The New FDA Focus: “Business as Usual” Now Includes Paying Attention to the Cost of Drug Development

In the “old days” (aka, last year), the FDA rarely mentioned the “cost of drug development.”  The line between research and development (R&D) costs and regulatory was clear and not to be breached.  And when the term “price” entered the vernacular, FDA officials were consistent in their message that the agency doesn’t have a regulatory role in the pricing of drugs.  Dr. Janet Woodcock, director of FDA’s Center for Drug Evaluation and Research affirmed in her congressional testimony that while the approval of new drugs may impact competition and pricing, the FDA’s job remains to approve drugs based on safety and efficacy.  While that is still true, the economics of drug development are very much on the minds of the FDA.

But don’t take my word for it.  At the Regulatory Affairs Professional Society (RAPS) annual conference last month, Dr. Scott Gottlieb, FDA Commissioner, spoke about the Agency’s drive toward innovation and “making the drug development process more scientifically modern and efficient.”  One of the main drivers for the urgency around this new push, in the Commissioner’s words, is the “cost of drug development.”

This message was a consistent theme throughout his speech.  In fact, during his 30-minute presentation, Dr. Gottlieb mentioned “cost” 40 times, “efficient” (as it pertains to drug development) 14 times, and “access” 10 times.  In addition to talking about “price” he even mentioned the word “payers,” something that was unthinkable just a few years ago!

“We’re on an unsustainable path, where the cost of drug development is growing enormously, as well as the costs of the new medicines,” said Dr. Gottlieb.  “We need to do something now, to make the entire process less costly and more efficient. Otherwise, we won’t continue to realize the practical benefits of advances in science, in the form of new and better medicines.”

Dr. Gottlieb went on to say that “those savings must be captured for the benefit of patients, and impact prices in a way that extends access to these opportunities.”

Before becoming FDA Commissioner, the cost and price of drugs was an area of focus for Dr. Gottlieb.  Now, as Commissioner, he is making cost, price, and access a central theme – and he is offering numerous solutions to tackle these issues.  In addition to a desire to make the drug development process more efficient and less expensive, the FDA is also focused on boosting generic competition and targeting drug patents that it believes stifles competition.  As the Commissioner said, “In a dynamic and competitive market, the capital needed to fund a new drug program is always competing against the next best economic use of that money. In other words, any investment is measured against the risk-adjusted, projected return on the next best opportunity. It can be developing a different drug, or building the next Amazon.com. All of these factors affect how much investment we’re going to see in endeavors that advance human health.”

Before you think this is an economist – or a pharma executive talking – look at the very real link Dr. Gottlieb makes to public health: “They [these factors] also affect how the products that succeed are ultimately priced, and how we make sure patients have access to these opportunities. Access is a critical matter of public health concern. For these reasons, as a matter of public health, we must consider all of the factors that impact the cost of new products. That includes the cost of discovery and development.”

The Message to Drug and Device Companies

Why is this important to pharma and device makers?  Well, unless you’ve completely turned off the news, you know that drug costs matter to Congress, the President, and now the FDA – or at least its voice at the top. So arguably, three influential stakeholders in terms of affecting public policy on drug development, are unified in their focus.

At 3D, we have been counselling our clients to break out of their “silo mentality” and consider drug costs and value parameters early in the drug development process, and across functions of their companies – from R&D to medical affairs, regulatory, commercialization and market access.  Making the value proposition of a drug an issue for just the market access division of a company – late in the development process – misses the point.  The world outside of pharma and medical devices doesn’t think in neat “silos” and “functions” – and neither should companies.

That’s why 3D’s advice when it comes to the value of a product is to incorporate the view of multiple stakeholders; from well beyond the typical patients, physicians, and payers – to the broader community of medical associations that write practice guidelines, caregivers who may be integral to the treatment paradigm, policymakers who pass legislation that affects drug development, and many more. Simply put, collaboration and transparency are important.  And these voices need to be included in the beginning of the drug development process – not just towards the end.

The “new FDA” is aware of the importance of involving stakeholders in drug development. In fact, Dr. Gottlieb explicitly stated that “the Agency also needs to engage in more communication between sponsors, investigators, IRBs, and other stakeholders involved in the development program. This is not a ‘business as usual’ approach. It may require a much more iterative process, with greater communication between all of the stakeholders involved in the clinical trial processes.”

The bottom line?  The FDA has clearly demonstrated a commitment towards focusing on the cost and value of a drug.  This goes well beyond its “clinical and regulatory checklist.”  The agency is thinking more innovatively and is inviting sponsors to do the same.  Now the question is:  How will pharmaceutical companies respond to the invitation?