FDA has a legitimate role to play in slowing down the cost of developing drugs, and it can do so by relying on good regulatory science, the agency’s commissioner Scott Gottlieb said.
Speaking at a Washington event sponsored by Friends of Cancer Research and focused on precision medicine, Gottlieb said the agency’s Oncology Center of Excellence demonstrates what the agency can do to streamline the drug development process.
“There are a lot of scientific opportunities to modernize our approach to drug regulation and also make it more rigorous. We’ve seen this, in particular, in oncology,” Gottlieb said.
The center has “thought about things like seamless trials, master protocols, site-agnostic clinical trials, and other ways to try to develop drugs through methodologies that not only could be more efficient and potentially lower-cost, but will yield a lot more information about how those drugs can work in clinical practice,” he said.
A partial transcript of Gottlieb’s remarks at the FOCR meeting Sept. 13 follows:
We’ve talked a lot about my concern about drug prices as a public health issue, because we do concern ourselves at FDA with issues of access, and to the extent that patients don’t have access to the medications they need because of the way they are priced that is something that should concern us all.
To the extent that there are things within the context of FDA’s regulatory portfolio that we think, in fact, of competition and marketplace in a way that could help lower prices and increase opportunities to patients, that is something that we will and are concerning ourselves with.
A lot of what we’ve done today has focused on generic drugs and things that we can do to try and accelerate competition in the space of generic drugs, and we focused on a couple of areas in particular.
First is complex drugs, which in the generic industry refers to high-value drugs. These are often drugs that have difficult formulations and aren’t easy to copy within the confines of the existing generic drug regulatory architecture.
We just don’t have good policy or good science to be able to genericize these drugs, and so you see a lot of these branded drugs remain branded drugs in perpetuity, long after patents have expired, long after Congress intended there to be vigorous competition. We are going to have much more to say about steps we think we can take to help bring more competition into this category.
The second bucket of issues that we’ve taken on is what I see as regulatory arbitrage that exists in the market right now, where someone can come in, pick off a low-volume generic drug, jack up the price a lot, and know that it takes up to 42 months on average—or historically it’s taken up to 42 months on average—for a second generic competitor coming to the market, because of the way the process works and the fact that applications undergo multiple cycles of review.
We want to end that arbitrage.
We want to prioritize generic applications in categories where there isn’t competition and bring down the amount of time it takes for a generic drug to be approved.
We’ve seen the review times come down substantially on the new drug side in large measure because we don’t have as many multiple-cycle reviews anymore. But on the generic drug side, we still see a lot of cycling of applications, and we think we can reduce that dramatically and make it a much more fluid process to the market.
So if someone comes into the market and buys a low-volume generic drug and thinks they are going to raise the price, they might have a monopoly for six months or eight months, but that’s about it.
And that’s going to reduce the incentive to do that, and I think it’s just good government that we have good process and we are prioritizing places of unmet need.
The third category of issues we’ve talked about is what I see as gaming of the system, places where I think drug companies are taking advantage of our rules, rules are intended for one purpose and using it as a way to prolong monopolies way beyond the point that Congress intended under Hatch-Waxman.
I talked a lot about the REMS Program where you see some of this activity. Congress is talking about it too, and I think there’s a lot of things we can do.
I have more to say about this, I think you’ll see us putting out a lot more policies on all these fronts.
I wanted to touch on briefly here is the new drug side of the house.
There are a lot of things we are doing and going to be doing to try to bring more innovation to the market and create more competition when it comes to new drugs by reforming the process, making it more modern and efficient.
There are a lot of places where we can really have a win-win and incorporate new science into how we evaluate new drugs and how we ask sponsors to evaluate drugs and allow them to come to market perhaps more quickly through a development process that might be lower-cost while still increasing our assurance of safety and fairness.
This isn’t a zero-sum game. If you somehow reform the process to make it more efficient and maybe low-cost, it doesn’t mean you are necessarily sacrificing on safety, and I think too many people treat this as a binary equation where you take something off one side you are taking something off the other. It’s really not the way we should be thinking about this.
There are a lot of scientific opportunities to modernize our approach to drug regulation and also make it more rigorous. We’ve seen this, in particular in oncology.
I think we’ve seen it in oncology in part owing to the leadership of Rick Pazdur, who has been very forward-leading and thinking about the scientific methodologies. He has some of the best people in the agency working for him.
His team have thought about things like seamless trials, master protocols, site-agnostic clinical trials, and other ways to try to develop drugs through methodologies that not only could be more efficient and potentially lower-cost, but will yield a lot more information about how those drugs can work in clinical practice.
We’re doing these things because we should do them for patients, because we want to see these products come to the market efficiently. And in some cases, certain products might not even come to the market at all if we go back to how we regulate them.
If you look at the immunological treatments now they are used for oncology, if the oncology division didn’t think about using master protocols that allow this to be tested in different applications simultaneously, we might not have the uses for them that we have right now and it might have taken much longer to get certain information.
But we also need to think about these things because of the cost of drugs development.
There was a debate going on Twitter on Monday. I made a comment that a lot of the drug development programs cost $1 billion in direct out-of-pocket cost, not even factoring in cost of capital and other things that the Tufts people include when they talk about the cost of development.
There was a study that came out and said, “No it’s $650 million looking at just 10 drugs.”
It’s surprising what happened at the debate that ensued, because either way, the number is too large. Either way, that’s unsustainable whether it’s at three quarters of a billion dollars or a billion dollars or $2.5 billion, we are on an unsustainable course and if the costs continue to go up at the percentages that they are, we’re going to see a lot few drugs get developed.
Or we are not going to see the second and third drug come to the market and that’s going to decrease competition and ultimately increase prices to patients.
People think about R&D and the investments in terms of the direct costs that it takes to develop a drug program. So, if it’s a billion dollars to develop drugs, someone might say, “Well, you know there should be a 4x return on that.” You hear that talk in Washington.
Unfortunately, that’s not how investment decisions get made, and some of you have been on the other side of the table. I’ve been on the other side of the table.
People think about making investment decisions based on what the cost of the capital is, and the cost of the capital to develop a drug isn’t just the direct cost. It’s the time cost of capital. It’s also the risk-adjusted cost of capital. So, you always need to adjust for the risk, and so you know in the market place where someone is weighing whether or not to invest in the next biotech innovation or invest in the next Twitter, it would be a real shame if more and more the capital went towards the next Twitter and away from the next biotech innovation.
I think we need to think about these things, think about them in terms of how we modernize the process scientifically to make it more efficient, hopefully to make it low-cost and to also bring more applications. Because right now if the costs continue to go up at the rate that they are for developing products, we’re just going to see fewer innovations as a consequence. And I think that that would be ultimately, obviously, bad for patients. Some things may not get done at all, and you may see less competition in product categories.
We had CVS come in to the agency to talk to us about their experience in the marketplace recently. We’re talking to a lot of payers right now to help us think through drug pricing issues, and also think through our response to the opioid crisis. They made a point that when they see the second or third drug in a category come to the market, they see tremendous price competition, price reductions, even in excess of what they experienced in the European market where there are price controls.
So, we want to see that innovation come to the market, because it provides useful differentiation to patients but it also provides all kinds of savings that ultimately leads to greater access. So, we’re thinking about all these things.
You may hear me more and more talking about stuff we are doing on the new drug along with the stuff we are doing on generic drugs. I want to put it in the right context, so folks understand, this is ultimately about patient access and new innovations pertaining to patients, but it also is about trying to make sure we continue staying on a sustainable course and continue to see treatments that are going to ultimately benefit patients.
