Transcript No Slide Title

Current Environment for
Pharmaceutical
Innovation:
Drug Development Trends and the
Value of Follow-On Innovation
Kenneth I Kaitin, Ph.D.
Director, Tufts Center for the Study of
Drug Development, Tufts University
EFPIA & Forum Workshop on
Therapeutic Reference Pricing
Ljubljana, Slovenia, March 10, 2006
The Current Environment for
Innovation
Major Threats to Pharmaceutical
Innovation
 Industry productivity and output
 Rapidly rising R&D costs
 Increasing size of clinical trials
 Increasing regulatory pressure
 Political threat of price controls in US
 Rising global healthcare costs
 Global price disparities
 Public discontent
 Safety of prescription drugs
 Regulatory agency accountability
 Industry Rx marketing practices
New Drug Approvals Are Not Keeping
Pace with Rising R&D Spending
60
40
R&D Expenditures
30
20
NCE Approvals
15
0
1963
0
1968
1973
1978
1983
1988
R&D expenditures are adjusted for inflation
Source: Tufts CSDD Approved NCE Database, PhRMA, 2005
1993
1998
2003
R&D Expenditures
(Billions of 2004$)
NCE Approvals
45
Pharma Industry Sales are Generally
Keeping Pace with R&D Spending
40
R&D Expenditures
210
140
30
20
Pharma Sales
70
0
1980
10
1984
1988
Source: PhRMA, Tufts CSDD Analysis, 2005
1992
1996
2000
0
2004
R&D (billions of 2004 $)
Sales (billions of 2004 $)
280
NME Approvals are Declining –
Biologics are Filling the Void
55
NME/BLA Approvals
NM E Approvals
BLAs Approvals
Source: FDA
20
05
20
03
20
01
19
99
19
97
19
95
19
93
19
91
19
89
19
87
19
85
19
83
0
Growing Percentage of NME Approvals
are from Small/Mid-Tier Pharma Firms
40
Number of NME Approvals
31
26%
24
21
17
63%
48%
47%
37%
53%
2001
2002
74%
52%
0
Small/M id-Tier Pharma
Source: Ventiv Health, 2005
2003
2004
Large Pharma (top 20)
Current Drug Development
Metrics
Clinical and Approval Times over
Two Decades
8
PDUFA Enacted
6.8
Years
6.0
3.0
7.2
7.0
6.4
6.3
5.8
2.9
2.6
2.0
1.4
1.4
1.5
0
1984-1986
1987-1989
1990-1992
1993-1995
1996-1998
1999-2001
(n=65)
(n=55)
(n=74)
(n=67)
(n=110)
(n=82)
Approval Phase
Source: Tufts CSDD Approved NCE Database, 2005
Clinical Phase
2002-2004
(n=61)
Clinical and Approval Times Vary
Across Therapeutic Classes, 2002-04
11.1
Neuropharmacologic
1.5
9.4
Antineoplastic
Endocrine
6.3
AIDS Antivirals
6.3
Anesthetic/Analgesic
6.2
4.8
Cardiovascular
7.6
1.3
0.6
6.9
3.4
1.9
1.5
0
9.6
7.5
6.3
14
Years
Clinical Phase
Source: Tufts CSDD, 2005
8.5
1.9
5.6
Gastrointestinal
10.2
0.8
6.6
Antiinfectives
12.6
Approval Phase
Approval Success Rates for NCEs
Also Vary by Therapeutic Class
33.1%
Antiinfective
28.2%
Anesthetic/Analgesic
23.0%
Neuropharmacologic
20.4%
Cardiovascular
15.4%
Immunologic
12.0%
Respiratory
0
Approval Success Rate
Source: DiMasi, Clin Pharm Ther, 2001;69:297-307
40
Capitalized Costs have Increased 481%
from the 1970s to the 1990s
1990s Approvals
336
1980s Approvals
214
84
1970s Approvals
0
54
466
104
802
318
138
M ILLIONS OF 2000 DOLLARS
Non-Clinical Costs
Source: DiMasi et al., J Health Econ, 2003;22:151-185
Clinical Costs
900
Drivers of Rising Clinical Costs
Chronic and complex indications
Clinical trial size
Patient recruitment/retention
Regulatory demands
R&D inefficiency
Market oriented studies
Opportunities and Challenges for
Research Based Pharma Industry
Opportunities
 Positive regulatory climate in US and EU
 Rapid expansion of scientific knowledge
 Move to smaller niche markets
 Collaborative relationships with small tier pharma
and biotech firms
Challenges
 Rapidly rising R&D costs
 Declining market exclusivity periods
 M&As and industry consolidation
 Public/political pressure to stem healthcare costs
The Economics of Follow-on
Drugs
“Me-Too” Drug Questions to Consider
 Do follow-on-drugs raise or lower drug prices?
 Are follow-ons the result of duplicative and after-
the-fact research (sequential development), or are
they mainly the result of a multi-firm race (parallel
development) for clinical advances?
 Are follow-ons perfect substitutes, or do they
offer product differentiation and choice from
diverse product profiles and varying individual
responses?
 Is the first-in-class the best-in-class?
 Are follow-on drugs less safe?
Follow-on Approvals Create Competition
Resulting in Price Discounts
8
7
Number of New Drugs
6
5
5
5
5
3
2
2
0
0
-10% to -3%
-3% to3%
3% to 15%
15% to 40%
Relative Price Discount
M ean Price for Existing Drugs
Price Leader
Analysis based on FYs 1995-1999.
Source: DiMasi, 2000 [http://aspe.hhs.gov/health/reports/drugpapers/dimassi/dimasi-final.htm]
>40%
Tufts CSDD examined
development timelines and
approval dates for follow-on
drugs in relation to first-inclass approvals for 72 classes
and 307 approvals.
Percent of Follow-on Drugs Reaching
Milestone at Time of First-in-Class
Approval
100
100
100
100
100
93
92
96
75
Percent
67
67
45
39
0
1985-1989
1990-1994
1995-1998
Year of First-in-Class Approval
Synthesis
1st Pharm
1st Human
Source: DiMasi, Paquette, Pharmacoeconomics 2004;22(Suppl 2):1-14
Phase 3
Year of First-in-Class Approval
Market Exclusivity for First-in-Class
has Declined: Mean Time to First
Follow-on Approval
8.2
1970s
5.9
1980-84
5.1
1985-89
2.8
1990-94
1.8
1995-98
0
9
Years
Source: DiMasi, Paquette, Pharmacoeconomics 2004;22(Suppl 2):1-14
Clinical Options: Safety, Efficacy, and
Convenience Trade-offs
 Example: interferons to treat multiple sclerosis
(Betaseron®, Avonex®, and Rebif®)
 Therapies differ in relapse rates, injection site
reactions, elevated liver function tests,
leukopenia, rates at which neutralizing
antibodies are developed, and frequency of
injections
 Diversity in outcomes offers choices that can
be made by individual patients in consultation
with their physicians
Is First-in-Class the Best-in-Class:
FDA Therapeutic Ratings for
Follow-on Drugs
80
67%
33%
0
Priority Rated (n=75)
Standard Rated (n=153)
Analysis based on 235 follow-on drugs in 72 subclasses, approved through 2003.
Ratings not available for 7 drugs.
Source: DiMasi, Paquette, PharmacoEconomics 2004;22(Suppl 2):1-14
Are Follow-on Drugs Riskier?: Safety
Withdrawals
 Examined our 72 classes for safety
withdrawals for first-in-class and follow-on
approvals
 2 first-in-class and 7 follow-on drugs
withdrawn (7 drug classes with 43 drugs)
 Considering all 72 classes, 2.8% of first-in-
class and 3.0% of follow-on drugs withdrawn
 Difference is not statistically significant
In Summary
 Follow-on drugs create competition resulting in
lower drug prices
 Development of follow-on drugs often occurs
contemporaneously with that of first-in-class drug
 Market exclusivity periods for first-in-class drugs
are shrinking, speeding price competition
 Follow-on drugs can provide clinical benefits by
enabling individualized therapy or offering
improved safety/efficacy/convenience profiles
 Follow-on drugs do not appear to be riskier
Conclusions
Conclusions
 Research-based pharma firms must meet the
demand for innovative new drugs in the face of
rising R&D costs and growing cost containment
pressure.
 Government must work to create an environment
that provides incentives to innovate while
controlling health care spending and ensuring
patient access to new medicines.
 Industry and government must work together to
meet the challenge.
Tufts Center for the Study of
Drug Development
Tufts University, Boston, Massachusetts, USA
Kenneth I Kaitin, Ph.D., Director
Website
http://csdd.tufts.edu
email
[email protected]