Kesselheim slides

Pharmaceutical Development:Pharmaceutical Development:Protecting Innovation vs. Promoting Public Protecting Innovation vs. Promoting Public

HealthHealth

December 12, 2008Aaron S. Kesselheim, M.D., J.D., M.P.H.Division of Pharmacoepidemiology and PharmacoeconomicsBrigham and Women’s HospitalHarvard Medical [email protected]

InnovationInnovation

How do we optimally integrate drug How do we optimally integrate drug development and public health?development and public health?– Ensure creation of important new drugs Ensure creation of important new drugs

currently through incentives for investmentcurrently through incentives for investment– Ensure that access to such drugs is not unduly Ensure that access to such drugs is not unduly

compromisedcompromised

Background: PatentsBackground: Patents

Make drug development profitable by Make drug development profitable by secure market exclusivity for new drugsecure market exclusivity for new drug– 20 years20 years

US Constitution, Art I, § 8, cl 8: “…US Constitution, Art I, § 8, cl 8: “…promote progress of science and the useful promote progress of science and the useful arts…”arts…”

Four basic criteria for patenting…Four basic criteria for patenting…

Proper subject matterProper subject matter UtilityUtility NoveltyNovelty Non-obviousnessNon-obviousness Patent document requirements: Written Patent document requirements: Written

description, enablement, best mode, description, enablement, best mode, definitenessdefiniteness



Quid pro quoQuid pro quo– Make details of invention public, but secure Make details of invention public, but secure

government protection against free ridersgovernment protection against free riders– Primary claim: Composition of matter covering Primary claim: Composition of matter covering

the active ingredientthe active ingredient

0

5,000

10,000

15,000

20,000

25,000

30,000

1975-1979 1980-1984 1985-1989 1990-1994 1995-1999

Source: National Bureau of Economic Research

Number of New Drug-Related Patents Granted

Background: Patents

Policy problemPolicy problem

Patent life Patent life ≠ Drug development≠ Drug development– Invention of new molecules occurs early in Invention of new molecules occurs early in

course of drug developmentcourse of drug development– Patent law requires filing of patent on Patent law requires filing of patent on

composition at that timecomposition at that time» Publication, use can make ineligiblePublication, use can make ineligible

– Preclinical studies, clinical trials, FDA reviewPreclinical studies, clinical trials, FDA review» 8-10 years between patent filing and approval

– Once approved, can charge whatever market Once approved, can charge whatever market will bearwill bear

Policy problemPolicy problem

Patent life Patent life ≠ Drug development≠ Drug development– Historically, FDA required full complement of Historically, FDA required full complement of

tests (NDA) for companies seeking to market tests (NDA) for companies seeking to market identical copies of drugs whose patent identical copies of drugs whose patent protection had expired (“generic drug”)protection had expired (“generic drug”)

» By 1984, 150 brand-name drugs lacked generic By 1984, 150 brand-name drugs lacked generic versions despite being off-patentversions despite being off-patent

» Generics accounted for only 19% of all Generics accounted for only 19% of all prescriptionsprescriptions

– Result: de facto permanent market exclusivityResult: de facto permanent market exclusivity» Runs past end of patent termRuns past end of patent term

Solution: Hatch-Waxman ActSolution: Hatch-Waxman Act 1984 Drug Price Competition and Patent Term 1984 Drug Price Competition and Patent Term

Restoration ActRestoration Act– To promote access, uplift generic drug mfrs:To promote access, uplift generic drug mfrs:

» ““ANDA” for generic drug mfrs showing bioequivalenceANDA” for generic drug mfrs showing bioequivalence

» 6-month generic exclusivity incentive for first company 6-month generic exclusivity incentive for first company to challenge patentto challenge patent

– To provide incentives, assist brand-name mfrs:To provide incentives, assist brand-name mfrs:» 5 yrs of data exclusivity for new products5 yrs of data exclusivity for new products

» 2.5 year window for resolution of patent challenge2.5 year window for resolution of patent challenge

» FDA review time added back to patent life (max FDA review time added back to patent life (max 14 yrs14 yrs))

Effects of Hatch-WaxmanEffects of Hatch-Waxman

SuccessSuccess– Remarkable number of important new drugs Remarkable number of important new drugs

approved in 1980s and 1990sapproved in 1980s and 1990s» Cardiovascular disease, cancer, GI disease, Cardiovascular disease, cancer, GI disease,

psychiatric disorderspsychiatric disorders

– Low costs of generic drugs allow cost-saving Low costs of generic drugs allow cost-saving and promote patient adherenceand promote patient adherence

» Beginning at conclusion of market exclusivityBeginning at conclusion of market exclusivity

» Now 65% of prescriptions are for generic drugsNow 65% of prescriptions are for generic drugs

Persistent ProblemsPersistent Problems Since Hatch-Waxman, balance between Since Hatch-Waxman, balance between

incentives for drug development and public incentives for drug development and public health goals continues to plague health goals continues to plague pharmaceutical marketpharmaceutical market

In particular, two categories of problems In particular, two categories of problems have emerged:have emerged:– Problem #1: Abuse of available incentivesProblem #1: Abuse of available incentives– Problem #2: Incentives misaligned with public Problem #2: Incentives misaligned with public

health goalshealth goals

Abuse of available incentivesAbuse of available incentives 1. Inappropriate patents1. Inappropriate patents

– Patents granted for pharmaceutical products Patents granted for pharmaceutical products that don’t meet statutory requirementsthat don’t meet statutory requirements

– USPTO is a regulatory body with important USPTO is a regulatory body with important limitationslimitations

» 2006: 332,000 applicants; 4,000 examiners2006: 332,000 applicants; 4,000 examiners

» In the pharmaceutical compound area, time In the pharmaceutical compound area, time allocated for complete examination of an allocated for complete examination of an application is 18 hours for an upper-level examiner, application is 18 hours for an upper-level examiner, and 21 hours for a mid-level examinerand 21 hours for a mid-level examiner

» Do not seek outside expertise, may not even be Do not seek outside expertise, may not even be allowed to search Internetallowed to search Internet

Drug patentDrug patent

Patents: ExamplesPatents: Examples

Abuse of available incentivesAbuse of available incentives Result: 90% of all drug patent applications are Result: 90% of all drug patent applications are

eventually approvedeventually approved– Patent feesPatent fees

Overturning bad patents takes time, effort, Overturning bad patents takes time, effort, resourcesresources

Abuse of available incentivesAbuse of available incentives

2. Patents not reward true discoverers2. Patents not reward true discoverers– Early basic science critical to drug development, but Early basic science critical to drug development, but

may not meet statutory req’ts for “patent”may not meet statutory req’ts for “patent”– Example: Example: RochesterRochester case case

» 1990s: Researchers at Univ of Rochester isolate COX-2 1990s: Researchers at Univ of Rochester isolate COX-2 receptor, apply for patent on “method of inhibiting”receptor, apply for patent on “method of inhibiting”

» Pharmacia/Pfizer develop Vioxx and Celebrex ($5B Pharmacia/Pfizer develop Vioxx and Celebrex ($5B market), claim Rochester’s patent invalidmarket), claim Rochester’s patent invalid

» Circuit Court upholds – did not take critical step of Circuit Court upholds – did not take critical step of isolating a compound, akin to “alchemists” isolating a compound, akin to “alchemists”

Source: Kesselheim & Avorn, University-based science and biotechnology research: defining the boundaries of intellectual property. JAMA 2005;293:850-854.


3. Evergreening/“Life Cycle Management”3. Evergreening/“Life Cycle Management”– Multiple (legitimate) patents covering the same Multiple (legitimate) patents covering the same

active ingredient, minor changes, or peripheral active ingredient, minor changes, or peripheral features of the pillfeatures of the pill

– Intended to perpetuate market exclusivityIntended to perpetuate market exclusivity– Example: Exploit “non-obvious” requirementExample: Exploit “non-obvious” requirement

» Combination drugsCombination drugs» Use of drug (e.g. crushing and mixing in Use of drug (e.g. crushing and mixing in

applesauce)applesauce)» Prilosec/NexiumPrilosec/Nexium

Prilosec/Nexium

Omeprazole (Prilosec)– Original patents expire Apr 2001

– Patents on pill coating protect until 2007?

– Generic availability delay 21 months» Meanwhile, market s-isomer (Nexium) in 2001

No evidence of improved outcomes

» Market over-the-counter version

Source: Kesselheim AS, Fischer MA, Avorn J. The rise and fall of Natrecor for congestive heart failure: implications for drug policy. Health Affairs 2006;25:1095-1102.

2001 2002 2003 2004

$120M

$100M

$80M

$60M

$40M

$20M

Actual spending on omeprazole Projected spending on omeprazole

No IP extension = $609MSubst for Nexium = $1.2B

Prilosec/Nexium

Source: Kesselheim AS, Fischer MA, Avorn J. Extensions of intellectual property rights and delayed adoption of generic drugs: effects on Medicaid spending. Health Affairs 2006;25:1637-47.

Prilosec/Nexium Policy implications

– Medicaid programs facing rising costs– One area where cost savings can be achieved

without affecting patient care


4. Manipulation of Hatch-Waxman 4. Manipulation of Hatch-Waxman regulatory/legal systemregulatory/legal system– Multiple Orange Book listingsMultiple Orange Book listings– Collusive agreements between brand-name and Collusive agreements between brand-name and

generic mfrsgeneric mfrs

Abuse of available incentivesAbuse of available incentives Reform effortsReform efforts

– Patent reformPatent reform» Supreme Court revamps “non-obvious” standard for Supreme Court revamps “non-obvious” standard for

combination invention (combination invention (KSR v. TeleflexKSR v. Teleflex))

» Patent office reform (e.g. allow broader Patent office reform (e.g. allow broader input/reexaminations of patents)input/reexaminations of patents)

– Eminent domainEminent domain» Government takes over control of Government takes over control of

inappropriate/abusive patentsinappropriate/abusive patents

– Better ways of determining multiple Better ways of determining multiple contributions to a finished drug productcontributions to a finished drug product

Source: Kesselheim AS and Avorn J. Biomedical patents and the public’s health: is there a role for eminent domain? JAMA 2006;295:434-437.

Misaligned incentivesMisaligned incentives

Some important public health issues fall Some important public health issues fall outside of patent incentive structureoutside of patent incentive structure– Orphan DiseasesOrphan Diseases– Pediatric PopulationsPediatric Populations– AntibioticsAntibiotics– Neglected DiseasesNeglected Diseases

Orphan Drug ActOrphan Drug Act ““Orphan condition”: <200,000 peopleOrphan condition”: <200,000 people Incentives:Incentives:

– Federal funding of some grants and contracts to Federal funding of some grants and contracts to perform clinical trials of orphan productsperform clinical trials of orphan products

– A tax credit of 50% of clinical testing costs A tax credit of 50% of clinical testing costs – Market exclusivity for orphan indication for 7 Market exclusivity for orphan indication for 7

years from date of approvalyears from date of approval» Iron-clad, stronger than patentIron-clad, stronger than patent

Orphan Drug ActOrphan Drug Act Great success …Great success …

– 325 approvals since 1983 for rare diseases and enzyme 325 approvals since 1983 for rare diseases and enzyme deficienciesdeficiencies

… … at a substantial costat a substantial cost– Annual spending on specialty pharmaceuticals Annual spending on specialty pharmaceuticals

increases by more than >20% per yearincreases by more than >20% per year» Patients disproportionately bear costsPatients disproportionately bear costs

» Harder to introduce genericHarder to introduce generic

– Misuse?Misuse?» Vioxx approved as orphan for JRA in 2004Vioxx approved as orphan for JRA in 2004

» Epogen approved as orphan in anemia of CKDEpogen approved as orphan in anemia of CKD

– Currently, ½ of all drugs produced by biotech Currently, ½ of all drugs produced by biotech companies are orphanscompanies are orphans

Pediatric Exclusivity ExtensionPediatric Exclusivity Extension 6 mos of market exclusivity if conduct clinical 6 mos of market exclusivity if conduct clinical

trials of products in pediatric populationstrials of products in pediatric populations Success …Success …

– 1/3 of drugs underwent labeling changes1/3 of drugs underwent labeling changes … … at a costat a cost

– Awarded regardless of outcome or utility of trialAwarded regardless of outcome or utility of trial» Many trials not publishedMany trials not published

– Overcompensates blockbusters (and may under-Overcompensates blockbusters (and may under-compensate turkeys):compensate turkeys):

» Cost of trials: $6 - $37MCost of trials: $6 - $37M

» Return from 6 mos exclusivity: $-9M to $507MReturn from 6 mos exclusivity: $-9M to $507M

Source: Li et al, Li et al, JAMAJAMA, 2007, 2007

AntibioticsAntibiotics

“ “The pipeline of new The pipeline of new antibiotics is drying up. antibiotics is drying up. Major pharmaceutical Major pharmaceutical companies are losing companies are losing interest in the antibiotics interest in the antibiotics market because these drugs market because these drugs are simply not as profitable are simply not as profitable as drugs that treat chronic as drugs that treat chronic (long-term) conditions and (long-term) conditions and lifestyle issues.”lifestyle issues.”

AntibioticsAntibiotics Perceived inadequacies of current system for Perceived inadequacies of current system for

antibiotic reimbursementantibiotic reimbursement– Short courses of therapy – blockbusters unlikelyShort courses of therapy – blockbusters unlikely– Resistance make “life-cycle management” less effectiveResistance make “life-cycle management” less effective– Public health efforts to limit prescribingPublic health efforts to limit prescribing

Spellberg B, Powers JH, Brass EP, Miller LG, Edwards Jr. JE. CID 2004;38:1279-86.

Powers JH. Clin. Microbiology & Infection 2004;10(S4): 23-31.

Is this really a problem?Is this really a problem?

New therapiesNew therapies

Talbot, et al., CID 2006; 42:657–68.

Acinetobacter baumannii Acinetobacter baumannii TigecyclineTigecycline

Aspergillus species Aspergillus species Some therapies in development, Some therapies in development, but no substantive breakthrough but no substantive breakthrough drugdrug

ESBL–producing ESBL–producing Enterobacteriaceae and Klebsiella Enterobacteriaceae and Klebsiella species species

TigecyclineTigecycline

VRE VRE Quinupristin-dalfopristin and Quinupristin-dalfopristin and linezolidlinezolid

Pseudomonas aeruginosa Pseudomonas aeruginosa Carbapenems onlyCarbapenems only

Methicillin resistant Methicillin resistant Staphylococcus aureus (MRSA)Staphylococcus aureus (MRSA)

Many drugs under developmentMany drugs under development

Wildcard Patent ExtensionsWildcard Patent Extensions

New class of antibiotic with specific targeted New class of antibiotic with specific targeted indications, the company would be able to pick indications, the company would be able to pick any drug in its portfolio and add, for example, any drug in its portfolio and add, for example, between six months and two years of market between six months and two years of market exclusivityexclusivity

““It is potentially very attractive to established It is potentially very attractive to established companies, but is politically challenging because companies, but is politically challenging because the economic burden would be placed on patients the economic burden would be placed on patients or payers for different medicines, possibly in or payers for different medicines, possibly in another countries.” -- WHOanother countries.” -- WHO

Permanent PatentsPermanent Patents

““Patent terms for antibiotics should be Patent terms for antibiotics should be extremely long … trying to encourage extremely long … trying to encourage pharmaceutical companies to stockpile pharmaceutical companies to stockpile drugs to deal with potential plagues.”drugs to deal with potential plagues.”

Kades E. Northwestern Univ. L. Rev. 2005;99:611-675

Exclusivity-based solutionsExclusivity-based solutions ProblemsProblems

– Using patents as a lever involves substantial costsUsing patents as a lever involves substantial costs» For wildcard patents, public health implications in other For wildcard patents, public health implications in other

marketsmarkets

– No guarantee that market will respond as predictedNo guarantee that market will respond as predicted– Potential for abusePotential for abuse

See: Outterson et al, Lancet Inf Dis, 2005

Neglected DiseasesNeglected Diseases

Tropical infections endemic in low-income Tropical infections endemic in low-income populations, usually in Africa or Asiapopulations, usually in Africa or Asia– WHO: >1 billion people suffer from a WHO: >1 billion people suffer from a

neglected tropical diseaseneglected tropical disease– Kala-azar, Chagas’ disease, sleeping sickness…Kala-azar, Chagas’ disease, sleeping sickness…– 1975-1999: 1,393 new drugs were made 1975-1999: 1,393 new drugs were made

available to the public, but only 16 were meant available to the public, but only 16 were meant for neglected diseasesfor neglected diseases

Source: Troullier et al, Source: Troullier et al, LancetLancet, 2002, 2002

Priority Review VoucherPriority Review Voucher

Food and Drug Administration Food and Drug Administration Amendments Act of 2007Amendments Act of 2007– Require review of new product within 6 mosRequire review of new product within 6 mos– Awarded upon approval of NDA for drug Awarded upon approval of NDA for drug

treating tropical diseasetreating tropical disease» Ineligible if active ingredient previously approvedIneligible if active ingredient previously approved

– May transfer/sell to other companiesMay transfer/sell to other companies

Priority Review VoucherPriority Review Voucher

ProblemsProblems– Incentives do not include implementation, Incentives do not include implementation,

“recycled” products, or adapting products to be “recycled” products, or adapting products to be useful in tropical climatesuseful in tropical climates

– Lack of transparency in transfer dealsLack of transparency in transfer deals– Public health concern with speedy FDA Public health concern with speedy FDA

reviews for products without substantial health reviews for products without substantial health interest involvedinterest involved

Source: Kesselheim, NEJM, 2008

Misaligned IncentivesMisaligned Incentives Reform:Reform:

– Critically examine whether incentives are Critically examine whether incentives are needed, and if so, how muchneeded, and if so, how much

– If additional incentives are needed, must include If additional incentives are needed, must include oversight to protect against abuse, ensure public oversight to protect against abuse, ensure public benefitbenefit

» Orphan Drugs: Ensure not pricing out of market, end Orphan Drugs: Ensure not pricing out of market, end exclusivity at certain pointexclusivity at certain point

» Pediatric Trials: Condition of drug approval?Pediatric Trials: Condition of drug approval?» Antibiotics: Reward appropriate conservation and Antibiotics: Reward appropriate conservation and

patient outcomespatient outcomes» Neglected diseases: Independent funds award Neglected diseases: Independent funds award

research, development, and then implementationresearch, development, and then implementation

Proposed alternatives to patent-based Proposed alternatives to patent-based incentive systemincentive system

““Regulatory exclusivity”Regulatory exclusivity”– Starting for fixed period of time after FDA Starting for fixed period of time after FDA

approval (e.g. biologics)approval (e.g. biologics)– Vary time based on importance of drug, origin of Vary time based on importance of drug, origin of

IP, investment by sponsor, how they handle the IP, investment by sponsor, how they handle the post-approval periodpost-approval period

PrizesPrizes Government investment/public fundsGovernment investment/public funds

– Include fair return to underlying publicly-Include fair return to underlying publicly-funded sciencefunded science

ConclusionConclusion

Patent system provides incentives, intellectual Patent system provides incentives, intellectual property protection for drug developmentproperty protection for drug development

Not optimally designed to do that, leading to Not optimally designed to do that, leading to misuse and unresolved public health issuesmisuse and unresolved public health issues

In attempting to reform and find better balance, In attempting to reform and find better balance, keep in mind:keep in mind:– Reward important public health outcomes over Reward important public health outcomes over

intermediate stepsintermediate steps– Ensuring rewards accrue to proper inventorsEnsuring rewards accrue to proper inventors

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