Faiz Kermani

Computers have revolutionized daily life and have become an indispensable technology solution. The pharmaceutical industry can be somewhat conservative in adopting new technologies, but most companies quickly realized that computers could potentially improve productivity and generate cost efficiencies by automating processes and speeding communication.  

Computers playing a driving role in R&D is more recent and started in the area of drug design. Most people still associate computer technologies with drug discovery, but they are exerting a growing impact further up the R&D chain into clinical trials. With many companies expanding the application of technology solutions to a wider range of R&D areas, commercial departments are also using computer-generated information to help them in their R&D decision-making as these models draw together disparate pieces of information related to R&D, such as potential sales, technical risk, competitor activity, opportunity costs and strategic fit within the company's product portfolio. Several companies have developed their own customized models in-house that couple the best features of external models with their specific corporate needs. Financial and marketing models are also frequently used by companies at both early and late stages of drug development.  

A development that should accelerate the adoption of computer-based simulations is the decision of regulatory agencies in Europe and the US to explore the use of these technologies for trials. If this technology can help enhance drug safety, it will provide an additional tool to help the agencies meet public expectations. 

Within the discovery stage of R&D, computer technologies have found common use in areas such as pharmacophore identification, virtual screening, and quantitative structure activity relationship methods for lead optimization and absorption, distribution, metabolism, excretion and toxicity prediction.

  For example, computer simulations can be used to develop drugs based on the 3D-structures of the proteins targeted by the test compounds being developed. These systems can be used to screen the most promising compounds from those that are being developed. Advances in 3D computer simulation mean that the technology can be quickly used to predict the interaction between a protein and the candidate compound structures. Previously, more conventional simulations were often insufficient and unreliable in predicting such interactions and had proved of little value in the drug development process. To obtain the information they need, many companies have now turned to alternative simulation-based tests.  

After 2000, following completion of the Human Genome Project, advanced computing solutions were sought by companies embarking on genomics programmes. Huge amounts of data are predicted to emerge from these programmes, and companies must determine how to process the vast array of genetic information and how to make decisions efficiently on what to move forward with and what to discard. In 2002, researchers from Curagen (CT, USA) calculated that existing drugs on the market only focused on 272 discrete molecular targets.

  In contrast, the amount of druggable targets, based on the human genome, was considered to be much higher at 8000. According to this analysis, 4990 were potential small-molecule targets, 2329 were antibody targets and 794 were targets for protein therapeutics.  

Despite the opportunities offered by genomics, companies must ensure that they are set up to handle and manipulate the overwhelming amount of data; without an appropriate strategy to manage the IT approaches used, the availability of too many targets has the potential to actually slow the R&D process down and increase costs by congesting the new drug pipeline.

Although discovery is an important part of the R&D process, clinical trials account for the majority of the R&D budget — and this share is increasing. Typically, pharma companies will devote approximately 40% of their R&D budget to clinical trials. Given the changing demands of regulators, this spend may need to be increased to run additional mandated trials. As a result, the failure of a drug at the later stages of clinical development is an extremely expensive failure for a company to bear.  

Many of the compounds in clinical development fail because of problems regarding absorption, distribution, metabolism, elimination or toxicity of the drug in the body; therefore, much more effort is being put into eliminating these compounds before they enter the costly clinical trials process. Traditionally, this has been done through 

 tests, but many companies are beginning to use computer simulations of human biological systems. These computer models, so-called 

 technology, allow researchers to set up different scenarios for the drug development process and the compounds progressing through them. There is hope that the 

 approach, used alongside other more traditional approaches, can help researchers choose the drug candidates that have the greatest chance of succeeding through clinical development. However, the beauty of this approach is that it can also be used both to kill off compounds that have a poor chance of making it through and to save compounds that were incorrectly deemed to have failed.  

These models can also be used to improve the trial itself. For example, during early-stage trials, simulations might focus on dose selection and the design of the study. Later on, the technology can be used to understand more about the study population; particularly to distinguish between potential responders and nonresponders to a drug. This information can then be used to reassess the study inclusion and exclusion criteria. Another valuable angle is that simulations can identify patients who may experience adverse events. The idea of simulations is to create more certainty among the clinical trial parameters to enhance the chances of success. 

A number of companies believe they can save pharma companies millions of euros and are marketing software that can be applied to the drug development process. In 2005, PricewaterhouseCoopers predicted that 

 methods to create virtual trials might save 10% of resources in the short term, with greater savings to follow in the longer term.

  If the benefits of such technologies could be demonstrated, they would be very attractive to the pharma industry. So far, the signs have been extremely promising and a number of the major companies have set up dedicated simulation groups at their R&D centers. 

 trial field is PharSight (CA USA), whose technology looks at how variability amongst patients might affect the results of a proposed clinical trial. Using the PharSight Trial Designer, researchers examine the different parameters for the clinical trial, and mathematical modelling tests the impact of these assumptions. The company's technology has been used by a number of the top pharmaceutical companies, including Pfizer, sanofi aventis and AstraZeneca. In one well-publicized case, Aventis used Pharsight technology to support a decision against taking a new selective oestrogen receptor modulator drug into clinical development.

  The savings from this decision were estimated at $50 million–$100 million. Entelos (CA, USA) is another player whose technology has been used by major companies; its biosimulation system was used by Johnson & Johnson for a Phase I diabetes trial, and showed how a 40% reduction in time and a 66% reduction in the number of patients could be achieved.

Interestingly, the activity of these companies has attracted attention from regulatory agencies. In 2001, Pharsight signed a 3-year Cooperative Research and Development Agreement with the FDA's Center for Drug Evaluation and Research to focus on industry and regulatory needs for population pharmacokinetic/pharmacodynamic (PK/PD) modelling and clinical trial simulation.

  This work forms part of the FDA's Critical Path Initiative (CPI), which uses current thinking to develop new ways to improve the drug development process. The CPI has already identified bioinformation sciences as a key knowledge area to be leveraged. In Europe, the EMEA is also showing an interest in this field and held a conference in 2008 on applying computer modelling to paediatric drug development.

  This is because regulations require a specific evaluation of products in children because of the PK and PD differences between children and adults.  

One of the problems identified in the slow uptake of 

 technology and other IT solutions among some companies is the reluctance of senior managers to relinquish authority over the decision-making process when compounds progress to clinical development. Despite advances in technology, it is still felt that human reasoning should take precedence because an 

 system could still result in errors; even though simulation models can factor in items such as the cost and success rates of clinical trials, and the potential market share and return on total investment generated by a new drug, some companies only see it as having a supporting role in drug development decision-making. Another factor is the shortage of people with skills in this field. 

 approaches can demonstrate value if applied correctly and the growing interest of regulatory agencies may persuade companies to take a fresh look at this technology area. 

is a freelance consultant and President of the Global Health Education Foundation, a charity that supports medical education and medical research projects in developing countries. He is a member of 

Genomics in Cancer Drug Discovery and Development

Pharma 2005: An Industrial Revolution in R&D

6. Entelos, Inc., Use of Systems Biology in Clinical Development: Design and Prediction of a Type 2 Diabetes Clinical Trial (2004). 

7. Pharsight, "FDA-Pharsight CRADA" (2009). 

8. EMEA, EMEA workshop on modeling in paediatric medicines (14–15 April, London, UK, 2008). 

Articles

Even though the pharmaceutical industry has come to recognize the importance and associated benefits of using computers, evolving computer-based simulation technology has still to make a suitable impression.

The rise of in silico R&D

Rare diseases represent an important area of unmet medical need (

). Globally, it is estimated that 5000–8000 distinct rare diseases exist, with approximately 30 million people in the EU and 25 million people in the US suffering from such conditions.

  Most diseases are assessed by their impact on society as a whole and little attention is paid to rare diseases because of their low prevalence. Officially, rare diseases are defined as those affecting fewer than five in 10000 people in the EU and fewer than 200000 people in the US.

 These disorders pose serious difficulties for sufferers and their families.

Patients often face long delays in getting an accurate diagnosis because many rare diseases are poorly characterized and doctors may not be familiar with them. Even after an appropriate diagnosis, patients often have few treatment options and usually have to wait years in the hope that a drug will be developed and approved for their specific condition. In the meantime, they are forced to seek expensive alternatives; however, they may experience problems with reimbursement.

Many pharmaceutical and biotech companies have been reluctant to engage in expensive research for rare diseases without assurance of a return on their investment. To be considered profitable, a treatment must be applicable to a certain number of patients during a certain number of years of commercial exclusivity. Progress has also been held back by the paucity of research on rare diseases and availability of scientific data.

Table 1: Challenges concerning rare disease management.			

Nevertheless, there have been improvements in the regulatory environment and thanks to the continuing efforts of patient organizations to raise publicity, rare diseases now represent a growing area for research. The unmet medical need has also been officially recognized, leading to the introduction of orphan drug legislation in the US, Australia, Singapore, Japan and finally in the EU in April 2000. Other countries such as Canada, New Zealand, South Korea and India have appropriate legislation under consideration. Orphan medicinal products are those intended for the diagnosis, prevention and treatment of a disease so rare that developing these products through conventional legislation would mean they would never be sufficiently profitable for companies.

Orphan drug legislation in the US and Europe

In 1983, thanks largely to the lobbying efforts of patients, the US government introduced the Orphan Drug Act. This act contains incentives for the pharma industry to develop products for rare diseases and contained provisions to allow patients with a rare disease better access to treatments. The main incentives to industry are a 7year period of marketing exclusivity (which some industry observers have likened to a type of patent) and tax benefits on clinical trials between the date of orphan drug legislation and new drug application (NDA). The act has been further refined through Congressional amendments in 1984, 1985, 1988 and 2007.

To handle regulatory matters in this field, the FDA set up the Office of Orphan Products Development.

  To date, more than 1700 drugs and biologics have been designated as orphan drugs in the US, with more than 300 achieving marketing approval. In the decade prior to 1983, fewer than 10 orphan products were brought to market, showing that modest regulatory incentives can have a large effect on drug development.

In the US, the National Organization for Rare Disorders (NORD) lobbies on behalf of patients with rare disorders and was established in 1983 by patients and families who worked together to get the Orphan Drug Act passed. It holds annual meetings where thought leaders from government, academia, the patient community and industry meet to help establish an agenda for action related to the R&D of orphan products on a national and international basis.

Following the work of the French government in 1995 to convince the European Council of Health Ministers to vote in a resolution to develop orphan medicinal products legislation, a number of European countries began to pay closer attention to the issue of orphan drugs. One of the major lobbying groups for specific European orphan drug legislation is the European Organization for Rare Disorders (EURORDIS),

  a coalition of 340 rare disease organizations in 38 countries — 29 of which are EU member states. Besides hoping to see legal framework in place for orphan drugs, EURORDIS aims to obtain better co-operation between national patient organizations and to campaign for patients to receive reimbursements for their treatments.

In December 1999, the European Parliament and the Council adopted regulation (EC) No. 141/2000 on Orphan Drugs. The time lag for orphan drug legislation in Europe was partly because of the makeup of the EU, where healthcare responsibilities are shared between member state bodies. Nevertheless, as in the US, the adoption of orphan drug legislation had a noticeable impact on EU drug development. EURORDIS figures show that, since 2000, 560 drugs and biologics have been designated as orphan drugs, and 52 have achieved marketing approval.

The EMEA and its Committee for Orphan Medicinal Products (COMP) have facilitated implementation of the orphan drug legislation. The COMP is composed of one representative per member state, three EMEA representatives and three members to represent patients' organizations. The EMEA provides extensive support to the COMP through its secretariat by validating applications, providing summary reports of orphan applications and supporting meetings of COMP. For a medicinal product to receive designation as an orphan medicinal product in the EU, it is required to comply with criteria outlined in Article 3 of Regulation (EC) No.141/2000.

In the EU, the incentives to industry are slightly different to those of the US in that market exclusivity is for a 10 year period after the grant of a marketing authorization. This period of market exclusivity is subject to certain restrictions and can be reduced to 6 years if at the end of the fifth year the criteria outlined in Article 3 are no longer met; for example, if the product is shown to be sufficiently profitable to no longer justify market exclusivity.

One of the exciting regulatory developments is greater co-operation between the US and Europe to harmonize regulations concerning orphan drug development. Both NORD and EURORDIS have been supporting moves in this direction. In 2006, a partnership between EURORDIS, the FDA and the EMEA resulted in a comparative analysis of EU and USdesignated and marketed orphan drugs. The data generated stimulated formal discussion between the FDA and the EMEA to harmonize the format and content of orphan drug applications at both agencies, speed up parallel designation, and develop common approaches for providing protocol assistance and other advice to industry.

One of the major outcomes so far has been the adoption of a common application form for sponsors seeking orphan designation of medicines in the EU and US. The agencies aim to reduce the burden of filing two separate requests when both the US and European markets are under consideration by a company. The common application form is flexible in that it contains a section for common information required by both the EMEA and the FDA, but also has sections for requirements unique to each agency.

  Both the FDA and the EMEA are confident that a greater degree of harmonization can be achieved, while still keeping the respective specificities of the EU and US regulations.

  For example, the agencies will still conduct independent reviews of such submissions. 

There has been considerable improvement in the field of rare disorders during the past 25 years as regulatory mechanisms designed to stimulate drug development are now in place in many countries. However, improvements still need to be made in other areas because legislation does not address the cost of drugs and who is going to pay for them.

  Similarly, more initiatives are needed to assist patients in finding information on rare diseases and to educate healthcare professionals about them.

Social media has dramatically improved access to information and has removed many of the traditional barriers for dialogue between patients;

  for example, RareShare is a unique social hub that builds communities for patients, families and healthcare professionals affected by rare disorders, and facilitates information exchange.

  Another development is the direct participation of patient organizations in public–private partnerships to manage the development of new drugs, rather than simply raising funds for background research. With continuing efforts such as these, there is new hope for meeting the ongoing needs of patients with rare diseases.

1. M. Kugler, Rare Diseases: Basic Information, 2008. 

http://rarediseases.about.com/cs/supportgroups/a/blbasic.htm

http://ec.europa.eu/health/ph_threats/non_com/rare_diseases_en.htm

3. EMEA, The European Union and the FDA working together to create Common Application for Orphan Designation for Medicines (2007), Doc. Ref. EMEA/557391/2007.

4. FDA, Developing Products for Rare Diseases & Conditions (2009). 

5. National Organization for Rare Disorders: Partners in Progress Summit (Washington, DC, USA, 14 May 009). 

www.rarediseases.org/news/Summit_2009_ppt_presentations

6. Anon, About Orphan Drugs. European Organization for Rare Disorders (2007). 

www.eurordis.org/rubrique.php3?id_rubrique=24

7. B. Comer, Compass utilizes social media for rare disease, MM&M (2008). 

www.mmm-online.com/Compass-utilizes-social-media-for-rare-disease/article/123242

Rare diseases represent an important area of unmet medical need.

EU and US unite against rare diseases

Thanks to medical interventions, conditions that would have been considered life-threatening 100 years ago can now be prevented, cured or controlled. Despite this progress, however, a number of diseases persist in exerting a heavy healthcare burden on marginalized communities in poor countries, even though they have largely been eradicated elsewhere across the globe.   

The perception that these diseases are low on the list of global healthcare priorities, as well as the fragmented approach to researching treatments, has resulted in them being grouped under the umbrella term 'neglected diseases'. Although a universally accepted list does not exist, the World Health Organization (WHO) considers neglected diseases to be primarily infectious diseases that thrive in the heat and humidity of tropical climates. According to the WHO, considering these diseases as a group is important for control programmes, because many people are afflicted simultaneously by more than one of them.

Since 1975, pharmaceutical companies have been responsible for the launch of over 1400 new chemical entities as human therapeutics,

  but relatively few of these have targeted neglected diseases. Subsequently, there has been considerable media and public pressure on the pharmaceutical industry to focus more attention on this area of drug development, as well as on governments to provide incentives for investment in neglected diseases. 

Efforts to develop specific R&D programmes for neglected diseases have steadily increased, but this has required new approaches to traditional R&D challenges, as well as recognizing other factors that lead to the persistence of neglected diseases in affected regions. For example, although treatments do exist for some of the conditions, the healthcare infrastructure in the affected areas remains poor, and without local government backing, it is difficult for private companies and non-profit organizations to effectively intervene. Furthermore, a proper distribution network needs to be organized to transport medicines to the clinics and training is also required for healthcare personnel to administer the medicines. Aside from treatment options, there is the additional need for the development and implementation of prevention strategies, which necessitates government support. 

One of the primary challenges of developing new treatments for neglected diseases is the fact that the drug development process is lengthy, expensive and risk intensive. A recent analysis of the pharmaceutical industry by CMR International found that it took approximately 11.5 years from the identification of a suitable drug target to the introduction of a new medicine,

  while the Tufts Center for the Study of Drug Development has estimated the cost of successfully getting a drug to market at more than $1.3 billion (€979 million).

  Additionally, according to the Pharmaceutical Research and Manufacturers of America, only two in ten medicines ever produce revenues that match or exceed average R&D costs.

Bearing this in mind, pharmaceutical companies embarking on R&D projects need to be confident that they can recoup their investment. Often, companies tend to focus commercial efforts on North America, Europe and Japan, because these markets represent more than 80% of global pharmaceutical sales and increase the likelihood of making a profit from discoveries. Because pharmaceutical companies have to answer to the demands of investors and the financial markets, it is difficult for their management to justify the expense of developing a medicine exclusively for use in developing countries, as a return on investment is unlikely. This dictates a new approach to tackling neglected diseases, whereby the experience of pharmaceutical companies in innovative R&D is linked to alternative financing mechanisms. 

The International Federation of Pharmaceutical Manufacturers and Associations (IFPMA) points to collaborative R&D programmes with different public and private partners as a viable solution.

  The IFPMA comprises 26 leading international companies and 44 national and regional industry associations covering industrialized and industrializing countries. These public–private partnerships (PPP) draw on the strengths of participating organizations, and share the cost and risk of developing drugs, thereby minimizing the impact of R&D failures on each of the partners. Partnerships can include governments, nongovernmental organizations (NGOs), pharmaceutical companies and academic groups.  

The notforprofit Medicines for Malaria Venture (MMV), established as a foundation in Switzerland in 1999 following discussions between the WHO and the IFPMA,

  is one such PPP. The organization's mission is to reduce the burden of malaria in diseaseendemic countries by discovering and developing affordable antimalarial drugs. Its strategy is based on virtual drug discovery and drug development, which involves outsourcing key activities, but managing their progress through a central unit.  

Although malaria is a major public health problem in more than 90 countries and causes up to 6 billion new infections worldwide annually, only four antimalarial drugs were developed between 1975 and 1999. However, the MMV has steadily built up a pipeline of 15 projects at different stages of development, which has been cited by the IFPMA as the largest antimalarial drug research portfolio since World War II.

  A number of major pharmaceutical companies are also involved in MMV's projects; in December 2008, the MMV signed an agreement with GlaxoSmithKline (GSK) to develop tafenoquine as a cure for 

 malaria, and in 2009 an agreement with Pfizer was announced that would allow MMV access to the company's library of novel chemical entities to screen for compounds with the potential to be developed into new malaria treatments. 

A number of other partnerships involving the pharmaceutical industry have also proved effective. In 2003, the WHO asked for assistance in combating an emerging meningitis epidemic in Africa, where outbreaks of the disease occur frequently during the dry season. The WHO registered 44280 meningitis cases and 5531 deaths in this region during 2002, but collaborating with GSK and the Bill & Melinda Gates Foundation enabled a new meningitis vaccine to be made rapidly available to African countries following the discovery of a new strain of the disease.

  An initial 3 million doses of the vaccine were made available in an area comprising 21 countries. The usual cost of such vaccines is $5–50 (€3.8–38) per dose, making it too expensive for the countries where it was needed most, but the collaborative approach allowed the new vaccine to be made available at $1.50 (€1.1) per dose. 

The current status of neglected disease R&D

R&D efforts to combat neglected diseases have increased substantially, but it is often difficult to assess the extent of the improvements and predict which areas have benefited most. In early 2009, the George Institute for International Health released details of a unique study of global public and private investment into R&D for new drugs for neglected diseases and found that more than $2.5 billion (€1.9 billion) was invested in 2007, with nearly 80% of this amount focusing on HIV/AIDS, tuberculosis and malaria.

  While this was considered encouraging, the authors pointed out that a number of diseases still received little attention and that there appeared to be no dedicated global initiatives to tackle them. These included conditions such as Buruli ulcer, caused by infection with 

, which has been reported in more than 30 countries — mainly with tropical and subtropical climates. 

According to the report, most funding for neglected diseases came from the US National Institutes of Health (42% of total funding) and the Bill & Melinda Gates Foundation (18% of total funding). Twelve organizations alone accounted for more than 80% of this global total and approximately one-quarter of funding was devoted to PPPs, such as the International AIDS Vaccine Initiative and the MMV. Unfortunately for most diseases, the funding was not sufficient to create even one new product; for example, sleeping sickness, leishmaniasis and Chagas disease collectively received only $125.1 million (€94.2 million) in funding and diarrhoeal illnesses collectively received only $113.8 million (€85.7 million) in global funding. Buruli ulcer was among a group of neglected diseases that received less than $10 million (€7.5 million), or 0.4% of total global investment. 

Since the late 1990s there have been greater efforts by a number of parties, including the pharmaceutical industry, to focus more R&D on launching new drugs for neglected diseases. To date, the most popular approach has been through PPPs, and, although such measures have proved successful in harnessing the different skills of those involved to develop new drugs, such efforts remain targeted to a narrow band of neglected diseases. As such, there still remain other areas that require attention. It will be important for governments, the WHO and pharmaceutical industry associations to encourage new collaborations in these remaining underserved areas. Only in this way can inroads into tackling neglected diseases truly be made.  

 serves as President of the Global Health Education Foundation (GHEF), a non-profit healthcare organization (

2. CMR International, "The CMR International 2007 Pharmaceutical R&D Factbook" (2007). 

					, (Pharmaceutical Research and Manufacturers of America, WA, USA, April 2009).			

5. International Federation of Pharmaceutical Manufacturers and Associations, "Neglected Diseases And The Pharmaceutical Industry" (2003). 

6. Medicines for Malaria Venture (2009). 

7. World Health Organization, "Partnership moves in record time to provide vaccine against meningitis as epidemic emerges in Africa" (2003).

Modern medicines have dramatically improved the health of millions of people worldwide, but the healthcare situation in industrialized countries is a stark contrast to that in the least developed countries where neglected diseases are still prevalent.

The R&D hurdles for neglected diseases

As the world's largest pharmaceutical market, the US is frequently targeted by companies for initial drug launches, and this means bending over backwards to convince the FDA that the product is safe and effective. As such, the FDA has a tremendous task on its hands in reviewing the huge amount of regulatory dossiers it receives as submissions, as well as ensuring the safety of products that have already reached the market.

In meeting its regulatory commitments, the FDA can find itself increasingly at odds with pharma companies, which are under pressure to launch as many drugs as possible and to grow their businesses from sales of these products. As the new political administration, under President Barack Obama, has promised a new direction for US healthcare,

  it is inevitable that the FDA will undergo significant change. However, although the agency and pharma have often been at loggerheads, it is the criticism of the general public regarding failings in drug safety that will have a greater impact on the future of the FDA.

A reorganization of the regulatory body will have huge implications for the pharmaceutical and biotech industries operating in the US, and will also influence activities in other markets because of the growing interactions between the FDA and its foreign counterparts. In particular, the next few months at the agency will be of great interest to all firms planning drug launches because the regulatory landscape could be about to be revolutionized. 

There is internal debate within the pharma industry concerning its productivity and innovation in R&D. Year by year, new drug output has steadily declined, despite continuing unmet medical need in a number of important disease areas. The global pharma industry continues to increase its investment in R&D — with an estimated spend of $70 billion (51.7 billion) in 2007

  — but the performance of the sector in translating this investment into innovative products remains questionable. Critics of the pharma industry have argued that companies rely too heavily on line extensions and working on new formulations of existing products rather than concentrating their efforts on true innovation in R&D. This has led to companies submitting weaker regulatory dossiers, which in turn has restricted the number of drugs reaching the market. 

Some companies have blamed regulatory agencies, such as the FDA, for the decline in new drugs on the market. In 2007, the FDA approved 65 original new drug applications (NDAs), the least since 1999.

  Furthermore, the ratio of NDAs approved to NDAs submitted has dropped from the 76% level of 2006 to less than 60%.

  Many companies believe that the FDA has been excessively bureaucratic, which has slowed the review process.

  One 2008 media report claimed that 15 additional new drugs could have been on the national market if the FDA had been more efficient in conducting its reviews.

  The FDA has a target of meeting 90% of its new drug approval timelines for review, but although full 2008 performance data have not yet been released, the agency has already indicated that it is unlikely to reach this goal.

Despite these criticisms, the FDA insists it has not changed the way in which it approaches regulatory review. Recently, an agency spokesman stated that the rate of NDA approvals to submissions remained steady at approximately 80% from 1997 through to 2005

  — although independent media reports have cited a decline after this period.

The FDA is in a tricky position because its role is primarily to safeguard the public rather than support the pharma industry in launching its drugs. Ironically, it frequently comes under attack in the US media for being too close to pharmaceutical companies and the agency has faced a media onslaught regarding the approval of some drugs whose safety risks eventually outweighed their benefits following launch. One of the most damaging episodes for the FDA was Merck's COX2 inhibitor Vioxx (rofecoxib), which was withdrawn from the market after being linked to an increase in the risk of heart attacks and strokes. In 2005, FDA representatives admitted administrative lapses regarding Vioxx in front of a Senate committee.

As a government agency, the operational aspects of the FDA are often not appreciated by the public or the pharma industry. To meet the demands of its regulatory role, the agency requires sufficient resources and strong leadership — both have been in short supply in recent years, but it looks as if Obama may change this.

The US media have reported that Dr Margaret A. Hamburg, a former New York City health commissioner, is set to be the agency's new head, with Dr Joshua Sharfstein, the health commissioner of Baltimore, serving as her deputy. These proposed appointments have been well received, with many among the public believing that they will keep the agency independent from the pharma industry, but also give it the required direction to meet its difficult challenges.

The change in leadership will primarily affect the US market, but it will also have an international influence — as one of the world's leading regulatory agencies, the FDA's thinking has a profound impact on shaping regulatory policy overseas. For example, it has a critical role in the efforts to promote greater regulatory harmony between different world regions through the International Conference on Harmonisation of Technical Requirements for Registration of Pharmaceuticals for Human Use (ICH). The ICH regularly brings together the regulatory authorities of the US, Europe and Japan, and experts from the pharmaceutical industry in these three regions to discuss scientific and technical aspects of product registration.

Despite the perception of having different regulatory processes, the FDA works closely with the EMEA in a number of key areas and holds regular bilateral meetings. Since 2003, the two agencies have had a confidentiality agreement in place that allows them to exchange information as part of their regulatory processes at both pre and postapproval stages. The agreement also has provisions to allow the exchange of staff between the two agencies. Another development is an initiative to develop a common application for orphan designation of medicines to simplify the process of obtaining orphan status for medicines developed for rare diseases.

All the signs indicate that the FDA will be increasing its cooperation with the EMEA within the coming years. Ensuring this cooperation improves standards will be part of the remit of the new leadership at the FDA. At the 2008 Transatlantic Economic Council meeting, the two agencies agreed to pool resources to become more effective at a global level.

  With many APIs manufactured outside the US and Europe, maintaining control over standards can be difficult. The FDA and EMEA hope to achieve increased regulatory vigilance by undertaking joint inspections of foreign facilities.

Many regulatory agencies in emerging markets also look to the FDA for guidance. For example, in early 2008, representatives of the FDA held talks with their counterparts in India regarding the provision of assistance to create an equivalent of the agency in the country. In November 2008, the FDA set up an office in China, its first foreign location. China's State Food and Drug Administration already has a number of agreements in place regarding information exchange with the FDA.

The FDA plays a vital role in regulating the US pharmaceutical market and its cooperation with international agencies influences the market at a global level. In recent years the agency has struggled to live up to public and industry expectations because of poor resourcing and uncertain leadership. With a new head of the FDA expected to be formally announced, it is likely the agency will receive the direction it needs to meet its future regulatory challenges.

1. "Barack Obama and Joe Biden's plan to lower health care costs and ensure affordable, accessible health coverage for all" (2008). 

2. Business Insights, "The Pharmaceutical Market Outlook To 2018: Key Threats And Opportunities For Big Pharma And Its Responses To Them" (2008). 

5. MedHeadlines, "FDA Criticized for Slow Approvals but Allows 21 New Drugs This Year" (2008). 

With a new head of the FDA expected to be announced imminently, the pharmaceutical industry waits to witness the changes that will inevitably accompany the new appointment. These changes could, however, also impact the rest of the world's pharmaceutical markets.

The FDA's new direction

In recent years, the pharmaceutical industry has struggled to maintain a high level of productivity. In the late 1990s, it was suggested that for the industry to maintain even a modest growth rate, companies would need to triple the number of new molecular entities (NMEs) launched annually.

  Judging by media releases from top 10 companies around this time period, such targets appeared eminently achievable.

  However, these public statements were primarily designed to impress the financial sector and meet shareholder expectations.  

In the current economic climate, many companies are being forced to be more realistic and admit that their original targets were not achievable. Financial analyses show that the global pharmaceutical industry is now investing twice as much in R&D as it was 10 years ago to generate two-fifths of the medicines it previously produced.

  Furthermore, in 2007, FDA approvals were at their lowest level for 5 years, with only 17 NMEs gaining approval in the US.

  In addition, FDA approved 65 original new drug applications (NDAs) in 2007, the fewest since 1999.

Declining new drug output has led to criticism of some of the major pharmaceutical companies for lacking new ideas and methodologies. Critics assert that the larger companies are producing too many 'metoo' drugs that are similar to each other and offer little clinical advantage compared with those already available on the global market. Major companies highlight their commitment to innovation by citing their heavy investment in R&D, but this has often not centred on inhouse efforts. 

In fact, licensing has become a key growth strategy for the top 20 global pharmaceutical companies, with a number of them openly stating it as a core strategy.

  However, a heavy reliance on licensingin while reducing investment in internal R&D may cause problems for companies. In one industry survey, respondents suggested that licensingin to fill a productivity gap was risky unless a company had sufficient inhouse R&D expertise to assess the compound's potential. In addition, licensing is a hugely competitive field and companies that have built up the widest network will have access to the most promising, laterstage compounds. In contrast, those companies with fewer partnering opportunities may be forced to opt for riskier earlystage compounds. 

With traditional R&D approaches failing to live up to expectations in terms of producing new drugs, many have looked to biotechnology to reinvigorate drug development and provide recognizable medical advances. The number of biotech compounds has been increasing steadily during the last 20 years, and most of these focus on difficult disease targets for underserved medical conditions. 

Since its emergence in the 1970s, recombinant DNA technology has been used to develop a number of therapeutic proteins, including antibodies, cytokines, hormones and vaccines for tackling and diagnosing a range of disorders. In 2008, the Pharmaceutical Research and Manufacturers of America (PhRMA) reported that there were more than 630 biotech drug products and vaccines in clinical trials targeting more than 200 diseases, including various cancers, Alzheimer's disease, cardiovascular disease, diabetes, multiple sclerosis (MS), AIDS and arthritis. The clinical impact that the current generation of biotech products have had in areas such as cancer and MS illustrates the potential biotechnology has to tackle diseases. In addition, biotechnology is at the heart of many medical diagnostic tests that provide the results needed to optimize drug treatment. 

From a general perspective, the US biotech industry is the most successful in the world and is likely to maintain this leading position for a while. This is because the US has been much more proactive than other countries in encouraging its biotech sector; for example, in 2003, the US House of Representatives introduced the Biotechnology Future Investment Expansion (BIOFIX) Act (H.R. 2968), a piece of legislation designed to change the US tax code to encourage further investment and innovation in the biotech industry. In Europe, the sector is much further behind in achieving such recognition at a regional level. Some believe that the bureaucratic political set-up of the EU is not always conducive for effective biotech legislation and that individual European countries may do better by implementing national policies. 

In 2006, US biotech companies spent $27.1 billion (€20.9 billion) on R&D and accounted for more than 70% of global biotech product revenues.

  Moreover, the number of US biotech companies is increasing and there are now close to 1500 biotech companies employing 180000 people. Although the top five US biotech companies are major manufacturers in their own right, most companies remain small and look for partnerships with larger companies and venture capital for survival.  

The biotech industry generates most of its revenue from licensing to major pharmaceutical companies. Collaborations between small biotech companies and larger drug development organizations, such as pharmaceutical companies, can be mutually beneficial. Under such agreements, smaller companies can gain financing to continue their R&D programmes, while the bigger company will supplement its new drug pipeline with an innovative product. The future is likely to see a continuation of this symbiotic relationship. In 2007, there were 417 new partnerships between biotech and pharmaceutical companies, and 473 deals with fellow biotech companies.

The field of biotech drug development shows no sign of slowing down and is becoming increasingly competitive. Since 2005, biotech drugs have represented 22% of the NME output of the industry and now account for a quarter of total R&D investment.

  Current annual worldwide recombinant product sales are approximately $70 billion (€54 billion).

 In 2007, biotech drug sales grew by 12.5% — twice as fast as the pharmaceutical market.

Although biotech R&D is seen as the future of drug development, the field has its own productivity issues that must be addressed. Given the nature of the diseases that biotech drugs are being developed for, the R&D process is inevitably lengthy and complex. The difficulty for companies involved in biotech research is that as the R&D process lengthens, so does the cost. This creates considerable pressures in the current tough economic climate, although there appears to be no slow down in major companies seeking biotech partners. Companies are looking at all areas that will give themselves an advantage to launch their biotech drugs in the market. Any improvements to the R&D process are of interest to a range of companies, as both major pharmaceutical companies and smaller specialized firms now develop and market biopharmaceuticals. 

In attempting to reduce the risk associated with biotech drug development, companies have been analysing the time, resources, expense and expertise that they can allocate. Because of such efforts during the 1980s and 1990s, companies improved their success rates for recombinant protein (rDNA) therapeutics. The Tufts Center for Drug Development (CSDD) found that the overall success rate for a 1990–1997 cohort of rDNA therapeutics entering clinical trials during was 35% compared with only 26% for a 1980–1997 cohort.

Yet despite these improvements, CSDD identified efficient manufacturing as one of the core areas to be addressed if further advances were to be made in biotech success rates.

  For example, despite the high level of R&D activity in the sector, there has been little basic change in the technologies used for commercial-scale manufacture of biopharmaceutical products since the 1970s.

  Most current products are being manufactured by old, familiar technologies — primarily using 

 as hosts. Therefore, an opportunity for the future is for biotech companies to exploit new platform technologies. Many newer technologies offer the advantage of speed, including much shorter times to go from gene to transformed host cell line/organism, to commercial-scale manufacture.

  This allows companies to produce the same or higher amounts of products in much shorter time periods. 

An analysis of the trends during the past decade reveals a clear decline in R&D innovation by pharmaceutical companies. Biotech drug development is a way for companies to improve this situation, but the field is highly complex, expensive and increasingly competitive. Despite the current economic environment, companies will need to make heavy investment in new technologies to ensure they benefit from the promise biotech R&D offers and avoid the decline that has been experienced in traditional pharmaceutical R&D. 

1. F. Kermani and G. Findlay, The Application of Drug Delivery Systems (Centre for Medicines Research International, UK, 2000). 

3. PR Newswire, "Pfizer Expects to Launch Three New Drugs in 1998, Company Tells Wall Street" (1999). 

4. AstraZeneca, "AstraZeneca Progresses Key Products And Aims To Double Product Portfolio Value Every Five Years" (1999). 

7. BIO, "Biotechnology Industry Facts" (2008). 

8. CMR International, The CMR International 2007 Pharmaceutical R&D Factbook (UK, 2007). 

9. R. Rader, Biopharmaceutical Expression Systems and Genetic Engineering Technologies (BioPlan Associates, Inc., MD, USA, 2008). 

10. M. Martino, "The biotech market share report" (2008). 

11. Anon, Tufts Center for the Study of Drug Development Impact Report, 

The productivity of the pharma industry has been declining for several years. Could biotechnology reinvigorate drug development?

Building on the promise of biotech

The US remains the dominant market for pharmaceutical manufacturers as it represents more than 40% of the global market.

  A major attraction for pharmaceutical companies is the reluctance of the US government to directly intervene in the market. Although other forces have the effect of regulating prices, pharmaceutical companies can charge higher prices in the US than other key markets, such as Europe and Japan. The US pharmaceutical industry remains fiercely opposed to governmental intervention and has made its views public on a number of occasions, particularly at political level.  

During the past 10 years, the US market grew at an average of 15% per year.

  In comparison, Europe has grown at an average of 5% and the Japanese market has only grown by 1.6% annually. The biggest surge in growth for the US pharmaceutical market occurred between 2001 and 2004. Recently, US market growth has slowed considerably; for example, while growth exceeded 8% in 2006, it dropped to 3.8% in 2007. Furthermore, total dispensed prescription volume, which grew at 4.6% in 2006, declined to 2.8% in 2007. This trend appears to be continuing as IMS Health predicts a growth rate of 4–5% during 2008 for the US pharmaceutical market.  

The slowdown in the US market has been linked to a number of blockbuster drugs coming off patent, pressure from payers to curb costs, a more cautious attitude from regulators in approving new drugs and the impact of the introduction of Medicare Part D.

  Furthermore, the industry is casting its eyes further afield and looking for new global markets for its products. Socalled emerging markets, such as India, China and Mexico, represent a new growth area for pharmaceutical companies and are growing in prominence.

While the US market may represent a tougher environment in which to operate in the future, it has not lost any of its allure for pharmaceutical companies. The industry has shown its willingness to fight to maintain its strong position. How it reacts during the coming months will depend much on the new US President, Barack Obama's healthcare policies. 

The US healthcare system is the most fragmented, complex and most rapidly changing in the industrialized world. It continues to grow tremendously in size and was valued at close to $2 trillion (€1.6 trillion) in 2007.

  Unlike Europe, there is no government sanctioned scheme for providing universal access to healthcare. Instead, insurance and provision are undertaken by both public and private bodies on a limited basis and for limited populations. Employers meet the majority of the massive cost of healthcare in the US. It is estimated that benefits, of which healthcare provision is the major part, account for more than one third of employers' payroll costs.

Employers either carry the risk for covering employee's sickness benefits themselves, or use an insurer or managed care plan. Where employers carry their own risks, they often use the services of an insurer or managed carer to administer inhouse schemes. Managed care plans are very well accepted among large employers, few of whom now use traditional indemnity insurers, but there is less penetration among small employers, among selffunding individuals or in the two public schemes. The two major public schemes, Medicaid and Medicare, act as safety nets for those who are unable to fund their healthcare through any other means. 

In most cases, people are eligible for Medicare if they or their spouse have worked for at least 10 years in Medicare covered employment, are 65 years or older and a citizen or permanent resident of the US. People are eligible for Medicare when they turn 65 even if they are not eligible for social security retirement benefits. Medicare is divided into four parts, each relating to different aspects of healthcare services (Table 1). 

Medicaid is another programme that is occasionally confused with Medicare by those less familiar with the US healthcare system. Medicaid is a staterun programme that provides hospital and medical coverage for people with low income and little or no resources. Each state has its own rules about who is eligible and what is covered under Medicaid. 

The high price of medicines has become a contentious issue in recent years, with many consumers calling on their political representatives to make healthcare more affordable. The cost of healthcare is a major issue at election time. The continuing high price of medicines in the US has resulted in price conscious individuals and employers seeking strategies to obtain cheaper products. 

Price insensitivity on the part of the US consumer had been considered to be one reason for the dramatic rise in prices seen during recent years. However, patients now have to pay a greater portion for these charges for medicines and are becoming more aware of the pricing element of pharmaceutical company marketing strategies.

  It is well known that consumer spending for prescription drugs tends to increase with age. Unsurprisingly, many US seniors have criticized the high prices that they currently pay for prescription drugs and have been looking to politicians to help drive down costs. 			

In the lead up to the 2008 US elections, the Republican candidate, John McCain, portrayed himself as willing to put pressure the pharmaceutical industry concerning its pricing, which included measures to let consumers import cheaper medicines from Canada. While this type of approach found favour with the public, pharmaceutical companies responded by increasing their donations to the Democratic campaign. According to figures from the Center for Responsive Politics, Barak Obama's campaign received $450094 (€357160) to John McCain's $132575 (€105201) by the end of August 2008.

  Interestingly, however, the Democratic campaign was highly critical of the pharmaceutical industry regarding its pricing strategies. 

The pharmaceutical industry's strong position has much to do with its political lobbying power. Most US pharmaceutical companies are members of the Pharmaceutical Research and Manufacturers of America (PhRMA), which lobbies at the highest level on behalf of its members, both in the US and abroad. PhRMA members are responsible for approximately 80% of the total R&D efforts of the pharmaceutical industry.

According to industry critics, PhRMA's tremendous political power has allowed companies to fight back against price restraints, and measures to promote generics and parallel trade. Historically, PhRMA's views have been closer to the Republicans than to the Democrats, but in recent elections, representatives from both parties have been critical of some industry activities.  

A noticeable increase in lobbying was highlighted by critics of PhRMA, following the political shift in congress from Republican to Democratic control. This has been linked to several industry critics in the Democratic party taking up roles in committees with the power to push for greater industry oversight. PhRMA is estimated to have spent approximately US$23 million (€18.3 million) in lobbying during 2007, a 26% rise from 2006.

  According to reports in the Houston Chronicle, PhRMA spent $12 million (€9.5 million) in the second half of 2007.

Lobbying measures included those against a bill to allow the federal government to negotiate prices directly with pharmaceutical companies under the Medicare prescription drug benefit, and legislation that would allow the purchase of lower cost medications from Canada and other countries. However, congress did not pass either of these bills. PhRMA also lobbied against certain measures of a prescription drug safety bill, which became law in September 2007. Industry critics noted that this bill did not include restrictions on direct to consumer advertisements, which had been opposed by the pharmaceutical industry. 

According to an October 2008 Boston Consulting Group (BCG) analysis, the new US Presidency may cause the industry a number of difficulties.

  President Obama's healthcare plan, published during the election, struck a highly populist tone and contained language that was far from friendly to the pharmaceutical industry.

  One of his main proposals was to let the US Federal government negotiate Medicare drug prices. This would overturn the elements of the 2003 Medicare Prescription Drug Improvement and Modernization Act, which actually banned the government from negotiating down the prices of prescription drugs.

  It was suggested that this change in policy could result in healthcare savings of up to $30 billion (€23.8 billion). Such a move would be unpopular with the pharmaceutical industry as it would have a major impact on earnings.

Another area that President Obama wishes to tackle is generics. His election healthcare proposal accused certain pharmaceutical companies of paying generics manufacturers to stay out of the market, thereby enabling them to maintain a monopoly. In response, he expressed a desire to increase the use of generics in programmes such as Medicare and Medicaid.

  However, what will be of greater concern to pharmaceutical companies are his intended policies for biogenerics. In the lead up to the 2008 election, Obama's advisors issued statements at the Annual Policy Conference of the Generic Pharmaceutical Association that their candidate supported generics and biogenerics legislation. President Obama's then cited position was to support as short a market exclusivity period as possible to get affordable biogenerics to market. This would be in direct contrast to that of the pharmaceutical industry and its biotech allies, which have reportedly been pushing for up to a 14-year exclusivity period.

No one can be sure exactly how the US political environment will unfold with respect to healthcare during the next few years, but it is likely to feature measures that pharmaceutical companies will find unpalatable. However, the position taken by President Obama during the election reflected the trend of growing public dissatisfaction with pharmaceutical companies and the state of the healthcare system. The pharmaceutical industry will continue to lobby politicians to supports its views, and may even win some powerful new friends to its cause, but it needs to urgently address other areas, such as public attitudes to its activities. If it cannot reform itself and prove to the public that its current commercial approach is justified for the development of new medicines then future political leaders are likely to view it as an easy target to gain votes.  

1. IMS Health Inc., "IMS Health Reports US Prescription Sales Grew 3.8 Percent in 2007, to $286.5 Billion" (2007). 

How will the world's dominant pharmaceutical market fare under the new US president?