5
DRUG INNOVATION AND THE PHARMACEUTICAL INDUSTRY

Treatment INDs for ddI and several non-AIDS drugs demonstrate that some large pharmaceutical companies have the resources to distribute investigational drugs to thousands of patients across the country, but new expanded access programs could test the limits of these resources. Industry spokespersons have expressed concern that expectations created by parallel track and other expanded access programs could begin to affect the way in which companies make decisions about product development. In the most troublesome scenario, companies would weigh expenses associated with expanded access against future profits and decide that AIDS drugs simply did not represent a good investment. As a result, some potentially successful AIDS therapies would not be developed.

The effects of adverse incentives created by expanded access would be evident first in smaller companies, particularly the fledgling biotechnology firms. These companies have the expertise to make major strides in the new field of rational drug design, but they may not have the resources to sustain premarket drug distribution.

Ultimately, the impact of expanded access on drug innovation in AIDS will depend on three issues: (1) the possibility that expanded access programs might delay commercialization of target drugs or of other drug candidates, either by raising safety concerns or by creating an environment in which controlled trials cannot be carried out; (2) the extent to which expanded access programs increase the direct costs of drug development; and (3) the perception of risk associated with expanded access, particularly with regard to product liability.

This chapter is based on the presentations of Patrick Gage, Stephen Sherwin, Jerome Birnbaum, Paul De Stefano, Lawrence Corey, and James Eigo.



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Expanding Access to Investigational Therapies for HIV Infection and AIDS: March 12-13, 1990 Conference Summary 5 DRUG INNOVATION AND THE PHARMACEUTICAL INDUSTRY Treatment INDs for ddI and several non-AIDS drugs demonstrate that some large pharmaceutical companies have the resources to distribute investigational drugs to thousands of patients across the country, but new expanded access programs could test the limits of these resources. Industry spokespersons have expressed concern that expectations created by parallel track and other expanded access programs could begin to affect the way in which companies make decisions about product development. In the most troublesome scenario, companies would weigh expenses associated with expanded access against future profits and decide that AIDS drugs simply did not represent a good investment. As a result, some potentially successful AIDS therapies would not be developed. The effects of adverse incentives created by expanded access would be evident first in smaller companies, particularly the fledgling biotechnology firms. These companies have the expertise to make major strides in the new field of rational drug design, but they may not have the resources to sustain premarket drug distribution. Ultimately, the impact of expanded access on drug innovation in AIDS will depend on three issues: (1) the possibility that expanded access programs might delay commercialization of target drugs or of other drug candidates, either by raising safety concerns or by creating an environment in which controlled trials cannot be carried out; (2) the extent to which expanded access programs increase the direct costs of drug development; and (3) the perception of risk associated with expanded access, particularly with regard to product liability. This chapter is based on the presentations of Patrick Gage, Stephen Sherwin, Jerome Birnbaum, Paul De Stefano, Lawrence Corey, and James Eigo.

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Expanding Access to Investigational Therapies for HIV Infection and AIDS: March 12-13, 1990 Conference Summary Treatment IND regulations stipulate that under some circumstances a manufacturer may charge for an experimental drug, but solely to recover costs. The proposed policy statement for the parallel track contains a brief reference to the treatment IND ruling but does not explore further the issue of drug costs. The policy of the Pharmaceutical Manufacturers Association is that the drug sponsor should bear the cost of any drug administered before market approval—in clinical trials or through expanded access protocols. So far, only one sponsor of an AIDS drug has sought payment under existing IND regulations. TIME TO COMMERCIALIZATION Previous chapters have emphasized the importance of making sure that expanded access programs do not delay FDA approval of effective drugs by slowing patient accrual in randomized clinical trials. After all, access to a drug is greatest when the drug is on the pharmacist's shelf. Pharmaceutical manufacturers also are concerned about the possible loss of income. In most cases, manufacturers do not begin to make a return on their investment in a drug until the FDA has reviewed all safety and efficacy data and approved the drug for marketing. Thus, the perception that a government agency might request an expanded access protocol for a drug and that such a protocol could delay the time to commercialization might lead a manufacturer to forgo development of that drug. A spokesman for Bristol-Myers Squibb notes that time and energy invested in the expanded access protocols for ddI have caused delays in market approval for two other drugs, both antibiotics in the late stages of clinical development. He says that the opportunity cost associated with these delays—the nonrecoverable loss of future sales resulting from reductions in useful patent life—might emerge as the largest single cost factor of the expanded access effort. DIRECT COSTS OF EXPANDED ACCESS A brief recounting of Bristol-Myers Squibb's experience with ddI demonstrates the full range of expenses associated with an effective expanded access program. At the request of the FDA, the company submitted a treatment IND application for ddI on August 15, 1989.

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Expanding Access to Investigational Therapies for HIV Infection and AIDS: March 12-13, 1990 Conference Summary Manpower Needs A company spokesperson recalled the coordination required to provide physicians and potential recipients of ddI with necessary information, to evaluate patient eligibility, and to manage the vast quantities of data generated by the expanded access program. In July of 1989 we had decided to locate our ddI (trade named Videx) product information center for expanded access at our U.S. Pharmaceutical Division at Evansville, Indiana. The objective was to be operational by early September. We immediately assembled a project team. Our Medical Department gathered and organized the information necessary to manage the expanded access project and worked with our Research Division and the FDA to develop and process the ddI protocols. Our Operations Group had the task of finding a building to house the information center and equipping it. Customer service representatives and other personnel were hired and trained. The staff at MIS [Management Information Systems] designed the computer system needed to handle physician and patient data. Our Marketing Group coordinated the information and communications elements. The Clinical Supply Group in the Research Division made preparations for the actual distribution of the drug. Just 35 days after the project started, the Videx Information Center was a reality. To date, our ddI hotline has handled over 30,000 calls from physicians and patients. We have sent out 3,566 ddI binders and enrolled 7,545 patients [as of March 11, 1990] The system works as follows: The physician calls our AIDS hotline. A data package and enrollment forms are sent the same day. The physician returns the completed forms, and the Center's medical staff evaluates the forms for patient eligibility. Within 72 hours of receiving the application, a month's supply of ddI is shipped or the physician is advised of patient ineligibility. Follow-up information from day 15 is provided to Bristol-Myers Squibb by day 30. Drug supplies for the second month are shipped upon receipt of this information. In short, Bristol-Myers Squibb renovated a building, established warehouse space and shipping facilities, installed a comprehensive communications system, developed a computer system for data storage

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Expanding Access to Investigational Therapies for HIV Infection and AIDS: March 12-13, 1990 Conference Summary and retrieval, and set up hard-copy record storage. In addition, they produced a four-part ddI registration kit that included study protocols, patient eligibility information, the necessary registration documents, and the ddI investigator's brochure. Additional manpower costs (primarily medical and regulatory affairs personnel) have been devoted to monitoring the expanded access program. For example, the company has established a system of onsite protocol audits to gauge reporting of adverse effects. Professional staff also make a concerted effort to keep clinical investigators in the ACTG, government scientists, and AIDS patients and their representatives informed about any new developments in the various clinical trials and expanded access protocols. Drug Costs The drug itself is a major cost factor. Early in development, the unit cost of a drug is high because the manufacturer has not had an opportunity to optimize strategies for formulation, packaging, labeling, quality control, and shipping. Also, the volume of production may be relatively low, so the manufacturer cannot take advantage of economies of scale. Drug costs in expanded access programs for AIDS drugs may be particularly high because thousands of patients require long-term treatment. The need to formulate drugs in different dosage strengths also adds to the cost. Bristol-Myers Squibb has produced ddI in three different dosages to accommodate patients of different weights. The Small Manufacturer Large pharmaceutical companies, such as Bristol-Myers Squibb and Burroughs Wellcome (the manufacturer of AZT), appear to have the manpower and financial resources to manage expanded access protocols, at least in the short term; this may not be true for smaller firms. A spokesman for Genentech (the largest of the new biotechnology companies) noted that most small companies would have difficulty marshaling the manpower required to provide administrative support for the parallel track. Companies like Genentech often have to seek outside funding (for example, R&D [research and development] limited partnerships) to finance basic clinical trials and to support the documentation tasks required for FDA approval. The demand created by expanded access

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Expanding Access to Investigational Therapies for HIV Infection and AIDS: March 12-13, 1990 Conference Summary protocols would be a further drain on resources. Biotechnology companies would have to begin the difficult process of scaling up production of recombinant proteins long before they had any chance of generating revenues. In some cases, they might have difficulty producing sufficient quantities of a drug for both randomized trials and expanded access. These concerns have led one biotechnology executive to suggest a cost-recovery program in which companies would be permitted to charge for expanded access drugs. The arrangement would be similar to that described in the treatment IND and medical device regulations. This kind of program, however, would be effective only if patients had some mechanism to pay for the drugs, either through government sponsorship or through expansion of private health care coverage (see Chapter 6). Patient advocates and some scientists involved in the drug development process are uncomfortable with this proposal. They say that most administrative costs associated with expanded access could be recaptured when a candidate drug receives market approval; for example, physician and patient education programs and drug distribution mechanisms in the parallel track could become the core of the commercial marketing program. Critics also express concern about the potential of expanded access to distort the clinical trials process. If manufacturers could recoup costs prior to market approval, wide distribution under a treatment IND or parallel track might become a goal in itself. Companies might have less incentive to complete randomized trials to collect definitive evidence about the safety and efficacy of a drug. For now, the latter concern is primarily theoretical. The basic cost issues, however, represent a practical barrier that may have to be addressed more fully by the architects of the expanded access concept. PRODUCT LIABILITY Smaller companies also are exceedingly sensitive to the potential for expensive legal actions. In the past, almost all drug-related product liability cases have involved agents already on the market. The expectation has been that subjects in clinical trials would not bring suit against drug manufacturers because the subjects had decided to participate in a research protocol knowing that there were risks involved in taking experimental drugs. Recently, however, suits brought against some manufacturers for adverse reactions sustained

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Expanding Access to Investigational Therapies for HIV Infection and AIDS: March 12-13, 1990 Conference Summary during drug trials have created an air of uncertainty for manufacturers. The law is unsettled with regard to liability for investigational drugs, and this uncertainty creates a perception of liability that may deter innovation. Pharmaceutical manufacturers incorporate liability concerns into decisions about which agents to develop and bring to market. Representatives of small and medium-sized companies suggest that the push for expanded access could increase the perception of liability for some drug candidates, thereby making them less attractive to potential sponsors. Concerns Specific to the Parallel Track Three features of the parallel track heighten concern about product liability. The first is timing. Parallel track protocols are slated to begin very early in the drug development process—long before the sponsor has definitive information about the potential severity of adverse effects. The second feature is the large number of participants. Administering a relatively unknown drug to 150 persons in a phase 2 trial is very different, in terms of potential lawsuits, from administering the drug to 5,000 patients in an expanded access protocol. The third issue is the diversity of health care providers. In a traditional drug trial, the pharmaceutical manufacturer depends on skilled clinical investigators to provide the highest level of medical care. These clinical researchers have access to sophisticated technology to help them monitor patients and to recognize the onset of adverse reactions. Many physician participants in expanded access protocols will not have research experience. Also, some physicians will see only a few patients on a parallel track protocol; they might have more trouble spotting the side effects of an investigational drug than someone who has 50 patients on the same protocol. Potential Solutions Observers have suggested several mechanisms to diminish the impact of liability concerns on decisions related to AIDS drugs. In Brown v. Superior Court, the California Supreme Court recently eliminated strict liability (liability without fault) for pharmaceutical products. Instead, plaintiffs must prove actual negligence on

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Expanding Access to Investigational Therapies for HIV Infection and AIDS: March 12-13, 1990 Conference Summary the part of the companies. Some other states have similar tort rules, but in general, inconsistency is the rule on the issue among the states. If this doctrine could be extended to apply to investigational drugs, companies might be reassured. Another reform would be to implement the so-called government standards defense. Under this theory, a company that has complied with the FDA requirements for approval has a legal defense to a negligence claim. This mechanism would prevent judges or juries from second-guessing the conclusions of the regulatory agency. However, it might be difficult to extend this form of legal protection to products not yet approved by the FDA. Product liability decisions are made by state courts. If the federal government stepped in to standardize these rules nationally, manufacturers would consider this action a large step forward. A final mechanism would be to amend existing FDA regulations to make it possible for pharmaceutical manufacturers to negotiate directly with prospective subjects in clinical trials, who would then waive their right to sue. The FDA usually does not permit this type of one-on-one negotiation, but an industry lawyer suggests that it might be appropriate in the context of expanded access programs for AIDS drugs because patients and their physicians assume greater responsibility for the decision to proceed with treatment than do participants in traditional clinical trials.

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