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The economics of follow-on drug research and development: Trends in entry rates and the timing of development — The authors’ reply

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Notes

  1. We believe that a much more value-neutral term, such as ‘follow-on’, is more appropriate for scientific and scholarly discussions of the issues than is the clearly pejorative term ‘me-too’, but we recognise that the latter term is very widely used.

  2. The policy would forbid regulatory authorities from allowing a new drug in an existing class from entering the market unless it was proven in pre-market testing to be ‘better’ than existing drugs. The definition of what constitutes a ‘better’ drug is left undefined.

  3. This is not to say that the entry of therapeutic class substitutes will induce the type of intense price competition seen with generic entry, where products essentially compete just on price. Branded drugs will compete on quality attributes and supporting promotional efforts as well, a notion that is also supported by data in Lu and Comanor[8] and DiMasi;[10] the results on pricing by therapeutic rating at least suggest that prices tend to adjust, to some extent, to quality differences.

  4. The Kravitz et al.[16] study that Hollis[2] cites was published after DiMasi[3] was posted. It provides strong support for the hypothesis that patients can affect physician prescribing. However, it offers little support for market-share effects with DTCA since all of the actor-patients in the study who mentioned a brand in their physician encounters were instructed to mention just one of the brand-name drugs used for the conditions considered. In addition, their results are consistent with a market-expansion hypothesis given their statistical evidence that physicians differ systematically in their propensity to prescribe antidepressants.

  5. The pursuit of different indications by rivals can occur prior to original marketing approval, as well as later. For example, although Celebrex® and Vioxx® were approved just 5 months apart; Celebrex® was originally approved for osteoarthritis and rheumatoid arthritis, while Vioxx® was originally approved for osteoarthritis, acute pain and dysmenorrhoea.

  6. The use of trade names is for product identification purposes only and does not imply endorsement.

  7. Of course, from a pre-innovation perspective, the effects of delays must be weighted by the likelihood that they will be incurred.

  8. We also note that while firms do project timelines for the development of their drugs, early projections often turn out to underestimate the subsequent reality as a consequence of a variety of unexpected circumstances.

  9. Results from Olson’s[25] regressions suggested that, other things equal, adverse drug reaction reports submitted to the FDA (for cases where causation was suspected for the drug), were 60%, 45% and 61% higher for novel new drugs than the average new drug for the serious-, hospitalisation- and death-reporting categories, respectively.

  10. Priority ratings are highly positively correlated with first-in-class status. We found that 80% of the first-in-class molecules in our dataset had received a priority rating, while 33% of the follow-on drugs had received such a rating from the FDA.

  11. For purposes of this discussion I will refer to both drugs and biologics as drugs.

  12. Although the share of new drug orphan approvals that are for small molecules has trended downward, small-molecule drugs still constitute a majority of these approvals over the entire history of the implementation of the Orphan Drug Act.

  13. Under the regulations, clinical superiority means that the manufacturer has demonstrated a significant therapeutic advantage with regard to some aspect of efficacy or safety, or in unusual cases by showing that the product “makes a major contribution to patient care”. It does not mean that the new product is ‘better’ than the original product in some overall sense for all patients, or even on average.

  14. In the absence of regulations precluding the approval of drugs that are the ‘same’, firms seeking marketing approval for macromolecules that are the ‘same’ as products already on the market would avoid some discovery and other costs, but some clinical trial testing would still be necessary. The situation is similar to that which was required to obtain approval of a generic drug in the US prior to the enactment of the Drug Price Competition and Patent Term Restoration Act of 1983.

  15. However, in his initial posting[1] on this topic, Hollis did suggest that me-tooism be defined according to the notion of ‘sameness’ in the orphan drug regulations and that drugs not be approved unless they meet the ‘clinical superiority’ standard in those regulations. Given the discussion above, this reflects a misunderstanding of those regulatory concepts. They would not achieve what Hollis wants to achieve.

  16. If such comprehensive testing were actually done, we would likely also be left often without a dominant outcome (i.e. comparisons where, on average, some attributes turned out better and some turned out worse), and the difficult problem of precisely weighing the relative benefits of numerous attributes.

  17. For examples, see discussions by Scherer[26] and Scotchmer[27] regarding innovation in general. To put the matter formally in a simple context, suppose that N firms pursue different independent approaches to developing a drug in a new, but unproven, class, and that the probability of failure, q, is the same for all firms. Then, the probability that at least one investigational drug will be found that has an acceptable benefit/risk ratio is 1-qN. Thus, the likelihood of at least one success increases with the number of firms pursuing different molecules in a class. This observation alone does not tell one what the socially optimal number of experimental approaches is, but we would certainly expect that generally it is greater than one.

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Acknowledgements

We thank Ernst Berndt and William Comanor for helpful comments.

The Tufts Center for the Study of Drug Development is supported in part by unrestricted grants from pharmaceutical and biopharmaceutical firms, as well as companies that provide services and products to this industry. Sponsoring companies have no direct access to any of the Tufts Center’s proprietary databases, and they have no direct influence on the group’s research agenda. No financial support was provided for this reply.

The authors have no other conflicts of interest directly relevant to this manuscript.

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  1. Tufts Center for the Study of Drug Development, Tufts University, 192 South Street, Suite 550, Boston, Massachusetts, 02111, USA

    Joseph A. DiMasi & Cherie Paquette

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  1. Joseph A. DiMasi
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Correspondence to Joseph A. DiMasi.

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DiMasi, J.A., Paquette, C. The economics of follow-on drug research and development: Trends in entry rates and the timing of development — The authors’ reply. Pharmacoeconomics 23, 1193–1202 (2005). https://doi.org/10.2165/00019053-200523120-00003

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