Overview of Drug Development: From Lab to Market to Generic

1. Overview of Drug Development: From Lab to Market to Generic Presented by Scott Gottlieb, M.D. American Enterprise Institute for Public Policy Research

2. Session Objectives In this session, we will Discuss the usual process a product undergoes from development through to launch Laboratory Research Pre-clinical Testing Investigational New Drug Approval Clinical Trials New Drug Application Approval Post-Marketing Commitments

3. The Path from Test Tube to Patient The intersection of business strategy and public policy

4. The Typical Path Requires Several Testing Stages, FDA Approvals, and Commercialization ~ 10 to phase 1 Pre-clinical Testing Phase 1 Trials IND ~ 250 to pre-clinical testing ~ 3 to phase 2 Research Phase 2 Trials Phase 4 Studies Millions of compounds ~ 2 to phase 3 FDA Approval Phase 3 Trials NDA/ BLA Product Launch Pharma Activity ~ 1 approved

5. The Process Starts with Laboratory Research* • Understand normal and abnormal body functions • Understand mechanism underlying disease with unmet need • Develop concept for a potential drug Basic (Bench) Research • Identify mechanism associated with disease (target) Target Identification • Assess target association with disease • Assess target ability to regulate compounds in the body • Confirm that interactions are associated with desired change in diseased cell behavior and have potential for intervention with a drug • Identify compounds that effect target Target Validation *Specific to drugs; biologics undergo a similar process

6. The Process Starts with Laboratory Research (continued)* • Discover or invent compound that alters the target • Compare to known substances to estimate likelihood of success • Develop potential leads as collections, or libraries, of molecules and test each to confirm effect on the drug target Compound Selection • Compare various compound properties to assist in selection • Alter compounds to increase potential efficacy and minimize potential side effects, adjust PK/PD parameters Compound Optimization** *Specific to drugs; biologics undergo a similar process **Pre-clinical studies often occur concurrent with compound optimization

7. Potential Drugs Undergo Pre-clinical Testing* Pre-clinical testing assesses how much compound is absorbed, how the body breaks it down, and how it reacts to, or excretes, break-down products, how it hits its intended target Uses two or more species of living animals because the potential compound may affect species differently Determines the potential drug’s safety at different doses Identifies any toxic side effects, latent toxicities (carcinogenicity) Assesses on target effects, off target effects Provides information for the design of proposed human studies *Specific to drugs; biologics undergo a similar process

8. The FDA Must Approve Progression to Clinical Testing Investigational new drug (IND) application process • The FDA reviews • Pre-clinical test results • Manufacturing information • Human test plans Local institutional review boards (IRBs) concurrently review the clinical trial protocols 30 days for review Chart is from http://www.fda.gov/cder/handbook/ind.htm

9. Clinical Trials* Establish Safety and Efficacy in Humans *Specific to drugs; biologics undergo a similar process

10. The FDA Must Approve the Drug Before Launch New drug application (NDA) process* 60 days to decide if file is ready for review 10 month review • Approved: Can be marketed in the US • Approvable: Not officially approved; can probably be approved after resolving specific issues • Not Approvable: Deficiencies that make it unclear that it can be approved in the future Assess • Safety & efficacy • Appropriate drug labeling • Adequate manufacturing methods Consider reviewer assessments Chart is from http://www.fda.gov/cder/handbook/nda.htm *Some biologic products must submit a biologic license application (BLA) instead

11. The Company Prepares for Product Launch During FDA Review and Approval • Define the current market and target customers • Set prices, have some advance discussions with payers where permissible • Determine distribution strategy, REMS, post market safety management • Determine strategies to address reimbursement hurdles • Define label strategy (life-cycle planning, follow-on studies and indications) • Execute launch plan* *Company launches drug at a time they determine appropriate, not necessarily immediately after FDA approval

12. Post Launch Consists of Life-Cycle Management • Monitor product performance, e.g. revenue and market share • Tackle barriers to adoption, compliance • Address market or competitive changes • Incorporate new clinical findings, expanded indications, new formulations

13. New drugs may undergo an expedited review* process Drugs classified as a real advance over available treatments undergo a 6 month “priority review” instead of the 10 month “standard review” Drugs that treat a range of serious diseases and fill an unmet need may request and receive a “fast track” designation at any point during drug development Fast track drugs are eligible for accelerated approval or rolling review Accelerated approval uses findings that are likely to predict clinical benefit rather than direct measurements & results Rolling review allows companies to submit completed NDA sections individually rather than the entire application all at once, allowing earlier resolution to potential problems Some Drugs Take a Different Path *Accelerates review but does not guarantee approval

14. Phase 4 Studies Monitor and Gather Additional Data Post-marketing commitments can occur when: FDA requests phase 4 studies, often before approval, and sponsor agrees (most phase 4 studies, authority to require studies under FDAAA) Approved drug that underwent accelerated approval Approved drug not adequately labeled for children or with incomplete pediatric testing Approved drug with only animal data or that could not ethically be tested in humans Phase 4 studies provide more information, e.g. about risks, benefits, efficacy, new indications, and optimal use

15. FDA Has Regulatory Authority to Approve Innovator and Generic Small Molecule Drugs Through the FDCA Innovator Small Molecule Drug Generic Small Molecule Drug Abbreviated New Drug Application (ANDA) 505 (j)(1) pathway New Drug Application (NDA) 505 (b)(1) pathway New Drug Application (NDA) 505 (b)(2) pathway • Requires proof of bioequivalence to demonstrate that the proposed product is identical to a previously approved product based on safety and efficacy FDCA= Federal Food, Drug, and Cosmetic Act NOTE: Further detail on strategies for bringing biosimilars to market are included in Task D: Evaluation of Alternative Strategies for Bringing Biosimilars to Market

16. Policy and Marketplace Challenges Facing Drug Developers • Rising cost of development, and a frontloading of clinical development process • Increasing data demands post market • Slowing sales ramps, tougher launches • Declining venture investments, shrinking R&D budgets as drug margins come down, and consolidation of facilities, manufacturing

17. Drug Shortages: No Single Cause, or a Single Solution • Market for parenteral generics has been squeezed by declining profits, margins • At the same time manufacturing requirements have been tightened following safety issues • End result: about 30% of U.S. manufacturing capacity is now offline with no clear resolution

18. Prior to the ACA, FDA Approval Pathway Existed Only for Innovator Biologics Manufacturer Submits Biologics License Application (BLA) via 351(a) to FDA • BLA was created under the US Public Health Service Act (PHSA) • Trials, in three phases, proving safety, purity, and potency; product information; labeling; manufacturing/ packaging • Particular emphasis on manufacturing process and licensing of facilities Review by Center for Drug Evaluation and Research (CDER) CDER reviews monoclonal antibodies and recombinant proteins Review by Center for Biologics Evaluation and Research (CBER) CBER reviews gene therapies, blood and blood components, and venoms Pending positive clinical evidence, approved under PHSA, but regulated as “drug” under FDCA • FDA states that no regulatory authority exists to approve generics under PHSA Note: Some older types of biologics are approved under FDCA pathways, primarily insulin and human growth hormone.

19. Several Uncertainties Remain for Biosimilars FDA failed to release guidelines by end of 2011 FDA draft guidance regulations released Final FDA regulation will likely follow a 60-day comment period ACA passes creating the pathway for biosimilars HCPCS=Health Care Common Procedure Coding System; NCD=National Coverage Determination; LCDs=Local Coverage Decisions