The Rest of the Research and Development Investment Story

When will the evolution in our understanding of medicine or science stop? The answer is: Never. Then why is it that many learned individuals, including healthcare professionals, believe that all research is halted once a biopharmaceutical is approved for use by the Food and Drug Administration? Why is there a belief that the only thing a pharmaceutical company does after FDA approval is to market and manufacture a medicine? This thinking, that all of our policy, legislative and clinical attention is geared towards research and development prior to the approval of a medicine, belies the fact that there is significant investment in post approval research and clinical commitments for a drug, often referred to as Phase IIIB/IV studies or post approval therapeutic commitments.

This segment of research and development can take many forms. For example, companies may further invest in safety surveillance studies or clinical effectiveness and health economic trials to demonstrate the value of medicine in a real world setting. There is also an inherent interest to learn more about how these new medicines may be useful in treating additional diseases and not just the initial FDA approved ones. For instance, sildenafil, which first received approval for use in erectile dysfunction by the FDA, was further investigated and gained additional approval by regulators for treatment of pulmonary hypertension. Similarly, methotrexate was initially developed as a chemotherapeutic agent but later received FDA approval for treatment of rheumatoid arthritis. In addition, companies may be obligated to invest additional resources in post approval programs due to Risk Evaluation and Mitigation Strategy requirements that are mandated by the FDA as a way to manage a known or potential serious risk associated with a drug or biological product. In 2009, a year after the REMS requirements were put in place by the FDA, 37 new chemical entities required post approval studies under a REMS program. In recent years, the FDA has also required safety or efficacy post approval studies for new molecular entities. For the past five years there has been a 13 percent increase in such requirements. Lesser known is the fact that additional regulatory requirements are also mandated for medicines well into the post approval period. In fact, companies often have to continue investing to fulfill the regulatory mandates well after the patent life of a molecule has expired. Finally, government agencies such as the Centers for Disease Control, which is responsible for the scheduling of vaccines, may place additional safety or efficacy research requests on the innovators aside from the FDA. At times, these requirements can lead to contradictory recommendations which require biopharmaceutical companies to develop a multitude of research and educational initiatives to fulfill differing requirements.

All of these actions, whether voluntary or required, have increased the financial encumbrance on biopharmaceutical companies. According to Jefferies and Company, the estimated cost of phase IIIB/IV studies reached $20 billion in 2011, a whopping 100 percent increase since 2005. Meanwhile, post marketing surveillance investment by U.S.-based pharmaceutical companies is estimated to reach greater than $50 billion in 2019, according to Transparency Market Research. Earlier this year, the Pharmaceutical Research and Manufacturers Association reported that annual Phase IV spending among U.S.-based companies rose by 14.2 percent. This increase is greater than Phase I and II clinical trial spending and constitutes a continuous upward shift in pharmaceutical spending on post surveillance investment over the past seven years. To put all of the expenditures in context, according to PhRMA, member companies invested $51.2 billion for pre-approval research and development in 2014, a number which has been flat for the past several years.

To ensure we have appropriate use of these vast investments in the innovation model, several policies outlined in the Cures legislation are important to note. First, we must ensure that FDA standards are clarified regarding FDAMA 114, which would allow for the communication of health care economic information by industry to payers as outlined in the legislation. Second, we need to make sure investment in disease surveillance goes beyond just neurological diseases to allow innovators to have a better understanding of disease and discovery research. Third, we ought to invest and promote precision medicine which will narrow the field of patients who will benefit from new innovations; thus reducing overall costs for everyone including industry.

Getting a drug to the market is an intensely complex proposition. It requires vast outlays of monetary and human capital. It is also a very risky endeavor as only one out of 10 drugs entering clinical trials results in an approval by the FDA. However, we should not lose sight of the path a medicine takes post approval, that it may require investments that dwarf pre-approval commitments. The next time an industry defender or opponent notes the average investment per each new molecule is $2.6 billion and goes on to claim that it’s too much or too little, it’s important to remember there is more to the story. That indeed it is a story half told.

Robert Popovian is the Senior Director of U.S. Government Relations at Pfizer Pharmaceuticals.

Morning Consult