Clinical Trial Applications in Mexico: decentralization and acceleration of protocol approval

 

With the goals of accelerating the development of new molecules that improve the healthcare and quality of life of Mexicans, and of stimulating clinical investigation, pharmaceutical innovation and foreign investment in the country, on the 5th of March 2014, the COFEPRIS has authorized the eight National Institutes of Health and the High-Specialty Hospitals Coordinating Commission to pre-approve clinical investigation protocols.

Once the Institutes pre-revise the clinical protocol, it would take the COFEPRIS about 20 working days to grant the final approval. This decentralizing action is expected to reduce the total approval timelines to just a month: a third of what it takes today.

During the official designation of the entities, Mikel Arriola, head of the COFEPRIS said: “This is a great window of opportunity. We want more investigation in Mexico, in Mexican patients, we want more and better treatments to be developed and we wantbig pharma companies to invest more in investigation and innovation, taking advantage of the scientific excellence of the Institutes”. He also clarified that this decentralization don’t transfer regulatory functions, given that the last word on the approval of the protocols will stay with the COFEPRIS.

The nine public institutions that have been assigned as Authorized Third Parties to pre-revise clinical protocols are:

• Instituto Nacional de Cancerología. (National Institute of Cancerology)
• Instituto Nacional de Cardiología. (National Institute of Cardiology)
• Instituto Nacional de Ciencias Médicas y Nutrición. (National Institute of Medical Sciences and Nutrition)
• Instituto Nacional de Rehabilitación. (National Institute of Rehabilitation)
• Instituto Nacional de Neurología y Neurocirugía. (National Institute of Neurology and Neurosurgery)
• Hospital Infantil de México. (Mexico Children Hospital)
• Instituto Nacional de Salud Pública. (National Institute of Public Health)
• Instituto Nacional de Enfermedades Respiratorias. (National Institute of Respiratory Diseases)
• Comisión Coordinadora de Institutos Nacionales de Salud y Hospitales de Alta Especialidad. (High-Specialty Hospitals Coordinating Commission)

The remaining five institutes and high-specialty hospitals will be able to join the scheme automatically and immediately.

Regulatory pathways for Registration of Pharmaceuticals for Human Use - European Union

Regulatory pathways for Registration of Pharmaceuticals for Human Use - European Union
There are currently four different procedures that can be used to submit a medicinal product for marketing approval in the European Union.
Centralized Procedure (CP)
Mutual Recognition Procedure (MRP)
Decentralized Procedure (DCP)
National procedure1.Centralized procedure: The Centralsied Procedure is administered by the European Medicines Agency (EMA). It consists of a single application which, when approved, grants marketing authorisation for all markets within the European Union.
Mandatory for the Centralised Procedure:
Biotechnological medicinal products
Orphan medicinal products
New active substances for which the therapeutic indication is the treatment of
– Diabetes
– Cancer
– Acquired immune deficiency syndrome (HIV)
– Neurodegenerative disorder (Alzheimer, …)
– Auto-immune diseases and other immune dysfunctions
– Viral diseases
Optional for the Centralised Procedure
New active substances
Innovative medicinal products
In the interests of patients at Community level
– Pandemic
– Generic medicinal products of nationally authorised reference medicinal products
– OTC medicinal products
Generic medicinal products of reference medicinal products authorised by the CPFurther Information: Centralized Procedure
2.Mutual Recognition Procedure (MRP):The MRP has been in place in the EU since 1995. The objective of this procedure is to obtain marketing authorizations in one or several Member States, when the medicinal product has already been granted authorization by at least one country in the European Community.
Where the medicinal product has already received in a MS a MA at the time of application.
The applicant requests one or more CMS(s)[Concerned member state] to mutually recognize the authorization granted by the RMS[Reference Member State]. Within 90 days of receipt of a valid application by the RMS, the RMS provides the Assessment Report, or if necessary, updates any existing one and sends it together with other documents to the CMS(s) and to the applicant. The RMS launches the clock after receipt of the Assessment Report and validation of the application by each of the CMS(s). Within 90 days, the CMS(s) recognizes the decision of the RMS. Thirty days after the close of the procedure; the competent authorities of the CMS(s) adopt a decision and grant marketing authorization. At the end of the MRP with a positive agreement, a national marketing authorization will be issued to each of the CMS(s).
Mutual recognition means that EU countries may approve the decision made about a medicinal product by another EU country. The pharmaceutical company submits their application to the country chosen to carry out the investigative work, which then approves or rejects the application. The other countries have to decide within 90 days whether they approve or reject the decision made by the original country.
The mutual recognition procedure is based on that medicines are evaluated and approved by a Reference Member State (RMS) followed by a 90-day period where the Concerned Member States (CMS) consider the RMS assessment report. If the CMS agree with the assessment they should issue a marketing authorisation within 120 days from the start of the procedure.
Further Information: Mutual Recognition Procedure

3. Decentralized Procedure (DCP): The new DCP came into effect in the EU in 2005. The objective of this procedure is to obtain marketing authorizations in several Member States, when no marketing authorization has been granted in the European Community.
Where the medicinal product has not received in a MS a MA at the time of application.
The applicant should send an application to the competent authorities of each of the Member States, where there is intent to obtain a marketing authorization. The RMS (Reference Member State) will start the procedure after the application is determined to be complete by both the RMS and all the CMS(s).
The RMS forwards a preliminary Assessment Report on the dossier to the CMS(s) and the applicant within 70 days. The CMS(s) is asked to give comments on the proposed national prescription status and to inform the RMS.
On day 105, the RMS will forward all comments to the applicant and stops the clock if necessary, until the applicant prepares a response document. The RMS prepares a Draft Assessment Report on day 120 and may close the procedure if a consensus has been reached between the CMS(s) and the RMS. Otherwise; the CMS(s) has 90 more days to approve the Draft Assessment Report and other documents. Competent authorities of the RMS and the CMS(s) adopt a decision within 30 days after acknowledgement of their agreement to the Assessment Report and other documents.
At the end of the Decentralized Procedure with a positive agreement, a national marketing authorization will be issued to the RMS and each of the CMS(s).


Further Information: Decentralized Procedure Member State's SOP


4. National procedure: Independent national procedures will continue, but are strictly limited from 1 January 1998 to the initial phase of mutual recognition (granting of the marketing authorisation by the Reference Member State) and to medicinal products which are not to be authorised in more than one Member State.
Independent national procedures can also be used for extensions of authorized medicinal products as far as no a priori harmonization has been achieved for the initial marketing authorisation.


Scope of MRP/DCP/National Procedures:

New active substances (if not mandatory for the centralised procedure)
Generic medicinal products to national (and centralised) authorised reference medicinal products (if not a biotechnological medicinal product)
Informed consent applications
Well established use (WEU) (bibliographic applications) Special Types:

a. Repeat Use Marketing Authorization
b. Duplex Marketing Authorization
c. Parallel Imports Authorization
a. Repeat Use Marketing Authorization: A Marketing Authorisation Holder (MAH) can use the Mutual Recognition Procedure (MRP) for the same authorisation more than once after completion of a first MRP or a Decentralised Procedure (DCP)for the recognition of a marketing authorisation by other Member States (MS).
This procedure can be used in the following situations:

either by application to new Concerned Member States (CMS) not involved in the first MRP or DCP
or by reapplication to CMS withdrawn from the first procedure.Further Information: Procedural advice on Repeat Use

b. Duplex Marketing Authorization: A duplex marketing authorisation is a marketing authorisation for a product of which the dossier is identical to that of a product which is already authorised. In principle, this concerns a standard marketing authorisation, and the dossier must meet the known legal criteria. In a duplex marketing authorisation procedure, the MEB can waive a full evaluation, and the proof of authorisation (marketing authorisation) can be quickly issued.


Further Information: Duplex Marketing Authorization


c. Parallel Imports & Distribution:
Parallel Imports is issued by national competent authorities (Every country having own guidance for parallel imports) and Parallel distribution is issued by EMA.
Examples:
i. IMB (Irish Medicines Board): Parallel-importation is the importation from an EU Member State or a country within the EEA of a medicinal product which is therapeutically equivalent to a product already authorised in Ireland, by an importer who is someone other than the importer appointed by the marketing authorisation holder of the product on the Irish market.

The imported product may then be parallel-distributed in Ireland provided that the importer obtains an authorisation to market the product. An authorisation for a parallel-distributed product is identified by the letters 'PPA' in front of the authorisation number.

The IMB also operates a Dual-Pack Import Registration scheme. This applies to the parallel-import of a product which is identical in all respects to the product on the Irish market, and which is packaged in dual-market, identical packaging carrying the marketing authorisation numbers in both the source country and in Ireland. For parallel-imports which meet these criteria, a simplified registration process may be appropriate.

FDA Mobile Regulatory Fear Mongering by PhRMA

In a blog post provocatively titled "An App for That, But For How Much Longer?" (here), PhRMA's Kate Connors agreed with a Washington Times op-ed piece that suggested the FDA will soon require apps such as medication prescription renewal reminders and blood glucose level tracking functions to be regulated as medical devices. You can read the op-ed in this threaded archive: "How safe is that app? Should pharma apps be registered as medical devices?".

The op-ed author, Joel White, executive director of the Health IT Now Coalition, "suggests that this effort would lead to increased costs as well as constraints on user access to these apps, which 'may cause developers to move on to other, less burdensome endeavors.' In the end, this could hinder the way that patients can actively improve their own care," said Conners.

Before I get to destroying the case made by Connors and White, I should point out how these two people are related. White is the president of JC White Consulting, a registered lobbying firm (see here) retained by the Health IT Now Coalition and PhRMA, among others (see here). In her blog post, Connors said "A few days ago, I missed an op-ed in the Washington Times that I just came across today – and I’m glad I did." Joel, you should have DM'd Kate! Whatever! It's nice that White gets paid to write this "independent" op-ed piece that PhRMA can cite as if it were independent! Guys! Wake up! It's the era of transparency! Unfortunately, you can fool some -- maybe even most -- of the people all of the time and that is what keeps PhRMA in business.

Anyway, back to "FDA Mobile Regulatory Fear Mongering." I say "fear mongering" because it can't be true that White and Connors failed to read FDA's July guidance in which it stated that the agency does NOT consider the following types of apps to be mobile medical apps for purposes of the guidance:

"Mobile apps that are solely used to log, record, track, evaluate, or make decisions or suggestions related to developing or maintaining general health and wellness. Such decisions, suggestions, or recommendations are not intended for curing, treating, seeking treatment for mitigating, or diagnosing a specific disease, disorder, patient state, or any specific, identifiable health condition. Examples of these apps include dietary tracking logs, appointment reminders, dietary suggestions based on a calorie counter, posture suggestions, exercise suggestions, or similar decision tools that generally relate to a healthy lifestyle and wellness."

PhRMA/White do not quote FDA because to do so -- as I just did -- would kill the argument that FDA mobile guideline/regulations will stymie pharma from developing apps and will "hinder the way that patients can actively improve their own care." You should also read "No, the FDA is not assaulting mobile technology, Washington Times editorial misguided" published by iMedicalApps.

Meanwhile, there are medical apps being created by pharma that SHOULD be regulated by the FDA, IMHO. These are "calculator" apps designed to be used by physicians during diagnoses. One such app had to be "recalled" because of a bug that generated incorrect results. Unfortunately, thousands of physicians may not have heard of the "recall," which merely removed the app from app stores, not from the phones of physicians who downloaded the app. These physicians may still be using the buggy app. See "The Problem with Unregulated 'Calculator' Apps for Physicians: Buggy Software!"

P.S. Connors pointed out that PhRMA has its own medication reminder app for patients: "In fact, we at PhRMA have helped support the Script Your Future campaign, which itself includes medication reminders as a tool."

Just for fun, I signed up to receive reminders. I was, however, somewhat put off by the long legal disclaimer, which said, in part:

"You acknowledge and agree that we provide the reminder service and access to the reminder service as an "as is" and an "as available" basis, that your use of the reminder service is at your own risk, and that we make no representations, warranties or covenants whatsoever with respect thereto. For greater certainty, we do not guarantee that the reminder service will be available, run error-free or uninterrupted, that we will correct all errors or deficiencies related thereto or that all messages sent by you will arrive at their intended destination on time."

ROTFL! In essence, PhRMA says it makes no promises that this app will be useful. How is this supposed to help me improve my care if PhRMA does not even care to fix errors or deficiencies? Not a very consumer-friendly attitude, I must say! BTW, I am sure the FDA did NOT require PhRMA to write that.

Pharmaceuticals: Economics and Regulation

P

harmaceuticals are unique in their combination of extensive government control and extreme economics, that is, high fixed costs of development and relatively low incremental costs of production.

Regulation

The Food and Drug Administration (FDA) is the U.S. government agency charged with ensuring the safety and efficacy of the medicines available to Americans. The government’s control over medicines has grown in the last hundred years from literally nothing to far-reaching, and now pharmaceuticals are among the most-regulated products in this country. The two legislative acts that are the main source of the FDA’s powers both followed significant tragedies.

In 1937, to make a palatable liquid version of its new antibiotic drug sulfanilamide, the Massengill Company carelessly used the solvent diethylene glycol, which is also used as an antifreeze.1 Elixir Sulfanilamide killed 107 people, mostly children, before it was quickly recalled; Massengill was successfully sued and the chemist responsible committed suicide. This tragedy led to the Food, Drug, and Cosmetic Act of 1938, which required that drugs be proven safe prior to marketing.2 In the next infamous tragedy, more than ten thousand European babies were born deformed after their mothers took thalidomide as a tranquilizer to alleviate morning sickness.3 This led to the Kefauver-Harris Amendments of 1962, which required that efficacy be proven prior to marketing. Note that even though thalidomide’s problem was clearly one of safety, an issue for which the FDA already hadregulations, the laws were changed to add proof of efficacy.

Many people are unaware that most of the drugs, foods, herbs, and dietary supplements that Americans consume have been neither assessed nor approved by the FDA. Some are beyond the scope of the FDA’s regulatory authority—if no specific health claims are made—and some are simply approved drugs being used in ways the FDA has not approved. Such “off-label” uses by physicians are widespread and can reach up to 90 percent in some therapeutic areas.4Although the FDA tolerates off-label usage, it forbids pharmaceutical companies from promoting such applications of their products.

Problems, sometimes serious, can arise even after FDA approval. Baycol (cerivastatin), Seldane (terfenadine), Vioxx (rofecoxib), and “Fen Phen” (fenfluramine and phentermine) are well-known examples of FDA-approved drugs that their manufacturers voluntarily withdrew after the drugs were found to be dangerous to some patients. Xalatan (latanoprost) for glaucoma caused 3–10 percent of users’ blue eyes to turn permanently brown. This amazing side effect was uncovered only after the drug was approved as “safe and effective.” One group of researchers estimated that 106,000 people died in 1994 alone from adverse reactions to drugs the FDA deemed “safe.”5

One problem with the 1962 Kefauver-Harris Amendments was the additional decade of regulatory delay they created for new drugs. For example, one researcher estimated that ten thousand people died unnecessarily each year while beta blockers languished at the FDA, even though they had already been approved in Europe. The FDA has taken a “guilty until proven innocent” approach rather than weighing the costs and benefits of such delays. Just how cautious should the FDA be? Thalidomide and sulfanilamide demonstrate the potential benefit of delays, while a disease such as lung cancer, which kills an American every three minutes, highlights the costs.

In 1973, economist Sam Peltzman examined the pre- and post-1962 market to estimate the effect of the FDA’s new powers and found that the number of new drugs had been reduced by 60 percent. He also found little evidence to suggest a decline in the proportion of inefficacious drugs reaching the market.6 From 1963 through 2003, the number of new drugs approved each year approximately doubled, but pharmaceutical R&D expenditures grew by a factor of twenty.7

One result of the FDA approach is the very high, perhaps excessive, level of evidence required before drugs can be marketed legally. In December 2003, an FDA advisory committee declined to endorse the use of aspirin for preventing initial myocardial infarctions (MIs), or heart attacks.8 Does this mean that aspirin, which is approved for prevention of second heart attacks, does not work to prevent first heart attacks? No. One of the panelists, Dr. Joseph Knapka, stated: “As a scientist, I vote no. As a heart patient, I would probably say yes.” In other words, he had two standards. One standard is the scientific proof that aspirin works beyond any reasonable doubt. By this standard, the data on fifty-five thousand patients fall short.9 The other standard is measured by our choices in the real world. By this standard, aspirin passes easily. “The question today isn’t, does aspirin work? We know it works, and we certainly know it works in a net benefit to risk positive sense in the secondary prevention setting,” said panelist Thomas Fleming, chairman and professor of the Department of Biostatistics at the University of Washington, who also voted no.10

When our medical options are left to the scientific experts at a government agency, that agency has a bias toward conservatism. The FDA is acutely aware that of the two ways it can fail, approving a bad drug is significantly worse for its employees than failing to approve a good drug. Approving a bad drug may kill or otherwise harm patients, and an investigation of the approval process will lead to finger pointing. As former FDA employee Henry Miller put it, “This kind of mistake is highly visible and has immediate consequences—the media pounces, the public denounces, and Congress pronounces.”11 Such an outcome is highly emotional and concrete, while not approving a good drug is intellectual and abstract. Who would have benefited and by how much? Who will know enough to complain that she was victimized by being denied such a medicine?

The FDA’s approach also curtails people’s freedom. The available medicines are what the FDA experts think we should have, not what we think we should have. It is common to picture uneducated patients blindly stumbling about the complexities of medical technology. While this certainly happens, it is mitigated by the expertise of caregivers (such as physicians), advisers (such as medical thought leaders), and watchdogs (such as the media), which comprise a surprisingly large support group. Of course, not all patients make competent decisions at all times, but FDA regulation treats all patients as incompetent.

A medicine that may work for one person at a certain dose at a certain time for a given disease may not work if any of the variables changes. Thalidomide, though unsafe for fetuses, is currently being studied for a wide range of important diseases and was even approved by the FDA in 1998, after four decades of being banned, for a painful skin condition of leprosy.12 Similarly, finasteride is used in men to shrink enlarged prostate glands and to prevent baldness, but women are forbidden even to work in the finasteride factory due to the risk to fetuses. Also, the FDA pulled Propulsid (cisapride), a heartburn drug, from the market in March 2000 after eighty people who took it died from an irregular heartbeat. But for patients with cerebral palsy Propulsid is a miracle drug that allows them to digest food without extreme pain.13 What is a poison for one person may be a lifesaver for another.

Economists have long recognized that good decisions cannot be made without considering the affected person’s unique characteristics. But the FDA has little knowledge of a given individual’s tolerance for pain, fear of death, or health status. So the decisions the FDA makes on behalf of individuals are imperfect because the agency lacks fundamental information (see information and prices). Economist Ludwig von Misesmade this same argument in its universal form when he identified the Achilles’ heel of socialism: centralized governments are usually incapable of making good decisions for their citizens because they lack most of the relevant information.

Some economists have proposed that the FDA continue to evaluate and approve new drugs, but that the drugs be made available—if the manufacturer wishes—during the approval process.14 The FDA could rate or grade drugs and put stern warnings on unapproved drugs and drugs that appear to be riskier. Economists expect that cautious drug companies and patients would simply wait for FDA approval, while some patients would take their chances. Such a solution is paretooptimal, in that everyone is at least as satisfied as under the current system. Cautious patients get the safety of FDA approval while patients who do not want to wait don’t have to.

Economics

A study by Joseph DiMasi, an economist at the Tufts Center for the Study of Drug Development in Boston, found that the cost of getting one new drug approved was $802 million in 2000 U.S. dollars.15 Most new drugs cost much less, but his figure adds in each successful drug’s prorated share of failures. Only one out of fifty drugs eventually reaches the market.

Why are drugs so expensive to develop? The main reason for the high cost is the aforementioned high level of proof required by the Food and Drug Administration. Before it will approve a new drug, the FDA requires pharmaceutical companies to carefully test it in animals and then humans in the standard phases 0, I, II, and III process. The path through the FDA’s review process is slow and expensive. The ten to fifteen years required to get a drug through the testing and approval process leaves little remaining time on a twenty-year patent.

Although new medicines are hugely expensive to bring to market, they are cheap to manufacture. In this sense, they are like DVD movies and computer software. This means that a drug company, to be profitable or simply to break even, must price its drugs well above its production costs. The company that wishes to maximize profits will set high prices for those who are willing to pay a lot and low prices that at least cover production costs for those willing to pay a little. That is why, for example, Merck priced its anti-AIDS drug, Crixivan, to poor countries in Africa and Latin America at $600 while charging relatively affluent Americans $6,099 for a year’s supply.

This type of customer segmentation—similar to that of airlines—is part of the profit-maximizing strategy for medicines. In general, good customer segmentation is difficult to accomplish. Therefore, the most common type of pharmaceutical segmentation is charging a lower price in poorer countries and giving the product free to poor people in the United States through patient assistance programs.

What complicates the picture is socialized medicine, which exists in almost every country outside the United States—and even, with Medicare and Medicaid, in the United States. Because governments in countries with socialized medicine tend to be the sole bargaining agent in dealing with drug companies, these governments often set prices that are low by U.S. standards. To some extent, this comes about because these governments have monopsony power—that is,monopoly power on the buyer’s side—and they use this power to get good deals. These governments are, in effect, saying that if they cannot buy it cheaply, their citizens cannot get it.

These low prices also come about because governments sometimes threaten drug companies with compulsory licensing (breaking a patent) to get a low price. This has happened most recently in South Africa and Brazil with AIDS drugs. This violation of intellectual property rights can bring a seemingly powerful drug company into quick compliance. When faced with a choice between earning nothing and earning something, most drug companies choose the latter.

The situation is a prisoners’ dilemma. Everyone’s interest is in giving drug companies an adequate incentive to invest in new drugs. To do so, drug companies must be able to price their drugs well above production costs to a large segment of thepopulation. But each individual government’s narrow self-interest is to set a low price on drugs and let people in other countries pay the high prices that generate the return on R&D investments. Each government, in other words, has an incentive to be a free rider. And that is what many governments are doing. The temptation is to cease having Americans bear more than their share of drug development by having the U.S. government set low prices also. But if Americans also try to free ride, there may not be a ride.

Governments are not the only bulk purchasers. The majority of pharmaceuticals in the United States are purchased by managed-care organizations (MCOs), hospitals, and governments, which use their market power to negotiate better prices. These organizations often do not take physical possession of the drugs; most pills never pass through the MCO’s hands, but instead go from manufacturer to wholesaler to pharmacy to patient. Therefore, manufacturers rebate money—billions of dollars—to compensate for purchases made at list prices. Managed-care rebates are given with consideration; they are the result of contracts that require performance. For example, a manufacturer will pay an HMO a rebate if it can keep a drug’s prescription market share above the national level. These rebates average 10–40 percent of sales. The net result is that the neediest Americans, frequently those without insurance, pay the highest prices, while the most powerful health plans and government agencies pay the lowest.

Pharmaceutical companies would like to help poor people in the United States, but the federal government and, to a much lesser extent, health plans have tied their hands. Drug companies can and do give drugs away free through patient assistance programs, but they cannot sell them at very low prices because the federal government requires drug companies to give the huge Medicaid program their “best prices.” If a drug company sells to even one customer at a very low price, it also has to sell at the same price to the 5–40 percent of its customers covered by Medicaid.

Drug prices are regularly attacked as “too high.” Yet, cheaper over-the-counter drugs, natural medicines, and generic versions of off-patent drugs are ubiquitous, and many health plans steer patients toward them. Economic studies have shown that even the newer, more expensive drugs are usually worth their price and are frequently cheaper than other alternatives. One study showed that each dollar spent on vaccines reduced other health care costs by $10. Another study showed that for each dollar spent on newer drugs, $6.17 was saved.16 Therefore, health plans that aggressively limited their drug spending ended up spendingmore over all.

Most patients do not pay retail prices because they have some form of insurance. In 2003, before a law was passed that subsidizes drugs for seniors, 75–80 percent of seniors had prescription drug insurance. Insured people pay either a flat copayment, often based on tiers (copayment levels set by managed-care providers that involve a low payment for generic drugs and a higher payment for brand-name drugs) or a percentage of the prescription cost. On average, seniors spend more on entertainment than they do on drugs and medical supplies combined. But for the uninsured who are also poor and sick, drug prices can be a devastating burden. The overlap of the 20–25 percent who lack drug insurance and the 10 percent who pay more than five thousand dollars per year—approximately 2 percent are in both groups—is where we find the stories of people skimping on food to afford their medications. The number of people in both groups is actually lower than 2 percent because of the numerous patient assistance programs offered by pharmaceutical companies. For all the talk of lower drug prices, what people really want is lower risk through good insurance.

Insurance lowers an individual’s risk and, consequently, increases the demand for pharmaceuticals. By spending someone else’s money for a good chunk of every pharmaceutical purchase, individuals become less price sensitive. A two-hundred-dollar prescription for a new medicine is forty times as expensive as a five-dollar generic, but its copay may be only three times the generic’s copay. The marginal cost to patients of choosing the expensive product is reduced, both in absolute and relative terms, and patients are thus more likely to purchase the expensive drug and make purchases they otherwise would have skipped. The data show that those with insurance consume 40–100 percent more than those without insurance.

Drugs account for a small percentage of overall health-care spending. In fact, branded pharmaceuticals are about 7 percent and generics 3 percent of total U.S. health-care costs.17 The tremendous costs involved with illnesses—even if they are not directly measured—are the economic and human costs of the diseases themselves, not the drugs.

---

About the Author

Charles L. Hooper is president of Objective Insights, a company that consults for pharmaceutical and biotech companies. He is a visiting fellow with the Hoover Institution.

---

Further Reading

Bast, Joseph L., Richard C. Rue, and Stuart A. Wesbury Jr. Why We Spend Too Much on Health Care and What We Can Do About It.Chicago: Heartland Institute, 1993.

DiMasi, Joseph A., Ronald W. Hansen, and Henry G. Grabowski. “The Price of Innovation: New Estimates of Drug Development Costs.”Journal of Health Economics 22, no. 2 (2003): 151–185.

Higgs, Robert, ed. Hazardous to Our Health? FDA Regulation of Health Care Products. Oakland, Calif.: Independent Institute, 1995.

Hilts, Philip J. Protecting America’s Health: The FDA, Business, and One Hundred Years of Regulation. New York: Alfred A. Knopf, 2003.

Klein, Daniel B., and Alexander Tabarrok. FDAReview.org. Oakland, Calif.: Independent Institute. Online at:http://www.fdareview.org/.

Miller, Henry I. To America’s Health: A Proposal to Reform the Food and Drug Administration. Stanford, Calif.: Hoover Institution Press, 2000.

---

Footnotes

1.

Philip J. Hilts, Protecting America’s Health: The FDA, Business, and One Hundred Years of Regulation (New York: Alfred A. Knopf, 2003), pp. 89–90.

2.

Daniel B. Klein and Alexander Tabarrok, FDAReview.org, Independent Institute, online under “History” at:http://www.FDAReview.org/history.shtml#fifth.

3.

“THALOMID (Thalidomide): Balancing the Benefits and the Risks,” Celgene Corporation, p. 2, online at:www.sanmateo.org/rimm/Tali_benefits_risks_celgene.pdf.

4.

Alexander Tabarrok, “The Anomaly of Off-Label Drug Prescriptions,” Independent Institute Working Paper no. 10, December 1999.

5.

Lazarov, Jason, et al. “Incidence of Adverse Drug Reactions in Hospitalized Patients.” Journal of the American Medical Association279, no. 15 (1998): 1200–1205.

6.

Peltzman, Sam. An Evaluation of Consumer Protection Legislation: The 1962 Drug Amendments. Journal of Political Economy 81, no. 5 (1973): 1049–1091.

7.

Parexel’s Pharmaceutical R&D Statistical Sourcebook 2004–2005(Waltham, Mass.: Parexel International Corporation, 2004), p. 9.

8.

“Broader Use for Aspirin Fails to Win Backing,” Wall Street Journal,December 9, 2003, p. D9.

9.

This 55,000 is the total number of patients tested in five published clinical trials of the use of aspirin to prevent initial non-fatal myocardial infraction.

10.

Food and Drug Administration, Center for Drug Evaluation and Research, Cardiovascular and Renal Drugs Advisory Committee meeting, Monday, December 8, 2003, Gaithersburg, Md.

11.

Henry I. Miller, M.D., To America’s Health: A Proposal to Reform the Food and Drug Administration (Stanford, Calif.: Hoover Institution Press, 2000), p. 42.

12.

“FDA Gives Restricted Approval to Thalidomide,” CNN News, July 16, 1998.

13.

“Drug Ban Brings Misery to Patient,” Associated Press, November 11, 2000.

14.

Klein and Tabarrok, FDAReview.org, online under “Reform Options” at http://www.fdareview.org/reform.shtml#5; David R. Henderson, The Joy of Freedom: An Economist’s Odyssey (New York: Prentice Hall, 2002), pp. 206–207, 278–279.

15.

Joseph A. DiMasi, Ronald W. Hansen, and Henry G. Grabowski, “The Price of Innovation: New Estimates of Drug Development Costs,” Journal of Health Economics 22 (2003): 151–185.

16.

Frank R. Lichtenberg, “Benefits and Costs of Newer Drugs: An Update,” NBER Working Paper no. 8996, National Bureau of Economic Research, Cambridge, Mass., 2002.

17.

The Centers for Medicare and Medicaid Services (CMS), January 8, 2004.

Brand Name Drus Filing Requirements Vs Generic Drugs Filing Requirements

(NDA)                                       Vs                        (ANDA)

1. Chemistry                                                 1. Chemistry

2. Manufacturing                                          2.Manufacturing

3.Testing                                                      3.Testing

4.Labeling                                                    4.Labeling

5.Inspections                                                5.Inspections

6.Animal Studies                                         6.Bioequivalence

7.Clinical Studies

8.Bioavailability

Generic drugs are less expensive because it isn’t necessary to repeat: 
　
Discovery
Pre-clinical studies
Clinical studies (repeating would be unethical)

International Regulatory Audits for Pharma

Society is becoming global. It is reflected in our accelerating steps toward the harmonization of regulatory standards, and this has implications for regulatory audits. Two particular trends driven by this evolution have appeared over the last 12 months, and these have the potential to affect the way that we manage audits by regulatory agencies. First, and after a long period of confidence-building, the FDA and EMA have launched a trial period in which they are moving “to allow some inspections on each others’ territories to be deferred or waived completely based on a number of considerations”. Included in that list of considerations is compliance history. Thus, a good record of compliance rewards the manufacturer for its strong efforts to implement an effective quality system. Inspections are never fun; they are disruptive to operations and costly in terms of personnel time for preparation, site visit and audit responses. Wouldn’t it be nice to reduce this disruption through mutual recognition of audits by other reputable regulatory and third-party auditing organizations?

The second trend, however, may actually increase the numbers of inspections by regulatory agencies. As manufacturers position their products in foreign markets, they must remember that those countries will have their own regulations and can audit US manufacturers to those regulations. Unless mutual recognition agreements are in place between countries, manufacturers cannot neglect the differences between the regulatory standards of each country. China provides an excellent case in point. Effective March 1, 2011, new Good Manufacturing Practices have been issued by the China State Food and Drug Administration. This new set of regulations, including a significantly modified annex on sterile pharmaceutical products, is relevant for all pharmaceutical products destined for the Chinese market. This year, Chinese inspection teams have begun to audit US manufacturing operations for compliance with these new regulations. These teams expect that the US sites will have educated themselves on the new Chinese regulations, will have trained their personnel on the application of those regulations and will have incorporated the requirements of these regulations into the documentation that they inspect. Such requirements add a new level of attention to global quality expectations, particularly if the regulations are not harmonized. On the positive side, exposure of Chinese inspection teams to foreign companies and their other regulatory requirements and procedures may motivate and promote such harmonization. Emerging economies are generating double-digit growth in pharmaceutical sales but they are also relatively new to the science and policy of international regulation. Their first interactions will likely define policies, regulations and relationships for many years to come. Meanwhile, companies doing business internationally need immediately to implement procedures to prepare for and respond to inspections and audits that may be substantially different from their previous experience. They will aslo be watching carefully to undestand the consequences of an inspectional report with many findings of concern.

So how do we prepare for international regulatory audits? Here are 5 areas to consider, some that relate to the new challenges, some that have been areas of challenge for some time now.

1: Identify all relevant countries in which you are marketing and incorporate their quality regulations and standards into your quality system, from the quality manual down. In some cases, this may require the services of a competent technical translator. It is important that these regulations be referenced as benchmarks for exported product to that constituency. Careful examination of the requirements may reveal little need for real work with respect to quality system revision if your operations are already in good control. However, you may want to consider whether it makes sense for all products to be in compliance with all quality systems from various countries. If there are carve-outs, related for example to the need to satisfy country-specific pharmacopeial standards that would be onerous to apply across the board, it is important to define how such exceptional products are to be handled.

2: Educate your quality management regarding the requirements of emerging and changing national regulations. An endpoint for this ongoing education might include a matrix in which regulations are compared formally in order to identify areas where requirements are not harmonized. Since regulators are not always fluent in English, how are you going to communicate your system to the auditors when they are on site? When US inspectors conduct foreign inspections, some level of English-language translation is expected for high-level documents. It would not be unreasonable then for inspectors from other countries to query the fact that documentation is available only in English. A good first step might be to consider translation of high-level or critical documents when you prepare for a foreign inspection.

3: Use risk analysis extensively to determine where quality resource allocations should be made. Regulatory agencies are currently attempting to use a risk-based approach to determine where they put their inspectional energies, and so should you. If you use a formally documented, risk-based approach to identify areas where the largest safety or quality concerns might be centered, you stand a better chance of convincing the regulators that you have a responsive system in which critical processes and elements are controlled with heightened attention. Resources are not infinite, so directing those resources to the areas where problems are most likely to occur is a good business decision as well.

4: Put particular focus on corrective and preventive actions (CAPAs) that cut across several areas of concern in a manufacturing operation. Every year FDA speakers give talks on the failure of companies to perform effective and efficient CAPA. CAPA spreadsheets should not be the place that complaints and problems go for death and burial. If resources are limited, a risk-based approach to priority-setting is better than a first-in, first-out, or random selection of action items that can be seen in some organizations.

5: Become a proponent of harmonization activities, and encourage your company to get involved in harmonization efforts at the international and political level. If we must look to a future where every country has its own regulations and inspection schedules, we will be spending more time, not less, in inspectional activities that deflect energy from other tasks.