The future of drug development. ISPOR Issues Panel May 19 th 2015

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1 The future of drug development ISPOR Issues Panel May 19 th 2015 Professor Adrian Towse Director of the Office of Health Economics Agenda Can we reduce drug development costs? Early access / adaptive pathways Reducing failure rates (commercial or scientific) Pre-competitive collaboration and open innovation Are drug development costs a problem? 2 1

2 Protocol Design Trends: Increased Tasks, Frequency, Effort, & Complexity 10% 8% 6% 8.6% 8.4% 10.5% 4% 6.5% 2% 0% -1.7% Number of Unique Tasks Frequency of Each Task Work Effort per Task Execution Burden Investigator Payment Source: Getz et al., American Journal of Therapeutics, 2008;15: Futurescapes: expectations in Europe for relative effectiveness evidence for drugs in 2020: Futurescapes: evidence expectations in the USA for comparative effectiveness research for drugs in 2020: The future of comparative effectiveness and relative efficacy of drugs: an international perspective: 2

3 Proposals for reform Barker urges industry to move to a learn and confirm model Orloff et al. argued for a radical redesign to reduce development costs with (i) more use of biological, pharmacological, and statistical modelling and simulation to fine tune study requirements, and (ii) adaptive trial design The President s Council of Advisors on Science and Technology (PCAST) Report recommended reengineering the clinical trials system Califf et al. also focused on the need for clinical trials to be integrated into the health care delivery system rather than research and delivery being regarded as separate enterprises. EHRs provide a means for both identifying patients for recruitment into clinical trials and for following patients in clinical trials reducing the costs of implementing trial protocols. OPTIONS FOR A NEW DRUG DEVELOPMENT PARADIGM New Flexible Blueprint for Clinical Development Patient/Payer Engagement Exploratory Research Confirmatory Trials Pivotal study Early access on condition of data collection LST Modeling, simulation, Proof of concept trials Adaptive designs Small efficacy study Studies to establish relative value Patient Access Approval Reimbursement Preferred Pricing Key Features Use of adaptive licensing in Europe Sponsor Activities Alignment on approach between regulators and innovators in EU Decouple safety and efficacy study populations Initial trial designed to meet requirements for patient access Partnerships Second LST designed to collect safety data and meet payer demands for premium pricing Patient organized registries and EHR enriched environment enables efficient RWE LSTs Single flow of learning, not fragmented Patient/payer perspective and access needs designed in Slide adapted from Barker, R. The future of medicine - Avoiding a medical meltdown

4 Millions of 2013 $ Pre-approval, Post-approval and Total Lifecycle Cost per Approved New Compound 2,870 2,558 1,861 1, Out-of-Pocket Capitalized Total Pre-approval Post-approval Agenda Can we reduce drug development costs? Early access / adaptive pathways Reducing failure rates (commercial or scientific) Pre-competitive collaboration and open innovation Are drug development costs a problem? 8 4

5 Returns from R&D are highly skewed Source: Berndt et al. Health Affairs 34, No. 2 (2015): Most products do not cover average R&D costs Source: Berndt et al. Health Affairs 34, No. 2 (2015):

6 The Decline of R&D productivity Trends in Attrition Rates of R&D Projects Source: Pammolli, Magazzini and Riccaboni, 2011, The productivity crisis in pharmaceutical R&D, Nature Reviews Drug Discovery, 10, pp R&D is shifting into diseases that matter to patients and payers but the science is more difficult Nature Reviews Drug Discovery 10, (June 2011) doi: /nrd3405 Presentation to the ABPI Conference 23 rd April

7 Agenda Can we reduce drug development costs? Early access / adaptive pathways Reducing failure rates (commercial or scientific) Pre-competitive collaboration and open innovation Are drug development costs a problem? ISPOR Plenary Earlier Access To Innovation. Is It Worth It? 13 Learning externalities patent citations A trial-and-error process in which both successes and failures play a role Citations by others Estimated citation lag distributions Self-citations Source: Pammolli, Magazzini and Riccaboni, 2011, The productivity crisis in pharmaceutical R&D, Nature Reviews Drug Discovery, 10, pp

8 Pre-competitive activity Companies own their assets but pool trials and knowledge More general issue of sharing knowledge e.g. of dry holes Presentation to the ABPI Conference 23 rd April 2015 Agenda Can we reduce drug development costs? Early access / adaptive pathways Reducing failure rates (commercial or scientific) Pre-competitive collaboration and open innovation Are drug development costs a problem? 16 8

9 Price driven by value per patient not cost-plus Danzon et al. shows optimal R&D comes from payers setting value thresholds reflecting local WTP Possible exception for ultra-orphans? Competition in a therapy area can lead to discounts 17 A Fairly Common Viewpoint on Me-too Drug Development More often, me-too drugs are made by competing companies, who create their own versions of blockbuster drugs to cut into a market that has already proved both lucrative and expandable Marcia Angell, 2004, The Truth About the Drug Companies: How They Deceive Us and What to Do About It 9

10 Percent of Me-Too Drugs Reaching Milestone Before First-in-Class Drug Reached the Same Milestone 52% 46% 32% 30% 24% 18% 18% 15% 19% 16% 17% 9% 1970s 1980s Period of First-in-Class U.S. Approval WW Patent U.S. Patent First-in-Humans IND Source: DiMasi and Faden, Nature Reviews Drug Discovery 2011;10(1):23-27 If costs go up relative to value? Market forces will impact at one or both levels of: R&D retrenchment, shift of portfolios Pressure to reduce R&D costs 20 10

11 Conclusions Need to focus on a new drug development paradigm Also pay for value cost plus is not relevant Use market forces Competition in therapy areas Contraction and/or efficiency in R&D 21 References Angell M, 2004, The Truth About the Drug Companies: How They Deceive Us and What to Do About It Barker, R The Future of Medicine: Avoiding a Medical Meltdown (Oxford University Press, New York, 2011). Barker, R.W. & Garner, S. Adaptive drug development and licensing. Regulatory Rapporteur 9, (2012). Berndt et al. Health Affairs 34, No. 2 (2015): Califf, R., Filerman, G., Murray, R. & al. The Clinical Trials Enterprise in the United States: A Call for Disruptive Innovation- Discussion paper (Institute of Medicine, Washington, DC, April 2013). Danzon, P., Towse, A. and Mestre-Ferrandiz, J., Value-based differential pricing: Efficient prices for drugs in a global context. Health Economics, Epub. doi: /hec DiMasi and Faden, Nature Reviews Drug Discovery 2011;10(1):23-27 Messner, D. A., Mohr, P. and Towse, A., Futurescapes: evidence expectations in the USA for comparative effectiveness research for drugs in Journal of Comparative Effectiveness Research,(Epub ahead of print). Messner, D. A., Towse, A., Mohr, P. and Garau, M., The future of comparative effectiveness and relative efficacy of drugs: an international perspective. Journal of Comparative Effectiveness Research,(Epub ahead of print). Orloff, J., Pinheiro, J., Levinson, S. & al, e. The future of drug development: advancing clinical trial design. Nature Reviews Drug Discovery 8, (2009). Pammolli, Magazzini and Riccaboni, 2011, The productivity crisis in pharmaceutical R&D, Nature Reviews Drug Discovery, 10, pp President's Council of Advisors on Science and Technology. Report to the President on Propelling Innovation in Drug Discovery, Development and Evaluation (Office of the President of the United States, Washington, DC, September 2012). Ricabboni Towse, A., Garau, M., Mohr, M.and Messner,D.A., Futurescapes: expectations in Europe for relative effectiveness evidence for drugs in Journal of Comparative Effectiveness Research,(Epub ahead of print). 11