Pharmaceutical Coverage and Innovation Dominate Policy Agenda

January 1, 2003
Jill Wechsler

Jill Wechsler is ACT's Washington Editor

Applied Clinical Trials

Applied Clinical Trials, Applied Clinical Trials-01-01-2003,

Congressional efforts to establish a Medicare pharmacy benefit will affect R&D, and a new FDA commissioner promises change.

Republicans gained control of both the Senate and House in November in part by promising to provide prescription drug coverage for 40 million Medicare beneficiaries. President George W. Bush and GOP Congressional leaders now are under pressure to fulfill the pledge.

They seek a program that is relatively low in cost and administered by private insurers and pharmacy benefit managers (PBMs) instead of the federal government, an approach that pharma manufacturers support.

The process of crafting this very costly program, however, will stimulate efforts to rein in pharmaceutical prices, which could undermine incentives for developing new medical therapies. Sponsors already are filing fewer new drug applications (NDAs) with the Food and Drug Administration (FDA); scientific challenges, regulatory requirements, and uncertainty about future reimbursement policies could undermine future research and development programs.

Full agenda
Last year, Congress approved bioterrorism and user fee legislation that increased resources for FDA and other government public health agencies (see sidebar), but left most health policy legislation on the table. This gives the legislators a full health care agenda to address this year.

Coverage for the uninsured. Former vice president Al Gore is leading efforts to make the plight of the uninsured a central policy issue for Democrats. While Gore calls for expansion in federal and state health care programs, the Republicans seek to increase tax credits to help consumers purchase health insurance.

Liability reform. Physicians have made malpractice and tort reform their top legislative issue, creating an opportunity for pharmaceutical companies to seek limits on damages in lawsuits claiming injury from drugs or vaccines. Last year the House passed a bill setting caps on malpractice damage awards, but it died in the Senate. Now there will be Senate hearings on the issue, but any kind of liability reform faces a very tough fight. In the recent debate over legislation establishing the Department of Homeland Security, Democrats almost killed GOP-backed provisions expanding liability protections for vaccine manufacturers, and the measure still may be modified.

Stem cell research. The biomedical research community believes that Republicans will maintain strong support for basic research, but budget squabbles already have delayed promised funding increases. Research funding is likely to become tangled in efforts by conservatives to push through legislation banning human reproductive cloning that also kills stem cell research. Moderates will work to craft a bill that limits only undesirable cloning but allows somatic cell nuclear transfer research on embryos to continue.

Clinical research safeguards. Congress dropped efforts last year to strengthen protections for participants in biomedical research studies but promised to revisit the issue this year. Hearings are slated to address informed consent procedures and researcher conflicts of interest, but legislation may remain on the back burner unless new scandals erupt.

Medicare Rx. Senate Republicans are expected to begin the debate with last years compromise bipartisan bill. A prime sponsor is Senator Charles Grassley (Republican, Iowa), who now will chair the Senate Finance Committee that is responsible for Medicare spending. The bill subsidizes insurers and PBMs that offer pharmacy plans within set parameters. Even the modest GOP plan will be costly, encouraging providers to use formularies, generic drug substitution, and other policies to limit program expenditures.

Generic drug access. Republican efforts to gain bipartisan support for a Medicare benefit package are likely to encourage changes in policies governing innovator patents and access to generic drugs. The broad generic reform bill that was approved by the Senate in 2002 is not likely to be reconsidered, but Senator Orrin Hatch (Republican, Utah), who once again chairs the Senate Judiciary Committee, is interested in a moderate proposal that codifies some of the regulatory changes recently proposed by FDA.

Decline in new drugs
Restraints on drug reimbursement and patent limits, however, carry the risk of curbing incentives for pharma companies to make the increasingly large investment in R&D required to develop new therapies. Such policies may aggravate an apparent decline in the number of new drugs and new molecular entities (NMEs) approved by FDA in recent years, with similar trends apparent in the European Union.

Some analysts maintain that the pharmaceutical R&D pipeline remains robust, but acknowledge that fewer new products are coming to market. In the mid-1990s, FDA approved more than 120 new drug applications a year, including a record 53 NMEs in 1996. Last year FDA approved only 66 NDAs and 24 NMEs, and 2002 numbers looked even bleaker last fall. Similarly, manufacturers are seeking priority approval status for only a handful of applications, a sign that fewer new therapies warrant regulatory treatment as breakthrough products.

These developments are prompting industry and policy makers to examine what factors may be slowing development and market approval of new drugs. Pharmaceutical and biotech companies point out that they continue to invest huge sums in R&D, but that the payoff has been curbed by regulatory demands and scientific setbacks. Curbs on reimbursement for me-too drugs put more pressure on companies to explore new therapeutic categories, which is more costly and time-consuming.

FDA slowdown?
A key issue is to what extent FDA regulatory policies aggravate these trends. While agency officials insist that they cant approve applications if companies dont file them, sponsors complain that FDA now demands more preclinical and clinical data in NDAs, particularly for highly innovative products. Consequently, companies now run more preclinical screening tests to detect liver toxicity and potential side effects. They also underwrite larger Phase 3 trials to obtain more safety data. Not only do such procedures boost research costs, but the added information also may lead a manufacturer to halt a development program based on problematic early data. Records show that manufacturers have nearly canceled some development programs that eventually produced major blockbusters.

Sponsors believe that increased testing requirements and an apparent slowdown in FDA application review times may be a sign that the agency has become more cautious about approving new products without extensive safety data. This may stem from stiff criticism over several high-profile drug withdrawals over the past five years, some involving patient fatalities.

Agency officials maintain that numbers indicating longer review times are misleading. With fewer NDAs coming into the agency, a few problematic applications can raise overall review-time statistics. The agency believes that added funding under its third new user fee program will address some regulatory difficulties and improve review operations. FDA also is making important changes in its regulatory policies, as seen in recent proposals to overhaul good manufacturing practices (GMP) standards and to consolidate regulation of certain biotech therapies with conventional drugs in the same therapeutic categories.

McClellans concerns
Most important, FDA now has a new commissioner to manage these new initiatives after two years without a permanent leader. Mark McClellan has been mapping out his agenda, which emphasizes the need to speed safe medicines to market, to accelerate access to generic drugs, to update drug manufacturing standards, to retain FDA scientists, and to reduce medical errors. McClellan wants to set standards for bar coding drug packages to enhance the safe use of medical products. And he acknowledges the importance of addressing regulatory issues on the international front.

Providing agency systems able to review new drugs, devices, and biological treatments as quickly and as efficiently as possible is at the top of the list and may require a reexamination and an updating of the way FDA does its job, the new commissioner told FDA and government officials at a ceremonial groundbreaking for new FDA facilities in the Maryland suburbs of Washington, D.C., on 15 November. FDA is not here just to check boxes on an inspection list, he said, but to implement the best possible approaches to reduce risks to the public health.

McClellan used this opportunity to emphasize the importance of retaining talented scientists for FDA to fulfill its critical missions. The exodus of top professionals from FDAs workforce could accelerate with the shift of key staffers from the Center for Biologics Evaluation and Research (CBER) to the Center for Drug Evaluation and Research (CDER). Jay Siegel, director of CBERs Office of Therapeutics Research and Review, already has left the agency, and other biologics experts are expected to follow suit.

McClellan aims to halt departures by establishing a work environment that encourages creativity, efficiency, and superior performance. In addition to building a new campus to eventually house most FDA offices, the new commissioner supports added educational opportunities and financial incentives for staffers, including salary increases linked to performance and retention allowances for physicians. He also indicated some support for FDA professionals to be involved in research activities relevant to fulfilling FDAs mission, touching on the controversial issue of how much research activity is appropriate for FDA staffers. Effective regulation of emerging technologies such as cellular and gene therapies requires a close connection to the latest scientific developments, McClellan said. Maintaining FDAs capacity to oversee new biomedical technologies on the horizon will provide an early challenge for the new commissioner.

SIDEBAR: Changing faces at CBER
Kathryn Zoon, director of FDAs Center for Biologics Evaluation and Research for more than 10 years, decided to call it quits following the decision by agency leaders to shift oversight for most biotech therapeutics to the drug center. Zoon will return to the National Institutes of Health where she was involved in interferon research before moving to FDA in 1980; now she will be a top official at the National Cancer Institute, which she describes as a more research-oriented job. Zoon headed CBER during a time of intense change in the biotech industry and in the development of biotech products and manufacturing technology. She is highly regarded by FDA staffers, and her departure reflects considerable dismay among CBER rank and file over pending organizational changes.

FDA announced that Jesse Goodman, CBER deputy director for medicine, will replace Zoon as CBER director.

SIDEBAR: Congress backs device user fees and orphan drugs
Although Congress left most health care issues on hold last year, the legislators did adopt some measures that increase support for FDA regulation of medical devices and for development of orphan drugs. The legislators boosted funding for FDAs orphan drug program and, in a separate bill, formally established an Office of Rare Diseases at the National Institutes of Health.

Congress also approved a long-debated user fee program for medical devices that authorizes FDA to collect fees from manufacturers filing market applications. Similar to the user fee program for pharmaceuticals and biotech therapies, FDAs Center for Devices and Radiological Health (CDRH) has to meet performance goals for reviewing applications and other activities. Congress is supposed to ante up an extra $15 million each year to support speedier review activities plus increased postmarket surveillance.

An important provision creates an Office of Combination Products in FDAs commissioners office, replacing a smaller group handling this issue. Device makers hope this will focus top agency attention on decisions about whether FDA should regulate a combination product as a drug, biologic, or device and bring about a shift in oversight of certain in vitro diagnostics to CDRH from CBER.

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