Big Pharma is clearly at a crossroads
For two decades, healthcare has relied on Big Pharma to crank out wonder drugs to control our disease symptoms and risk factors. But progress has slowed—in some cases stalled.
» 7 of the 13 historic pharmaceutical companies had no new molecular entities (NMEs) approved in 2016.
» Even as the cost of developing a drug is rising, the odds of getting a drug from Phase 1 all the way to FDA approval have fallen below 10%.
» Those odds in oncology are only 5.1%, in cardiovascular only 6.6% and in neurology only 8.4%.
» As a result, financial returns across Big Pharma have steadily fallen over the current decade from 11% to 3.7%.
$154 billion is spent every year on drug research. That annual investment is in jeopardy if it doesn’t pay out. Already the R&D investment into antibiotics and vaccines has slowed to a trickle because of the lack of financial return.
Better chance that trials using genetic selection criteria will clear the approval process
BIOMARKER DRUGS WILL END THE ERA OF BLOCKBUSTER DRUG ECONOMICS
Research into genetic biomarkers has dramatically helped figure out why drugs work in some patients and not in others. There are already 62 cancer treatments approved for specific genetic subpopulations, and 238 overall. When they work, they tend to work far better. This raises the odds of approval considerably. Clinical trials that use genetic selection criteria have a 3x better chance of negotiating the full approval pathway. Critically, given that Phase 3 trials are so expensive, those odds of approval double.
All of this reduces development risk, but the tradeoff is clear: the genetic screening means the market size for any of these drugs is much smaller.
There is a bright spot, however: Pharma companies’ libraries of previously failed compounds can now be reanalyzed by biomarker interactions. They might have worked for certain genetic profiles. Potentially, many of those compounds can be brought back to market with low R&D investment.
39%of American patients have delayed a drug regimen due to its price.
The FDA is forbidden by law from considering a drug’s price in the evaluation process, and only approves drugs that prove they’re better than existing treatments. Most other countries do consider a drug’s cost, and often approve drugs that don’t work quite as well if they cost less. The result is per capita spending on drugs in the US is twice the international average.
THE RISING PRICES OF DRUGS ARE PROVOKING CONSUMER ACTIVISM AND POLITICAL SCRUTINY
Some shocking examples:
Emflaza: This muscular dystrophy steroid was available outside the US for decades. American families were able to import it, paying $1,600 or less per year. When Marathon Pharmaceuticals licensed it for the US market, they wanted to charge $89,000 a year, arguing the market size was so small (12,000 American patients), they needed to charge that price to get a return. Marathon took so much heat they had to sell Emflaza to PTC Therapeutics.
Daraprim: Nowadays, when a drug comes off patent, sometimes the price for the generic version goes up, not down. This happens when the FDA licenses only one manufacturer to make it, creating an artificial monopoly—or even granting an exclusive marketing license to drugs that had been available for decades. When Turing Pharmaceuticals got licensed to make Daraprim, they raised the price from $13.50 a pill to $750. Successful activism led to a near boycott: monthly sales fell from 22,500 pills to only 600 pills.
INSURERS ARE PUSHING BACK, TOO, WANTING MORE EVIDENCE THAN WAS SUBMITTED TO THE FDA BEFORE THEY’LL COVER A DRUG
Amgen’s cardiovascular drug, Repatha, was expected to be a game-changer. Insurers, however, restricted coverage to only those with extremely high cholesterol, saying Repatha’s efficacy wasn’t worth the $14,000 price when the prevailing treatment only cost $150 a year.
DESPERATELY SEEKING AFFORDABILITY, PATIENTS TURN TO ONLINE PHARMACIES THAT PROMISE TO SEND THREE-MONTH SUPPLIES FROM OVERSEAS
Of the 30,000 prescription drug websites, 96% are operating illegally with no pharmacy license at all. The drugs may or may not be what’s advertised.
It won’t change wholesale, with a sweeping act of Congress. Instead, it will change piece by piece—a chain reaction.
It seems like a simple question. “How do we know if a drug works?” But in the future this question will be answered differently. Bayesian statistics are surpassing frequentist statistics in the age of the internet and machine learning. Historically, the scientific gold standard has always been group-based evidence. A drug might work on some patients, but if it doesn’t work well enough across the group it’s considered a failed trial—and it’s not even made available to those who were benefiting. But biosensors and continuous monitoring can change the math. Genetic biomarkers have prepared us for this conceptual leap. “Efficacy” can be personalized. We can prove a drug’s benefits patient by patient, and stop the drug’s use whenever the benefits disappear.
Last year’s 21st Century Cures Act (often overlooked because of ACA reform) already forced the FDA to consider data from outside clinical trials, such as observational studies, insurance data and patient input. For the first time, the FDA will have to confront data collected via biosensors during continuous monitoring—rather than just before/after endpoints.
The FDA has scoffed at surrogate endpoints in trials. They won’t be able to once machine learning on large datasets kicks out hidden layers, concretely tying constellations of surrogates to long-term outcomes.
Because of the high prices, insurers will force a stark decoupling of approval and reimbursement.
The “Right to Try” movement will force the FDA to allow terminal patients the opportunity to try drugs approved in other countries.
Insurers will start to require biosensor monitoring of surrogate endpoints, to be sure some drugs are actually effective on each individual patient. Diabetes or heart conditions will go first.
“Personal use” purchasing will be tolerated. Alarmed by more people buying drugs online that might be harmful and counterfeit, the FDA won’t intervene when patients buy from licensed pharmacies abroad that get real drugs from approved manufacturers.
Bioelectronic devices will begin to replace some drugs. Their manufacturers, as well as disease management companies, will preach to the public an ideal of going off medications.
More countries will follow Japan, allowing drugs in emerging research areas a six-year license after only Phase 2. During those six years, evidence of real-world efficacy can be accumulated. Pressure on the US to follow will mount.
While it still may be illegal to pay your way into an official clinical trial, it will be legal to pay your way into an observational study. Pharma will learn to use this to defray costs.
Pharma will partner with the FDA to consider drug price, not just drug efficacy, in its review. Price competition will open the door for shelved drugs to enter the market.
To handle the sheer volume of authorizations, drug regulation will become like financial regulation—reliant on third-party certification companies, akin to credit rating agencies.
Having long wanted post-market studies on drugs, the FDA will grant some drugs a temporary license after Phase 2 if continuous efficacy can be monitored. Patients who don’t get benefits will have to go off the drug immediately. Those who get verifiable benefits will stay on.
A new era of drug development will begin.
The pace of innovation is amazingly fast, but regulatory issues and authorities cannot keep up. Though the FDA has made some great steps forward, they will face major dangers in the coming years.
the Medical Futurist
Those who predict the FDA will be radically weakened in this future are dead wrong. Quite the opposite. The FDA’s global safety net plan will become the reality. The American FDA and its partner agencies will play the same role in medicine as the American military does in patrolling the world’s seas and skies.
Many people believe the FDA can’t possibly regulate rogue medicine around the world. They are overlooking the way the FDA is already building a fairly effective global trust network.
» Pharma companies desperately want a single international regulatory standard, predicting it could reduce development costs by 20%.
» Clinical trials are now distributed to sites internationally. More than half of all clinical sites are outside the US. This forces regulatory agencies to coordinate. Rather than being “rogue” incubators of fringe science, these international hospitals and universities all conform to American standards of good clinical practice to be eligible for inclusion in the trials.
» No trials are conducted without some US sites, and all the trial sites comply with the same standard as inside the US, and go through inspection and investigation.
» Through pacts, treaties and licensing deals, the US is bringing the world together. 143 international agreements are already in place among 43 nations.
» The FDA already asserts authority over 300,000 foreign facilities that ship to the US, and last year alone it inspected over 3,500 of them.
» The FDA already has to govern all the food products imported to the US. That’s some 37 million shipments a year. Their expertise in food will translate increasingly to drugs.