The WasteWatcher: The Staff Blog of Citizens Against Government Waste

A Pro Forma Forum?

The WasteWatcher is the staff blog of Citizens Against Government Waste (CAGW) and the Council for Citizens Against Government Waste (CCAGW). For questions, contact blog@cagw.org.


On Friday, November 20, the Department of Health and Human Services (HHS) held a conference entitled, “HHS Pharmaceutical Forum: Innovation, Access, Affordability and Better Health.”  The purpose of the forum was to bring together various stakeholders to “share information and discuss ideas to increase access to information, drive innovation, strengthen incentives and promote competition.”

But more likely, it simply was a pro forma conference so the Obama administration could pretend they really are concerned about promoting innovation and competition, while they work feverishly behind the scenes to enact policies that would end up doing just the opposite. There was a lot of discussion about the government getting more involved in drug pricing schemes. The forum helped to enlist support from various groups that naively support these harmful policies.

The Obama administration has long called for the Secretary of HHS to “negotiate” prices and adopt Medicaid-style rebates in Medicare Part D.  It has also attempted to implement regulations that would disrupt and destroy the vigorous negotiations that occur between pharmaceutical companies, pharmacy benefit managers and pharmacists.  All of these ideas would in the long run hurt beneficiaries because governments do not negotiate prices; governments utilize price controls to “fix” perceived pricing problems in the marketplace.

There are plenty of examples throughout history of how governments have utilized price controls for goods or services and their actions have always made matters worse.  If the government sets the price too low, there will be a shortage; set the price too high, and there will be excess supply.  I laid out the problems with price controls in my September 2015 Waste Watcher, “Massachusetts Should Know Better.”

Ironically, it is the government that is a primary reason for high drug prices and that is because of the length of time it takes for a generic or brand-name company to jump the regulatory hoops to get their products into the marketplace.

The Food and Drug Administration (FDA), which regulates the drug approval process, has a backlog of approximately 3,800 abbreviated new drug applications (ANDAs).  These applications are what generic drug companies file with the FDA to get their product approved for the marketplace.

On October 1, 2012, the Generic Drug User Fee Agreement Act (GDUFA) took effect.  Under this agreement, generic drug companies have agreed to pay user fees to the FDA to speed up the approval process for ANDAs.  The user fee money is used to hire more FDA drug reviewers and inspect pharmaceutical facilities.

But according to Inside Health Policy, since GDUFA took effect, the backlog grew by 33 percent, from 2,866 to 3,800 ANDAs.  Granted, it will take some time for the FDA to hire the personnel it needs -- they have hired about 1,000 so far -- and to properly train them to review the ANDA’s but they have a monumental task in front of them.  The FDA is required by the user fee agreement to act on 90 percent of the pre-GDUFA ANDAs by September 30, 2017.

The other problem is the amount of time it takes to approve an ANDA for the market.  In fiscal year 2003, an average review time was about 17 monthsAccording to the Healthcare Supply Chain Association, that time has grown even longer.  Just before passage of the user fee act in 2012, review time was 30 months.  By fiscal year 2012, it was 31 months, in fiscal 2013 it was 36 months, and by fiscal year 2014 it was projected to be 42 months.

GDUFA expires in 2017 and renewal negotiations are already underway.  If there has been no huge improvement in getting ANDA approval times shortened, expect the generic industry to be much tougher in their negotiations with the FDA over user fees.

As for research-based pharmaceutical companies, it takes far longer to get their drugs approved.  Currently it takes on average $2.6 billion and at least 10 years to bring a new drug to the marketplace.  Most of this time and money is spent on conducting clinical trials.

A pharmaceutical company will test multiple drug compounds on animals for toxicity and gather information on safety and efficacy.  This is the pre-clinical trial phase.  If a compound seems promising, the pharmaceutical company will then submit an Investigational New Drug Application (IND) to the FDA.  The drug then has to undergo several clinical trials.  Phase 1 tests the promising drug on 20 to 100 healthy volunteers for safety; Phase 2 tests the drug’s safety and effectiveness on hundreds of patients that have the disease the drug is supposed to treat; and Phase 3 gathers even more information on the drug’s safety and effectiveness on thousands of patients.  The pre-clinical phase can take three to six years and the clinical trials can take up to seven years to complete.  FDA review can take up to two years to complete.

Most drug compounds do not make it past Phase 1 and 2 because they may not be safe or effective.  Of the thousands of drug compounds that begin at the research bench, only one will make it to the point where a New Drug Application can be submitted to the FDA where its safety and effectiveness data will be reviewed before approval.

Much of how clinical trials are conducted today is based in the technology and science of the past where years of data of thousands of patients are studied and evaluated.  But computers and the remarkable advances in the life sciences, such as genomics (the study of genetics) and proteomics (the study of protein structure and functions) gives scientists the ability to collect and analyze all kinds of data about a patient and disease states that can and should be utilized to greatly speed up clinical trials.  The FDA needs to be willing to accept faster pathways to approve the drugs.

In a July 9, 2014 hearing before the House Energy and Commerce Committee concerning the “21st Century Cures Act,” experts were asked how the clinical trial process could be modernized.  Chief Biotechnology Officer and Head of Scientific Strategy and Policy Jay P. Siegel, M.D. at Johnson and Johnson testified that greater use of scientific and technology tools such as electronic health records, using biomarkers as surrogate endpoints, and including patients in the research process could speed up clinical trials.

For example, measuring a direct benefit of a new drug, such as shrinking a tumor in size and prolonging life, would encompass a large and lengthy clinical trial.  But utilizing a biomarker, such as seeing a physiologic or molecular change in a tumor that comes before any shrinkage in size, which could take months, would demonstrate the drug is working.

Traditionally, patients have played a passive role in clinical trials but Siegel argues that they should play more active roles, such as helping to define risk versus benefit determinations, and measuring outcomes, such as how they feel as opposed to something that can be objectively measured.

The 21st Century Cures Act, which passed the House on July 10, 2015 with strong bipartisan support, contains several items that could speed up clinical trials and bring more patients into the decision-making process but the bill’s fate lies in the Senate.  Whether or not this particular legislation reaches the president’s desk, it is imperative that new methodologies and new technologies are readily accepted by the FDA that will speed up clinical trials, lower costs, and get life-saving drugs to the patients that need them.

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