Life Science Compliance Update

October 01, 2012

President’s Council of Advisors on Science and Technology: Propelling Innovation in Drug Discovery, Development, and Evaluation

National Center for Translational Sciences
Due to biomedical innovations—including advances in medicines, medical procedures, and public health, life expectancy at birth has risen from around 47 years at the turn of the 20th century to 78 years today, and many diseases that were once fatal or debilitating can now be prevented, delayed, or ameliorated.   

In fact, pharmaceutical therapies have helped lead to vaccines that have eradicated or controlled many devastating infectious diseases including polio, small pox, and measles.  HIV is now treated with over 20 Food and Drug Administration (FDA)-approved drugs.  Multi-drug regimens effectively control HIV infection, preventing the development of AIDS.  Pharmaceutical therapies have led to cures for multiple malignancies that were once universally fatal; for example, childhood leukemia is now cured in 80 percent of cases, testicular cancer in over 90 percent of cases, and Hodgkin’s lymphoma in over 90 percent of cases.  Along with a reduction in smoking and better medical care, cholesterol-lowering therapy, blood-pressure-lowering drugs, anti-platelet agents, and diabetes treatment have contributed to a substantial decrease in death from heart attacks (70 percent decline over the past 60 years). 

A recent report recognized that in addition to academic researchers who “have unlocked secrets of basic biology and revealed mechanisms that underlie disease,” these innovations have been brought forth by a “a robust bio-pharmaceutical industry, which has developed molecules to treat disease and conducted clinical trials to demonstrate their efficacy.”  Despite this progress, challenges remain.   

To address these challenges, “The United States should set a goal of doubling the output of innovative new medicines that meet critical public health needs over the next 10 to 15 years, while continuing to increase drug safety,” a presidentially appointed council of experts advised in a report released in late September.  The council recommends a number of actions involving industry, academia, and the Federal Government.  

“While basic biomedical sciences have seen stunning progress in past decades, challenges remain in translating those scientific advances into practical solutions,” according to the report—Propelling Innovation in Drug Discovery, Development, and Evaluation—produced by the President’s Council of Advisors on Science and Technology (PCAST).  The report assesses the reasons for that long-term trend.  

To support innovation and accelerate the development of new therapies, the report makes a number of detailed recommendations aimed at  

  • bolstering the discovery and development of new therapeutic compounds;
  • optimizing processes used by the Food and Drug Administration (FDA) to evaluate the safety and efficacy of candidate drugs;
  • enhancing long-term monitoring of approved medicines; and
  • enhancing public understanding about the benefits and risks of medicines.  

“With improved collaboration among all the participants in the drug development ecosystem and optimization of drug-evaluation pathways, American researchers and companies should be able to accelerate the development of safe and effective drugs while also strengthening the U.S. economy,” said Eric Lander, who co-chairs PCAST.  

The report notes that heart disease and stroke remain leading causes of mortality, many common cancers are still incurable unless they are caught in the earliest stages, and the vast majority of rare diseases lack effective therapies altogether.  Infectious diseases, including those caused by antibiotic-resistant bacteria and viruses with pandemic potential, pose a constant threat of large-scale mortality. And treatments for psychiatric diseases, which impose a tremendous burden on society, are frustratingly limited in their efficacy, as are treatments for neurodegenerative diseases such as Alzheimer’s.  

All three major components of the drug development ecosystem—basic biomedical research in universities and research institutes, clinical research in hospitals, and drug discovery and development in the biopharmaceutical industry—are facing growing challenges as the time, complexity, and cost of developing drugs have gone up, the report states.  The rate of new-drug applications submitted by industry to the FDA, as well as new drug approvals, has remained relatively constant for 20 years.  In an encouraging sign, however, the FDA approved 35 new medicines in the past year—among the highest totals in the past decade. 

The report concludes there are two critical needs related to drug discovery and development that must be addressed to advance innovation:  

(1)  Scientists need better methodologies and tools for translating basic biological insights into validated therapeutic targets and leads—a gap in the drug discovery and development pipeline that academic scientists often view as “too applied” and pharmaceutical companies often eschew as “too basic” to justify private investment.  

(2) Pharmaceutical developers and regulators need to incorporate new efficiencies into clinical trials of candidate medicines—complex and costly human studies that today constitute fully 40 percent of the biopharmaceutical industry’s R&D budget.  

To achieve some of the report’s broader goals, PCAST recommends the creation of a public-private “Partnership to Accelerate Therapeutics,” involving representatives from the bio-pharmaceutical industry; the academic biomedical research and ethics community; physician societies and pharmacists; patient-focused research foundations and advocacy groups; healthcare providers and insurers; and the Federal Government. The Partnership would help identify and plan collaborative actions to speed drug development while balancing competing stakeholder interests and minimizing duplication of efforts.  

This report should be applauded for such a recommendation.  We have long praised industry collaboration, and with such a large and diverse group of stakeholders, we are hopeful that this report will lead to more progress and innovation.  The report recognized that “development of innovative medicines … remains essential for progress in the prevention and treatment of human disease.” 

In addition, the report concludes that the return on investment in certain disease domains may be too low to justify their pursuit by companies, even though the potential benefits for public health in these domains may be large.  It recommends that the Department of Health and Human Services (HHS) commission a study to assess potential mechanisms to encourage companies to tackle important medical challenges that may be financially unattractive.  

“There is a tremendous need for new antibiotics, for example, but the potential market share for such medicines is typically small and their duration of use is typically short,” said PCAST member Christine Cassel, a physician who—with Lander and PCAST members Ed Penhoet and Rick Levin—oversaw a group of 30 outside experts who helped inform PCAST in its work.

R&D Under Stress

The report recognized, contrary to some critics assertions, that there is evidence that industry R&D investment, a major component of this innovation ecosystem, is under significant stress: 

  • The pharmaceutical industry is facing the largest “patent cliff” in its history: drugs with annual sales exceeding $200 billion will come off patent in the period 2010-2014, resulting in a loss of more than $100 billion in sales to generic substitutions; only a small fraction is expected to be replaced by new product revenues.
  • Venture capital to start new biotechnology firms and fund innovative drug development activities appears to be declining, due not only to general economic conditions but to what are cited as concerns about unfavorable returns in the drug-innovation sector.
  • Many companies are exiting important fields of critical public health need. For example, despite the growing health care and economic burden of neurodegenerative diseases, such as Alzheimer’s disease and psychiatric diseases, many major pharmaceutical companies are closing down or severely curtailing drug discovery programs. 

The report identified two critical areas related to drug discovery and development that must be addressed to advance innovation: 

  1. 1.    Scientific knowledge gaps between basic research and commercial projects.
  2. 2.    Inefficiency in clinical trials.  

The report also highlighted multiple issues and opportunities that relate to the evaluation of new drugs for approval:   

  1. There are opportunities to accelerate the approval of a broader range of truly innovative drugs for patients who need them. Such acceleration should be supported by stronger tools for and enforcement of post-approval study 
  2. The FDA requires methods to rapidly approve drugs for narrow populations for which there is a favorable benefit-risk balance, while protecting the broader population from drugs that have an unknown or unfavorable benefit-risk balance 
  3. Stronger post-marketing surveillance and communication tools are needed to generate evidence on the benefits and risks of drugs and to communicate those benefits and risks to the public 
  4. Innovators require greater clarity about general regulatory pathways for innovative products and approaches 
  5. Innovators require greater consistency, efficiency, and communication with respect to their individual drug applications 

These recommendations are encouraging.  We have seen the pharmaceutical and medical device industry significantly maligned for their attempts to create wealth from medical products.  Reports like these go a long way to dispelling the myth that creating new products is easy and can cost as little as a million dollars.  The truth drug development is around $3 billion per new product which in the end may not be sustainable.  A little encouragement from the Whitehouse on the need for reduced regulations will go a long way to encouraging future investment.

September 05, 2012

FTC Approves Accelerated Recovery Initiative to Reduce Drug Shortages

Empty Pharmacy Shelves
The Federal Trade Commission (FTC) issued a formal Advisory Opinion to the Generic Pharmaceutical Association (GPhA) approving the trade group’s proposed “Accelerated Recovery Initiative,” which hopes to address drug shortage issues.  The GPhA requested an opinion on July 16, 2012.   

GPhA plans to adopt this program, known as ARI, to help the Food and Drug Administration (FDA) to respond to the unprecedented increase in shortages of critically important medicines that has occurred in recent years, as we have reported several times.  The ARI will attempt to resolve the shortages by providing FDA with information that GPhA believes will enable FDA staff to “more efficiently and effectively to accelerate the recovery of critical drugs in shorts supply” and thereby to help ensure patients have access to the drugs they need.  A key element of the ARI is an agreement among competitors to compile competitively sensitive production information from manufacturers of shortage drugs. 

The FTC said the proposal appears “not likely to harm competition.”  Although the manufacturer data that GPhA proposes to collect is competitively sensitive and the ARI would raise substantial antitrust concerns if this information were shared with competitors, “the proposed program includes many safeguards designed to insure that such sharing does not occur.”  GPhA has chosen an independent third party to collect and transmit the data to the FDA and that no other party, including GPhA, will have access to this information or any analysis derived therefrom. The program also includes various other features intended to minimize the risk that the ARI could serve to facilitate collusion among drug manufacturers. Accordingly, FTC said it “has no present intention to bring an enforcement action to challenge GPhA's proposed ARI program if it is implemented as described and the safeguards it contains are adhered to in practice.” 

The FDA has undertaken a variety of activities to address the drug shortage problem. In the case of generic injectables, this often involves asking other manufacturers of the drug in shortage if they are willing and able to increase their production. Other FDA strategies include expediting regulatory reviews to accelerate approval of new sources of supply, new manufacturing lines, or new raw material sources. The FDA also exercises regulatory discretion, for example permitting controlled importation of equivalent products approved abroad but not in the United States.  In May 2012, the FDA reported that industry response to its October 2011 request to manufacturers for voluntary early notification of potential supply disruptions had enabled it to prevent 128 potential drug shortages over the six month period from November 2011 through April 2012. 

The Proposed Program 

The ARI is intended to assist the FDA in responding to drug shortages by providing the agency with information from manufacturers relating to their production and supply of designated shortage drugs.  GPhA plans to engage IMS Health Incorporated to collect information from manufacturers of shortage drugs about their current and projected production and supply schedules.  IMS will use this data, along with market data it currently collects, to analyze whether, and to what extent, the anticipated supply of a given drug is likely to fall short of the projected demand over the next several months and then provide this information to FDA staff. The current focus of the program is on accelerating the recovery of critical drugs that are in short supply, but it is possible that the ARI program could also be used to assist the FDA to head off potential drug shortages. 

The program will operate “under terms of strict confidentiality and with appropriate safeguards.”  In particular, IMS will report the production information it collects and the analysis it performs only to the FDA and will not share it with any other party.  FTC understood the details of the program to be as follows: 

1. Scope of the Program: The FDA, with input from GPhA, will decide on the initial group of drugs to be addressed through the ARI program.  GPhA anticipates that the initial focus of the program will be on a subset of drugs currently on the FDA's published list of drugs in shortage.  Other criteria for inclusion in the ARI are expected to include at least the following:  

a)    the drug is expected to be in shortage for more than 90 days;

b)    there is no therapeutic alternative (as defined by the American Society of Health-System Pharmacists' list); and

c)    it is multi-source (that is, there are other manufacturers that might be able to increase their production). 

The FDA would have discretion to include in the ARI program a drug that does not meet all of these criteria-for example, a drug that is not currently on the FDA drug shortage list but has the potential to go into shortage-where circumstances warrant.  Drugs may move into and out of the ARI program as requested by the FDA and depending on the circumstances.  Given the benefits of preventing potential drug shortages from becoming actual shortages, as the ARI program evolves there may be a focus on drugs that are not currently in shortage but present a potential for a shortage to develop. 

2. Manufacturer Participation: IMS, with assistance from GPhA, will recruit drug manufacturers to participate in the program.  All manufacturers of drugs covered by the ARI will be invited to participate, regardless of whether they are members of GPhA and regardless of whether they are manufacturers of branded or generic drugs.  When a drug is added to the ARI program, manufacturers of that drug that are not already ARI participants will be invited to join the program.  GPhA will not participate in recruitment of firms selling potential, rather than actual, shortage drugs.  Participation in the ARI is voluntary and the program will be “non-exclusive,” that is, participating firms will be free to participate in a similar program by some other sponsor (were one to be organized). In addition, nothing in the program would limit the ability of a firm to provide information directly to the FDA or to otherwise disclose its own ARI data for other legitimate purposes consistent with the antitrust guidelines. 

Companies that choose to join must execute a participation agreement that requires them to pay annual ARI dues and to comply with specified confidentiality rules, antitrust guidelines, and prohibitions on misuse of the ARI process.  The draft participation agreement includes various commitments to be made by individual companies, GPhA, and IMS to ensure that the data participants submit is kept confidential and not shared or used in ways not contemplated by the program. 

3. IMS Activities:  IMS will gather information from manufacturers of selected shortage drugs, perform a “gap analysis” for each drug included in the ARI program, and submit reports to the FDA.  IMS will not use the information generated under the ARI for any other purpose. IMS will contact manufacturers of ARI drugs that have signed a participation agreement and request current supply and production information and forecasts for the next 90-180 days for the drug or drugs in question.  IMS will ask manufacturers to update this information on a monthly basis and to notify both IMS and the FDA immediately of unanticipated changes or potential supply disruptions.  Requests for information from manufacturers about potential shortage drugs in the ARI program will be limited to those manufacturers that make or have made the drug in question.  IMS will use the production and supply data it collects, along with its own forecasts of demand based on past demand data, to perform the gap analysis, that is, the projection of the extent of a likely supply shortfall.  

IMS will produce a monthly report to the FDA providing both a summary analysis for each drug along with a detailed breakdown by National Drug Code number.  IMS will provide the gap analysis and underlying data that IMS generates under the ARI program only to the FDA and will clearly mark each report as confidential. IMS will not provide information contained in these reports, or any data gathered from participants, to GPhA, ARI participants, or any other party.  In addition, IMS will institute appropriate safeguards (e.g., firewalls) to limit internal access to this information to guard against the risk that knowledge of this confidential information could spill over into other aspects of IMS’s business and be used for non-ARI purposes.  

IMS communications with individual manufacturers under the ARI program will be limited to that which is necessary to gather the data needed to perform the gap analysis for an ARI drug.  “IMS will only be receiving supply/forecast data for the drugs at issue and will not be having an ongoing dialogue with the manufacturers, nor will it be requesting any additional information from these manufacturers.”  All communications with manufacturers concerning their ability to increase their production or supply of a drug will continue to be undertaken by the FDA.  IMS will not make recommendations to the FDA regarding how the agency should seek to address a given drug shortage. Instead, GPhA expects that the FDA will use the factual information IMS provides along with non-public information possessed by the agency to determine appropriate solutions to a shortage.  

IMS will not disclose competitively sensitive information to GPhA. IMS will submit monthly reports to GPhA, and GPhA expects it may share those reports with its members and the public at large.  These IMS reports to GPhA will identify

  • The number of drugs addressed in the most recent FDA report,
  • The number of reports IMS sent to the FDA, and
  • The number of drugs added or deleted from the ARI program during the prior month.  

The report may identify by name the specific drugs addressed in the most recent IMS report to the FDA, to the extent that the drug already appears on the FDA's drug shortage list.  In no event, however, will IMS disclose to GPhA information that would identify any potential shortage drug that the FDA has requested IMS to analyze, unless the FDA has already publicly disclosed that information. In addition, IMS will not disclose information that would reveal the production and supply infonnation submitted by manufacturers. 

Legal Analysis 

The key antitrust issue raised by the ARI arises from the fact that it involves an agreement among competitors to pool information about their output, both present and future.  As a general matter, the antitrust laws do not prohibit trade associations from collecting data from competing sellers and collectively providing information and analysis to government officials.  Such activity, undertaken for a legitimate purpose, may serve to promote rather than injure competition and consumer welfare. 

Under some circumstances, however, such data gathering programs can serve to facilitate collusion among competing sellers and thereby present a substantial risk of anti competitive harm. Trade association programs that involve sharing of competitively significant information among competitors have long been a subject of antitrust scrutiny, given their potential to facilitate collusion among rivals.  Such programs are not per se unlawful unless part of a larger scheme to fix prices or other competitively significant terms of dealing. Instead, they are judged under the rule of reason, based on their likely effects on competition in light of the particular circumstances. 

FTC said that “certain circumstances [in the proposed ARI raise the potential for competitive harm.  As GPhA recognizes, the inventory and future production information it proposes to collect is competitively sensitive.  In addition, markets for the sale of generic injectables, which represent the vast majority of drugs in shortage, typically have few sellers.  Such market concentration tends to make markets more susceptible to collusion. 

On its face, however, FTC asserted that “the proposed ARI program does not involve the exchange or sharing among competitors of the output information that the program would collect.  Rather, the information would be collected and analyzed by a third party, IMS, which would share this information solely with the FDA.”  Moreover, the program will operate “under terms of strict confidentiality and with appropriate safeguards.”  GPhA has designed various aspects of the program to limit the potential that the ARI might result in harm to competition. 

First, the role of GPhA itself is strictly limited to shield it from access to competitively sensitive information.  GPhA is involved in developing the initial identification of drugs to be part of the ARI, will assist IMS in recruiting participants, and will provide financial support for the program.  Aside from publicizing the program, no other activities by GPhA are specified.  GPhA will receive monthly reports from IMS, which it may disseminate to its members and others, but these will provide no information relating to the production data that IMS has collected, nor will they identify potential shortage drugs that IMS has analyzed. 

Second, GPhA has defined the obligations and activities of IMS to limit the risk that IMS would inadvertently facilitate anticompetitive behavior.  IMS's duty to strictly limit disclosure of the production data gathered from ARI participants, and any information and analysis derived therefrom, solely to FDA staff is a binding commitment set forth in formal written agreements.  Likewise, the agreements make clear that IMS's use of the information is strictly limited to ARI program activities. IMS also plans to institute appropriate internal safeguards to prevent misuse or improper disclosure of information generated under the ART. 

In addition, GPhA has defined IMS's role to be providing objective data and gap analysis reports to the FDA, not recommendations on how to address a given shortage. The ARI does not provide a role for IMS to act as a representative of ARI participant companies in matters involving drug shortages.  Nor does the ARI set up IMS as an intermediary between ARI participants and the FDA to broker solutions to a drug shortage or potential shortage. “This carefully defined role for IMS helps to guard against the risk that the ARI could have the unintended effect of fostering collusion among competing sellers acting through IMS,” FTC opined. 

Third, GPhA has taken steps to discourage ARI participants from attempting to use the program for anticompetitive ends. The draft ARI participation agreement: 

  1. Emphasizes the confidential nature of the production information to be collected;
  2. Advises companies of the need to ensure that their employees, agents, and consultants adhere to ARI program rules, which include confidentiality obligations embodied in the agreement and a set of antitrust guidelines that are provided along with the participation agreement; and
  3. Provides that participants that breach those obligations will be terminated from the program.  

Moreover, participants must make an express commitment not to use the ARI program activities to “exchange, discuss or agree on the price, output, cost, or other terms of competition, regarding any Shortage Drug or any other product or service.”   In addition, under the agreement, participants must indemnify GPhA, IMS, and other ARI participants for any losses resulting from breach of this commitment. Jd. § 8. 

FTC recognized that the safeguards GPhA has included “help to assure that the ARI is likely to operate in accordance with its legitimate purpose and limit the risk that the program would serve to facilitate collusion among actual or potential rivals.” 

“The ARI's protections against disclosure of confidential information may also offer other benefits,” FTC noted.  For example, assurance to manufacturers that their confidential information will be protected may encourage greater participation in the program and thereby result in more useful information to support the FDA's efforts to combat drug shortages.  

In addition, safeguarding non-public information relating to the supply of critical drugs, particularly as to the potential for a shortage, may help to reduce the risk of actions that distort the supply chain, whether abusive conduct by other market participants that may seek to exploit a shortage for their own advantage, or the potential for hoarding by well-intentioned health care providers concerned about their patients. 

Finally, it does not appear that the ARI program presents other risks to competition and consumers.  As noted above, the program is “non-exclusive,” that is, it involves no agreement among competitors to deal only through the ARI. It would not preclude ARI participants from also participating in another organization's program that sought to use similar data for legitimate purposes.  Nor would it have any effect on manufacturers' ability to use their own participant data in other business contexts. 

FTC did not assess the likelihood or extent of any precompetitive benefits that may result from the ARI because the anticompetitive effects appear unlikely.  FTC also noted that it understands that GPhA is continuing to discuss with FDA staff how best to make the ARI complement the FDA's existing drug shortage activities. 



Preview | Powered by FeedBlitz


October 2015
Sun Mon Tue Wed Thu Fri Sat
1 2 3
4 5 6 7 8 9 10
11 12 13 14 15 16 17
18 19 20 21 22 23 24
25 26 27 28 29 30 31