Every once and a while we get a clear example of the gulf between those battling over important public policy issues and can understand why the public and policy makers are confused by resulting charges and counter charges. Last week was a good illustration.
The Washington Post reviewed a study by the Tufts Center for the Study of Drug Development in its story titled Does it really cost $2.6 billion to develop a new drug? As the title implies the claims of huge costs and risks undertaken by drug developers are summarily dismissed by their critics. The story fairly presents both sides of a debate with vastly different worldviews.
The Tuft’s study estimates that the costs of drug development have doubled from $802 million in their 2001 study to $2.6 billion today. The causes include:
In the past, researchers have developed an Ebola vaccine for monkeys and macaques, which are also affected by strains of the Ebola virus. The vaccine is so effective that many monkeys can be brought back to health even when injected with 100 times the lethal dose of Ebola after vaccination. However, with HIV, tuberculosis and many other diseases claiming more lives every year, research focus on Ebola has been low in recent years. So how long does it take a typical vaccine to go from concept to reality?
A large reason for these high costs is the incredibly high rate of failure during drug development. About 95 percent of all pharmaceuticals researched for use in humans fail to achieve the effectiveness and safety standards required for FDA approval, according to Forbes estimates. During 2013, the companies represented by PhRMA spent a total of $48.5 billion on research and development activities related to pharmaceutical drugs.
Another reason for the high costs associated with taking a drug to market is the fact that there is a complicated regulatory process. According to the Burrill Report , the rising costs associated with drug development can be explained, at least in part, due to regulatory barriers in place that slow approval and place many hurdles between the drug and the marketplace. “In the 2000s, that time grew to 13.5 years from just 6 years in the 1970s,” the Burrill Report explained.
The Companies We Follow series is visiting this major manufacturer of medications as we continue our survey of recent innovations in pharmaceutical fields. Patent applications recently published by the U.S. Patent and Trademark Office show that Pfizer’s recent development goals have focused on a broad spectrum of diseases and disorders. We discuss a trio of patent applications related to treatments involving the nervous system, including a couple of medications treating Alzheimer’s disease along with a host of other ailments. A couple of patent applications are also related to novel treatments for cancer, especially in the area of preventing cancerous growth.
Here at IPWatchdog, we wanted to take some time in our Companies We Follow schedule to take a closer look at the incredible world of innovation in pharmaceuticals. In our perusal of Eli Lilly patent applications recently published by the U.S. Patent and Trademark Office, we got a close look at many of the medications created in recent months by this company. Leukemia, diabetes and Alzheimer’s disease are all addressed by innovative compounds which we explore in detail below. We also feature a trio of patent application related to improvements to injector pens for self-administration of medications. But perhaps most exciting is the patent that covers antibodies that could be used to treat the Ebola virus.
Patents encourage and protect innovation. That’s undeniable, but it’s naïve to believe that’s all we need to develop the new products that evolve into the industries that bolster the dynamic U.S. economy. Patents, and other forms of intellectual property protection, are a necessary prerequisite, but incentivizing innovation requires more. Just as plants require sunshine, water and nutrients to grow, innovation needs more than simply patent protection to thrive. To thrive innovation requires a climate that is conducive for business success.
Sadly, Capitol Hill is frequently the setting for both grandstanding and pandering, and given the prevailing political and public sentiment it is also frequently a place where businesses find an inhospitable welcome. A recent case in point: Three senior members of Congress (Henry Waxman, Frank Pallone Jr., and Diana DeGette) have started a joint investigation into the pricing of Sovaldi, a breakthrough drug for hepatitis C produced by Gilead Sciences (NASDAQ: GILD). Rather than applaud the health benefits that this drug will deliver, Congress is grilling the company on their pricing decision, striking fear in the investment community, and indirectly undermining the healthcare innovation that is so desperately needed.
The pharmaceutical industry is widely criticized for wasteful spending on duplicative research to develop “me too” drugs, and focusing their efforts on “evergreening” patents. Those who argue that incremental innovation and follow on improvements to existing therapies aren’t worthy of patent protection need to look more deeply at the reality of what subsequent innovation provides. The case for protecting incremental innovation is laid out in a new publication by the Fraser Institute (released 19 June 2014), in which a thorough exploration of the therapeutic and economic value of follow-on pharmaceutical innovation is provided.
Pharmaceutical innovation is an inherently dynamic process; one innovation builds on another and improvements draw from a long history of earlier technological advances. Sir Isaac Newton once stated, “If I have seen far, it is by standing on the shoulders of giants.” In her classic paper on innovation, Scotchmer cites this quote and emphasizes that virtually all technical progress builds on a foundation provided by earlier innovators. Innovation is an undeniably cumulative event, and progress happens both in leaps and bounds (radical innovation) and in small steps (incremental innovation). In the context of the pharmaceutical industry, radical innovations encompass breakthrough discoveries of the ‘first-in-class’ medicine with a new mechanism of action. In contrast, incremental innovations may expand an existing therapeutic class through the development of a new drug based on differences in adverse effects, delivery systems, dosing schedules, or heat stability. In 2012, 45 new drugs gained regulatory approval from the US FDA, the highest number since 1997. Currently there are 907 biologics, medicines and vaccines in development, targeting more than 100 diseases. Much of this innovation can be considered incremental, resulting in so-called ‘me-too’ or follow-on drugs. These are therapies that largely replicate the action of existing drugs. All indicators suggest that a significant share of medical progress is happening through incremental innovation.
One of the most difficult issues in antitrust and patent law involves “pay for delay” or “exclusion payment” settlements in which a brand-name drug company pays a generic firm to settle patent litigation and delay entering the market. In the landmark case of FTC v. Actavis, the Supreme Court held that such settlements could have “significant anticompetitive effects” and violate the antitrust laws.
Despite the importance of the Court’s decision, several questions remain unanswered. One of the most crucial is what constitutes a payment. The district courts have split on this issue, and in In re Lamictal, Judge William Walls of the District of New Jersey ruled that “payment” under Actavis was limited to cash. The court concluded that “nothing in Actavis says that a settlement contains a reverse payment when it confers substantial financial benefits” and that “[b]oth the majority and the dissenting opinions reek with discussion of payment of money.” Id.
On behalf of 53 professors, the American Antitrust Institute, and Consumers Union, Steve Shadowen and I filed an amicus brief in the Third Circuit urging reversal of the district court’s opinion. We made five general points.
Actavis plc (NYSE: ACT) announced yesterday that it has entered into an agreement with Valeant Pharmaceuticals International (NYSE: VRX) to settle all outstanding patent litigation related to Actavis’ generic version of Acanya® (clindamycin phosphate and benzoyl peroxide) Gel, 1.2%/2.5%. Acanya® Gel is a lincosamide antibiotic and benzoyl peroxide indicated for the topical treatment of acne vulgaris.
Under the terms of the agreement, Valeant will grant Actavis a license to market its generic Acanya® Gel beginning on July 1, 2018 or earlier under certain circumstances. Other details of the settlement were not disclosed.
Launch of Actavis’ product is contingent upon Actavis receiving final approval from the U.S. Food and Drug Administration (FDA) on its Abbreviated New Drug Application (ANDA) for generic Acanya® Gel.
Recently IPWatchdog.com published an article that cited the work we do at the Infectious Disease Research Institute (IDRI) as an example of how dedicated individuals and corporations can work together to transform science into global health solutions. By integrating capabilities, we strive to create an efficient pathway to bring scientific innovation from the lab to the people who need it most.
I write today to explain more about what IDRI does and why leveraging spin-out companies supports global health initiatives.
One of the most important engines in populating and growing the life sciences sector within the United States is the practice of universities spinning out new technologies into startup biotechnology companies. This, in turn, drives the development of new drugs, vaccines and other much-needed health products.
Recently I had a frustrating morning dealing with a particular anti-patent “do-gooder” who seemingly thinks that everything wrong with the world today is because of the patent system. As is typical with this type of zealot, he intentionally misrepresented what Dr. Kristina Lybecker wrote in her recent article titled Compulsory Licenses Won’t Solve a Healthcare Crisis. Then this ignorant fellow turned on me to say that I supported 9,000 people a day dying in order to preserve patent rights. As you can see, this fellow is not a deep thinker, and not at all capable of honest debate, but isn’t that the case with all those who hate the patent system?
This level of asinine attack would hardly be worthy of my time if it were only the ranting of one particular lunatic, but sadly there are many people who seem to believe that the greater good can be served by stripping pharmaceutical companies of their patent rights and allowing generic drug manufacturers to make the latest drugs in the name of a health crisis. As if preventing a corporation from making money will lead that corporation to simply shrug and start all over again only to have rights stripped away again after billions of dollars of further investment.
The average cost of drug development by a major pharmaceutical company is at least $4 billion per drug, but can be as high as $11 billion per drug. Of course, as is self-evident to anyone capable of critical analysis, no drug company is going to invest billions of dollars to take a drug from laboratory idea to market reality if at the end of the successful trip generic drug manufacturers are allowed to ignore patent rights and immediately start making cheap versions of the patented drug. The generics didn’t have to do any research or engage in the costly and time intensive FDA approval process.
The Federal Trade Commissionfiled an amicus brief in the U.S. District Court for the District of New Jersey stating that an agreement by a branded drug company not to launch an authorized generic (AG) drug “provides a convenient method for branded drug firms to pay generic patent challengers for agreeing to delay entry.”
In a “no-AG” agreement, the branded firm, as part of the patent litigation settlement, agrees that it will not launch its own generic alternative when the first generic begins to compete. Since the introduction of the branded AG would cut into the revenues of a competing generic product, a no-AG commitment can induce the generic firm to delay entry of its product to the market. Thus, the Commission concludes, a no-AG commitment is legally sufficient to trigger a rebuttable presumption of illegality under the law of the Third Circuit.