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TRENDS

Are Development Times For Pharmaceuticals Increasing Or Decreasing?

Abstract

 
This study examines trends in drug development times. Longer clinical trial times have been described as one factor leading to higher drug prices. Previous reports on development times have been based on proprietary data. We examined trends in development times for 168 drugs with data collected from publicly available sources. The median clinical trial and regulatory review periods for drugs approved between 1992 and 2002 were 5.1 and 1.2 years, respectively. Clinical trial periods have not increased during this time frame, and regulatory review periods have decreased. Therefore, it is unlikely that longer clinical trial times are contributing to rising prescription drug prices.

Our examination of development time adds to the earlier work in the area; we were able to reveal data on individual drugs, analyze development times by various drug characteristics, and examine trends in ways that have not been published before, mainly because we were not limited by proprietary agreements with industry. In addition, we used government-verified development dates on approved drugs, not proprietary data, to examine trends.

Development time is important because of numerous claims that it is a factor in drug pricing. The pharmaceutical industry argues that long drug development times lead to high drug prices, and it identifies increasingly longer clinical trial periods as an important factor.³ Long development times presumably lead to higher opportunity costs of capital and higher research and development (R&D) costs. It has also been suggested that decreases in development time can have a substantial downward effect on these costs.⁴ The claim that longer development times lead to high drug prices suggests that drug pricing is based on costs. In other words, high R&D costs lead to higher drug prices, and current prices are necessary to fund future R&D spending.

Market factors probably play a much larger role than development times in determining drug prices.⁵ Previous studies have found that therapeutic value and market structure are the main explanatory variables for pricing of new molecular entities (NMEs). For example, John Lu and William Comanor found that introductory prices for drugs that represented an important therapeutic gain were two to three times higher than prices for drugs that were used for similar purposes.⁶ However, given the claim that longer development times lead to higher drug prices and the close attention paid by policymakers to drugs’ affordability, a closer look at development times is warranted.

Development time is also of interest as it has an indirect effect on patent life. A shorter development period can lead to longer patent duration, because patent applications are usually filed prior to drug development.

In previously published work we compared the prices of different groups of drugs after accounting for development time, government support, market size, and other drug characteristics.⁷ In this paper we focus solely on development time and analyze trends based on publicly available data.

Study Data And Methods

Top Study Data And Methods Study Findings Study Limitations Concluding Comments NOTES

 
We conducted a retrospective study examining development times by drug characteristics and government regulatory designations. To be eligible for this study, a human therapeutic drug (we excluded development data on nonhuman drugs and diagnostic medications) had to be listed in the Federal Register Government Printing Office (GPO) Web site before May 2003 (the date that data collection was completed). This is the only publicly available source of data on drug development time.⁸

For purposes of comparison, we also collected data on review times from the U.S. Food and Drug Administration (FDA) Web site. In addition, we collected data on a variety of factors thought to influence development time: FDA regulatory designations, because drugs that have received fast-track or accelerated review might be rapidly developed; use category (acute, chronic, intermittent), because clinical trial times might vary for drugs that are used for different periods; orphan drug status, because such drugs target rare diseases and might take longer to develop; first-in-class status, because drugs that are novel might take longer to develop; and annual sales, because drugs with higher potential sales might be developed more rapidly.

Development process. The drug development process involves three major stages: pre–clinical phase, clinical trial phase, and regulatory review phase.⁹ When a compound with potential clinical benefit is identified, a drug company files an investigational new drug (IND) application with the FDA. The IND application is a compilation of all known information about the compound. If the FDA does not intervene after thirty days, the IND becomes effective, and the clinical trial period can begin. The clinical trial period involves testing of a new compound in humans. The regulatory review period starts with the filing of a new drug application (NDA) with the FDA for marketing a new drug and ends with approval of the drug. There are no publicly available data for the first phase (before an IND application).

Under the Drug Price Competition and Patent Term Restoration Act of 1984, drug companies have the option of filing for patent term restoration with the U.S. Patent and Trademark Office (USPTO), which can result in the retrospective addition of the length of the clinical trial and regulatory review phase to the patent term.¹⁰ This option is available for all drugs that have less than fourteen years of patent life remaining at the time of approval. When filing, companies are required to declare both the IND and NDA dates. The FDA verifies the dates and publishes a notice in the Federal Register. This notice provides the dates necessary to calculate the clinical trial and regulatory review periods of a particular drug. For our study, the clinical trial period is the time between the date the IND becomes effective and the date the NDA is filed. The regulatory review period starts with filing of the NDA and ends with the approval of the drug.

Drug characteristics. We defined use categories based on the information listed in the FDA-approved drug label. "Acute" drugs are those used fewer than thirty consecutive days by patients; "chronic" drugs are those used more than thirty days; and "intermittent" drugs are used once, once a week, or once every few weeks. When the drug label did not give details on how long a drug should be used, we based the categorization on how long the drug had been used in the clinical trials described. We collected data on "orphan drugs," a regulatory designation for drugs used to treat rare diseases, from the FDA Web site. "First-in-class" was defined as a drug first in its chemical class to be approved for its indication. We obtained 2002 annual sales data from IMS Health. We defined a drug as a "biopharmaceutical" if it was approved by the FDA Center for Biologic Evaluation and Research (CBER) rather than the FDA Center for Drug Evaluation and Research (CDER). We obtained data on "fast-track status" and "accelerated review" from the FDA Web site. Fast-track status was described in the 1997 FDA Modernization Act as a formal mechanism that allows industry to interact with the FDA and that includes a number of procedures that can lead to more rapid drug approval.¹¹ Accelerated review is a program intended to allow products for life-threatening diseases to be available on the market more quickly on the basis of preliminary evidence before patient benefit has been formally demonstrated.

Statistical analysis. We used nonparametric statistical methods to examine differences in the distribution of total development times among the various drug categories. Differences between two groups were assessed using the Wilcoxon rank-sum test; differences among three or more groups were assessed using the Kruskal-Wallis test. All analyses were performed using Stata 8.0.

Study Findings

Top Study Data And Methods Study Findings Study Limitations Concluding Comments NOTES

 
Sample development times. A total of 168 human therapeutic drugs approved between 1 January 1992 and 1 January 2002 that met the eligibility criteria were identified in the Federal Register. A total of 298 human therapeutic new molecular entities (NMEs) were approved by the FDA in this period. Our study included 145 (approximately half) of these NMEs and another twenty-three drugs that are not NMEs (mainly biologics and vaccines). Exhibit 1 shows the twenty-five drugs with the highest annual sales (2002) in our sample. The median total post-IND development time for all drugs in the database was 6.4 years; it ranged from 2.6 to 17.3 years (data not shown). The median clinical trial phase was 5.1 years and ranged from 1.4 years to 14.6 years, while the median regulatory review phase was 1.2 years and ranged from 0.3 years to 5.0 years.

View larger version (33K): [in this window] [in a new window]   EXHIBIT 3 Total Post-IND Development Period, Clinical Trial Period, And Regulatory Review Periods, By Year Of NDA Approval, 1992–2001

View larger version (32K): [in this window] [in a new window]   EXHIBIT 4 Total Post-IND Development Period, Clinical Trial Period, And Regulatory Review Period, By Year Of IND Filing, 1985–1995

Top Study Data And Methods Study Findings Study Limitations Concluding Comments NOTES

Pros and cons of analytic method. We examined trends in development time by the year in which the IND was filed as well as by the year in which the NDA was approved. Each method has its limitations. Exhibit 3 demonstrates the changes in median development time charted by the year NDAs are approved. Given that the initiation of each drug’s development started during a different year, a clear picture of how drug development time has changed over time does not emerge. Exhibit 4 demonstrates the change in median development time charted by the year of IND filing. The effects of legislation on development time can be more clearly examined, because the development of each cohort of drugs was initiated in the same year. However, because we do not have data for all drugs for which INDs were filed every year, we might be focusing on drugs that took much less time to develop. For example, there still could be drugs that are now in development for which INDs were filed in 1992. However, our sample includes drugs approved up to 2002, and the trend is present during the entire period.

Concluding Comments

Top Study Data And Methods Study Findings Study Limitations Concluding Comments NOTES

 
Our findings indicate that drug development times vary by drug characteristics and have decreased over time. There is some suggestion that drugs that treat rare diseases (orphan drugs) and first-in-class drugs take longer to develop. One would expect it to be harder, for example, to find and enroll patients with rare diseases into clinical trials. Drugs that are first-in-class might be harder to develop because these drugs are being tested by industry and reviewed by the FDA for the first time. This could explain the differences we found in development times, although they were not statistically significant. Drugs with higher annual sales appear to be developed more quickly. This could represent a company’s financial interest in more rapidly developing a drug that appears to be a blockbuster. It also appears that FDA regulatory designations such as fast-track status have resulted in decreased development times; however, fast-track status was not implemented until 1998, and if the development times of drugs that received fast-track status are compared to drugs that were approved after 1998, the difference in median development time is only 1.4 years (as opposed to 2.3 years in Exhibit 2). This suggests that development time overall has been decreasing independently of the effect of such regulatory designations.

The fact that development times have been decreasing for each new cohort of drugs with INDs filed in the same year is especially informative. Design, recruitment, and implementation of clinical trials by industry might be becoming more efficient. In addition, the FDA might have become better in communicating its expectations on clinical trial design and quality to industry.

Longer clinical trial periods have been offered as a justification for increasing drug prices; our analysis demonstrates that these periods have not been increasing and might in fact be decreasing. This finding, in turn, suggests that development times are not a factor in rising drug prices. Previous research has demonstrated that drug prices are affected by market factors such as the availability of substitutes and the relative therapeutic advantage of one drug over another that treats similar diseases.¹⁴ The argument that long drug development times are a reason for high drug prices might be more politically acceptable than the explanation that certain market factors determine price and that firms will price new drugs to maximize profits.

The 1984 Hatch-Waxman act allowed the pharmaceutical industry to add the period that drugs have been under testing and review to the length of the patent. Recent reports suggest that patent life has been increasing because of new patent provisions offered as new incentives to industry for drug discovery and development.¹⁵ Given the increase in patent life reported elsewhere and the decrease in drug development times noted in this study, incentives that lead to increased patent life need to be examined carefully.

In conclusion, clinical trial times are not increasing and are an unlikely contributor to rising prescription drug prices.

Editor's Notes

 
Salomeh Keyhani (Salomeh.Keyhani{at}mountsinai.org) is an assistant professor of health policy at Mount Sinai School of Medicine in New York City. Marie Diener-West is a professor of biostatistics, ophthalmology, and epidemiology at the Johns Hopkins Bloomberg School of Public Health in Baltimore, Maryland. Neil Powe is a professor of medicine, epidemiology, and health policy and management at the Bloomberg School.

Salomeh Keyhani is a former Robert Wood Johnson Clinical Scholar, supported by the Robert Wood Johnson Foundation. This research is the sole responsibility of the authors. They acknowledge the detailed and thoughtful input of the anonymous reviewers who helped improve this manuscript.

NOTES

Top Study Data And Methods Study Findings Study Limitations Concluding Comments NOTES

 

1. M.K. Olson, "Managing Delegation in the FDA: Reducing Delay in New-Drug Review," Journal of Health Politics, Policy and Law 29, no. 3 (2004): 397–430[Abstract]; D.P. Carpenter, "The Political Economy of FDA Drug Review: Processing, Politics, and Lessons for Policy," Health Affairs 23, no. 1 (2004): 52–63[Abstract/Free Full Text]; and D. Carpenter et al., "Approval Times for New Drugs: Does the Source of Funding for FDA Staff Matter?" Health Affairs 22 (2003): w618–w624 (published online 17 December 2003; 10.1377/hlthaff.w3.618); and M.K. Olson, "Explaining Reductions in FDA Drug Review Times: PDUFA Matters," Health Affairs 23 (2004): s1–s2 (published online 30 January 2004; 10.1377/hlthaff.w4.s1).
2. J.M. Reichert, "Trends in Development and Approval Times for New Therapeutics in the United States," Nature Reviews: Drug Discovery 2, no. 9 (2003): 695–702[CrossRef][Web of Science][Medline]; K.I. Kaitin et al., "Measuring the Pace of New Drug Development in the User Fee Era," Drug Information Journal 34, no. 3 (2000): 673–680; and R.M. Abrantes-Metz, C.P. Adams, and A. Metz, "Pharmaceutical Development Phases: A Duration Analysis," Working Paper no. 274 (Washington: Bureau of Economics, Federal Trade Commission, 2004).
3. Pharmaceutical Research and Manufacturers of America, "Why Do Prescription Drugs Cost So Much...and Other Questions about Your Medicines," June 2000, http://www.phrma.org/publications/publications/brochure/questions (accessed 31 August 2005); and PhRMA, "The Search for a Cure for Cancer: New Medicines, New Hope," Summer 2003, http://www.phrma.org/publications/twopager/2003-06-24.752.pdf (accessed 28 January 2005).
4. J.A. DiMasi, R.W. Hansen, and H.G. Grabowski, "The Price of Innovation: New Estimates of Drug Development Costs," JournalofHealthEconomics 22, no. 2 (2003): 151–185; and J.A. DiMasi, "The Value of Improving the Productivity of the Drug Development Process: Faster Times and Better Decisions," PharmacoEconomics 20, no. 3 Supp. (2002): 1–10.[Web of Science][Medline]
5. S.O. Schweitzer, Pharmaceutical Economics and Policy (New York: Oxford University Press, 1997).
6. Z.J. Lu and W.S. Comanor, "Strategic Pricing of New Pharmaceuticals," Review of Economics and Statistics 80, no. 1 (1998): 108–118.[CrossRef]
7. S. Keyhani, M. Diener-West, and N. Powe, "Do Drug Prices Reflect Development Time and Government Investment?" Medical Care 43, no. 8 (2005): 753–762. This paper includes data on twelve additional antiretroviral drugs for which development data were obtained from sources other than the Federal Register. We chose to include data on antiretroviral drugs because the purpose of our previous study was to examine differences in prices between different drug classes after accounting for development time and other factors. Data on development time other than those available in the Federal Register are scarce; however, given interest in AIDS drugs early in the epidemic, data on these drugs were occasionally revealed by industry. We chose not to include these drugs in this study because they represent a highly select group that had rapid development and might have biased our data on development time downward.[Medline]
8. The Federal Register (http://www.gpoaccess.gov/fr/advanced.html) can be searched to find notices related to patent term restoration.
9. U.S. Congress Office of Technology Assessment, Pharmaceutical R&D: Costs, Risks, and Rewards, February 1993, http://www.wws.princeton.edu/~ota/disk1/1993/9336_n.html (accessed 18 April 2005).
10. U.S. Food and Drug Administration, "Frequently Asked Questions on the Patent Term Restoration Program," 8 December 2003, http://www.fda.gov/cder/about/smallbiz/patent_term.htm (accessed 29 November 2005).
11. FDA, "Fast Track, Priority Review, and Accelerated Approval," 31 January 2006, http://www.accessdata.fda.gov/scripts/cder/onctools/Accel.cfm (accessed 31 January 2006).
12. FDA, "Frequently Asked Questions."
13. U.S. Patent and Trademark Office, "Formal Requirements for Application for Extension of Patent Term; Correction of Informalities—Patent Rules," http://www.uspto.gov/web/offices/pac/mpep/documents/appxr_1_740.htm (accessed 31 January 2006); and FDA, Dockets Management, http://www.fda.gov/ohrms/dockets (accessed 31 January 2006), for an actual application.
14. Lu and Comanor, "Strategic Pricing."
15. H. Soehnge, "The Drug Price Competition and Patent Term Restoration Act of 1984: Fine-Tuning the Balance between the Interests of Pioneer and Generic Drug Manufacturers," Food and Drug Law Journal 58, no. 1 (2003): 51–80[Medline]; and National Institute for Health Care Management Research and Educational Foundation, "Prescription Drugs and Intellectual Property Protection: Finding the Right Balance between Access and Innovation," August 2000, http://www.nihcm.org/prescription.pdf (accessed 12 January 2005).

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