per subject and included all laboratory assessments such as CDC with diff, blood
chemistry, metheglobin, and PCR analysis. Other costs included CRF development, shipping, investigator meetings, data
management, reports, and monitor fees. 2,000 patients. $1,289,200 cost. $644.60 per patient.
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South Africa (a) (1996) Phase II EBA Study of new anti-TB agent. 3-day study drug administration, hospitalization – 5
days, CBC with differential x 2, blood chemistry x 2, Audiometry, EBA mycobacteriology, Physical Exam, chest X-ray,
HIV screen, and urinalysis. Personnel costs included one medical doctor and two nursing staff. Overhead was responsible
for 30 percent of the total costs. 120 patients. $140,000 cost, $1,167 per patient.
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South Africa (b) Phase II EBA Study of a new anti-TB agent. Includes hospitalization for 7 days, sputum level monitoring
for 3-6 days. Other costs include laboratory assessments such as ,physical exam, x-ray hematology, blood, data collection
and storage, subject reimbursement of $150 per subject, bacteriological studies, and department overhead. Does not include
monitoring or data validation. 13 patients. $33,638 cost. $2,678 per patient.
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South Africa(b). Phase III single-center trial of a new anti-TB agent. A 3-year trial with a 6-month assessment period.
Costs include consumables, administrative services, travel, computer costs, maintenance, capital equipment, laboratory
costs, and ½ of all staff costs. Costs for monitoring, hospitalization, and ½ of the clinical trial staff are not included. 400
patients. $600,000 cost. $3,525 per patient.
R&D investment as a percent of sales
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According to data from US tax returns, as a
group, the pharmaceutical sector reported
spending roughly 7.5 percent of sales in R&D.
Trans-Atlantic Consumer Dialogue (TACD)
resolution (health 6-00) on transparency of
pharmaceutical economics
1.Any application for data exclusivity should include a
disclosure of the costs of data collection.
2.The EU and the US should require firms that market
pharmaceutical drugs in the US or the EU market to
disclose, for each product,
1.annual global (and national) revenues,
2.costs of clinical trials, disaggregated by timing and nature of trial
(Phase I, II, III, IV, etc), the number of patents and the duration of
the trial,
3.when the product involves licenses from third parties, the royalty
payments and terms, and
4.The role of the government in the development of the drug,
including the awarding of grants, cooperative research and
development agreements, licenses, tax credits and other subsidies.
TACD resolution on transparency of
pharmaceutical economics, con't
1.Governments should publish data detailing the
government's own costs of conducting clinical trials,
which can be used as a benchmark for the cost of
clinical trials.
2.The government should publish reports detailing
public expenditures on the purchase of products
developed initially with public funds.
TACD resolution on transparency of
pharmaceutical economics, con't
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Policy makers need to obtain better information about
pharmaceutical economics, to answer such questions
as:
1.What is the percentage of R&D investments spent on development
of new and innovative products, as opposed to "me too" therapies?
2.How much of the private sector R&D budget is spent on nonessential medicines?
3.What is the private sector allocation of spending between preclinical development, clinical trials, and post approval R&D?
4.How much R&D is spent on tropical illnesses and other diseases
that affect the poor?
5.How much did a drug benefit from public subsidies?
Issues in Compulsory Licensing
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Keep it simple.
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Public use does not require prior negotiation.
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No need to have judicial review
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US public use provisions under 1498
Not required by TRIPS
Compensation can be based upon simple royalty
guidelines, or more complex and elegant
pharmaeconomic analysis.
Issues in Compulsory Licenses
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Exports
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Now is the time to create Article 30 export provision.
Use it or lose it?
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Important for state practice to set global norms.
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Developing countries need to establish that
compulsory licenses can be routinely used.
Good candidates for compulsory licenses.
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Glivec, for leukemia
Singular for Asthma
Various diagnostic devices or tests
Research and Development Treaty
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TRIPS is an effort to fund global R&D through
strong intellectual property rights.
Broader efforts are needed, that reflect public
health priorities.
A treaty on R&D would be designed to promote
public health goals, and deal with many market
failures, such as the funding of basic research,
drugs for neglected diseases, and problems
relating to access to drugs.
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