Drug Innovation on the Decline

[February 1, 2007, AJHP News]

Donna Young

BETHESDA, MD, 18 January 2007—The number of new drugs entering the U.S. market has declined sharply, while spending by the pharmaceutical industry on research and development has steadily increased, congressional investigators said in a recent report.

From 1993 through 2004, pharmaceutical research and development expenses increased by 147%, the Government Accountability Office (GAO)—the investigative arm of Congress—reported.

However, investigators said, the number of new drug applications (NDAs) submitted to FDA during that same period increased by only 38%.

From 1993 through 1995, GAO reported, the number of NDAs submitted for new molecular entities (NMEs) increased, but declined by 40% between 1995 and 2004.

Of the 1264 NDAs submitted to FDA from 1993 through 2004, only 32% were for NMEs, congressional investigators said. The remaining 68% were applications for variations of medications already on the U.S. market, often referred to as "me-too" drugs.

Me-too drugs are less risky to develop, GAO stated, "because the safety and efficacy of the drugs on which they are based have already been studied."

But, investigators reported, me-too drugs "do not offer any significant therapeutic benefits over products already being sold."

In addition, GAO said, when companies concentrate resources on developing me-too drugs, innovation in new medications is reduced.

"The report shows that much drug industry research doesn't translate into real breakthroughs for patients," Senator Edward M. Kennedy (D-Massachusetts) said in a statement.

"The goal of Congress, FDA, the industry, and academia must be to deliver truly innovative new medicines to patients," said Kennedy, one of the three Democratic lawmakers who requested the GAO report.

Mergers and acquisitions in the pharmaceutical industry also hamper new drug development, GAO found, because the newly formed companies often choose only the most promising compounds for further development.

Mergers and acquisitions also add to the pressure to develop blockbuster drugs because investors expect the combined company to generate a substantial growth in revenue, investigators added.

A lack of precise regulatory standards that outline what constitutes a safe and effective medication also affects drug development decisions, GAO said.

Sponsors and FDA must address the safety and effectiveness of drugs on a case-by-case basis, investigators said. As a result, pharmaceutical firms sometimes choose to abandon a drug rather than risk significant development costs in an uncertain regulatory climate.

FDA officials, GAO said, acknowledged in interviews that the agency's regulatory standards are not precise. But, investigators said, regulators insisted that they need to have the flexibility to address safety and efficacy issues "as they arise."

For example, regulators told GAO, FDA may discover a new drug-drug interaction, and, in such a case, the agency would use that new information to address previously unknown safety issues.

Intellectual property protections, such as patents, also affect innovation in drug development, investigators found. Patents allow pharmaceutical companies to charge prices that allow them to recover their investments made in discovering and developing a new drug and earn a profit, GAO said.

But, investigators noted, companies can easily obtain new patents by making minor changes to existing products, regardless of whether the drugs offer significant therapeutic advances. Firms that develop new uses for previously approved drugs may receive an additional three years of "market exclusivity."

"These intellectual property protections enable companies to earn significant profits while reducing the incentive to develop more innovative drugs," investigators said.

Pharmaceutical industry representatives and analysts interviewed by GAO told investigators that "due to the rising costs and complexity of developing new drugs, these intellectual property protections are crucial to maintaining drug development efforts."

About 1 of every 10,000 chemical compounds initially tested as a new medication is found safe and effective, and eventually receives labeling approved by FDA, making the drug discovery and development process complex, time-consuming, and costly, GAO stated.

Drug companies spend about 13 years studying the benefits and risks of a new compound and hundreds of millions of dollars completing those studies before seeking approval from FDA to market the drug in the United States, investigators said.

Most compounds fail during the drug discovery and preclinical testing stages of the development process, according to GAO. Only 5 in every 10,000 compounds successfully complete these first two stages. In general, those two stages typically take a total of 6.5 years to successfully complete for a particular compound.

Only one of the five drugs that completed the first two stages successfully completes the clinical trials stage of the development process, investigators noted, adding that it takes a total of seven years to complete Phase I, Phase II, and Phase III clinical trials.

It takes another 1.5 years for FDA to complete its review process of an NDA, GAO said.

GAO noted that representatives from government, academia, public interest groups, and the pharmaceutical industry interviewed for its report provided a number of suggestions to reduce the costs, increase the speed, and encourage innovation in drug development.

One recommendation was to design a system to collect and analyze data on why drugs fail during clinical testing.

For example, GAO stated, a team of regulators and pharmaceutical representatives could review FDA and company databases to obtain examples of drug failures and then perform a systematic analysis of the causes of these failures.

The interviewees also suggested that government partner with industry and academia to develop inventories of validated biomarkers and surrogate endpoints to use when testing the safety and efficacy of drugs in development.

Government, industry, and academia could also work together to clarify FDA's guidance and the level of scientific evidence needed to support the use of biomarkers and their validation as surrogate endpoints, the interviewees told GAO.

Those interviewed for the report also told investigators that regulators should partner with industry and academia to identify diseases in great need of treatment and implement an expedited regulatory process using conditional approval to decrease the time needed to develop drugs to treat these diseases.

In addition, the interviewees said, academia should place a greater emphasis on developing research scientists with knowledge of translational medicine by providing financial incentives, such as scholarships, for students to pursue this discipline. Private and public partnerships, they added, could also create incentives to develop such scientists.