One of the under-examined parts of President Obama’s 2012 budget proposal is the way it tries to cut down on government healthcare expenses by expediting the introduction of generics in the drug market.
The budget would significantly shorten the data exclusivity period granted to brand name “biologics” — a class of cutting-edge pharmaceuticals derived from living organisms. Data protections prevent generic competitors from gaining accesses to a new drug’s formula and producing copies.
The thinking is that by cutting down the time the original maker has a data monopoly — in this case, from 12 to 7 years — generic manufacturers will start producing cheaper alternatives faster.
The government stands to reap major savings if this provision goes unnoticed by patients and policymakers. Public insurance programs currently spend tens of millions of dollars on brand name biologics.
But chopping data exclusivity could seriously damage domestic drug innovation, which is already struggling. Indeed, decades of government mismanagement have left the federal approval pathway for new biotech drugs a cumbersome, inconsistent, and costly mess. And the result has been fewer new, life-saving drugs in the hands of patients.
The process of developing a biopharmaceutical products- including discovering a unique pathway that regulates disease, scaling up production facilities and having them licensed as safe, thoroughly testing the final product for safety and efficacy — is incredibly expensive. For biologics, once the cost of failures and the lost opportunity to keep cash in the bank is taken int account, the average tab runs particularly high, at about $1.3 billion.
Intellectual property protections like data exclusivity enable brand name firms to sell their product competition-free, improving the chances they can offset those huge upfront costs in sales. By weakening these protections, regulators make it that much more difficult for advanced drugs to turn a profit, invest in a deeper understanding of the product, and support future development.
That’s going to make a dire drug situation even worse. In recent years, government regulators have made it increasingly difficult for any sort of drug to win approval. In fact, the FDA approved just 21 new drugs last year. That’s down from 25 in 2009 and 24 in 2008.
And it’s not as though drug makers have simply stopped trying to release new products. A recent study from the trade group BIO found that the success rate of firms bringing new medicines to market has dropped by about half in recent years. Researchers reviewed 4,000 drugs that sought FDA approval between 2004 and 2009 and found that just one in 10 made it all the way from early clinical trials to market.
That’s down from about one in five in earlier years.
One of the biggest problems with the FDA pathway is that officials have taken to arbitrarily shifting their approval standards. Sometimes this shifting makes it effectively impossible even for drugs proven to save lives to make the grade.
Take the recent case of Avastin. Back in 2008, Genentech successfully applied for accelerated approval from the FDA for the drug in the treatment of late-stage breast cancer. The decision was based on a standard called “progression free survival,” which, roughly put, measures how much longer patients live without their cancer growing while on the drug. In combination with the chemotherapy agent Taxol, Avastin can significantly slow growth of tumors or even shrink them.
Today, thousands of breast cancer patients rely on Avastin. Many have seen the length and quality of their lives dramatically improved by this medicine.
The FDA’s accelerated pathway, however, requires the manufacturer to provide additional studies to prove the drug’s worth in order to quality for permanent approval. Firms that don’t swiftly produce such evidence can be subject to millions in fine.
Last December, after examining additional evidence on Avastin, the FDA ruled to repeal the drug’s approval for breast cancer. Agency officials decided to apply a new standard called “overall median survival,” which measures the drug’s effect on extending average lifespan.
Avastin doesn’t fare well on this standard. Most of its benefits fall on a small, select group of “super responders. ” For the average patient, though, while Avastin can improve quality of life, it doesn’t significantly extend lifespan.
Because FDA officials decided to move the goalposts midstream and deny Avastin approval for breast cancer, insurers are likely to stop covering the drug. The shift to “one size fits all” response as a measure conveniently allows government health regulators to claim Avastin is not cost effective. Yet, such medications have reduced deaths from cancer by 15 percent over the past decade. The combination of earlier detection and use of cancer drugs that shut down cancer’s “escape route” have ,contrary to conventional wisdom, cut the cost of care.
The combination of weaker data exclusivity for biologics and an arbitrary shift in approval standards is slowing the pace of medical progress. By extension the Obama administration is endangering gains in health that reduce medical spending and increase prosperity. Weakening intellectual property protection for biologics is short-sighted and counterproductive.
Written By Dr. Robert Goldberg
(Dr. Robert Goldberg is vice president of the Center for Medicine in the Public Interest. He is also author of “Tabloid Medicine: How the Internet is Being Used To Hijack Medical Science For Fear and Profit” (Kaplan, December 2010).