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Improving Drug Development ROI in 2017
With forecasts of decreasing peak sales for late pipeline drugs, a logical way to increase the return on investment (ROI) for pharmaceutical companies is to develop products with lower research and development (R&D) costs. How can this be achieved in an environment with increasing regulatory hurdles and clinical development costs?
Since 2010, Deloitte LLP and GlobalData have been tracking the R&D performance of 12 leading global life science companies by their R&D spend. In the most recent annual update, the authors included an additional cohort of 4 mid- to large-cap companies that have experienced recent rapid growth. Among the major findings of the report were:
*The 4 “Mid- to large-cap” companies were “selected based on perceived recent performance and pharmaceutical R&D spend. These companies all fall within the top 25 pharmaceutical companies based on R&D spend(in)g for 2012 to 2014.”
Some good news to come from the report was that innovation levels were high. This was based on FDA reports of record numbers of approvals of new drugs, orphan designations, and breakthrough therapies for 2016. The report also cited data from the Pharmaceutical Research and Manufacturers of America that > 7000 drugs and treatments are in development globally. It is therefore reasonable to assume that new treatment options will continue to enter the market.
So how can a pharmaceutical company use these data to improve their ROI?
Regular readers of this blog will be familiar with our core message that drugs approved via the 505(b)(2) pathway typically have reduced costs and accelerated development timelines compared with the 505(b)(1) pathway for new drugs. For those who have only tuned in more recently, the 505(b)(2) approval pathway is used to approve drugs for which some studies or data are already available thereby reducing the number of studies that a sponsor must conduct. So where are the numbers to back this up?
Let’s first consider that a significant portion of R&D costs cover products that fail in development. What are the chances that a 505(b)(1) vs. 505(b)(2) product will succeed?
A 2016 report by BIO (Biotechnology Innovation Organization), Biomedtracker, and Amplion tracked 9,985 clinical and regulatory transitions over the last 10 years from 7,455 development programs of 1,103 companies in their Biomedtracker database. When the authors compared the probability of approval success for new molecular entities (NMEs) with that of products that were neither NMEs nor generics [i.e., 505(b)(2)s], the results speak for themselves. As shown in the table below, at every stage of development, 505(b)(2) products have a greater chance of a successful approval than 505(b)(1) products.
Even at the NDA stage, the probability of success is markedly greater for a 505(b)(2) product. Why is this? Products developed for approval via the 505(b)(2) pathway can be significantly de-risked with optimal regulatory interactions. This means that not only are less data/studies required for approval, but that if regulatory interactions are conducted properly, greater FDA feedback can be obtained earlier in the development process. In Camargo’s experience, this greatly de-risks the development and approval processes.
We have also previously blogged about the growing popularity of the 505(b)(2) pathway as Sponsors learn of the benefits in reducing the size and scope of their development program. In 2015, FDA approved 73 NDAs for drugs (NMEs + non-NMEs but not biologicals), 44 of which were 505(b)(2) approvals (60%). While the number of NDAs has been steadily increasing over the last decade, so has the number of 505(b)(2) approvals.
The Deloitte report noted that companies that have a consistent focus on fewer therapeutic areas enjoyed greater R&D returns than companies with more diverse portfolios. The authors believed that this was related to the deep knowledge and expertise that a company accumulates when it focuses on specific diseases or mechanisms of action over time. They postulated that constantly changing therapeutic area requires a higher investment to achieve similar returns. They also believe that companies with focused therapeutic areas negotiate more effectively with regulators.
Camargo has noted in previous blogs that familiarity with FDAs therapeutic Divisions improves the quality of the regulatory action, and reduces unpleasant surprises at milestone meetings such as Pre-IND and Pre-NDA meetings.
Author: Angela Drew, Ph.D., Product Ideation Consultant, Camargo Pharmaceutical Services
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Camargo Pharmaceutical Services provides comprehensive drug development solutions, specializing in customized programs including the 505(b)(2) pathway.