Anyone interested in drug development will want to take a look at Clinical Development Success Rates 2006-2015, a new report from the Biotechnology Innovation Organization (BIO) in partnership with Amplion and Biomedtracker. Per the associated press release, the study “recorded and analyzed 9,985 clinical and regulatory phase transitions, across 1,103 companies” over the past decade to calculate phase-success rates (i.e. the probability of moving forward from Phase 1 to Phase 2, from Phase 2 to Phase 3, etc.) as well as the overall likelihood of approval (LOA).
The results of the BIO study are similar to those reported by Joseph DiMasi and others at the Tufts Center for the Study of Drug Development (CSDD) who looked at 1,442 compounds from 50 leading pharmaceutical firms that initially entered clinical testing between 1995 and 2007. BIO found slightly higher Phase 1 to Phase 2 transition rates but somewhat lower success rates for each step thereafter, leading to an average LOA of 9.6% versus 11.8% as reported by the CSDD. It’s interesting to contemplate whether the higher number of investigational agents moving from Phase 1 to Phase 2 in the BIO study is the reason for lower success rates in subsequent phases. If that is the case, it suggests that the industry needs to work on “failing fast” so that resources are not unnecessarily expended on unpromising candidates.
In addition to aggregate success rates, the BIO report provides detailed figures by disease state and finds that therapies aimed at hematologic or infectious conditions have the highest LOAs (26.1% and 19.1%, respectively) while oncologic and psychiatric agents have the lowest LOAs (5.1% and 6.2%).
Relative success rates for drugs aimed at rare diseases versus those aimed at chronic, high-prevalence conditions were also examined. It turns out that rare drug development programs have a 25.3% LOA as compared to 8.7% for the chronic condition set. The industry shift towards orphan drug development over the past decade is well documented and is frequently attributed to the high prices commanded by therapies for small-population diseases. In forecasting models, however, a three-fold greater likelihood of actually making it to market is almost certainly going to be a bigger driver of net present value than price. The emphasis on orphan drugs has, of course, arisen from a very complex set of factors but improved approval odds are hard to ignore; having these odds quantified in a robust data analysis may well accelerate the flow of development funds towards rare diseases.
The BIO report is free and can be downloaded here.
The DiMasi / Tufts figures are reported in the May 2016 issue of the Journal of Health Economics.
To estimate costs associated with infused drugs discarded because they are left over after administration to a patient, Peter Bach of the Center for Health Policy and Outcomes at Memorial Sloan Kettering Cancer Center and colleagues looked at 20 infused cancer agents with single-vial packaging and weight-based dosing. In the January 20, 2016 issue of BMJ, they report a range of 1% to 33% in the amount of drug left over following administration. After accounting for differences in drug price, they found that the value of products that would not be received by a patient under recommended dosing scenarios equals $1.8 billion or 10% of the combined 2016 sales for these drugs. Roughly $1 billion more is paid to hospitals, clinics, and other providers in the form of “buy and bill” markups for left over portions.
In most other settings, it would be a simple matter to set aside the left over product and use if for the next “customer” but, as is usually the case, the rules and practices governing pharmaceuticals are not so straightforward. The CDC states that single-use vials “should only be used for a single patient” because “these medications typically lack antimicrobial preservatives and can become contaminated.” Although the FDA’s position is not as clear cut as the CDC’s, it also cites microbial contamination along with medication errors as factors that “may” cause problems. CMS’ position, however, is that “it is permissible for healthcare personnel to administer repackaged doses derived from [single-dose vials] to multiple patients, provided that each repackaged dose is used for a single patient in accordance with applicable storage and handling requirements.” Meanwhile, the US Pharmacopeial Convention allows sharing only if the remaining drug is used within six hours and handled by specialized pharmacies.
Not long ago, gloom and doom was predicted for the pharma industry as blockbuster drugs ran out of patent protection, taking their historic profits with them. The patent cliff, a several-year span in which Lipitor, Diovan, Singulair, Plavix, Lovenox, Nexium, and Cymbalta (just to name a few) faced generic competition with limited options for replacement in the pipeline, was seen as heralding a period of long-term difficulty for innovative drug makers.
Based on information from IMS Health’s newly published Medicine Use and Spending Shifts: A Review of the Use of Medicines in the U.S. in 2014, however, it may be time to change the tune. Domestic drug spending last year reached $374 billion, exceeding forecasts and achieving the highest annual increase (13.1%) since the early 2000s. While fewer patent expirations and an increase in brand prices get some of the credit for the upswing, the real growth driver was specialty drugs.
Of the $20.2 billion increase in spending on new brands, 78% was from this category, defined by IMS as “products that are often injectable, high-cost, biologics or require cold-chain distribution … are mostly used by specialists … and include treatment for cancer and other serious chronic conditions. “ More than half of the new brand sales growth ($11.3 billion) comes from recent launches of new hepatitis C drugs while new cancer and multiple sclerosis medicines were respectively responsible for $1.6 billion and $2.0 billion. Overall, according to IMS, the $54 billion in increased specialty medicine spending over the last five years makes up 73% of growth across all categories in that period.
These trends have given specialty drugs a firm foothold in the market, making up 33% of all drug spending last year. And it looks like this will continue for the next few years, as 42% of late-stage-pipeline drugs are currently in this category.
Bright and shiny topline growth numbers aren’t everything though: at some point, we’ll get around to posting an analysis of how these phenomenal revenue figures are really derived from a handful of extremely successful drugs rather than a broad-based industry turnaround. The plateau in drug utilization, which we evaluated in-depth in a 2013 whitepaper, provides further reason for skepticism regarding the sustainability of the current rally.
It has also been said that everything carries within itself the seeds of its own destruction – this was true in the late 1990s/early 2000s when the last period of outsized growth was eventually contained through Paragraph IV challenges, higher copays, aggressive formulary management, and pro-generic policies. Considering that specialty drug prices have already sparked backlash among physicians and pharmacy benefits managers and that we’ve just recently seen the advent of biosimilars which promise to exert pricing pressure on biologics, it is not too difficult to predict that counterforces will eventually curtail the latest round of growth as well.