Post-approval indications and clinical trials for cardiovascular drugs: some implications of the US Inflation Reduction Act.

OBJECTIVE: To describe the historical baseline landscape of cardiovascular drug post-approval activity, including the number and timing of post-approval clinical trials and approved indications. The US Inflation Reduction Act of 2022 (IRA) Drug Price Negotiation Program (DPNP) and its Maximum Fair Prices (MFPs) will affect incentives for investment in post-approval activity such as clinical trials for new indications. While three of the first ten drugs selected for the DPNP and MFP-setting are cardiovascular or antithrombotic drugs, limited attention has been paid to potential cardiovascular drug impacts, and to post-approval innovation. METHODS: For the 65 drugs originally approved by the FDA from 1995 through 2021 for a cardiovascular or antithrombotic indication (60 small molecules and 5 biologics), we develop a novel dataset of industry-sponsored, post-approval clinical trials and FDA-approved label changes for new indications. We analyze their number and timing relative to DPNP drug selection and MFP implementation dates, by drug approval-year cohort. RESULTS: We find 49% of indications were awarded and 76% of industry-funded clinical trials were completed post-approval, reaching 98% of trials for drugs in the earliest 1995-99 cohort. For the 60 small molecules, 76% of post-approval trials ended five years or more after original drug approval, 65% ended seven or more years after original drug approval (i.e. after potential DPNP selection), and 53% nine or more years after original drug approval (i.e. after potential MFP implementation). CONCLUSIONS: Post-approval FDA indication approvals and clinical trial starts and primary completion dates often occurred after or near new DPNP selection and MFP implementation dates. This has economic consequences for future investment incentives. Post-approval trials for small molecules, longer-duration trials, and larger-enrollment trials, and post-approval indications focused on limited patient populations and older patients could face particular economic challenges.

Continuing trends in U.S. brand-name and generic drug competition.

OBJECTIVE: To provide updated evidence in a series of analyses of U.S. trends over the past two decades in key financial metrics for branded drugs: market exclusivity periods (MEPs, the time between launch and first generic entry) for new molecular entities (NMEs); the probability, timing and number of patent challenges under Paragraph IV of the Hatch-Waxman Act; and the intensity of generic penetration. METHODS: As previously, we used IQVIA National Sales Perspectives U.S. data to calculate MEPs for the 356 NMEs experiencing initial generic entry from 1995 through 2019, the number of generic competitors for twelve months afterward (by prior sales level), and generic shares. We calculated the probability, timing and number of Paragraph IV challengers using Abbreviated New Drug Application (ANDA) approval letters, the FDA website, public information searches, and ParagraphFour.com. RESULTS: For NMEs experiencing initial generic entry in 2017-19, the MEP was 13.0 years for drugs with sales greater than $250 million in 2008 dollars the year before generic entry (NMEs>$250 million), 14.1 years overall. One year later, brands' average unit share was 18% for NMEs>$250 million, 23% overall. Ninety-three percent of NMEs>$250 million experiencing initial generic entry faced at least one Paragraph IV challenge (2019, three-year rolling average), an average of 6.0 years after brand launch (81% and 6.3 years for all NMEs). NMEs faced an average of 6.8 and 8.9 Paragraph IV challengers per NME, for all and NMEs>$250 million, respectively (2017-19 figures). LIMITATIONS: All analyses were restricted to NMEs experiencing generic entry. CONCLUSION: The average 2017-19 MEP of 13.0 years for NMEs>$250 million has changed relatively little over the past decade and remains lower than for all NMEs (14.1 years). Paragraph IV challenges are more frequent and occur earlier for NMEs>$250 million. Generic share erosion remains high for both NME types.

Updated trends in US brand-name and generic drug competition.

OBJECTIVE: To provide updated evidence on US trends in: market exclusivity periods (MEPs, time between brand-name drug launch and first generic competitors) for new molecular entities (NMEs); likelihood, timing and number of Hatch-Waxman Act Paragraph IV patent challenges; and generic drug penetration. METHODS: This study used IMS Health National Sales Perspectives(TM) US data to calculate MEPs for the 288 NMEs experiencing initial generic entry between January 1995 and December 2014, the number of generic competitors for 12 months afterward (by level of annual sales prior to generic entry), and generic penetration rates. The likelihood, timing and number of Paragraph IV challengers were calculated using data from Abbreviated New Drug Approval (ANDA) letters, the FDA website, public information searches, and ParagraphFour.com. RESULTS: For drugs experiencing initial generic entry in 2013-2014, the MEP was 12.5 years for drugs with sales greater than $250 million (in 2008 dollars) in the year prior to generic entry ($250 million + NMEs), 13.6 years overall. After generic entry, brands rapidly lost sales, with their average unit share being 7% at 1 year for $250 million + NMEs, 12% overall. Ninety-four percent of $250 million + NMEs experiencing initial generic entry in 2013-2014 had faced at least one Paragraph IV challenge, an average of 5.2 years after brand launch (76% and 5.9 years for all NMEs). NMEs faced an average of 5.1 and 6.2 Paragraph IV challenges per NME, for all and $250 million + NMEs, respectively. LIMITATIONS: Analyses, including Paragraph IV calculations, were restricted to NMEs where generic entry had occurred. CONCLUSION: The average 2013-2014 MEP of 12.5 years for $250 million + NMEs, 13.6 overall remains consistent with prior research. MEPs are lower, and Paragraph IV challenges are more frequent and occur earlier for $250 million + drugs. Generic share erosion is also greater, and continues to intensify for both NME types.

Innovation in the pharmaceutical industry: New estimates of R&D costs.

The research and development costs of 106 randomly selected new drugs were obtained from a survey of 10 pharmaceutical firms. These data were used to estimate the average pre-tax cost of new drug and biologics development. The costs of compounds abandoned during testing were linked to the costs of compounds that obtained marketing approval. The estimated average out-of-pocket cost per approved new compound is $1395 million (2013 dollars). Capitalizing out-of-pocket costs to the point of marketing approval at a real discount rate of 10.5% yields a total pre-approval cost estimate of $2558 million (2013 dollars). When compared to the results of the previous study in this series, total capitalized costs were shown to have increased at an annual rate of 8.5% above general price inflation. Adding an estimate of post-approval R&D costs increases the cost estimate to $2870 million (2013 dollars).

The roles of patents and research and development incentives in biopharmaceutical innovation.

Patents and other forms of intellectual property protection play essential roles in encouraging innovation in biopharmaceuticals. As part of the "21st Century Cures" initiative, Congress is reviewing the policy mechanisms designed to accelerate the discovery, development, and delivery of new treatments. Debate continues about how best to balance patent and intellectual property incentives to encourage innovation, on the one hand, and generic utilization and price competition, on the other hand. We review the current framework for accomplishing these dual objectives and the important role of patents and regulatory exclusivity (together, the patent-based system), given the lengthy, costly, and risky biopharmaceutical research and development process. We summarize existing targeted incentives, such as for orphan drugs and neglected diseases, and we consider the pros and cons of proposed voluntary or mandatory alternatives to the patent-based system, such as prizes and government research and development contracting. We conclude that patents and regulatory exclusivity provisions are likely to remain the core approach to providing incentives for biopharmaceutical research and development. However, prizes and other voluntary supplements could play a useful role in addressing unmet needs and gaps in specific circumstances.

Regulatory and cost barriers are likely to limit biosimilar development and expected savings in the near future.

In March 2010 Congress established an abbreviated Food and Drug Administration approval pathway for biosimilars-drugs that are very similar but not identical to a reference biological product and cost less. Because bringing biosimilars to the market currently requires large investments of money, fewer biosimilars are expected to enter the biologics market than has been the case with generic drugs entering the small-molecule drug market. Additionally, given the high regulatory hurdles to obtaining interchangeability-which would allow pharmacists to substitute a biosimilar for its reference product, subject to evolving state substitution laws-most biosimilars will likely compete as therapeutic alternatives instead of as therapeutic equivalents. In other words, biosimilars will need to compete with their reference product on the basis of quality; price; and manufacturer's reputation with physicians, insurers, and patient groups. Biosimilars also will face dynamic competition from new biologics in the same therapeutic class-including "biobetters," which offer incremental improvements on reference products, such as extended duration of action. The prospects for significant cost savings from the use of biosimilars appear to be limited for the next several years, but their use should increase over time because of both demand- and supply-side factors.

Recent trends in brand-name and generic drug competition.

OBJECTIVE: To provide evidence on recent trends in: (1) market exclusivity periods (MEPs, the time between launch of a brand-name drug and its first generic competitor) for new molecular entities (NMEs); (2) the likelihood and timing of patent challenges under Paragraph IV of the Hatch-Waxman Act; and (3) generic drug penetration. METHODS: IMS Health National Sales Perspectives data were used to calculate MEPs for the 257 NMEs experiencing initial generic entry between January 1995 and September 2012 and the number of generic competitors for 12 months afterwards, by level of annual sales prior to generic entry and time period. The likelihood and timing of Paragraph IV challenge were calculated using data from Abbreviated New Drug Approval (ANDA) approval letters, the FDA website, and public information searches to identify drugs experiencing Paragraph IV filings, and the first filing date. RESULTS: For drugs experiencing initial generic entry in 2011-2012, the MEP was 12.6 years for drugs with sales greater than $100 million (in 2008 dollars) in the year prior to generic entry, 12.9 years overall. After generic entry, the brand rapidly lost sales, with average brand unit share of 16% at 1 year; 11% for NMEs with pre-generic entry sales of at least $250 million (in 2008 dollars). Over 80% of NMEs experiencing 2011-2012 initial generic entry had faced at least one Paragraph IV challenge from a generic manufacturer. These challenges were filed relatively early in the brand-name drug life cycle: within 7 years after brand launch, on average. LIMITATIONS: Analyses, including Paragraph IV calculations, were restricted to NMEs where generic entry had occurred. CONCLUSION: Pharmaceutical competition continues to evolve; while the average MEP below 13 years for 2011-2012 remains consistent with prior research, Paragraph IV challenges are increasingly frequent and occur earlier, and generic share erosion has intensified.

Does generic entry always increase consumer welfare?

This article examines how the nature of competition between brands in a therapeutic category changes after generic entry and provide a framework for analyzing the effect of generic entry on consumer welfare that takes into account the generic free riding problem. It demonstrates that changes in competition along dimensions other than retail price--such as competition in research and development efforts and in promotional activities--may, in certain situations, result in generic entry having an overall negative impact on consumer welfare.

Evolving brand-name and generic drug competition may warrant a revision of the Hatch-Waxman Act.

The evolution of pharmaceutical competition since Congress passed the Hatch-Waxman Act in 1984 raises questions about whether the act's intended balance of incentives for cost savings and continued innovation has been achieved. Generic drug usage and challenges to brand-name drugs' patents have increased markedly, resulting in greatly increased cost savings but also potentially reduced incentives for innovators. Congress should review whether Hatch-Waxman is achieving its intended purpose of balancing incentives for generics and innovation. It also should consider whether the law should be amended so that some of its provisions are brought more in line with recently enacted legislation governing approval of so-called biosimilars, or the corollary for biologics of generic competition for small-molecule drugs.

The economic returns of pediatric clinical trials of antihypertensive drugs.

BACKGROUND: Congress has authorized the United States Food and Drug Administration (FDA) to provide industry sponsors with a 6-month extension of drug marketing rights under the Pediatric Exclusivity Provision if FDA-requested pediatric drug trials are conducted. The cost and economic return of pediatric exclusivity to industry sponsors has been shown to be highly variable. We sought to determine the cost of performing pediatric exclusivity trials within a single therapeutic area and the subsequent economic return to industry sponsors. METHODS: We evaluated 9 orally administered antihypertensive drugs submitted to the FDA under the Pediatric Exclusivity Provision from 1997 to 2004 and obtained key elements of the clinical trial designs and operations. Estimates of the costs of performing the studies were generated and converted into after-tax cash outflow. Market sales were obtained and converted into after-tax inflows based on 6 months of additional patent protection. Net economic return and net return-to-cost ratios were determined for each drug. RESULTS: Of the 9 antihypertensive agents studied, an average of 2 studies per drug was performed, including at least 1 pharmacokinetic study and a safety and efficacy study. The median cost of completing a pharmacokinetic trial was $862,000 (range $556,000 to 1.8 million). The median cost of performing safety and efficacy trials for these agents was $4.3 million (range $2.1-12.9 million). The ratio of net economic return to cost was 17 (range 4-64.7). CONCLUSION: We found that, within a cohort of antihypertensive drugs, the Pediatric Exclusivity Provision has generated highly variable, yet lucrative returns to industry sponsors.

Follow-on biologics: data exclusivity and the balance between innovation and competition.

Legislation to create a regulatory pathway for follow-on biologics is currently being considered by the United States Congress. A critical issue in this respect is the period of data exclusivity for innovator companies before a follow-on competitor can rely in part on data obtained for an original biologic for an abbreviated approval. Given the nature of patents on biologics, the period of data exclusivity is anticipated to have a key role in determining how quickly follow-on competitors emerge, and consequently also on the time available for originator companies to recoup their investment. With this issue in mind, this article discusses factors influencing return on investment on biologic research and development. A break-even analysis for a representative portfolio of biologics provides support for a substantial data exclusivity period.

Misleading congress about drug development: Reply.

The review essay by Donald Light about a Congressional Budget Office report on pharmaceutical research and development (R&D) (Light 2007) contains factual errors, leaves the reader uninformed about rebuttal responses to criticisms made in the review about studies of R&D costs, and draws erroneous conclusions about the nature of industry economics.

Impact of economic, regulatory, and patent policies on innovation in cancer chemoprevention.

Chemoprevention agents are an emerging new scientific area that holds out the promise of delaying or avoiding a number of common cancers. These new agents face significant scientific, regulatory, and economic barriers, however, which have limited investment in their research and development (R&D). These barriers include above-average clinical trial scales, lengthy time frames between discovery and Food and Drug Administration approval, liability risks (because they are given to healthy individuals), and a growing funding gap for early-stage candidates. The longer time frames and risks associated with chemoprevention also cause exclusivity time on core patents to be limited or subject to significant uncertainties. We conclude that chemoprevention uniquely challenges the structure of incentives embodied in the economic, regulatory, and patent policies for the biopharmaceutical industry. Many of these policy issues are illustrated by the recently Food and Drug Administration-approved preventive agents Gardasil and raloxifene. Our recommendations to increase R&D investment in chemoprevention agents include (a) increased data exclusivity times on new biological and chemical drugs to compensate for longer gestation periods and increasing R&D costs; chemoprevention is at the far end of the distribution in this regard; (b) policies such as early-stage research grants and clinical development tax credits targeted specifically to chemoprevention agents (these are policies that have been very successful in increasing R&D investment for orphan drugs); and (c) a no-fault liability insurance program like that currently in place for children's vaccines.

Economic return of clinical trials performed under the pediatric exclusivity program.

CONTEXT: In 1997, Congress authorized the US Food and Drug Administration (FDA) to grant 6-month extensions of marketing rights through the Pediatric Exclusivity Program if industry sponsors complete FDA-requested pediatric trials. The program has been praised for creating incentives for studies in children and has been criticized as a "windfall" to the innovator drug industry. This critique has been a substantial part of congressional debate on the program, which is due to expire in 2007. OBJECTIVE: To quantify the economic return to industry for completing pediatric exclusivity trials. DESIGN AND SETTING: A cohort study of programs conducted for pediatric exclusivity. Nine drugs that were granted pediatric exclusivity were selected. From the final study reports submitted to the FDA (2002-2004), key elements of the clinical trial design and study operations were obtained, and the cost of performing each study was estimated and converted into estimates of after-tax cash outflows. Three-year market sales were obtained and converted into estimates of after-tax cash inflows based on 6 months of additional market protection. Net economic return (cash inflows minus outflows) and net return-to-costs ratio (net economic return divided by cash outflows) for each product were then calculated. MAIN OUTCOME MEASURES: Net economic return and net return-to-cost ratio. RESULTS: The indications studied reflect a broad representation of the program: asthma, tumors, attention-deficit/hyperactivity disorder, hypertension, depression/generalized anxiety disorder, diabetes mellitus, gastroesophageal reflux, bacterial infection, and bone mineralization. The distribution of net economic return for 6 months of exclusivity varied substantially among products (net economic return ranged from -$8.9 million to $507.9 million and net return-to-cost ratio ranged from -0.68 to 73.63). CONCLUSIONS: The economic return for pediatric exclusivity is variable. As an incentive to complete much-needed clinical trials in children, pediatric exclusivity can generate lucrative returns or produce more modest returns on investment.