Unclogging the Drug Pipeline

Friday, October 26, 2012

The Spending Reductions through Innovations in Therapies (SPRINT) Act, introduced earlier this year in the Senate, is supposed to spur innovation in pharmaceutical research and development for chronic, costly health conditions such as Alzheimer’s disease, cancer, diabetes, and heart disease. According to a press release, the bill will invest “in public-private partnerships to ensure scientists and researchers are able to develop new safe and effective drugs”; shrink product development timelines; increase the number of drugs in the development pipeline; and speed up the FDA review process “so that drugs can be brought more quickly to market to the patients who need them.”

But the legislation fails to address what actually impedes the development of important new medicines. Plenty are in the development pipeline. The federal government has already announced a boost in spending on research and development for Alzheimer’s. Moreover, drug companies currently spend more than $65 billion on pharmaceutical R&D, and they know better than anyone that the big payoffs will be for treatments for the kinds of prevalent chronic diseases targeted by the legislation. For example, more than a hundred drugs are in development for Alzheimer’s, dementias, and other cognition disorders, and almost nine hundred medicines are being tested for cancer. The vast range of experimental treatments includes vaccines, human gene therapy, and orally administered and injectable medicines.

The real problem is getting new drugs through the pipeline and into the marketplace. And here, government regulation has become a significant obstacle for drug developers and a disincentive for potential investors. Bringing a drug to market takes twelve to fifteen years and costs more than $1.4 billion. The number of drugs approved by the FDA is dropping every year despite significant annual increases in the agency’s budget. Perhaps the most ominous statistic is that manufacturers recoup their R&D costs for only one in five approved drugs, a deterioration from the one-in-four figure of about a decade ago.

Potential investors respond to these disincentives. A recent survey of the intentions of venture-capital firms reveals that the firms have begun to avoid funding early-stage pharmaceutical and device companies in the United States, and both the dollars and the R&D are increasingly moving abroad.

Thirty-six percent of respondents said they planned to increase investments in life-sciences companies in Europe while only 13 percent planned to increase investment in U.S. companies; and 31 percent said they planned to decrease investment in life-sciences companies in the United States, compared to 7 percent that planned to decrease investment in Europe. Sixty-one percent of the investors cited regulatory challenges as the primary reason—more specifically, they alluded to dysfunction, unpredictability, and risk aversion at the FDA. The proposed legislation would address none of these endemic problems.

The FDA’s excessive risk aversion—unchecked, encouraged, or even created by Congress—has forced companies to perform ever-larger, longer, more complex, and more expensive clinical trials. Expressing his industry’s frustration at FDA capriciousness and intransigence, Fred Hassan, the former CEO of the drug company Schering-Plough, said of the regulatory climate: “What will it take to get new drugs approved? The point is, we don’t know.” Kenneth Kaitin, director of the Tufts Center for the Study of Drug Development, described the obstructionist culture at the FDA as having caused it to become viewed as “an agency that is supposed to keep unsafe drugs off the market, not to speed access to life-saving drugs.”


The head of the FDA, Margaret Hamburg, continues to deny that her agency is in any way responsible for the crisis in drug development, but in reality the FDA has consistently pushed the envelope of its statutory authority in ways that stifle innovation. Although there exists a statutory requirement only to show that a new drug is safe and effective, the agency—sometimes spurred by Congress—has invented new criteria, including a requirement to demonstrate superiority over existing drugs, which it applies arbitrarily. Proving that a test drug is better than existing drugs often is much more difficult and vastly more expensive than just proving that it is safe and effective. If the efficacies of two medicines differ only marginally, the clinical trials must be very large to show a statistically significant difference.

If this new criterion were widely implemented, there would be less competition in the drug market, fewer treatment choices for physicians, and higher prices for drugs. Wyeth’s former chairman and CEO Robert Essner described the impact of the requirement to show superiority this way: “If you’re the first company to get approved in a certain area and competitors can’t get on the market, the FDA is now establishing monopolies. And that’s certainly not their mandate.” Whatever one thinks of the existing requirements, surely we should not have an FDA that aggressively discourages competition.

The number of drugs approved by the FDA is dropping every year.

The FDA’s demand that a new drug demonstrate superiority has contributed to much-publicized recent shortages. The fewer alternative medicines for a given ailment, the greater the vulnerability to shortages if the production or distribution of one of the drugs is disrupted for any reason.

The FDA has begun to impose what amounts to yet another criterion for new drugs: postmarketing studies as a condition of approval. Such clinical trials used to be relatively rare—and were required for patient populations such as the elderly or pregnant women that were not adequately represented in the earlier studies—but are now required in more than three-quarters of approvals.

The FDA’s excessive risk aversion forces companies to perform ever larger, longer, more complex, and more expensive clinical trials.

And in 2008, Congress created still another criterion for new (and certain old) drugs by enabling the FDA to require companies to produce a risk evaluation and mitigation strategy (REMS) whenever regulators perceive the need for one. A REMS is “a strategy to manage a known or potential serious risk associated with a drug or biological product,” which could be said to encompass virtually every new medicine. The FDA’s explanation continues: “A REMS can include a Medication Guide, Patient Package Insert, a communication plan, elements to assure safe use, and an implementation system, and must include a timetable for assessment of the REMS.”

However, the various “elements to assure safe use,” which can include limiting advertising only to certain physician specialties or dispensing of the drug only by specially designated pharmacies, can be so drastically restrictive as to constitute a new, limited, or conditional class of approvals. Even the FDA admits that it has applied these requirements too aggressively.


Among drug industry-watchers, including those in Congress, there has been much hand-wringing about the dismal output from the drug R&D pipeline, but few have recognized how far public policy is culpable.

The recently introduced bill does nothing to drain the regulatory swamp. In essence, it would merely enable the secretary of health and human services to spend an additional $50 million on activities that are already under way in the government and the private sector. It contains only vague, boilerplate language about regulation that directs the secretary to “facilitate innovative and expedited review” and “regular and ongoing communication” between FDA and drug developers, and to develop “regulatory science.”

Congress instead could use its legislative or oversight authority to address the many genuine regulatory obstacles to the development of new medicines. One is an FDA policy that slows drug development and increases costs by giving the drug-review and drug-safety offices equal responsibility for “significant safety issues” pertaining to medicines under review or already approved for marketing. The drug-safety group is so narrowly focused that it largely ignores the fact that all drugs have side effects, hence safety cannot be evaluated in a vacuum. Instead, safety must be part of a risk-benefit judgment. Moreover, the group has shown overt hostility to both drugs and their manufacturers. Its motto might be: “If you don’t approve new drugs, you avoid safety problems with them.”

Another development that should concern Congress is the FDA’s message to drug companies that it considers “accelerated approval” to be too lenient. Introduced two decades ago, accelerated approval lets the FDA issue what amounts to a limited, or conditional, approval of a new drug that is intended for a “serious or life-threatening disease” and for which there is an “unmet medical need.” Intended as a “quick on the market, quick off” mechanism if the original positive results don’t pan out, it has worked well and saved countless lives, especially those of patients with some of the diseases targeted by the new legislation. But regulators dislike feeling pressured to approve new drugs even when lives are at stake.

Surely we shouldn’t have an FDA that aggressively discourages competition.

If members of Congress were genuinely committed to improving the efficiency of regulation to get new drugs out more quickly, they could authorize the outsourcing of some of the FDA’s functions. Recognizing that bureaucrats cannot duplicate the depth and breadth of expertise that exists in academia, many foreign regulatory agencies use non-government experts for reviews and approvals. Dozens of independent studies over several decades have recommended transferring some tasks performed internally by the FDA to outside experts.

There is a domestic model for the outsourced regulation of consumer products: nationally recognized testing laboratories (NRTLs), the prototype of which is Underwriters Laboratories, a large, not-for-profit organization that tests and certifies a wide spectrum of products, many of which present inherent potential hazards to life and property. The NRTLs use hundreds of discrete standards, or guidelines, to certify product safety (but not effectiveness, except in a few special cases where the two factors are inextricably linked, such as fire extinguishers and smoke detectors). NRTLs are accredited by the Department of Labor.

Another way that Congress could help to balance drug safety, innovation, and the availability and price of new medicines would be to make regulators accountable for unnecessary obstruction of drug development and delays in approval. This could be accomplished by creating a powerful, independent agency ombudsman whose actions would encourage regulators to act in the public interest.

With the new proposed legislation, certain members of Congress have shown once again that they misunderstand the nation’s problems and have no idea how to solve them.