The FDA announced yesterday that it had taken steps to mitigate shortages of two cancer drugs, Doxil and preservative-free methotrexate. Doxil, a drug used to treat ovarian and other cancers, has been in short supply for months, after manufacturing problems shut down the drugs' sole U.S. plant. The FDA will temporarily allow importation of Doxil from an Indian manufacturer, a move that is expected to effectively end the shortage.

For preservative-free methotrexate, a critical cancer drug for pediatric acute lymphoblastic leukemia (ALL) and bone cancer, the FDA has asked other pharmaceutical companies to step in to fill demand after a major supplier, Ben Venue, shut down a plant making the drug for "maintenance and requalification of equipment."

The FDA reports that it has prevented nearly 200 shortages in 2011 thanks to advance notice from manufacturers, but 280 drugs remain in short supply. Short term fixes are welcome. Long term fixes are harder to come by.

The U.S. market strongly encourages substitution of branded drugs by generics immediately after a drug loses patent protection. For very profitable drugs (like statins) generic companies will rush in to fill the vacuum, slashing prices and saving consumers and insurers billions in annual drug costs. For high demand, high profit generics (and branded drugs), shortages will be few and far between.

But for other medicines, like sterile injectable drugs, which have high manufacturing costs and narrow profit margins, fierce price competition may eventually drive all but one or two manufacturers from the market. And when there are only one or two suppliers, it creates the opportunity for drug shortages when unexpected manufacturing problems at a single plant can place thousands of lives in jeopardy.

One solution, offered by the FDA's Sandra Kweder in an interview yesterday, is for "a shift in the industry to assuring good manufacturing practices to prevent finding themselves in a critical juncture where they have no choice but to shut down."

This, however, puts all the blame in the wrong place. By all means, companies should comply with the current Good Manufacturing Practices required by the FDA, and find ways to share information to help prevent or alleviate the effect of drug shortages.

But perverse Medicare price controls, just-in-time inventory supply practices at hospitals, reverse auctions by Group Purchasing Organizations for filling generic drug contracts, tougher FDA manufacturing and inspection standards for domestic companies (which can raise costs), and increased global competition from low-cost suppliers in India and China has created something of a "race to the bottom" in the generic drug market.

In this environment, quality (but higher cost) manufacturers may (rationally) exit the market to focus on higher margin products. And the few low cost suppliers that remain for complex drugs like sterile injectables may not be able to ensure the integrity of their manufacturing and supply chain over time at a rock-bottom price.

In other words, if private and public purchasers insist on driving prices below a sustainable level, drug shortages may become an endemic feature of the U.S. generic drug marketplace - as they have over the last several years.

You can find good articles on the problem (and potential solutions) here, here, and here (by yours truly).

Funding constraints, hopefully addressed by the new generic drug user fee agreement, have limited the FDA's ability to conduct timely inspection of foreign plants, posing a potential safety risk for patients. It also creates an imbalanced playing field for U.S.-based companies that are inspected more frequently and adhere to higher, more expensive safety and quality standards. In this environment, quality American manufactuers can't compete on price.

Until China and other developing countries raise their manufacturing standards to match those of the U.S., a market-based solution that would supplement the FDA's efforts would be for industry to work with regulators to create a voluntary third-party certification system for manufacturing standards and supply chain integrity for contractors based in developing countries where regulatory standards don't meet those of the FDA or EMA. This approach would mimic independent non-profit organizations like the Joint Commission, which certifies hospital quality, for the global pharmaceutical manufacturing and supply chain. Something like this may already be in the works at Rx360.

Under a certification system, companies that submitted to regular third party inspections and other quality measures would receive a "seal of integrity" that they met or exceeded established regulatory standards.

Generic drug purchasers could still opt to buy from the lowest bidder, but they would do so at their own (and their patients') risk. Third party certification of supply chain integrity would help counteract the "race to the bottom" in generic drug pricing without intrusive government regulation by sending better market signals about manufacturers' commitment providing a dependable supply of the highest quality medicines - not just the cheapest.

Andrew von Eschenbach wrote an op-ed piece for The Wall Street Journal in which he proposed that, "[i]nstead, after proof of concept and safety testing, the product could be approved for marketing with every eligible patient entered in a registry so the company and the FDA can establish efficacy through postmarket studies."

John LaMattina expressed disappoint in von Eschenbach's position via a Forbes article, laying out a few criticisms. I will address just one here. LaMattina stated that physicians, patients, and payers must be convinced, beforehand, that the risk of taking a new medicine is worth the potential benefit. I agree. He went on to say that if von Eschenbach gets his way, "[t]he doctor might just as well prescribe a placebo," implying that so little efficacy data would be available that new products would be indistinguishable from placebos. I disagree.

Von Eschenbach is not pushing placebos and is not against efficacy data in general; he simply wants to move most of the expensive and lengthy process of proving efficacy from before the product is approved until after. There will still be some proof of efficacy before launch--at least from the proof of concept and safety testing--but the decision on how much more proof of efficacy would be needed before launch would be the responsibility of the pharmaceutical companies, not a government agency.

Question: How do drug companies make internal go/no development decisions? Answer: With data on safety and efficacy. I guarantee that a new drug being developed for pain, will, at an early stage, have some data showing pain relief.

On the same day last week that Paul Howard was discussing the Biosimilars User Fee Act, the FDA issued the first two in a series of long awaited guidance documents that will lay the groundwork for implementing the Biologics Price Competition and Innovation Act. Folks in the biotech and generic drugs industries have been anticipating the documents since at least last summer, when CDER head Janet Woodcock announced that the documents had been completed. But FDA kept putting off their release in order to fine tune its approach intended to navigate a course between the very strict process advocated by innovator biotech companies on the one hand and the comparatively less strict process advocated by generic manufacturers on the other.

The result, however, is a little underwhelming, as the draft guidance docs still leave many details of the process undefined. As this article on the Nature blog explains:

"Ultimately, the FDA provided few concrete details about what would be required, preferring to judge on a case-by-case basis. That offers flexibility, but companies may be deterred by the lack of specificity, cautions D'vorah Graeser, a patent agent at Graeser Associates International, a law firm based in Chicago and Israel. 'I don't think [the FDA] gave much guidance,' she says, noting that the first few companies to jump in are still taking on a big risk. 'They may be rejected and have to go back to the drawing board several times,' she says."

Or, as Jim Czaban at the law firm Wiley Rein explains, "the Guidances are very small baby steps that leave many important questions unanswered."

Essentially, the guidance on Scientific Considerations in Demonstrating Biosimilarity to a Reference Product tells us that "FDA intends to consider the totality of the evidence provided by a sponsor to support a demonstration of biosimilarity, and recommends that sponsors use a stepwise approach in their development of biosimilar products." This stepwise approach "can include a comparison of the proposed product and the reference product with respect to structure, function, animal toxicity, human pharmacokinetics (PK) and pharmacodynamics (PD), clinical immunogenicity, and clinical safety and effectiveness." And, at each step, manufacturers should examine "the extent to which there is residual uncertainty about the biosimilarity of the proposed product and identify next steps to try to address that uncertainty."

Un-huh! We had to wait nearly two years for this?

On the one hand, the supreme amount of flexibility the FDA approach allows is a plus. We know, for example, that even the simplest biologics are orders of magnitude more complicated than small molecule drugs, and that there will be a huge amount of variation in manufacturers' ability to replicate approved biological products with anything approaching perfect fidelity. So, tying the process down to a simple, detailed flowchart in which all the possible variations are accounted for would be difficult, if not impossible.

Still, the European Medicines Agency (which, admittedly had a few years' head start on the FDA) has issued a larger and more comprehensive set of rather more detailed guidance that makes it easier for manufacturers to know what they need to do to secure approval. FDA may well be able to follow in EMEA's footsteps and eventually issue its own more detailed proposals. But why did it take so long to get a set of documents from FDA that tell us essentially nothing we did not already know?

After all, FDA has been slowly but surely approving a very small number of biosimilar products since 1998. [No, that's not a typo. The correct date is 1998.] Through a quirk of FDA history that I described in this paper, a small number of follow-on biological products (primarily hormones) have been eligible for approval through an abbreviated regulatory pathway created in 1984 along with the "true generic" pathway. Examples of products approved this way include GlucaGen in 1998, Follistim in 2002, Hylenex and Fortical in 2005, and Omnitrope in 2006.

The abbreviated 505(b)(2) process (named for the section of the Food, Drug, and Cosmetic Act in which it is described) involves a great deal of analytical data from laboratory and animal testing, supported by somewhat less clinical testing than is required for innovator products. Section 505(b)(2) wasn't designed with follow-on biological products in mind, but its approach is essentially the process envisioned under the Biologics Price Competition and Innovation Act. The problem with these new guidance documents is that they convey practically no useful information about the process that could not have been learned merely from observing how the approval of those other biosimilar products had been managed.

Don't get me wrong, it IS nice to see these documents finally in print. But if the agency is serious about creating a reasonable, transparent, and predictable pathway for approving biosimilar products, it's going to have to do better than this.

Imagine there is no regulatory agency saying which drugs are efficacious, and consequently, which drugs could be marketed. (Assume that safety is still regulated.) Pharmaceutical companies would develop and manufacturer medicines and sell them to patients. If the patient felt better or got better, he/she would keep taking that medicine. If the patient didn't get better, had a tolerability issue, or didn't see the value, he/she would stop taking that medicine.

The problem with this, as we all know, is the placebo effect. The patient's perceived net benefit is equal to the real benefit plus the placebo effect. There could be a real effect like reduced blood pressure or increased CD4 cell counts--or there could be none at all. The placebo effect could convince the patient that there's a real benefit even when there is none.

The FDA's approach to get around this problem is to separate the real effect from the placebo effect via clinical trials with large numbers of patients to determine whether the medicine is really working or not. Sometimes this divide-and-conquer solution isn't possible, or even necessary, when the entire patient experience is holistic and subjective.

Consider pain. In clinical trials, the visual analog scale is used frequently to assess a patient's perceived pain level. This is merely an objective measurement of nothing other than a subjective assessment. A patient's assessment of pain is highly individualized and situationally dependent.

The American Action forum has a helpful short primer on understanding the Biosmiliars User Fee Act recently negotiated by the FDA and industry. It also gets into some of the thornier issues surrounding biosimilars, namely whether or not you can produce a biologic that is clinically identical to the innovator drug without access to protected trade secrets:

Members of the biotechnology industry have questioned the constitutionality of the FDA review process. Genentech, one of the leading biotech manufacturers, suggested that agency reviewers cannot perform the rigorous scientific comparative assessment necessary to reach legitimate conclusions about the "similarity" or "sameness" of two products without first examining secret trade data concerning the manufacturing processes of the innovator, which is prohibited by law.vii Moreover, such unauthorized reliance would violate not only section 505(b)(2) of the Food, Drug and Cosmetic Act (FDCA), but also the Trade Secrets Act and the United States Constitution.

Beyond legal issues, the scientific community has raised concerns over biosimilars and patient safety. This is, without question, the primary topic discussed throughout FDA meetings.viii For decades, the FDA had taken the position that each biologic is unique and inexorably linked to the manufacturing processes used in its creation. Complex operational details of the manufacturing processes are central to and define the identity and unique molecular safety and effectiveness attributes of each biologic. A follow-on biologic manufacturer that uses different starting materials and a different process will produce a product that is different from the innovative product. The effects of the differences between a "follow-on" and its respective innovator product can only be determined by subjecting the follow-on biologic to substantial clinical testing in patients to prove that it is safe and effective.

This concern is legitimate. Even innovative companies have run into serious manufacturing problems when they've made small changes to products they otherwise know and understand intimately. As I wrote in 2007:

In 1998, Johnson & Johnson added a new stabilizer to the European manufacturing process for its drug Eprex, an erythropoietin molecule grown in cloned Chinese hamster ovary cells and used by cancer and kidney-failure patients to help stimulate production of red blood cells.

The moral is that even Eprex's original manufacturer...was caught off guard by an adverse event after a seemingly harmless manufacturing switch.

As a result, while some simple biosimilars will require relatively little clinical testing for safety and efficacy, more complex ones will have to go through a process that is much closer to that of a new biologic.

Still, assuming technology has progressed to the point that clinical testing can be pared back at least somewhat, analysts expect biosimilar prices to be 20-30% less compared to the original biologic. And when you're talking about drugs that can cost $100,000 or more a year, that's nothing to sneeze at.

One final note; While biologics have 12 years of marketing exclusivity under the Patient Protection and Affordable Care Act, the Obama Administration has signaled that it wants to cut that exclusivity down to 7 years as part of its deficit reduction plan. While this might be a boon for payers, who could access cheaper biosimilar drugs five years earlier, it would sharply dampen incentives for innovation - leaving patients worse off in the long run.

Joel White, executive director of the Health IT Now Coalition, argues in the Washington Times that the FDA should avoid regulating health care applications on smart phones and other mobile devices. FDA regulation would drive up costs and slow innovation, he argues:

Mobile medical applications are becoming increasingly popular as many Americans want to engage actively and control their own health care. Estimates indicate that the number of smartphone consumers using medical apps will grow to 500 million by 2015. This demand for mobile medical applications underscores a market-driven explosion in the use of health-information technology in ways that engage consumers, health care providers and technology vendors to enhance health care outcomes and lower health costs.

The average time to approve a medical device is about three years and can cost upward of $75 million. In the software market, that is a lifetime. Additionally, if mobile apps are regulated as medical devices, they will be subject to the health care reform law's 2.3 percent medical-device tax, raising prices as taxes are passed on to consumers. Free apps may no longer be free.

The FDA, in its defense, believes that regulation would only be required for a small subset of apps that would directly impact the operation of currently regulated medical devices, as it notes here.

On the FDA's web site, FDA Commissioner Margaret Hamburg looks back at the 50th anniversary of the thalidomide tragedy, and argues that it was a watershed moment for the FDA and a paradigm for how sound regulation can protect the public health and advance innovation:

Now I know that in some circles regulation is viewed as a roadblock to innovation and economic growth. But in actuality, when done right, regulation isn't a roadblock; it's the actual pathway to achieving real and lasting innovation. Smart, science-based regulation instills consumer confidence in products and treatments. It levels the playing field for businesses. It decreases the threat of litigation. It prevents recalls that threaten industry reputation and consumer trust, not to mention levying huge preventable costs on individual companies and entire industries. And it spurs industry to excellence.

The tragedy of thalidomide led to changes that strengthened both the regulatory and scientific environment for medical product development and review.
In response to the public uproar, in 1962 Congress enacted the Kefauver-Harris amendments to the Federal Food, Drug and Cosmetic Act. Thanks to these new amendments, manufacturers had to prove that a drug was not only safe, but also effective. Approvals had to be based on sound science. Companies had to monitor safety reports that emerged postmarket and adhere to good manufacturing practices that would lead to consistently safe products.

I agree with Commissioner Hamburg that government regulations should set the basic "rules of the game" in markets. When they do that, they actually do lead to the kind of competition, quality improvements, and innovation that Commissioner Hamburg lauds. But regulations can also become a tool for restricting competition (a barrier to entry) and American history is replete with regulatory policies that hamstrung innovation for decades (like the AT&T monopoly in telecommunications). So the question is not whether regulation is good or bad per se, but what type of regulations are applied to a given technology, and how regulatory agencies like the FDA apply the powers at its disposal (predictably or unpredictably, etc).

In this respect, I think the FDA's overall performance - at least since 1962 - is much more nuanced than Commissioner Hamburg suggests. Safe - and effective - drugs certainly predate the Kefauver Amendments. Many drugs that we take for granted today, including corticosteroids, antihistamines, vaccines and antibiotics (like penicillin and streptomycin) were developed decades before the FDA's current regulatory structure evolved. The efficacy requirements also - whatever you think of them - undoubtedly raised the costs of innovation, as economists Daniel Klein and Alex Tabarrok point out:

The task of proving efficacy is much more difficult, expensive, and time-consuming than the task of proving safety. To a great extent, efficacy, which is sensitive to individual conditions and mediated by market process, had in the past always been judged jointly by doctors and consumers. A drug's efficacy ought to be judged relative to the alternative therapies and is therefore constantly changing, being discovered, and being proven by medical-market experience, with the use of postmarket surveillance and research. Safety, naturally, always calls for strong prior assurance. But the search for improved efficacy had proceeded, to some extent, by people serving as each other's guinea pigs, and the result had been rapid progress. In 1962, however, the FDA began to act on the premise that it could establish authoritative knowledge of efficacy prior to experience and experimentation in actual market processes.

The time spent waiting for FDA approval and the expense and duration of the bureaucratically determined testing procedures combined to cause tremendous delays in drug development and production. Drug development declined significantly after 1962, and the wait for new life-saving drugs increased to more than a decade by the end of the 1970s.

(For a left of center critique of the FDA, see Michael Mandel's review of the FDA's Melafind decision.)

Aside from the efficacy requirement, the FDA arguably learned the wrong lessons from the thalidomide tragedy: namely, that its primary job was to keep bad things from happening, rather than accelerate market access for truly innovative medicines.

By the 1990s, more medicines were approved first in Europe than in the U.S. - in some cases several years longer. After the AIDS crisis hit the U.S. in the 1980s, AIDs activists demanded that the FDA accelerate access to experimental therapies, and the FDA responded - under intense pressure - in creating several new regulatory pathways including compassionate access, treatment IND, and (eventually) accelerated approval. But, again, the agency was responding to a crisis, rather than being proactive in its approach to innovation.

After Congress passed the Prescription Drug User Fee Act in 1992, FDA reviews of new drug applications sharply accelerated, and the U.S. based pharmaceutical industry came to dominate the global scene, albeit for complex reasons that have as much to do with the U.S. ecosystem for life sciences research and the importance of the U.S. prescription drug market, than the FDA per se. In the wake of the Vioxx tragedy in 2004, the FDA seems to have again ratcheted up its safety requirements, demanding more data, more tests, and longer clinical trials from companies to rule out the risk of rare side effects.

The FDA faces steep challenges: drug safety problems are highly visible, while lost innovations are, by definition, invisible. Congress alternates between excoriating the agency and saddling it with new responsibilities - often without the funds to actually implement them. The agency struggles to keep up with the latest scientific developments, and adapt its regulations to changing scientific realities. When it does adapt, it's accused of collusion with the industry it is supposed to regulate.

Recent FDA Commissioners, including Commissioner Hamburg (and before her Dr. Andrew von Eschenbach and Dr. Mark McClellan) have struggled to modernize the agency, and recognize that it is trying to regulate the "21st century products with 20th century regulatory tools" but they face a steep uphill climb because of the culture of the agency, its strained relationship with Congress, limited budget, and restictions on its ability to tap outside expertise. Douglas Holtz-Eakin and I discuss several recommendations for FDA reform here.

But the most important innovation would be for the FDA to find more ways measure safety and efficacy without the use of large, expensive, and time consuming clinical trials - and without coming to all or nothing decisions on drug approvals. Thalidomide, as Commissioner Hamburg notes, returned to market decades later as a drug for leprosy (really a cover for off-label AIDS use) and later for cancer.

The right lesson to draw from the thalidomide scandal is that no drug is safe for all patients, in all circumstances - and that patients and physicians need to be empowered with the information to use new treatments most effectively. That lesson is only beginning to be absorbed now, fifty years after the thalidomide tragedy.

Greg Conko did a terrific job in his post on the WSJ article discussing two private companies attempts to "clean up" and aggregate adverse drug event reports collected by the FDA.

The only thing I'd underscore is how little context drug warnings contain, whether they are offered by the media, private companies, or even on a drug's FDA approved label. For instance, what was the absolute rate of a particular serious adverse event? What's the rate compared to other drugs in the same class, or other types of treatments? Which demographic groups - based on age, sex, gender, or other variables - were more likely to experience serious adverse events?

Better yet, how do the risks and benefits of a given medication compare to the risks of the underlying disease for a given patient? (The benefits and risks may look very different to different groups of patients - even with a supposedly "dangerous" drug like Vioxx.)

The more you parse the data, the clearer it becomes that "one size fits all" warnings can be less than useless for individual patients.

So until adverse event information becomes much more personalized, the litany of reports collected by the FDA - or even disseminated by well meaning companies who are trying to empower consumers - is bound to frighten patients more than actually empower them. (Mostly, I suspect that the web sites the WSJ chronicles will be trolled by lawyers looking to launch the next class action lawsuit against a deep pocket drug or device company.)

To give credit where credit is due, the FDA is trying to develop a real time, distributed network of health insurance databases the agency can use to monitor for "signals" of adverse events called the Sentinal Initiative. This could mark the beginning of exactly the kind of nuanced risk information from the FDA that would actually help individual patients and physicians make smarter prescribing decisions.

As part of the next user fee negotiation for the FDA, the agency is also committed to working with industry and patients to develop more transparent methods for evaluating the risks and benefits of new medicines, and standardizing ways to collect data on "patient reported outcomes" - quality of life measures that would not only support product approval, but help companies develop better products to begin with.

Like Greg, I hope that more private companies dive into the raw data provided by health insurers, the FDA, and other government agencies and turn it into real information that's actually useful to patients and their families. There's definitelty a big market for that data - it it's done right.

The L.A. Times offers more details on studies showing that the use of Avastin may help shrink tumors in early stage breast cancer.

The FDA approves a new drug to treat metastatic kidney cancer - the seventh medicine approved since 2005, according to the FDA.

A study of nearly 200,000 women and girls shows that Gardasil, the HPV vaccine designed to prevent cervical cancer, does not cause autoimmune disorders.

Censoring influenza research: good for national security, or bad for public health? The Economist weighs the issues.

AEI scholar Joseph Antos offers a review of the Wyden-Ryan proposal for Medicare reform in the New England Journal of Medicine.

The Washington Post reports that FDA staff are suing the agency over surveillance of some personal email accounts.

Roche already has a diagnostics division, so they don't need the acquisition to help drive any of their targeted medicines. After all, once you know the "target" for a personalized cancer drug (like Herceptin) and get it on the FDA-approved label you don't need to know anything else about your patient's genome.

So why the Illumina bid? (Besides the fact that the stock is way off its high.) This Bloomberg Businessweek article gives a lot of good background on the bid, and asks a lot of good questions.

Analysts also point out that the market for the expensive gene-sequencing machines - primarily academic scientists with government grants - is a shrinking market right now, so Roche's bid has got to be about the future market for genomic technologies more than the present one.

What is the next market for super-fast, cheap gene sequencing? It's hospitals, doctors offices - heck, maybe even the CVS drug store down the street. That's the future of genome sequencing: fast enough and cheap enough to become a consumer commodity.

(I think that Roche is betting that if you're willing to pay $500 or $600 today for a tablet to play Angry Birds, you'd pay the same - or more - out of pocket to know your or your children's genetic future. For instance, what diseases to watch out for, what drugs or vitamins to take - or avoid - etc.)

The problem I see is that we don't have a health care system, or a regulatory system, that is prepared to interpret the flood of genomic information from Illumina's superfast machines and then turn it into actual clinical knowledge. The FDA has already signaled that it's very leery about consumer genomic services, and without that approval the technology isn't going anywhere. (And even then, it still has to be translated into plain English for physicians and patients.)

Roche, I think, has the complete play here. They're intimately familiar with the regulatory hurdles at the FDA, and know how the agency thinks and what kind of data they will be looking for in terms of regulatory approval for genomic applications. They've got marketing channels into physician and hospital offices, and the science research base to help translate emerging genomic discoveries into clinical information and - better yet - personalized treatments coming out of Roche's labs.

If personalized medicine is going to expand beyond specialized cancer treatments, companies like Roche will lead the way since they have all the tools to translate the genome into mainstream medicine.

The question is, how long will it take (5, 10, 15 years?) for the transformation to become complete, and how much (or how little) regulators will slow the revolution down - in the name of protecting consumers from themselves.

Hopefully, innovative companies will be allowed to lead the way, with the FDA just validating the underlying methodologies.

When you think about the industries where the U.S. has been preeminent, it's mostly a list of has-beens -- steel, autos, heavy equipment. Those few industries where the US is still a world leader include pharmaceuticals and medical devices. But this is changing.

Today, pharmaceutical and medical device manufacturers rely on patents to protect their innovations as they compete in the commercial markets. In most cases, innovators have 17 years from the date of patent issuance to recoup their investment. But having a patent is not the same as having a product. First you need FDA approval.

That's when the real work begins. Experts estimate that it costs approximately $1 billion and 10 years to bring a new drug to market. There are lots of patents sitting on the shelf, never to see the commercial light of day. Molecules may not perform the way scientists had expected in the earliest stages of discovery; side effects may prove to be problematic and so development stops in the middle of clinical trials. And getting the biggest US insurer - the Centers for Medicare and Medicaid Services (CMS) to agree to reimburse the product is a further hurdle that must be crossed.

Given the substantial time and financial commitments required to bring a new drug to market, Congressional and public pressure to further reduce the length of patent protection represents a major challenge for the US medical products industry. What most people don't realize is this very pressure puts at risk one of our few remaining industrial jewels. The argument put forth in support of more limited protection is the opportunity to bring generics to market faster ... and at a significantly lower cost than branded pharmaceuticals.

That generics come at a cheaper price should come as no surprise to anyone. Generic manufacturers don't have to invest in risky R&D, don't bear the brunt of regulatory approval, and don't have the same commercialization costs to bear. But the focus on bringing generics out faster to lower overall healthcare costs misses one critical point. Pharmaceuticals, while highly visible, represent only about 10% of the cost of healthcare in the US. And they enable greater productivity on the part of people taking them for the most part! If we're serious about lowering healthcare costs, then we need to look elsewhere.

Finally, increased regulation in this country makes it more difficult to get drugs approved in the first place. So much so that venture capitalists, in evaluating investment opportunities, commonly reject proposals from start-ups who want to launch their new products first in the US. They regard such plans as reflecting business naiveté.

If the risk to innovation and access to life saving new compounds isn't significant enough, consider this: 6,000,000 jobs -- good jobs -- are connected to the pharmaceutical and medical device industry. There was never a time we could afford to put 6 million jobs at risk - and certainly not now.

Two new studies suggest that Avastin may have some additional benefit for small groups of patients with metastatic breast cancer. In particular, patients with HER-2 negative metastatic breast cancer showed "signifificantly higher rates of pathologic complete response when [Avastin] was added to neoadjuvant chemotherapy."

Translation: when given to women with localized breast cancer prior to surgery, Avastin helped produce a "pathological complete response" or pCR (so that the tumor was no longer detectable) somewhat more often (about 20%) than with chemotherapy alone.

The question that will obsess researchers now is whether or not the surrogate marker will translate into an overall survival benefit - and thus might lead the FDA to put metastatic breast cancer back on Avastin's label in this particular subgroup.

See also this article from ABC, and this article in the Washington Post.

But the most interesting story is what is - or isn't happening at the molecular level that makes the drug more potent in these subgroups. If we can identify that marker, doctors can target the drug at patients who are most likely to benefit, especially since both studies also showed that Avastin produced some serious side effects in patients who used it.

The National Venture Capital Association and PricewaterhouseCoopers released a report on VC biotech investments for the 4th quarter 2011 and all of 2011 in a new report released late last week.

The good news is that "venture capitalists invested significantly more money in biopharma companies during the fourth quarter of 2011 and all of [2011] compared to a year earlier."

The bad news is that there was also less funding for the earliest (and thus riskiest) biotech investments, which may mean "fewer new drugs and technologies coming to market over time."

At least one commentator took the glass-is-half-empty approach to the latest data:

"This decline in first-time funding speaks to the precarious state of life sciences venture funding and with it the entire medical innovation paradigm in this country," said Jonathan Leff, a partner and managing director with Warburg Pincus, during a conference call with reporters. "We continue to see great potential in life sciences innovation. However, like other investors in the space, we have found that the life sciences investment environment has grown significantly more challenging in recent years."

Challenging enough, he said, that VCs continue to shun riskier early-stage startups in order to keep more capital for follow-on financings in existing companies, for later-stage investments, and for investments in companies overseas, especially in China. ...

"Unless this trend is reversed and unless the capital begins coming back into new formation and supporting new innovative products and technologies, this will result in a real decline in the number of new innovative drugs and medical devices that will come to market in the years and decades ahead," Leff declared. "VCs are finding that the cost, time, and uncertainty involved in developing innovative drugs and medical devices have all escalated to the point where increasingly, the economic math just doesn't work."

Queue up the dirge music. Leff holds out some hope that PDUFA V may smooth out some of the unpredictability in the FDA's drug approval process, and eventually coax VC investors back into the market for early stage funding, but also concedes that it may "take a decade" to gauge how any changes at the FDA affect the VC environment.

Of course, by that time, a more attractive investment and/or regulatory climate in China, Singapore, or the E.U. may make the whole issue moot by sending the lion's share of VC funding abroad.

A new study conducted by the research organization Patient View confirms something many of us already knew: the pharmaceutical industry's corporate reputation is pretty dismal -- even among the patients and patient advocates who rely on innovative new medicines. Top scoring individual firms are, as you might expect, touting their positive reputations, defined as "meeting expectations of patients and patient groups." But, that should be cold comfort even to the winners since -- unlike say new car buyers -- pharmaceutical consumers don't generally shop for medicines on the basis of what they think of various manufacturers.

Reputation in the drug industry matters much more in the political sphere than in the retail sphere because, as Ed Silverman at Pharmalot points out, "patient groups are not only growing in number, but increasingly trying to influence regulatory and payer decisions through assertive lobbying." And regulation isn't imposed at the firm level, but at the industry level. A drug firm with a sterling reputation will suffer from regulation motivated by the public's attitudes regarding the entire industry. So, even top scoring firms need to be worried about these results -- and they need to think more strategically about how the entire industry can begin to burnish its reputation.

The study is available only to Patient View subscribers, selected news media, and other readers willing to cough of £750. But via Pharmalot and the Pharma Times, we learn that the survey included 500 patient groups from 61 countries, and respondents were asked about their views regarding the drug, biotech, and generic industries generally, and of the 30 largest companies specifically (The full list of companies can be viewed here.). The study used six indicators to measure company performance: "Whether the company has an effective patient-centred strategy," "The quality of the information that the company provides to patients," "The company's record on patient safety," "The usefulness to patients of the company's products," "The company's record of transparency with external stakeholders," and "Whether the company acts with integrity."

So, what did they find? Just 42 percent of respondents said "they believe the multinational pharma industry has a 'good' or 'excellent' corporate reputation, while for biotech and the generics sector the equivalent figures are 44% and 41%, respectively." And fewer than 30 percent believe pharma's reputation has improved over the past five years. In addition, "while 66% of the respondents believe that pharmaceutical companies are 'good' or 'excellent' at being innovative, only 13% consider them to be 'good' or 'excellent' at adopting fair pricing strategies which ensure that they do not make 'unseemly' profits. Just 31% consider that companies act with integrity, with only one-third believing that drugmakers run ethical marketing practices and 23% considering them to be transparent in their corporate activities."

Leading the pack of individual drug firms was Novartis, coming in first overall as well as in four of the six individual indicators: having an effective patient-centred strategy, the quality of information for patients, its record on patient safety, and the usefulness of its products. Pfizer and Lundbeck came in second and third respectively. For a full list of the results you'd have to read the full report, to which I don't have access.

One caveat worth pointing out is that "patient groups" are not the same thing as individual patients. It's entirely possible for patients, even in the aggregate, to have a higher or lower opinion of individual firms or the entire industry -- largely because patients will have more individualized experience with some companies and little or no experience with others. And, though I think patient groups generally do a good job representing the interests of their members, the professional representatives will tend to be much more attuned to questions related to a company's willingness to share information and work with the organizations.

Perhaps more importantly, as I noted above, the organized patient groups will be more active -- and more effective -- at influencing the development of laws and regulations. And, because even the most respected companies can't escape regulations implemented to rein in or punish the entire industry, the views of the organized patient lobby matter tremendously. So, while a company like Johnson & Johnson might be ranked in the top 20 of the "World's Most Admired Companies," that reputation won't necessarily help it fend off predatory or debilitating regulation if the view of the entire industry remains low -- particularly among the most active advocates.

Since over 80 percent of the respondents in this survey faulted the industry for its pricing practices, one of the first things the industry must do is debunk the belief that it is reaping huge profits on the backs of suffering patients. With soaring drug prices at the top of every pharma industry critics list of complaints, it does appear unseemly for drug firms to consistently return double-digit profitability. But, as the Congressional Budget Office has pointed out, "those figures misrepresent the industry's actual profits." Standard accounting measures overstate profitability for R&D intensive industries by treating most research spending as an expense rather than as a capitalized investment that increases the company's value. "Not accounting for that value overstates a firm's true return on its assets."

Ultimately, the high retail prices of pharmaceuticals reflect the vast expense of developing those products and getting them approved for sale. Without correspondingly high prices to enable the recoupment of those costs, few investors would willingly take the risks inherent in supplying capital to the pharmaceutical industry. The result would be fewer and fewer lifesaving medicines. We scholars may keep pointing that out. But if the drug industry itself doesn't figure out how to do a better job convincing patients and organized patient advocates of that fact, its reputation isn't likely to recover any time soon.

That's the title of a provocative new book by Dr. David Agus and the topic of an excerpt in the Wall Street Journal this past Saturday, called The Doctor in Your Pocket. In the not too distant future, Agus believes, his children - and everyone else - will be able to:

....monitor and adjust their health in real time with the help of smartphones, wearable gadgets--perhaps like small, invisible stickers--to track the inner workings of their cells, and virtual replicas of their bodies that they will play much like videogames, allowing them to know exactly what they can do to optimize every aspect of their health. What happens when I take drug x at dosage y? How can I change the expression of my genes to stop cancer? Would eating more salmon and dark chocolate boost my metabolism and burn fat? Can red wine really lower my risk of heart attack?

What is equally exciting is that this patient data will be added to a universal database that can be aggregated by powerful search engines like Google and constantly fed into new trials and experiments--speeding up our understanding of which drugs work best for which people. The database might show, for example, that people with a particular genetic profile respond to one type of cancer treatment but not another. As more people anonymously add their health data, this database would become more and more effective as a tool for preventive medicine.

Dr. Agus could've just as easily called the book, The End of Health. Today, we only think we're sick when the flu or the cold virus sends us staggering back to our bed, or the cancer becomes a lump we can touch or see on an X-ray.

In reality, your body is a constantly shifting molecular battleground, with life and death battles being waged every minute by myriad protective genes and the immune system to neutralize invading infections induce pre-cancerous cells to commit suicide, and keep a healthy balance between thousands of other protein-protein interactions.

Typically, tumors start from a single cell a decade before the fatal cancer is unleashed. The first insidious tendrils of Alzheimer's in the brain may launch decades before the dementia becomes detectable. And the diseases that will kill or cripple us are almost uniquely personal to our genetics, diet, and environment, requiring an equally personalized approach to treating the complex diseases that afflict modern humanity. (My colleague Peter Huber has written eloquently on the challenges and opportunities of personalized medicine in a seminal City Journal article, Cherry Garcia and the End of Socialized Medicine.)

So fighting the battle against disease, and the ravages of aging that often cause disease, is happening in your body now, and the drug that the FDA approves to fight the disease after it is half way to killing you is often too late to do much good -and at enormous financial cost.

If we want to really conquer diseases like cancer, as opposed to just slow it down at the margins, we need to mine the information on those myriad interactions in your body in something approaching real time. It'll be tremendously challenging, but as Argus points out all of basic technology - smartphones, supercomputers, whole genome scans, etc., are all available today and getting cheaper all of the time.

What we really need now, is a vanguard of people - hundreds or thousands - to put the technology to the test, and then let the supercomputers loose to crunch the data and uncover the associations that will help drive new prevention efforts to attack these diseases at their molecular roots when they're still just chemicals as opposed to solid tumors or ravaged neurons.

Thankfully, capitalism is very good at scanning things, crunching numbers, and delivering personalized recommendations (a la Amazon) simultaneously to millions of people.

To paraphrase Glenn Reynolds from Instapundit, "(much) faster please."

Analogies can be powerful tools to help us think and act clearly. However, we need to ensure that our analogies are faithful, or they may do more harm than good. Consider the following statement by the FDA's Dr. Steven Hirschfeld in 2002.

"We don't want to put a weapon into the hands of a soldier until it has been tested, and tested under stress." He was comparing weapons to medicines, both of which have benefits and risks, and was saying that both weapons and drugs should be tested to ensure safety before they are used.

If someone is shooting at a target, his/her weapon had better be pretty safe. Since target practice is just a pastime, the benefit is relatively low and so should the risk.

If someone is in a dire situation in the middle of a war or crime scene and death is imminent, the benefit of a functioning weapon is substantially higher and therefore the acceptable risk can be higher, too.

Consider Cristy Kessler, a University of Hawaii associate professor who was suffering from three rare autoimmune diseases and was "preparing to die." She received an unapproved stem cell transplant in Turkey (i.e., an "untested weapon"). We can think of her as being in the middle of a bloody military battle. What is the value to her of safely getting off the battlefield? Incredibly high. And since she was in mortal danger, it didn't matter much whether her own defective weapon or her enemy's weapon delivered the final, fatal blow.

The real issue is the relative risks. Are we, as Americans in 2012, facing a target shooting situation or a battlefield situation? It's a battlefield--but even worse. One single disease, lung cancer, kills more Americans each year than the combined U.S. casualties from battle in the Revolutionary War, the War of 1812, the Mexican War, the Spanish-American War, World War I, the Korean War, the Vietnam War, and the Persian Gulf War.

Yesterday, the California Healthcare Institute released a topline summary of a CEO survey that asked executives about the most important challenges facing biomedical innovation over the next five years.

The survey found that:

Nearly three quarters (74 percent) of biomedical industry CEOs surveyed said their companies have had to delay a research or development project in the past year.

In addition, 80 percent of CEOs surveyed do not believe that U.S. FDA has the best regulatory approval process in the world, and three-quarters believe that within five years, another country could conceivably recreate the ecosystem that has made the U.S. the leading biomedical region in the world.

Off course, it's not really possible to consider access to capital idependently of the regulatory environment. Investors have pulled away from life sciences investments as they perceive companies having a harder time getting new products through the FDA. For instance, this 2011 survey of over 150 VC firms from the National Venture Capital Association found that investors "identified FDA regulatory challenges as the most significant factor driving away investment from startup companies that are bringing critical therapies to market."

The possibility that another country could leapfrog the U.S. in creating a more attractive environment for medical innovation and investment is no idle threat. China, with an enormous market and an increasingly sophisticated workforce, could compete for biopharmaceutical investment in the not too distant future.

More findings on the challenges facing U.S. based life-sciences companies will be released when CHI isssues its 2012 California Biomedical Industry Report in February.

Look foward to more MPT commentary when it comes out.

The $1,000 genome - the capacity of a gene sequencer to read your entire genome at a consumer friendly price - has long been thought to be a tipping point for personalized medicine. And, according to the Wall Street Journal, the $1,000 genome is either here now or will be very shortly.

Once it's cheap enough for millions of Americans to have their genomes sequenced, the demand for personalized drug treatment or prevention regimens should skyrocket. Researchers will also benefit from a diverse array of genomes to scan for links to common and uncommon diseases. Once those links are established (and more are being established ever day) companies will have a self-identified market for targeted therapies. Finally, drug development will also be transformed.

Today, drug development is an empirical, trial and error process that occurs over many years and three distinct phases of FDA-mandated clinical trial testing. Phase I trials look at basic safety testing in healthy volunteers; Phase II trials occur in small groups of patients with the disease in question, hopefully showing both a promising efficacy signal and continued safety. Finally, Phase III trials (pivotal for FDA approval) are the largest trials (with hundreds to thousands of patients) and are conducted in two independent, double blind, placebo controlled trials.

But if you have a targeted therapy with a validated link to a gene variant, you should be able to go from relatively early safety and efficacy testing without the need for large, lengthy, and expensive Phase III trials. This would allow important new medicines to reach patients years faster than with a non-targeted therapy.

This is because whole genome sequencing would allow companies to essentially pre-screen "non-responders" (who don't have the gene) out of their trials. Not only would this save in trial recruitment costs (assuming whole genome scans are incorporated into electronic health records), targeted therapies typically show much higher efficacy than non-targeted therapies, giving the FDA the confidence to approve targeted medicines faster, with knowledge that the treated group will get more of the benefits - and fewer of the risks - associated with testing or prescribing medicines on an all-comers basis.

This approach - allowing medicines to be marketed after Phase II testing in return for enhanced postmarket surveillance - is called conditional approval and its being seriously considered in Congress and at the FDA.

In a nutshell, the $1,000 genome will transform medicine - provided that the rest of the U.S. medical system and the FDA catch up with consumer's ability to access genomic data.

For instance, how accurate will the coming $1,000 genomes be? Even a small error rate could have profound consequences, especially if it led doctors to prescribe powerful drugs based on a whole genome analysis that later turned out to be flawed. And just a few bad outcomes could slow adoption of the technology.

Will physicians be capable of actively interpreting the information and incorporating it into the patient's plan of care? If physicians can't act on whole genome sequencing in a medically meaningful way, the patient has only purchased a $1,000 paperweight.

Can patients and physicians rely on research establishing gene (or gene panel) disease associations? Establishing a link between, say, heart disease or diabetes might encourage a physician to be more proactive in managing a patients' cholesterol or diet - but if the link isn't valid, the added spending or stress won't be worth it.

Finally, will the FDA be willing to shift from its current premarket focus to a postmarket, monitoring approach? In the cancer space, they've taken this approach through the accelerated approval pathway, which allows drugs to be marketed based on preliminary efficacy evidence, followed by additional postmarketing commitments from companies. With the increasing use of whole genome sequencing and electronic health records, the agency should be more comfortable with shifting to a conditional approval approach for more common diseases - but the agency might also require Congressional legislation to prod it to catch up with new technologies.

The first $1,000 genome will be a milestone. But as is often the case with any truly new technology (think IT technology in 1990s) it make take some time for it to be used most effectively. Here's hoping that they work out the kinks very quickly.

Over at Xconomy, Tim Mayleben, president and CEO of Aastrom Biosciences, makes a passionate plea for regulatory reform and changes at the NIH to support companies moving through the "valley of death", i.e., that can't get access to the capital they need to move from preclinical research to clinical proof of concept studies. (Once you have proof of concept data, it gets much easier to raise capital.)

Without these changes, Mayleben warns, the U.S. may abdicate its leadership of the global biomedical industry:

The most important issue facing Aastrom and many other companies in biotechnology is the lack of adequate funding to support innovative new companies, technologies and therapies. The challenges in drug development, especially in the early stages, are only compounded by the current regulatory environment with a primary focus on risk reduction. ...

...the current situation has to change if the United States is going to remain the global leader in the discovery, development, and commercialization of innovative new therapies in the next two decades. If we don't improve the current conditions, we will continue on a path to increasing irrelevance in biomedical research and innovation, especially given the fact that other countries are rapidly recognizing the potential of our industry to improve human health and create jobs, and they are in many ways ahead of the U.S. in supporting these companies.

Mayleben believes that the NIH should shift more funding from basic research to translational research, perhaps even supporting companies with the most promising new therapies. It certainly would make sense for the NIH - with a budget of over $30 billion dollars, to develop more of the basic tools for advancing new drug candidates through to proof of concept studies, either by standardizing biomarker assays and diagnostics on a disease by disease basis, and working with the FDA to validate new regulatory science tools, like adaptive clinical trial designs.

While this might be seen as conflicting with the NIH's mandate for supporting basic science research, without better translational tools, NIH-funded basic research will wither on the vine far too often because companies can't get to the point where their treatments are candidates for FDA approval.

But my favorite recommendation that Mayleben makes is for the FDA to become more flexible about when - and how - it evaluates efficacy and safety for new drug candidates. Essentially, Mayleben is suggesting that the FDA move to a conditional approval framework.

The ability to review and approve new therapies with great speed and, equally importantly, the ability to "disapprove" and remove therapies from the market or alter the product indication post approval, could significantly improve the competitive position of the U.S. in biotechnology in the years ahead. Industry will have to accept the fact that FDA decisions might not mean approval forever. They will build a model where marketing can begin while additional data is collected to provide further confirmation that benefits outweigh risks.

(For some overview on how this might work in practice, see here.)

I think this is exactly what needs to happen, and a development that's long overdue. Of course, the FDA's current accelerated approval process is basically what Mayleben is calling for; but the FDA typically uses accelerated approval only for drugs for cancer or other life threatening or orphan indications. However, from a disease burden perspective, conditional approval is also needed for widespread diseases or conditions that affect tens of millions of Americans, like diabetes and obesity.

Our drug development system is set up to prevent the next Thalidomide or Vioxx, rather than accelerate the search for cure for Parkinson's or diabetes. Right now, most of the industries' and the FDA's money, time, and expertise are focused on gathering information in the pre-market environment, where at least some of what we learn will later turn out to be incomplete or flat out wrong. It also ignores the potential of new tools like electronic medical records, and new social networking sites to improve how medicines are used "in the real world".

To give the most innovative biotech companies a better chance of bringing truly innovative new therapies to market, we need a new paradigm - a postmarket paradigm that would match the rest of the U.S.'s fluid, information-based economy.

Let's start with the assumption that lawmakers, manufacturers, healthcare providers and patients are generally well-intentioned, honorable and capable individuals who care about the integrity of what they do. Human nature being what it is, there have been and likely always will be a competitive streak that operates such that individuals will attempt to maximize personal well-being -- sometimes at the expense of those around them. The right balance between the individual and the society has been the subject of debate for thousands of years. The fact that it's being debated hotly today should come as no surprise to anyone. The fact that some think there shouldn't be a healthy debate and natural tension between these two views should be the surprise reflecting an unfortunate naiveté! At one extreme is the view that people are basically not to be trusted and therefore society should put in place restrictions to keep people in line following minute prescriptions about what is or isn't acceptable behavior in a wide range of circumstances.

This is a country of law, of rules... The issue in the debate is how far those rules have gone -- intruding into basic individual freedoms, threatening states' rights in favor of a central government, and basically undermining innovation. If you start with the premise that people (and therefore business) can't be trusted, then your goal is to prescribe in infinite detail what can and can't be done and then delineate the penalties for non-compliance. Even in Soviet Russia under Communist/Socialist rule and the real threat of severe penalties, people found ways around rules, with people often paying officials large sums to enable special treatment (even in Soviet Russia corruption was widespread). Not that I'm suggesting our Federal Government has become an entirely socialist system -- yet. But the move in recent years towards more rules is quite alarming, and it carries with it the real possibility of stifling the very innovation and entrepreneurship that has made this country great.

Too much structure (i.e. rules) stifles freedom and creativity. Too little structure (i.e. rules and expectations of appropriate conduct) can breed chaos and corruption. We are unfortunately becoming a nation of people watching people to make sure that others don't violate the rules. But often the rules that we do have are not reinforced. The solution is not, as some would suggest, to layer on more rules. The solution ironically may be to make the rules clearer, more transparent and simpler.

Some people in general and some people in business will focus on finding the loopholes to advantage them. Nothing will be so ironclad to prevent people from finding ways around onerous rules. So finding the minimally necessary structure... the right level of guidance to balance competing interests and maintain innovation and safety is really what the doctor ordered. Effectively applying this principle to the challenges facing the FDA as it confronts PDUFA and MDUFA will be critical to success.

Government has a responsibility to protect its citizens from harm -- whether the threat comes from abroad or within. The removal of bureaucratic rules which keep potentially life-saving innovations from reaching their intended audiences is clearly in the spirit of protecting citizens from harm. So, it is in that spirit that I look favorably on recent efforts within the FDA to accelerate the new drug approval process.