What's in Your Pipeline? The Feds Want to Know

The Agency for Health Care Research & Quality (the US government's de facto comparative effectiveness research center) is slowly but surely funneling out its portion of the $1.1 billion in stimulus money set aside for comparative effectiveness research last year.

Remember the stimulus money? It is supposed to be a down payment on health care reform--though lately it looks more and more like it may BE health care reform, for now at least.

Among the recent announcements, this one caught our eye: a request for bids to create a "horizon scanning system" for the agency.

No, this isn't some fancy pair of binoculars. AHRQ defines horizon scanning as "(1) the identification and monitoring of new and evolving healthcare interventions that are purported to or may hold potential to diagnose, treat or otherwise manage a particular condition; and (2) an analysis of the relevant healthcare context and landscape in which these new and evolving interventions exist in order to understand their potential impact on clinical care, the healthcare system, patient outcomes and costs."

The goal of the project is to "provide AHRQ with a systematic process to identify and monitor healthcare technologies that are likely to have a high clinical, system and cost impact in the US."

In other words, what is in the pipeline that we need to know about today to make sure that our comparative effectiveness research anticipates innovative technology.

This is a pretty big deal, if AHRQ can pull it off. The agency's director, Carolyn Clancy, explained the idea during The RPM Report's FDA/CMS Summit in December. "What I find amazing is that no developed country has figured out how to do this well so we are going to try to build a science in this area."

The goal of horizon scanning is not "academic navel gazing," she stressed. Rather, the agency wants "to anticipate what is on the horizon in the next three to five years and what kinds of questions might we be working to understand, even before the product is on the market, which patients are likely to benefit."

That may sound scary to some: Will the federal government be working to restrain uptake of new technology? It may also sound like an opportunity: if you have a breakthrough that truly transforms a treatment paradigm, maybe the feds will become champions for early adoption. For Clancy, it is the latter: This is "not intended in any way to discourage innovation," she told the FDA/CMS Summit. "Quite the reverse."

Whether horizon scanning is a threat, an opportunity, neither or both, we can't say for sure yet. But this we do know: if you aren't building comparative effectiveness research into your drug development plan, the federal government will try to do it for you.

image from flickr user Matti Mattila used under a creative commons license.

Stealth Comparative Effectiveness in U.S.

Are you sitting down?

The FDA is practicing stealth comparative effectiveness.

Or at least that's one of the claims to come out of a lively panel discussion that attempted to grade the regulatory agenda of the new leadership at FDA during the first day of The Pink Sheet's annual FDA/CMS Summit.

The discussion was sparked some provocative data released by the Director of the Office of New Drugs, John Jenkins, during his status report on new drug approvals. (You think he only took industry to task for submitting incomplete applications? Guess again.)

In an effort to silence critics who charge the FDA is becoming more conservative, approving fewer drugs because of its safety first initiatives, Jenkins and his team parsed applications data for the past 17 years, looking at the percentage of new molecular entities approved on first action during five-year increments. Here's what they found: NMEs with priority review did pretty well; in the most recent period, 68% of the compounds won approval, up from 58% in the previous time period. But for standard NME applications, the story was far different: 70% of the medicines were not approved on first action.

Calling this failure rate "a huge burden on the system," Jenkins challenged the drug industry to do some more navel gazing. "The industry needs to ask itself why the failure rate [for standard NMEs] is so high," he says.

It's not like execs haven't been asking that question. Perhaps the only issue causing more hand-wringing than comparative effectiveness is the lack of R&D productivity in the industry. That's why folks at Lilly, for instance, are aiming to expand their highly publicized Chorus experiment, which aims to identify earlier--and more cheaply--whether new compounds even have a shot at becoming viable medicines.

Mary Pendergast, the former deputy FDA commisioner and now President of Pendergast Consulting looked at Jenkins' data and came up with one possible answer that takes some heat off the industry. Maybe one reason it's so much harder to get the second, third, fourth, and fifth drugs in a class approved these days stems from FDA's desire to see superiority data. "What we are seeing--and should be paying attention to--is [the emergence of] stealth comparative effectiveness," she claims.

Note that current laws stipulate explicitly that FDA does not have a mandate to practice comparative effectiveness. But in Pendergast's view, the emphasis on superiority data "is a tiny loophole that the FDA is driving a truck through."

Better that than a camel through the eye of a needle, eh?

Image courtesy of flickrer (cup)cake_eater used with permision through a creative commons license.

Plavix Label Change: Good For Effient Now, Bad For Brands in the Long Run?

The Food & Drug Administration's public health alert on Plavix is, as we point out in "The Pink Sheet" DAILY, a nice boost for Eli Lilly and Daiichi Sankyo, who market the competing platelet agent Effient.

But the back story to this regulatory action merits closer attention by all pharmaceutical sponsors. This is no ordinary labeling change, and the implications of how the regulatory response came about only underscore how difficult it will be for all sponsors who hope to sustain (or revive?) the blockbuster model in the years to come.

This labeling change suggests a model for application of pharmacogenomic research that biopharma companies will find very threatening: it sure looks like sponsors hoping to build blockbuster franchises are at a huge disadvantage against payors hoping to limit those opportunities.

And that's why this labeling change may end up being bad news for all brands in the long run--very much including Effient.

First, the news: FDA has revised Plavix labeling to emphasise that the Bristol-Myers Squibb/Sanofi Aventis blockbuster doesn't work too well in patients who are poor metabolizers of the drug. In particular, FDA is concerned about impairment of the CYP2C19 metabolic pathway, whether because of genetic variations or coadministration of other drugs, including the widely used proton pump inhibitor omeprazole (Prilosec).

Okay, none of that is actually news. FDA first issued the warning in January, and quietly modified Plavix labeling in May.

What is news is that FDA has decided that information is now a formal warning, rather than a milder precaution--and, more importantly, the agency chose to amplify that warning (especially regarding PPI use) via a media conference call.

It is easy to see why Lilly and Daiichi would be pleased: anything that complicates the decision to prescribe Plavix will help them make the case that doctors should prescribe Effient (and, as we've already pointed out, they need all the help they can get).

Okay, so this sounds almost reassuringly like a classic story of head-to-head competition in a blockbuster class, and how the regulatory process can play to one side's advantage. Plavix is dinged, Effient benefits.

But this is nowhere near that simple.

Because there are third parties involved: payors and pharmacy benefit managers. The interaction between PPIs and Plavix was first publicized by Aetna and by Medco, both of whom used claims data to suggest an association between PPI use and diminished outcomes for patients treated with Plavix.

Its not just that payors capitalized on a safety issue: they really drove the regulatory response and the application of a newly discovered pharmacogenomic marker. In Medco's case at least, Chief Medical Officer Robert Epstein told us, the whole idea was to find a way to test the emerging theory that CYP2C19 genotyping may predict Plavix response. Since Medco didn't have genotyping data on patients in its database, it looked at concomitant use of omeprazole instead, since the PPI is a known inhibitor of the 2C19 pathway.

FDA's first public health alert followed the Aetna and Medco claims studies; the latest one came after Bristol and Sanofi conducted a drug interaction study confirming the observational results. That's certainly not a regulatory model sponsors are eager to consider--especially since we would be willing to bet that the observational research that triggered the warning cost Medco much less than the clinical trial the sponsors were forced to conduct to confirm it.

Medco, at least, isn't done. As we reported here, the company is now taking the next step, conducting a large scale observational study to test the hypothesis that the superior efficacy demonstrated by Lilly in its head-to-head study of Effient vs. Plavix can be explained by the inclusion of poor metabolizers of Plavix in the comparator group.

And Medco's interest most definitely is NOT in helping either brand in this class.

Medco's interests include advancing the company's positioning as a leader in therapy management, particular as it comes to applying pharmacogenetic knowledge. And Medco certainly wants to work with its payor clients to make sure insured members receive the best possible care.

But what Medco wants above all is to carve out a long term market for generic clopidogrel--and in effect limit Effient's share (as well as the share of all future brands in the class)--to whatever slice can't be held for the generic.

The study design, as Epstein explained to us, is simple: Medco will (at its own cost) run a genetic screen on patients prescribed Plavix to identify those who properly metabolize the drugs. It will then compare 14,000 of those patients to 14,000 Medco members who receive Effient, and see if there is a difference in cardiovascular outcomes.

Medco clearly expects to demonstrate that there is no meaningful difference between the two.

Now this whole thing could backfire on Medco. Its data could end up suggesting superior outcomes even when the comparison arm is enriched for Plavix response. (And Medco has registered the trial on ClinicalTrials.gov, so while we doubt they would trumpet that result, they can't just bury it either.)

And the study could by itself end up promoting the launch of Effient. Certainly, Lilly and Daiichi are only too happy to have Medco's support in spreading the message that their drug is active regardless of that specific genomic marker.

Indeed, as part of the screening effort, Medco is likely to drive some conversions from Plavix to Effient: patients who are genotyped as poor metabolizers will be informed of that status (as will their physician). Medco will not make any recommendations, but it is safe to bet that many identified as poor responders to Plavix will switch therapies. Given that 30% or so of the population has the genotype in question, Medco is likely to notify about 6,000 people that they may not be getting the full benefit of their antiplatelet therapy with Plavix.

But that only underscores the bigger point. Medco is willing to make a relatively big investment--and even to help grow a potential blockbuster franchise in the short term--in order to help limit the size of that market in the long run.

And it will cost Medco far less to do that than it costs for sponsors to bring potential blockbusters to the market in the first place.

Now, Epstein wasn't willing to disclose how much this undertaking will cost, but he did suggest it isn't terribly expensive. Medco collects the outcomes data already, so the only cost will be running the genotyping program. Medco will be doing the tests in house, via its own CLIA-certified lab test, so that expense will be kept as low as possible.

All in all, that is not a trivial expense for a pharmacy benefit management company to take on spec, but we're willing to bet it is less than 1% what it cost for Lilly to "prove" the superiority of Effient in a head to head trial.

Which is why, when it comes to trying to establish blockbusters in an era of high payor influence and ever advancing knowledge of the heterogeneity of drug response, it seems like the odds are stacked in favor of those who want to keep market sizes small.

Look for much more on this topic in an upcoming issue of The RPM Report.

image from flickr user mafleen used under creative commons.

Off-Label Promotion … By HHS

Like everyone else, we get more email in a day than we can possibly read, so sifting through the in-box is an exercise in triage and second-guessing. As in, “What were we thinking when we signed up for every HHS list-serve?”

Then there are days like today, when we saw the following gem glimmering in our over-crowded in-box:

Sender: US Dept. of Health & Human Services
Subject: Going Off-Label

Yeah, we opened that one. Given the billions upon billions paid (and to be paid) to settle prosecutions of manufacturers involving off-label use of medicine, we were keen to know exactly what HHS plans to do next.

Okay, so it turns out it was a link to HHS Healthbeat, a daily podcast for consumers, focusing on off-label use of medicine. (You can listen to the podcast here, or just read it—it's short—here).

“Everybody tells the patient to read and follow label directions. But sometimes the doctors themselves don’t. They prescribe a drug in ways – or for conditions – that the label doesn’t talk about,” HHS tells consumers.

Then some words of solace for those in industry who fear that off-label use is itself being criminalized in the context of recent enforcement actions: “That actually can be good for you. It’s called an off-label use, and the doctor may be acting based on the latest research.”

Now, HHS isn’t exactly encouraging off-label use. The podcast includes a quote from Agency for Healthcare Research and Quality Director Dr. Carolyn Clancy, who advises: “If it turns out that your doctor has given you an off-label drug, you should ask your doctor if the off-label drug is likely to work better than an approved treatment.”

Of course, that is also a question AHRQ can (and we assume will) help to answer, now that HHS has $1.1 billion to spend on comparative research…

The Next "Non-Interference" Clause

The biopharma industry is quite pleased with Oregon Democratic Rep. Kurt Schrader’s bill to create a federal comparative effectiveness research institute. His bill (HR 2502) addresses a lot of industry’s concerns about how a federal agency might go about conducting and publicizing comparative research.

There’s plenty of substantive reasons for industry to support the approach outlined in Schrader’s bill. (You can read our coverage of the bill here; for more on why industry is so concerned about CER, start here.)

But what caught our attention was a short clause in the bill labeled “Physician Out.” The provision is an effort to put into legislative language a protection against industry’s nightmare scenario: a situation where a federal agency essentially dictates treatment based on one-size-fits-all conclusions about comparative (and cost) effectiveness.

So, the bill says:

“None of the reports submitted under this section or research findings disseminated by the [new federal comparative research] Institute shall be construed to prevent the physician and patient to ultimately determine what is best for the patient involved given the individual circumstances of different patients.’’

Does anyone else hear an echo of the now infamous “non-interference” clause included in the Medicare prescription drug legislation enacted in 2003? That provision famously prohibits the federal government from interfering in the pricing of prescription drugs sold under the Part D benefit.

The protection was deemed critical by biopharma companies—especially on the biotech side of the ledger—as a way to assure investors that the new law was not a price-control bill.

But it also became an instant rallying cry for Democrats, who painted the Part D program as gift to Big Pharma at the expense of better prices for the elderly and disabled.

To us, the hue-and-cry over the clause was always much ado about nothing. The entire Medicare Part D model was premised on the notion that private drug insurance plans would take risk for delivering high quality care at the lowest possible cost. If you believe that model works, there is no reason for the government to interfere in the first place. On the other hand, if the Part D model didn’t work, price controls were inevitable.

More to the point, the Bush Administration had no intention of interfering, so the clause protected against a threat that didn't exist. In the end, the “non-interference clause” didn’t add a penny to the bottom lines of any biopharma companies. But it did undercut the political payoff industry might have gotten from Part D.

The pharmaceutical industry deserves credit for making the drug benefit happen at a time when there was no reason to believe it would. Yes, it was good for business, but it was also good for Medicare beneficiaries.

It would have been naïve to expect a grateful American public to shower Big Pharma with love—but thanks to “non-interference,” something closer to the opposite happened. So, whatever good the “non-interference” clause did to reassure investors, it was a gift to critics of the industry and especially to the Democratic party, allowing them to score political points without undercutting a long-held goal of expanding the generosity of the Medicare program. The fact that the Democrats have dropped the issue (for the time being at least) doesn’t change the reality that the outcry over the provision probably helped a few of them get elected in the first place.

Will history repeat itself with the effort to prevent “interference” in the doctor-patient relationship? On its face, the clause strikes us as another exercise in wistful thinking if not legislative over-reaching. If your belief is that CER is a conspiracy to create a government-dictated health care rationing system, why would these few words make a difference? More realistically, if government-funded CER defines professional standards and coverage policy, there is no need for anyone to interfere in prescribing decisions—they will conform regardless.

The bigger issue is that all this emphasis on protections seems to us to be painting industry in the wrong light—defined by fear rather than opportunity.

After all, everyone in industry believes that pharmaceutical therapy in general is a cost-effective form of health care. (Lilly CEO John Lechleiter made that argument earlier this month during a DC health care policy address.)

The fear that CER will be defined as driving down the small slice of spending on health care devoted to pharmaceuticals is understandable—but probably misplaced. After all, even if pharmaceutical spending is zeroed out, health care spending will still be on an unsustainable course in the decades ahead. Over time, any federal comparative research effort is much more likely to focus on variations in practice that drive huge costs, rather than focusing narrowly on whether drug A is better than drug B.

So, by rights, biopharma companies should be leading the charge on comparative effectiveness. Instead, the perception is that industry opposes CER. That is not the official position of any company, to our knowledge, but that is beside the point. Right now, it looks like industry is afraid of CER—as if it doesn’t believe what it says about drugs being cost-effective.

And that’s the danger of falling into the “non-interference” trap. If biopharma companies truly believe in the value of their therapies, they shouldn’t let themselves be defined as afraid of the consequences of research to prove it.

Notes from BIO: A Big Gap In Industry's Plan For Comparative Research

The biopharma industry has a big problem with the comparative effectiveness research provisions included in the stimulus bill enacted earlier this year.

As we noted in The RPM Report, it lacks several key elements that industry says need to be part of a functioning system, including an implementation process that they feel invovles their input. That sure makes a lot of folks at BIO very nervous.

Hence, an all-out lobbying campaign for new legislation to establish an independent institute to oversee comparative research.

The preferred approach was articulated by Senate Finance Committee Chairman Max Baucus in legislation introduced last year, and industry hopes to see that vision included in any health care reform bill this year, Foley Hoag Attorney Barrett Thornhill said during a breakout session May 20.

There's just one problem: even in the best case scenario, legislation won't change how the initial bolus of funding--$1.1 billion--gets spent.

Thornhill, whose firm represents the Partnership to Improve Patient Care--an association funded by BIO and PhRMA and other organizations to lobby on CER--puts the chances of getting the Baucus proposal into health care reform at just 50/50. But even it if is included and signed into law this fall, he notes, a new institute won't be set up until the end of 2010 at the earliest, with research projects beginning no earlier than 2011.

So "you have this gap between when the [stimulus] funding gets handed out until you have new framework even established," Thornhill noted. "So its hard for us to go out and lobby to have this Conrad-Baucus entity just control the funding. The pushback is 'What are we are going to do for two and a half years? Just sit on our hands?'"

"That's not what the House Democrats are interested in doing," Thornhill says, "and I guarantee that's not what they are going to do."

Seroquel Lessons: Raised Eyebrows and Furrowed Brows

The very interesting Washington Post front page story on March 4 about an unfavorable Seroquel study that may have been “buried” during clinical development ends with a comment from the principal investigator of the CATIE trial, the large NIH comparative trial of antipsychotics.

Post writer Shankar Vedantam says “Jeffrey Lieberman, a Columbia University psychiatrist who led the federal study, said doctors missed clues in evaluating antipsychotics such as Seroquel. If a doctor had known about Study 15, he added, ‘it would raise your eyebrows.’"

That’s an intriguing observation, especially since Lieberman was not only the lead investigator for the NIH study but also for a smaller comparative study commissioned by Seroquel manufacturer AstraZeneca which was conducted during the course of the large NIH comparative project.

As we wrote at the time of the first CATIE results in 2005, AstraZeneca was one of the most aggressive participants in the atypical antipsychotic field in its preparations for the release of comparative information from CATIE.

During 2003, while CATIE was already underway, AstraZeneca commissioned a 52-week comparative trial of Seroquel, Lilly's Zyprexa and J&J's Risperdal in first-episode psychosis, a trial that closely paralleled CATIE but compared a response in a category of patients that was excluded from the NIH trial.

Called CAFÉ (Comparison of Atypicals in First Episode Psychosis), AstraZeneca’s trial even echoed CATIE’s name. The two studies shared about 14 of the sites included in CATIE.

CAFÉ may have added information about another group of patients but it also improved the results for Seroquel noticeably and gave AstraZeneca something positive to say when the CATIE results were released.

The recent Post story raises issues about studies that might not have been reported to keep unfavorable information from the light of day.

The real world is even more complicated. As the CATIE/CAFÉ situation reminds, studies can be designed and run by similar teams that make it difficult to parse a useful meaning from the research. And that's an important message for the future.

During a period while the policy and budget communities in Washington are rallying around comparative effectiveness as a way to align health care spending with the most sensible and cost effective treatments, the CATIE experience is a useful warning of a tough road ahead for that effort.

Previous experience presages a particularly difficult path ahead for the advocates of comparative research as an educational tool – what could be called the Baucus school of comparative effectiveness.

The way comparative trials have been run to this point suggests there will be plenty of furrowed, confused brows in the future as well as raised eyebrows.

Innovation Is the Pharmaceutical Industry's Only Salvation

We here at The IN VIVO Blog probably get a little bit too caught up in our own blathering. As a tonic, we'll be inviting some outsiders to contribute. As here: to get an investor's point of view on the industry, we asked T. Rowe Price biotech analyst Jay Markowitz, MD to share some of his thoughts.

If the movie Cool Hand Luke were a commentary on the pharmaceutical industry, the most memorable line would be, "what we've got here is failure to innovate." (For an IN VIVO take on Cool Hand Luke and innovation via the JP Morgan Healthcare meeting, click here)

The decline of the drug industry is all the more dramatic in the context of its past accomplishments. Many of the most important advances in health, from HIV to cancer, are attributable to new drugs. And yet in a 2008 survey by USA Today, the Kaiser Foundation, and the Harvard School of Public Health, 44% of Americans had an unfavorable view of the pharmaceutical industry. Only health insurers and oil companies did worse.

The industry's woes boil down to a single cause: inadequate innovation. It is estimated that by 2015, $200 billion worth of branded drug sales may be lost to generic competition. The 24 new drugs approved by the FDA in 2008 was the highest number since 2004; only nine came from multinational drug companies. This meager number can replenish but a fraction of pending lost sales.

The poor record of new drug approvals can’t be blamed on a lack of R&D spending. Last year the major pharmaceutical companies spent over $50 billion on drug discovery and development. If current trends are any guide, the $1 billion estimated cost per new drug now will seem like a bargain in the future.

The industry finds itself in such a predicament because it can no longer go after me-too drugs in such blockbuster categories as ulcer medicines, blood pressure pills, antidepressants, and cholesterol lowering agents. Pharmaceutical companies previously had the luxury of letting someone else take the risk of innovation; if that someone succeeded, the drug company could follow fast with a similar drug that might have some advantages. It paid more to imitate than create. With minimal clinical differentiation of their products, companies needed to spend heavily on marketing to drive sales. But it was more profitable to spend on drug promotion than drug creation.

That equation is changing. Now that cheap generics and multiple branded drugs are available in many therapeutic categories, innovation may end up being all that pays.

To reverse its current plight and not only survive but thrive in the future, industry leaders must accept the gravity of their situation and address its root cause.

First, they must recognize that innovation is more about people than process; it can neither be scaled nor industrialized. Drug companies ought to pare back internal research, foster a more entrepreneurial culture, and be more open-minded about accessing research done by others. Far more productive to divide a $1 billion research investment among ten to twenty small, scrappy, hungry companies than to concentrate in one that is big and complacent.

Second, they need to leverage their strengths in drug development and regulatory affairs. Whereas smaller companies may be more adept at discovering novel drugs, testing them in people and getting them approved put a premium on money, manpower, and experience. Because they are constrained by capital and limited know how, all too often smaller companies make mistakes by under-investing in clinical trials or pursuing needlessly risky approval strategies. Pharmaceutical companies should grasp the opportunity to partner with smaller companies in the middle phases of human testing, thereby providing the necessary money and expertise to minimize the chance that a drug fails because it was developed for the wrong indication or because of poor planning and execution. Good new drugs are too precious to delay or waste.

Third, they should embrace comparative-effectiveness testing and value-based drug pricing to support the argument for first- or best-in-class drugs. Although such a strategy would result in higher clinical attrition, clear product differentiation would reduce the need for sales and marketing. Far better for data, not advertising, to determine which drugs are prescribed.

And fourth, they should not view mega-mergers as a solution. Yes, in the short term, consolidation can increase sales and, by reducing redundant costs, profits. And it can bring new capabilities to the acquirer. But it will ultimately disappoint unless it redresses fundamental problems. For a merger between two big pharmaceutical companies to generate long term value, it must result in more novel drugs than each would have created separately.

From my point of view as an investor, the drug industry -- despite its challenges -- is ideally positioned to translate tremendous gains in chemistry, biology, and genetics into important new medicines that extend lives and reduce suffering. But it must discard its risk-averse and xenophobic culture, embrace the drug discovery work taking place in hundreds of creative, entrepreneurial companies, and recognize that constant innovation is its only hope for sustainable growth. The good news is that there are ample opportunities to succeed. Several pharmaceutical companies are already taking appropriate steps to revive their businesses. But these steps must be bigger and faster.

Jay's views do not necessarily reflect those of his employer, T. Rowe Price, Inc., an investment management company.

The IN VIVO Blog Podcast: Comparative Effectiveness, HHS Candidates, and Health Reform

Welcome to the first IN VIVO Blog podcast. We know ... it took us a while, but we finally got there. There will be many different kinds of podcasts from various reporters and editors of the IN VIVO Blog, which includes writers of The RPM Report, IN VIVO, The Pink Sheet, Start-Up and other publications.

Our first podcast comes to you from the editors of The RPM Report. It's called "3 things in 3 minutes." What is it? It's just that: 3 topics that we try and discuss in 3 minutes (we went a little over).

The topics for this discussion? Comparative effectiveness, the next HHS Secretary, and whether Medicare Part D should be a model for health care reform. If you listen closely, you may even be rewarded with a "bonus topic."

Click here to listen to the podcast.

So tell us what you think. We'd love to hear your thoughts. Just be gentle.

Comparative Effectiveness Compare and Contrast

Since Sen. Max Baucus introduced his latest legislative attempt to create a national center on comparative clinical effectiveness research, we’ve had some time (OK, OK, a week—it is summer, after all) to dig into the details.

With the help of our colleagues over at “The Pink Sheet,” we’ve put together a list of some of the key differences between the Baucus bill (S 3408) and previous comparative effectiveness legislation—including language in the senator’s own Medicare Part D price negotiation bill from 2007.


So here’s a little compare and contrast, as reported in this week’s issue of The Pink Sheet.”

Organizational structure: Baucus would create the “Health Care Comparative Effectiveness Research Institute” as an independent, public-private entity. Past efforts had the Agency for Healthcare Research & Quality as a central player: The CHAMP Act would have established a center inside AHRQ, and Rep. Tom Allen (D-Maine)'s bill would have established a trust fund through the quasi-government agency.

Who sets the agenda?: Research priorities would be determined by the center itself. That’s a change from the comparative effectiveness language in Baucus’ Medicare Part D price negotiation bill, under which HHS would set the research agenda. But the government would have some influence over what would be studied: the HHS secretary and NIH director would sit on the governing board.

Money, money, money: Baucus calls for appropriations of $5 million in 2009, $25 million in 2010 and $75 million in 2011. Starting in the fourth year, annual contributions would be made from the Medicare Trust Fund ($1 per beneficiary per year), revenues generated by a fee on private health insurance policies ($1 per insured person per year); and general revenues ($75 million a year). Funding would increase to $300 million a year by the year 2013, and all funding would sunset after 10 years.

By comparison, the CHAMP Act set government appropriation levels at $90 million, $100 million and $110 million during the first three years, but was not as direct in setting levels for private participation. The bill said that the private sector contribute beginning in the fourth year to bring the total trust fund amount of $375 million.

And then there’s the billion-dollar question for industry….

How will the research be used?: Baucus does not offer any specific guidance on how the information can or cannot be used by private or public payors. That’s a big change from the price negotiation bill, which clearly stated that “authorizing consideration of comparative clinical effectiveness studies in developing and reviewing formularies under the Medicare prescription drug program.”

Temple and Comparative Effectiveness Standards Revisited

We told you to pay attention to the case of Vanda Pharmaceuticals.

To read our story, click here.

We haven’t changed our minds on the importance of FDA’s decision to reject the company’s atypical antipsychotic iloperidone and some of the regulatory and policy issues it brings to the fore.

We quoted comments from FDA’s Bob Temple at a July 30 Institute of Medicine meeting on evidence-based medicine. Temple heads up the office which regulates psychopharmacologic drugs and also serves as director of FDA’s Office of Medical Policy.

At the meeting, Temple said this:

“We have taken a couple of steps that I think are interesting. We’ve turned down new antipsychotic drugs because they didn’t seem as effective as the available therapy. I can’t remember if that ever happened before or whether we didn’t have the [courage] but we did. We decided that it wasn’t good if you’re an acute schizophrenic in the middle of an episode to be treated poorly.”

Our story has generated a number of comments, but we thought you’d be most interested in this one from Temple himself, who says we didn’t get it exactly right when analyzing his remarks at the meeting.

“Some of what I said is misinterpreted,” Temple said in an email. “At the IOM, I was explaining what I perceive drug companies to be perceiving and doing, not describing an FDA standard. That is what I was referring to when I said that ‘It’s getting harder to develop the third, fourth, fifth, and sixth member of a class of drugs because when there’s a generic available [within a class], people are inclined to use the cheap one.”

Our mistake. We thought we communicated that but after re-reading our story, it was confusing. Here’s the rest of Temple’s comments in their entirety. When Temple speaks, we always pay attention.

Temple: “Your next sentence said that comparative randomized studies ‘are the best, and maybe only, way to get drugs through FDA.’ That interpretation and conclusion are incorrect, and surprising, as your next sentence seems to recognize the commercial aspect of what I was saying: ‘To get anyone interested in the next member, you almost need to have some sort of advantage.’

It seems apparent that in my statement I was referring to my impression of what companies are doing to have a commercially viable product when there is a generic available for the drug class, and was not referring to any FDA requirement. In most settings, especially for symptomatic treatments, we do not get or ask for comparative data and are perfectly willing to approve a drug that is shown effective.

I did then go on to say that for antipsychotics (not naming a particular drug) we have rejected drugs that seemed clearly inferior to standard treatment because leaving someone with schizophrenia inadequately treated (which can take weeks to recognize) represents a risk. This is not so novel a position. We ask that new antibiotics, new anti-cancer drugs, new drugs intended to save lives or prevent bad outcomes (stroke, heart attack) have effects close to standard treatment for the same reason - importantly decreased effectiveness is not safe. We had not seen examples of anti-psychotic drugs that were markedly less effective than standard therapy; so I’m not sure you can really say that there's a new higher threshold.”

When looking at Vanda’s iloperidone, we still think there’s little room for negotiation on whether the company will have to do a head-to-head study against Risperdal. The company will have to decide whether it’s worth the money—and risk.

Antipsychotics and Comparative Effectiveness: FDA's Temple Explains Vanda "Not Approvable"

Pay attention to Vanda Pharmaceuticals.

The company and it's rejected investigational atypical antipschotic drug iloperidone appear to be a marker in the ongoing debate over whether FDA is increasingly using a comparative efficacy standard when considering new drug approvals.

“We are disappointed by this response, but will meet with the FDA to discuss this decision further,” Vanda Pharmaceuticals CEO Mihael Polymeropoulos said in a statement after receiving a “non-approvable” letter from FDA for the schizophrenia drug iloperidone, July 29.

Based on comments by FDA's dean of the drug review process, Bob Temple, there may not be much to discuss.

The atypical antipsychotic was licensed from Novartis after the Swiss company dropped it from development. Polymeropoulos previously headed up Novartis' global pharmacogenetics group before founding Vanda in 2003.

The FDA maintained that Vanda had demonstrated the effectiveness of iloperidone at 24 mg/day with efficacy similar to the active comparator, Pfizer’s ziprasidone (Geodon), according to the company. Vanda also claims the agency confirmed a prior study’s results that iloperidone was better than placebo in patients with schizophrenia at doses of 12-16 mg/day and 20-24 mg/day.

But FDA turned the drug away due to its lackluster performance versus Johnson & Johnson’s atypical risperidone (Risperdal). The agency, in its letter, said Vanda would have to conduct an additional trial comparing iloperidone to placebo and including an active comparator such as Risperdal or Eli Lilly’s olanzapine (Zyprexa). The company will also have to generate more safety data for the higher dose.

FDA has been assailed recently for going beyond its statutory obligation of approving and rejecting drugs simply based on its mission rooted in a singular question: do the benefits outweigh the risks? Critics say FDA is adopting a comparative effectiveness standard for me-too drugs.

FDA Office of New Drugs director John Jenkins insists that assertion is absolutely incorrect and that FDA always bases approvals on the benefit/risk question. To read more, click here. However, not everyone at the agency has been nearly as insistent on that issue.

Temple, who oversees the office which regulates psychopharmacologic drugs and also serves as director of FDA's Office of Medical Policy, has warned sponsors of the higher bar for approval in the past for classes where there are already multiple therapeutic options. To read about our warning in 2007, click here.

At a July 30 Institute of Medicine meeting on evidence-based medicine and comparative effectiveness, Temple unexpectedly—and briefly—addressed the iloperidone decision—we think.

“It’s getting much harder to develop the third, fourth, fifth, and sixth member of a class of drugs because when there’s a generic, people are inclined to use the cheap one,” Temple said.

Temple tried to frame comparative effectiveness studies—specifically randomized clinical trials and not literature reviews or observational studies—as the best, and maybe only, way to get those drugs through FDA.

“So to get anyone interested in the next member, you almost have to be able to have some sort of advantage. It could be safety, of course, but I see more interest than ever before because the industry regularly didn’t look at this sort of thing in comparative studies for a fair number of drugs.”

Then he weighed in specifically on what we assume was the iloperidone decision.

“We have taken a couple of steps that I think are interesting. We’ve turned down new antipsychotic drugs because they didn’t seem as effective as the available therapy.”

He continued: “I can’t remember if that ever happened before or whether we didn’t have the [courage] but we did. We decided that it wasn’t good if you’re an acute schizophrenic in the middle of an episode to be treated poorly.”

Those sentiments make it extremely unlikely that Vanda will be able to get an approval without conducting a large, expensive, prospective, head-to-head comparative clinical trial outlined in the FDA letter. Temple made it appear that there would be little room for negotiation.

Now it’s up to Vanda whether they want to use the $65 million in cash on hand plus future rounds of raising capital to do the studies FDA wants.

The broader message to drug developers is you can go ahead and add antipsychotics to the list of drugs that will have a higher threshold for FDA approval.