Live Blogging from FDA in the 21st Century Conference, Panel 5: Major Issues in Drug Regulation

 [Live-blogging off-the-cuff, all errors, typos, etc, are my fault]

Geoffrey Levitt, Pfizer, Drug Safety Communication: The Evolving Environment

A drug by itself is just an object. Because of that fact it creates turf, governance. You must have effective processes for communicating accurate info.

Pharmacovigilance is the accuracy part. Spontaneous adverse event reports are flooding to companies. 600,000 of such reports go to Pfizer a year, with 2000 a day on avg. Each has to be classified, reported, and followed-up. If you mess up you get a warning letter. But it has limits: passive, haphazard, poor signal to noise value. Main value is generating safety signals to follow up on. But studies of that kind for follow-up are very expensive and competing with other possible safety studies and new drug development for funding.

For this reason there has been interest in active real-time drug safety monitoring, like Sentinel.

Once you have accurate and up to date info, how do you communicate it to the audiences that need it. It is not static info, dynamic and constantly changing, and often not fully baked. Timing is everything. That leads to governance. Who owns it? Which stakeholders get to drive it. In Wyeth v. Levine, S. Ct says drug sponsor owns the label, and is responsible at all times for content of the label, including safety info. In reality not that simple. Today there is a number of players outside health authority and drug sponsor who have emerged as powerful forces. Academic researchers, drug payers, detailers, and many others.  This is not by accident. One reason is emergence of vocal critics who have critiqued the sponsors ability to directly communicate. Claim that this is a form of collusion  of which Levitt does not agree.

Vioxx sparked a few important developments. IOM produced one of the most important recommendations that led to FDAAA especially as to post-market surveillance and power over the safety label. Balance of authority shifted from that authority towards FDA. FDA also began to be more proactive about communicating, even before fully confirmed and without participation of sponsor. Also put into place obligations to post clinical trial results on public website, so clinicaltrials.gov is born. In retrospect, that was the opening shot in a full barrage of FDA on clinical trial transparency. In Europe this had led to a drastic new policy of affirmatively publishing clinical study reports full-scale not just trial results.

Critics of the current model want to tear down the gate, and reinterpret data themselves by own standards. That may lead to different results and different conclusions. Will the erosion of the primacy of the sponsor and FDA lead to more truth or more confusion?

W. Nicholson Price II, Petrie-Flom Center, The Role of Innovation Policy in Pharmaceutical Manufacturing

M & M manufacturing is more precise than drug manufacturing. Poor innovation in drugs. 200 to 300 billion dollars a year are spent on drug manufacturing. This is very expensive and inefficient, contrary to the typical story that drug manufacturing is cheap. Drugs are way behind computers and electronics. Uses same processes as decades ago. A 20% reduction in manufacturing costs would lead to a gain annually 50 billion for consumers if paid back directly, or even more if invested in R & D. Connected also to drug shortages.

Why isn’t there innovation in the first place? Manufacturing can be innovative, see other industries. Compare to new drug discovery. Patent plus FDA regulation makes innovation a possibility. In manufacturing, neither IP incentives nor regulation incentives properly. The main innovation used to incentive drug manufacturing is patent. Drug manufacturing is pretty secretive so hard to know if someone is violating. Instead drug manufacturers tend to do trade secrets. But trade secrecy disrupt building on one another. But this much is common to other industries. What sets drug apart is that FDA actually hinders manufacturing innovation through barriers.

Pre-approval, FDA has been leery of new technologies such as high performance liquid chromatology. FDA was not familiar with the this technique and so FDA for a decade would not approve an NDA with this kind of technology. And pre-approval delay is very expensive. So strong incentive not to pilot new technologies.

Post-approval, FDA requires filings and pre-approval for regulatory changes increasing costs. Stifle continuous process innovation that are successful in other industries. A drug product is defined based on what is going on in clinical trials. Specifications for drug are determined before they know how to make it well and must stay the same.

Solutions: (1) FDA mandates robust manufacturing improvements in Quality by Design. But FDA has backed off a bit here. (2) Augment or parallel IP system. Analogy to not incentivizing and generics. Could give extensions for manufacturing innovations to one drug or to other. (3) FDA use its club to decrease trade secrecy by requiring disclosure. But reducing trade secrecy would increase value of manufacture patent value and possibly licensing.  There are many other topics covered in my paper.

Rena Conti, U Chicago, and Ernst Berndt, MIT. Anatomy of  U.S. Cancer Drug Shortages.

What is a shortage? “I ran out of the drug” self-report. They are unable to obtain a drug and resort to grey market to get a drug.

From Econ perspective, when quantity demanded exceeds quantity supplied that is a shortage. That makes current persistence of shortage fascinating from econ perspective. Avg length is 18 months or more up to 36 months. Usually what should happen is price goes up, and new entrants enter and make more, and some combo of increased quantity and reduced demand should solve it. But that’s not happening. Also should lead to change in manufacturing.

Their work looks at: (1) What might systematic sources of shift/change be, by looking at literature and policy and shareholder reports. (2) Are shorted drugs disproportionally affected by recent shifts, which they examine looking at IMS health data using generic drugs.

Where have shortages occurred? Mostly injectables. All classes of drugs have shortages but most focus on cancer and immune-drugs. Why focus on these? Because central to clinical practice of dread disease, so very scary to have an effect there.

On supply, clear that supply requires overcoming regulatory hurdles. FDA allows Abbreviated New Drug Application, an ANDA. 2 to 5 million dollars to file an ANDA. But in oral capsules and tablets this may not be that significant as barriers. For Injectibles more costs and barriers. Why? Emphasis on sterility all the way through to the finished products. More rigorous process controls. Trained workforce to be on site daily. Likely gains to specialize in generic injectables by economies of scale. Evidence in that small number of manufacturers in this setting.

What about demand? Unlike oral drugs, physicians and hospitals are primary purchasers and demanders of these drugs. Oncologists buy them and inject or infuse them to patient and reimburse through copayment arrangements. The difference between acquisition and reimbursement costs have been significant and a big profit to specialists. Starting in Medicare Modification Act of 2003, provider reimbursement switch from AWP to based on Average Sale Price. Many people think that this change is responsible for the shortage.

Daniel Carpenter, Harvard, Jeremy Greene, John Hopkins School of Medicine, Susan Moffitt, Brown, Jonathan Warsh, Oxford, Therapeutic and Economics Effects of Efficacy-Based Drug Withdrawals: The Drug Efficacy Study Initiative and Its Manifold Legacies.

Standardization is really important. FDA’s actions allow for differentiation. Allows consumers to make distinction among products and hypothesize to allow optimization. The DES/I (Drug Efficacy Study) process yanked 370 products off that market.  This is what happened when FDA, after Kefauver-Harris amendments in 1962, had to start reviewing for efficacy existing drugs and partnered with National Academy of Science among others to do simultaneous drug review of 4000 drugs. Really incredible moment in history.

Libertarian economic theory would say that equilibrium price should rise, consumer value and social welfare declines, and innovation should be slowed.

The Market for Lemons theory would say that there may be suboptimal matching of drugs in marketplace, and increased standard of evidence demanded may ensure that patients have greater confidence. So yanking some drugs for quality basis would reverse the market for lemons .

Treat Desi as a qusi-historical experiment and do a differences-in-differences analysis. Today’s presentation looks at mortality. Looks at about 90 therapeutic categories. [Method much more complex than I am summarizing…]

During the DES/I withdrawal at the beginning you don’t see big effect on deaths, in part because it took a while to get those drug off the market. 27% reduction in mortality after 12 years for  a withdrawal. So you don’t see the effect early on. This supports a parallel trend assumption. For fixed effects model, you get a 48% reduction of mortality in 12 to 15 years. If you use Autoreg error method you get about 24% [Carpenter here discusses lots of cautions, initial results]

This would mean 42,000 to 148,000 lives saved by yanking these drugs off the market through DES/I. Now this also created a market for effective drugs, in that the drugs left on the market were understood as effective by everyone who used them.

Q AND A:

FLANIGAN: Could getting info out be enough?

CARPENTER: If you saw same degree of reaction in the variables you would get the same effect. But Lemons model is that consumers can’t distinguish, and need to actually get lemons out. Hope to actually be able to test it, see effect of designations not just removals.

RUGER: If we could shift drug use to more effective drugs within the same class, would we see the same effect?

QUESTION: Is manufacturer regulation in Massachusetts quite different.

PATRICK LEARY: Were the ones being removed from DES/I widlely used.

GREENE: Several of the actors in the historical record were recommending that DES/I do comparative effectiveness, but it didn’t happen.

CARPENTER: We are still documenting use patterns and switching. But if you look at fixed antibiotic markets, lots of money was being made through drugs that were ultimately withdrawn. This really remade the market in mental health. Most treatments for depression at the time were barbiturates. DES/I actually paved the way for SSRIs and other psychopharmaceuticals.

CONTI: The benefits of a lot of these drugs are hard to see because they are underutlized.

COHEN: Effect of information sharing on exacerbating shortages by stockpiling?

CONTI: Transaction prices is essentially hidden by multiple rebates in the system. We don’t know what contracts state between ANDA holders and manufacturers. Do those contracts have quality requirements as well?

PRICE: If you tell people about shortages, you get hoarding. So you end up having FDA trying to reduce the scope of information.

HUTT: Different rules of evidence used by different parts of National Academy of Sciences in DES/I.

HUTT: The bureaucracy at FDA won’t let you change Good Manufacturing Processes quickly. Can you get them to change by statute.

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