Analysis Details:
US Biodefense Countermeasure Development Financing
Comments and conclusions from our analysis are presented in the Letter to the Editor,
and will not be repeated here. The key spreadsheets used in the analysis are available
from Lynn Klotz
Summary of our analysis methodology
The analysis starts with the 32 candidate countermeasures in the 8 countermeasure
classes presented in Table 1 of Matheny, et al.1 These candidate countermeasures are
referred to here as “identified,” “under development,” or “existing” candidates. We
follow the assumption of Matheny, et al. regarding the development status of existing
countermeasure candidates in 2009 by employing the phase transition probabilities in
Table S1 below.
Notation
Probability
Traditional pipeline
pre to I
I to II
II to III
III to approv
Ppre-->I
PI-->II
PII-->III
PIII-->A
57.0%
Ppre-->I
PI-->II
PII-->III
PIII-->A
57.0%
71.0%
44.2%
68.5%
Biologics
pre to I
I to II
II to III
III to approv
83.7%
56.3%
64.2%
Table S1. Probabilities for successful transition to the next development phase from
year to year. Probabilities from DiMasi, et al.2 This analysis and Matheny, et al. employ
the same probabilities.
___________________________________________________________________
It is convenient to represent the movement of candidates through clinical trials from 2009
onward using the states diagram in Figure S1, where it is assumed that it takes two years
to traverse Phase II and three years to traverse Phase III, and that transitions from year to
year within a phase occur with probability 1.0. While some drugs are terminated in midphase, this assumption is made simply because we do not have mid-phase transition
probabilities.
The length of time in each state used in this analysis differs slightly from Matheny, et al.
(their Supplementary Table 2) mainly in Phase I clinical trials for biologic drugs where
they allot 20 months instead of the 24 months in Phase I allotted here, and in Phase II
1
clinical trials for biologic drugs where they allot 29 months instead of the 24 months
allotted here. This change, made to simplify our analysis, will result in out-of-pocket
costs for one class of countermeasures (anthrax antitoxin) that are at most a few percent
lower than the estimate of Matheny, et al. at most a few percent greater. These small
changes in phase durations contribute little error compared to the many larger sources of
error in any analysis of BARDA overall financing needs.
Phase III
year 1
PI-->II
Phase II
year 1
Phase I
P = 1.0
PII-->III
Phase II
year 2
P = 1.0
P = 1.0
Phase II
year 2
1 - PI-->II
Phase III
year 3
PIII-->A
Approved
1 - PII-->III
1 - PIII-->A
Failed
Figure S1. States through which traditional-pipeline and vaccine countermeasure
candidates can move during clinical trials. The probabilities of moving from one state
to another from year to year are indicated next to the lines connecting the states.
Following DiMasi and coworkers3 and Matheny, et al., the New Drug Application (NDA)
state is not included.4 The figure displays the states in our analysis of traditional pipeline
candidates. For biologic candidates, the one difference is that two years are allotted for
Phase I.
____________________________________________________________________
Movement of candidates through the states in Figure S1 can be viewed as a Markov
process, making available the matrix algebra methods for such processes to keep track of
multiple candidates from year to year to FDA approval or failure. Specifically, if Ptran is
the 8 x 8 matrix that defines the yearly probabilities for transition from one clinical trial
state to another:
Ptran =
Phase I
Phase II, y1
Phase II, y2
Phase I
0.000
PI --> II
0.000
Phase II, y1
0.000
0.000
Phase II, y2
0.000
0.000
Phase III, y1
0.000
Phase III, y2
0.000
Phase III, y3
Phase III, y1 Phase III, y2 Phase III, y3
Approved
Failed
0.000
0.000
0.000
0.000
1 - PI --> II
1.000
0.000
0.000
0.000
0.000
0.000
0.000
PII --> III
0.000
0.000
0.000
1 - PII --> III
0.000
0.000
0.000
1.000
0.000
0.000
0.000
0.000
0.000
0.000
0.000
1.000
0.000
0.000
0.000
0.000
0.000
0.000
0.000
0.000
PIII --> A
1 - PIII --> A
Approved
0.000
0.000
0.000
0.000
0.000
0.000
1.000
0.000
Failed
0.000
0.000
0.000
0.000
0.000
0.000
0.000
1.000
2
and if П0 is the 8 x 1 vector listing the number of candidates in each state in the year
2009, then the number of candidates in each state in 2010, П1, is given by the matrix
product
П1 = П0 x Ptran
and the number of candidates in each state, П2, in 2011 is given by
П2 = П1 x Ptran
and so on, for each year through 2015, when all candidates in the development pipeline
should either by approved or have failed. (In the model of Figure 1, all traditional
pipeline candidates are either approved or have failed by 2014. Biological candidates
require the additional year, 2015, as they spend two years in phase I.)
Our analysis of BARDA funding needs to complete development of identified
candidates
Taking into account the state transitions from 2008 to 2009, the starting vector, П0, for
the eight countermeasure classes to begin the Markov process calculations are presented
in Table S2. Importantly, Matheny, et al., place the one gram-positive antibiotic,
Cethromycin, at the pre-clinical development stage as a biodefense countermeasure in
2008. In contrast, we place it in year three of Phase III, as indicated by its developer (see
http://www.advancedlifesciences.com/product.php).
Countermeasure class
Anthrax vaccine
Filovirus vaccine
Filovirus antiviral
Junin virus antiviral
Smallpox antiviral
Gram pos. antibiotic
Gram neg. antibiotic
Anthrax antitoxin
NI
NII (y1)
NII (y2)
NIII (y1)
NIII (y1)
NIII (y1)
3.42
1.14
2.28
1.14
1.14
0
0.57
1.71
2.13
2.13
0
0
1.42
0
0
1.67
1
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
1
0
0
Table S2. Starting vectors П0 for the eight countermeasure classes for the year 2009.
NI is the number of candidates in Phase I, NII (y1) is the number of candidates in the first
year of Phase II, etc. The body of the table is the number of candidates of each class in
each phase. Fractional numbers are “expected” numbers and result from the fact that
some candidates will fail between 2008 and 2009 based on the transition probabilities in
Table S1. Fractional numbers should not be rounded-off until the end of the analysis.
_____________________________________________________________________
3
As an example of the movement of candidates through the development process modeled
in Figure S1, the numbers of anthrax vaccine candidates in each state found from the
Markov process analysis for years 2009 to 2015 for are presented in Table S3.
4
Year
>> Number of countermeasures in each phase
(from Markov transition matrix analysis)
Phase I
Phase II, y1
Phase II, y2
Phase III, y1
Phase III, y2
Phase III, y3
Approval
Failed
Total (as check):
2009
2010
2011
2012
2013
2014
2015
3.42
2.13
1.00
0.00
0.00
0.00
0.00
0.00
6.55
0.00
2.43
2.13
0.44
0.00
0.00
0.00
1.55
6.55
0.00
0.00
2.43
0.94
0.44
0.00
0.00
2.74
6.55
0.00
0.00
0.00
1.07
0.94
0.44
0.00
4.09
6.55
0.00
0.00
0.00
0.00
1.07
0.94
0.30
4.23
6.55
0.00
0.00
0.00
0.00
0.00
1.07
0.95
4.53
6.55
0.00
0.00
0.00
0.00
0.00
0.00
1.68
4.87
6.55
Table S3. Clinical trial progress for anthrax vaccine candidates from 2009 to 2015.
The body of the table is the number of anthrax candidates in each state. The states in
2009 for each of the 6.55 candidates under development are the starting point of the
analysis. The numbers in states for succeeding years derive from the matrix
multiplications in the Markov process analysis.
________________________________________________________________
The formula for determining out-of-pocket cost, COST(i), for any one year, i, for a
particular countermeasure class (e.g., anthrax vaccines) is given by
Eq (S1) COST(i) = cost(phase I, i) x N(phase I, i)
+ [1/2 x cost(phase II, i)] x [N(phase II-1st year, i) + N(phase II-2nd year, i)]
+ [1/3 x cost(phase III, i)] x [N(phase III-1st year, i) + N(phase III-2nd year, i)
+ N(phase III-3rd year, i)]
where the various N terms indicate the number of candidates in different Figure 1 states
in year i.
Eq (S1) treats out-of-pocket costs for Phase II and Phase III clinical trials as equally
apportioned over the two and three year lengths of those trial phases.
Baseline out-of-pocket cost data used in Eq (S1) are presented in Table S4. The 2008
baseline cost estimates were calculated by inflating previously reported drug
development costs5, 6 using a range of inflation rates of 6%, 9%, 12% and 15% through
2008. For future years (2009 – 2015), we have taken two different approaches towards
estimating baseline cost estimates. In the first approach, which Matheny, et al appear to
have used, we apply the 2008 baseline costs given in Table S4 to all subsequent years.
This yields total cost estimates in constant 2008 dollars. However, drug development
costs inflated at a much greater rate than the GDP over the years between 1987 and 2000
(e.g., about 12.5% yearly intrinsic drug development inflation vs. 2.5% yearly general
inflation).7,8 If this trend continues, costs projections made in constant 2008 dollars will
underestimate the real future costs of drug development. Thus, in the second approach,
we assume that the “intrinsic” drug development inflation rate will continue to exceed the
general inflation rate, and use baseline cost estimates that increase over time for each
future year. These were calculated using “intrinsic” drug development inflation rates of
3.5%, 6.5%, 9.5% and 12.5%, obtained by subtracting the approximate GDP price
deflator rate over the past 20 years from the inflation rates used to determine the 2008
5
baseline costs.9,10 The estimated baseline costs listed in Table S4 for 2009 – 2015 were
obtained in this manner
While vaccine development clinical trial time-lines, phase-transition probabilities and
costs may be quite different from traditional-pipeline development, only limited clinical
trial data are available for vaccines.11 The limited available data indicate that these
critical analysis variables are similar to traditional drugs, so both Matheny, et al. and this
analysis assume they are the same.
Inflation rate (2000 through 2008):
Approx. average historical GDP (last 20 years):
Drug development inflation rate (2009 through 2015):
6.00%
2.50%
3.50%
Year
No. years from 2000:
No. years from 2008:
2000
2005
2008
2009
2010
2011
2012
2013
2014
2015
0
5
8
9
10
11
12
13
14
15
1
2
3
4
5
6
7
Traditional pipeline/vaccines
I
$15.2
II
$23.5
$37.5
$38.8
$40.1
$41.5
$43.0
$44.5
$46.0
$47.7
III
$86.3
$137.5
$24.2
$142.4
$25.1
$147.3
$26.0
$152.5
$26.9
$157.8
$27.8
$163.4
$28.8
$169.1
$29.8
$175.0
$30.8
Biologics
I
$32.3
II
$37.7
$44.9
$46.5
$48.1
$49.8
$51.5
$53.3
$55.2
$57.1
III
$96.1
$114.4
$38.4
$118.5
$39.8
$122.6
$41.2
$126.9
$42.6
$131.3
$44.1
$135.9
$45.7
$140.7
$47.3
$145.6
$48.9
Inflation rate (2000 through 2008):
Approx. average historical GDP (last 20 years):
Drug development inflation rate (2009 through 2015):
2.50%
9.00%
6.50%
Year
No. years from 2000:
No. years from 2008:
2000
2005
2008
2009
2010
2011
2012
2013
2014
2015
0
5
8
9
10
11
12
13
14
15
1
2
3
4
5
6
7
$47.1
Traditional pipeline/vaccines
I
$15.2
$30.3
$32.3
$34.4
$36.6
$39.0
$41.5
$44.2
II
$23.5
$46.8
$49.9
$53.1
$56.6
$60.2
$64.2
$68.3
$72.8
III
$86.3
$172.0
$183.1
$195.0
$207.7
$221.2
$235.6
$250.9
$267.2
Biologics
I
$32.3
II
$37.7
$48.8
$52.0
$55.4
$59.0
$62.8
$66.9
$71.2
$75.8
III
$96.1
$124.4
$41.8
$132.5
$44.5
$141.1
$47.4
$150.3
$50.5
$160.1
$53.8
$170.5
$57.3
$181.6
$61.0
$193.4
$65.0
Inflation rate (2000 through 2008):
Approx. average historical GDP (last 20 years):
Drug development inflation rate (2009 through 2015):
2.50%
12.00%
9.50%
Year
No. years from 2000:
No. years from 2008:
2000
2005
2008
2009
2010
2011
2012
2013
2014
2015
0
5
8
9
10
11
12
13
14
15
1
2
3
4
5
6
7
Traditional pipeline/vaccines
I
$15.2
$59.2
$64.9
$71.0
II
$23.5
$58.2
$63.7
$69.8
$76.4
$83.7
$91.6
$100.3
$109.8
III
$86.3
$213.7
$37.6
$234.0
$41.2
$256.2
$45.1
$280.5
$49.4
$307.2
$54.1
$336.4
$368.3
$403.3
Biologics
I
$32.3
II
$37.7
$53.0
$58.0
$63.5
$69.5
$76.1
$83.4
$91.3
$99.9
III
$96.1
$135.0
$45.4
$147.8
$49.7
$161.9
$54.4
$177.2
$59.5
$194.1
$65.2
$212.5
$71.4
$232.7
$78.2
$254.8
$85.6
Inflation rate (2000 through 2008):
Approx. average historical GDP (last 20 years):
Drug development inflation rate (2009 through 2015):
2.50%
15.00%
12.50%
Year
No. years from 2000:
No. years from 2008:
2000
2005
2008
2009
2010
2011
2012
2013
2014
2015
0
5
8
9
10
11
12
13
14
15
1
2
3
4
5
6
7
Table S4. Yearly out-of-pocket costs for clinical trial phases for the inflation rates
used in the analysis. Out-of-pocket costs are calculated for the years of the analysis
6
from the base year 2000 for traditional pipeline drugs and vaccines and from the year
2005 for biologic drugs. Data for traditional pipeline drugs in 2000 is from DiMasi,
Hansen, and Grabowski (2003)12 and for biologics in 2005 from DiMasi and Grabowski
(2007)13.
________________________________________________________________
Using Eq (S1) ) and the baseline costs in Table S4, the yearly and total out-of-pocket
costs to complete the development of all countermeasure classes are presented in Tables
S5 and S6. In Table S5, yearly and total out-of pocket costs are calculated in constant
2008 dollars using the first approach describe above. These data are summarized in Table
1 of our Letter. In Table S6, the yearly and total out-of pocket costs are calculated using
the second approach.
7
8
Inflation rate through 2008:
Inflation rate 2009 - 2015:
6%
0%
Countermeasure
2009
2010
2011
2012
2013
2014
2015 2
Anthrax vaccine
$141.5
$105.6
$108.9
$112.6
$92.4
$49.2
$0.0
$610
Filovirus vaccines:
$67.5
$55.0
$58.3
$59.6
$59.6
$16.4
$0.0
$316
Filovirus antivirals:
$55.2
$30.3
$30.3
$32.8
$32.8
$32.8
$0.0
$214
Junin antiviral
$27.6
$15.2
$15.2
$16.4
$16.4
$16.4
$0.0
$107
Smallpox antiviral
Gram-positive antibiotics1
$54.2
$41.8
$43.9
$45.2
$45.2
$16.4
$0.0
$247
$45.8
$0.0
$0.0
$0.0
$0.0
$0.0
$0.0
$46
Gram-negative antibiotics
$13.8
$7.6
$7.6
$8.2
$8.2
$8.2
$0.0
$54
Anthrax antitoxin
$70.4
$70.4
$68.1
$68.1
$66.7
$30.7
$30.1
$405
Yearly total BARDA costs:
$476
$326
$332
$343
$321
$170
$30
$1,999
million
Year
Total Cost
$1,999
Total seven-year BARDA cost:
Inflation rate through 2008:
Inflation rate 2009 - 2015:
9%
0%
Countermeasure
2009
2010
2011
2012
2013
2014
2015 2
Anthrax vaccine
$176.9
$132.1
$136.1
$140.8
$115.5
$61.5
$0.0
$763
Filovirus vaccines:
$84.4
$68.8
$72.9
$74.5
$74.5
$20.5
$0.0
$396
Filovirus antivirals:
$69.1
$37.9
$37.9
$41.0
$41.0
$41.0
$0.0
$268
Junin antiviral
$34.5
$19.0
$19.0
$20.5
$20.5
$20.5
$0.0
$134
Smallpox antiviral
Gram-positive antibiotics1
$67.8
$52.2
$54.9
$56.5
$56.5
$20.5
$0.0
$308
$57.3
$0.0
$0.0
$0.0
$0.0
$0.0
$0.0
$57
Gram-negative antibiotics
$17.3
$9.5
$9.5
$10.3
$10.3
$10.3
$0.0
$67
Anthrax antitoxin
$76.6
$76.6
$74.0
$74.0
$72.5
$33.4
$33.4
$441
Yearly total BARDA costs:
$584
$396
$404
$418
$391
$208
$33
Total seven-year BARDA cost:
$2,434
million
Inflation rate through 2008:
Inflation rate 2009 - 2015:
12%
0%
Countermeasure
2009
2010
2011
2012
2013
2014
2015 2
Anthrax vaccine
$219.8
$164.1
$169.2
$175.0
$143.5
$76.4
$0.0
$948
Filovirus vaccines:
$104.9
$85.5
$90.6
$92.5
$92.5
$25.5
$0.0
$492
Filovirus antivirals:
$85.8
$47.1
$47.1
$51.0
$51.0
$51.0
$0.0
$333
Junin antiviral
$42.9
$23.5
$23.5
$25.5
$25.5
$25.5
$0.0
$166
Smallpox antiviral
Gram-positive antibiotics1
$84.2
$64.9
$68.3
$70.2
$70.2
$25.5
$0.0
$383
$71.2
$0.0
$0.0
$0.0
$0.0
$0.0
$0.0
$71
Gram-negative antibiotics
$21.5
$11.8
$11.8
$12.7
$12.7
$12.7
$0.0
$83
Anthrax antitoxin
$83.1
$83.1
$80.3
$80.3
$78.7
$36.3
$36.3
$478
Yearly total BARDA costs:
$713
$480
$491
$507
$474
$253
$36
Total seven-year BARDA cost:
$2,955
million
Inflation rate through 2008:
Inflation rate 2009 - 2015:
15%
0%
Countermeasure
2009
2010
2011
2012
2013
2014
2015 2
Anthrax vaccine
$271.5
$202.7
$209.0
$216.2
$177.3
$94.4
$0.0
$1,171
Filovirus vaccines:
$129.6
$105.7
$111.9
$114.3
$114.3
$31.5
$0.0
$607
Filovirus antivirals:
$106.0
$58.2
$58.2
$63.0
$63.0
$63.0
$0.0
$411
Junin antiviral
$53.0
$29.1
$29.1
$31.5
$31.5
$31.5
$0.0
$206
Smallpox antiviral
Gram-positive antibiotics1
$104.0
$80.1
$84.3
$86.7
$86.7
$31.5
$0.0
$473
$88.0
$0.0
$0.0
$0.0
$0.0
$0.0
$0.0
$88
Gram-negative antibiotics
$26.5
$14.5
$14.5
$15.7
$15.7
$15.7
$0.0
$103
Anthrax antitoxin
$90.0
$90.0
$86.9
$86.9
$85.2
$39.3
$39.3
Year
Total Cost
$2,434
Year
Total Cost
$2,955
Year
Total Cost
$517
$3,577
Yearly total BARDA costs:
Total seven-year BARDA cost:
$869
$580
$3,577
million
$594
$614
9
$574
$307
$39
Table S5. Yearly and total out-of-pocket costs to BARDA for the eight
countermeasure classes to complete development of all candidates in each class.
Costs to complete development for all countermeasure classes using 6%, 9%, 12% and
15% inflation rates through 2008 and 0% inflation thereafter. All costs in millions of
dollars.
Notes to table:
1
Matheny, et al. has the one gram-positive antibiotic. Cethromycin, beginning Phase I in 2009. We instead
place Cethromycin, in year three of Phase III in 2009 for anthrax as indicated by its developer, Advanced
Life Sciences (http://www.advancedlifesciences.com/product.php).
2
In the year 2015, there is zero cost for traditional pipeline and vaccine candidates, as we follow the
DiMasi analysis (2003, 2007) where the small cost of NDA approval is neglected. Matheny, et al. neglect
this cost as well.
_________________________________________________________________
10
11
Inflation rate through 2008:
Inflation rate 2009 - 2015:
6%
3.5%
Year
2009
2010
2011
2012
2013
2014
2015 2
Anthrax vaccine
$146.4
$113.2
$120.7
$129.3
$109.7
$60.5
$0.0
$680
Filovirus vaccines:
$69.9
$59.0
$64.7
$68.4
$70.7
$20.2
$0.0
$353
Filovirus antivirals:
$57.2
$32.5
$33.6
$37.6
$39.0
$40.3
$0.0
$240
Junin antiviral
$28.6
$16.2
$16.8
$18.8
$19.5
$20.2
$0.0
$120
Smallpox antiviral
Gram-positive antibiotics1
$56.1
$44.7
$48.7
$51.8
$53.7
$20.2
$0.0
$275
$47.5
$0.0
$0.0
$0.0
$0.0
$0.0
$0.0
$47
Gram-negative antibiotics
$14.3
$8.1
$8.4
$9.4
$9.7
$10.1
$0.0
$60
Anthrax antitoxin
$72.9
$75.5
$75.5
$78.1
$79.2
$37.8
$39.1
$458
Yearly total BARDA costs:
$493
$349
$368
$393
$382
$209
$39
Total seven-year BARDA cost:
$2,234
million
Inflation rate through 2008:
Inflation rate 2009 - 2015:
9%
6.5%
Countermeasure
Total Cost
$2,234
Year
2009
2010
2011
2012
2013
2014
2015 2
Anthrax vaccine
$188.4
$149.8
$164.5
$181.2
$158.2
$89.8
$0.0
$932
Filovirus vaccines:
$89.9
$78.1
$88.1
$95.8
$102.0
$29.9
$0.0
$484
Filovirus antivirals:
$73.5
$43.0
$45.8
$52.8
$56.2
$59.8
$0.0
$331
Junin antiviral
$36.8
$21.5
$22.9
$26.4
$28.1
$29.9
$0.0
$166
Smallpox antiviral
Gram-positive antibiotics1
$72.2
$59.2
$66.3
$72.7
$77.4
$29.9
$0.0
$378
$61.0
$0.0
$0.0
$0.0
$0.0
$0.0
$0.0
$61
Gram-negative antibiotics
$18.4
$10.7
$11.4
$13.2
$14.0
$15.0
$0.0
$83
Anthrax antitoxin
$81.6
$86.9
$89.4
$95.2
$99.4
$48.8
$51.9
$553
Yearly total BARDA costs:
$622
$449
$488
$537
$535
$303
$52
Total seven-year BARDA cost:
$2,987
million
Inflation rate through 2008:
Inflation rate 2009 - 2015:
12%
9.5%
Countermeasure
Total Cost
$2,987
Year
2009
2010
2011
2012
2013
2014
2015 2
Anthrax vaccine
$240.6
$196.7
$222.1
$251.6
$225.9
$131.8
$0.0
$1,269
Filovirus vaccines:
$114.8
$102.5
$119.0
$133.0
$145.7
$43.9
$0.0
$659
Filovirus antivirals:
$94.0
$56.5
$61.8
$73.3
$80.2
$87.8
$0.0
$454
Junin antiviral
$47.0
$28.2
$30.9
$36.6
$40.1
$43.9
$0.0
$227
Smallpox antiviral
Gram-positive antibiotics1
$92.2
$77.8
$89.6
$100.9
$110.5
$43.9
$0.0
$515
$78.0
$0.0
$0.0
$0.0
$0.0
$0.0
$0.0
$78
Gram-negative antibiotics
$23.5
$14.1
$15.5
$18.3
$20.1
$22.0
$0.0
$113
Anthrax antitoxin
$133.4
$98.6
$105.4
$113.1
$123.8
$62.5
$0.0
Countermeasure
Total Cost
$637
$3,951
Yearly total BARDA costs:
$824
$574
Total seven-year BARDA cost:
$3,951
million
Inflation rate through 2008:
Inflation rate 2009 - 2015:
15%
12.5%
$644
$727
$746
$436
$0
Year
2009
2010
2011
2012
2013
2014
2015 2
Anthrax vaccine
$305.5
$256.6
$297.6
$346.3
$319.5
$191.5
$0.0
$1,717
Filovirus vaccines:
$145.8
$133.7
$159.4
$183.1
$206.0
$63.8
$0.0
$892
Filovirus antivirals:
$119.3
$73.6
$82.8
$100.9
$113.5
$127.6
$0.0
$618
Junin antiviral
$59.6
$36.8
$41.4
$50.4
$56.7
$63.8
$0.0
$309
Smallpox antiviral
Gram-positive antibiotics1
$117.1
$101.4
$120.1
$138.9
$156.3
$63.8
$0.0
$698
$99.0
$0.0
$0.0
$0.0
$0.0
$0.0
$0.0
$99
Gram-negative antibiotics
$29.8
$18.4
$20.7
$25.2
$28.4
$31.9
$0.0
$154
Anthrax antitoxin
$101.2
$113.8
$123.8
$139.2
$153.5
$79.6
$89.5
Countermeasure
Total Cost
$801
$5,287
Yearly total BARDA costs:
Total seven-year BARDA cost:
$977
$734
$5,287
million
$846
$984
12
$1,034
$622
$90
Table S6. Yearly and total out-of-pocket costs to BARDA for the eight
countermeasure classes to complete development of all candidates in each class.
Costs to complete development for all countermeasure classes using 6%, 9%, 12% and
15% inflation rates through 2008 and using intrinsic drug-development inflation rates of
3.5%, 6.5%, 9.5% and 12.5% thereafter. All costs in millions of dollars
Notes to table:
1
Matheny, et al. has the one gram-positive antibiotic. Cethromycin, beginning Phase I in 2009. We instead
place Cethromycin, in year three of Phase III in 2009 for anthrax as indicated by its developer, Advanced
Life Sciences (http://www.advancedlifesciences.com/product.php).
2
In the year 2015, there is zero cost for traditional pipeline and vaccine candidates, as we follow the
DiMasi analysis (2003, 2007) where the small cost of NDA approval is neglected. Matheny, et al. neglect
this cost as well.
_________________________________________________________________
Comparison analysis for identified candidates
Matheny, et al. calculated future costs in 2008 dollars, thus appearing to have followed
the more standard approach of calculating future costs in present day dollars without
accounting for future intrinsic drug development inflation. Using this method, the result
for our highest inflation rate (15%) is somewhat lower than the result obtained by
Matheny, et al. (Table S5). As shown below (Table S7), Matheny, et al, use slightly
higher inflation rates for some of the drug development phases. However, the higher
inflation rate accounts for only approximately 20% of the difference between our cost
estimate and theirs (data not shown).
We also calculated BARDA funding needs for the current year, 2009, in 2008 dollars
(Table S5). At 15% inflation, our cost estimate for 2009 ($869 million) slightly exceeds
that of Matheny, et al. Thus, while our calculation of the total cost to complete
development of existing countermeasure candidates is lower than that of Matheny, et al.,
at every inflation rate, our calculation for the single year 2009 at 15% inflation is higher
than the calculation of Matheny, et al. ($869 million vs $817 million). Applying the
inflation rates of Matheny, et al. (Table S7) to our model increases our 2009 estimate
further to $911 million (data not shown). The difference between our results and those of
Matheny, et al, for the single year 2009 is largely due to the shift of Cethromycin
development from Phase I to the more expensive Phase III clinical development (not
shown). This seemingly illogical statement is correct because many candidates that start
in Phase I never make it to the much more expensive Phase III.
Our cost estimates surpass those of Matheny, et al, only when we take intrinsic drug
development inflation into account and the inflation rate exceeds 12% Table S6). More
significantly, incorporating intrinsic drug development inflation into the model shows
even more clearly the major impact that different starting assumptions about inflation
rates can have on estimates of future funding needs for development of biodefense
countermeasures. This reinforces the primary conclusion of our Letter, that BARDA must
obtain new estimates of drug development inflation.
13
It is useful to understand how Matheny et al. arrived at their inflation rates up to and
including 2008 to verify their base 2008 out-of-pocket costs. This calculation is
summarized in Table S7.
Out-of Pocket Cost Traditional Pipeline/Vaccines
($-millions)
Phase
2000
1987
Inflation Rate
I
$15.2
$2.13
16.3%
II
$23.5
$3.95
14.7%
III
$86.3
$12.80
15.8%
Out-of-Pocket Costs
($-millions)
Clinical trial phase
Year
Matheny, et al .
Study
Average Inflation Rate
DiMasi
($-millions, 2000)
Traditional pipeline/vaccines
I
Matheny, et al .
Study
2008)
$51.0
16.3%
II
$23.5
$70.0
14.6%
III
2000
$86.3
$279.0
15.8%
DiMasi
($-millions, 2005)
Biologics
I
$15.2
$50.0
15.7%
II
$37.7
$56.0
14.1%
III
2005
$32.3
$96.1
$148.0
15.5%
Table S7. Our calculation of “average” inflation rates confirming the rates and
method of obtaining them used in Matheny, et al.. The “average” inflation rates were
calculated using the following equation: r = ( Clast / Cfirst )1 / N – 1, where Clast is the listed
cost for the later year, and Cfirst is the listed cost for the earlier year. N is the number of
years between the later year and the earlier year.
________________________________________________________________
To obtain out-of-pocket costs for clinical trial phases for the year 2008, Matheny, et al.
calculated an average yearly inflation rate using data from the years 1987 and 200014,15
(top Table S7) resulting in their 2008 base out-of pocket costs for each clinical trial
phase. The 2008 base costs are the starting costs for their analysis from 2009 to 2015
(bottom Table S7). These costs for the different clinical trail phases used by Matheny, et
al. all hover around 15%.
Additional candidates to reach the 90% goal
Base out-of-pocket costs in our analysis and in Matheny, et al., are compared in Table
S8. These serve as the starting point for analysis of the cost of developing additional
countermeasure candidates for the years 2009 through 2015.
14
Inflation rate:
6%
Our Analysis
9%
12%
Matheny, et al .
15%
Traditional pipeline/vaccines
I
II
III
$24.2
$37.5
$137.5
$30.3
$46.8
$172.0
$37.6
$58.2
$213.7
$46.5
$71.9
$264.0
$51
$70
$279
Biologics
I
II
III
$38.4
$44.9
$114.4
$41.8
$48.8
$124.4
$45.4
$53.0
$135.0
$49.1
$57.3
$146.1
$50
$56
$148
Table S8. Base out-of-pocket costs for 2008 for the three clinical trial phases from
our analysis and Matheny, et al. All costs are in millions of dollars. Base out-of–pocket
costs for our analysis are taken from our Table S4 and for Matheny, et al. from their
Supplementary Table 2.
__________________________________________________________________
Matheny, et al. find that it will take an additional $9.9 billion to develop enough
additional candidates to attain a 90% probability that at least one successful
countermeasure for each class will be developed. The 90% goal is, in theory, reasonable.
The number of additional candidates needed depends on how many are already in
development and their stage in clinical trials. In Table S9, the numbers of additional
candidates needed as calculated by Matheny, et al. and this analysis are compared.
Additional Number to Reach PD =
0.9
(assuming all start at Phase I)
Numbers in Each Phase (2009)
Countermeasure
2
Anthrax vaccine
Filovirus vaccine
Filovirus antiviral
Junin virus antiviral
Smallpox antiviral
Gram pos. antibiotic1
Gram neg. antibiotic
Anthrax antitoxin
NI
NII
NIII
Matheny, et al.
Our Analysis
3.42
1.14
2.28
1.14
1.14
0
0.57
1.71
3.13
2.13
0
0
1.42
0
0
1.67
0
0
0
0
0
1
0
0
2
6
8
9
7
9
9
3
53
1.4
5.2
7.2
8.4
6.3
4.7
8.9
2.6
44.8
Totals:
Table S9. Number of additional countermeasure candidates needed to attain a 90%
probability of at least one successful countermeasure in each class. NI, NII and NIII
are the numbers in each clinical trial phase for each countermeasure class under
development. PD is the desired probability goal, here equal to 0.9 or 90%.
Notes to table:
1
Cethromycin is in Phase III as an anthrax countermeasure, is already funded to complete clinical trials,
and should meet BARDA's requirements if approved.
2 One of the anthrax vaccine candidates is in mid-Phase II, but the phase transition probabilities
15
used in our calculation do not account for candidates failing in mid phase, so it is placed at the beginning of
Phase II for purposes of the calculation. Placement in mid-phase would reduce slightly the additional
number.
_______________________________________________________________________
In our analysis, the equation used to calculate the number of additional candidates, Nadd,
all starting from phase I is
Eq (S2)
Nadd = {log (1-PD) - [ NI x log(1-PI) + NII x log(1-PII) + NIII x log(1-PIII)]} / log(1-PI)
where Pi for i = I, II or III are the probabilities for transitioning from Phases I, II or III to
the next phase. PD is the probability goal. Eq (2) is derived in Appendix 1. This equation
is mathematically equivalent to the one in Matheny, et al., but we have taken the
logarithm and rearranged it to solve explicitly for Nadd.
Our analysis estimates a need for 45 additional significantly fewer than Matheny, et al.’s
53. In all classes, we find fewer needed candidates than Matheny, et al. The difference in
the totals is due to:
(1) Matheny, et al. "round up" in every class of countermeasures. In reality, some classes
will likely require more additional candidates than estimated, while other will require
fewer. To prevent systematic overestimation, rounding-off should take place after
computing the total number of additional candidates required across all countermeasure
classesDoing so leads to a difference of 4.0 countermeasures.
(2) The misplacement of Cethromycin’s clinical trial state in Matheny, et al. leading to a
difference of 4.3 countermeasures.
The out-of-pocket costs to develop these additional candidates to reach the 90% goal, all
starting in Phase I, are calculated in constant 2008 dollars in Table S10 (summarized in
Table 1 of our Letter), and are calculated using intrinsic drug development inflation rates
in Table S11.
16
Inflation rate through 2008:
Inflation rate 2009 - 2015:
6%
0%
Number
to be
Developed
Out-of-pocket Cost
per Single
Countermeasure
Total
Out-of-pocket Cost
Traditional pipeline & vaccines
42.2
$94.0
$3,965
Biologics
2.6
$129.9
$338
Countermeasure
Class
Maximum total BARDA requirement:
Inflation rate through 2008:
Inflation rate 2009 - 2015:
$4,303
million
9%
0%
Number
to be
Developed
Out-of-pocket Cost
per Single
Countermeasure
Total
Out-of-pocket Cost
Traditional pipeline & vaccines
42.2
$117.5
$4,956
Biologics
2.6
$141.3
$368
Countermeasure
Class
Maximum total BARDA requirement:
Inflation rate through 2008:
Inflation rate 2009 - 2015:
$5,324
million
12%
0%
Number
to be
Developed
Out-of-pocket Cost
per Single
Countermeasure
Total
Out-of-pocket Cost
Traditional pipeline & vaccines
42.2
$146.0
$6,158
Biologics
2.6
$153.3
$399
Countermeasure
Class
Maximum total BARDA requirement:
Inflation rate through 2008:
Inflation rate 2009 - 2015:
$6,557
million
15.0%
0%
Number
to be
Developed
Out-of-pocket Cost
per Single
Countermeasure
Total
Out-of-pocket Cost
Traditional pipeline & vaccines
42.2
$180.4
$7,609
Biologics
2.6
$165.9
$432
Countermeasure
Class
Maximum total BARDA requirement:
$8,041
million
Table S10. Analysis of maximum out-of-pocket costs for additional countermeasure
candidates to reach the 90% goal (constant 2008 dollars). All additional candidates
are assumed to start development at the beginning of Phase I in the year 2009, so this is a
maximum cost (see Letter for discussion). The out-of-pocket costs per single
countermeasure derive directly from the Markov Process analysis of drugs moving
17
through the development process starting with the base costs for 2008 in Table S8. Costs
are in millions of dollars.
_____________________________________________________
18
Inflation rate through 2008:
Inflation rate 2009 - 2015:
6%
3.5%
Number
to be
Developed
Out-of-pocket Cost
per Single
Countermeasure
Total
Out-of-pocket Cost
Traditional pipeline & vaccines
42.2
$105.3
$4,441
Biologics
2.6
$144.8
$377
Countermeasure
Class
Maximum total BARDA requirement:
Inflation rate through 2008:
Inflation rate 2009 - 2015:
$4,818
million
9%
6.50%
Number
to be
Developed
Out-of-pocket Cost
per Single
Countermeasure
Total
Out-of-pocket Cost
Traditional pipeline & vaccines
42.2
$145.2
$6,124
Biologics
2.6
$172.8
$450
Countermeasure
Class
Maximum total BARDA requirement:
Inflation rate through 2008:
Inflation rate 2009 - 2015:
$6,574
million
12%
9.5%
Number
to be
Developed
Out-of-pocket Cost
per Single
Countermeasure
Total
Out-of-pocket Cost
Traditional pipeline & vaccines
42.2
$198.9
$8,389
Biologics
2.6
$205.7
$535
Countermeasure
Class
Maximum total BARDA requirement:
Inflation rate through 2008:
Inflation rate 2009 - 2015:
$8,925
million
15%
12.5%
Number
to be
Developed
Out-of-pocket Cost
per Single
Countermeasure
Total
Out-of-pocket Cost
Traditional pipeline & vaccines
42.2
$270.9
$11,426
Biologics
2.6
$244.4
$636
Countermeasure
Class
Maximum total BARDA requirement:
$12,062
million
Table S11. Analysis of maximum out-of-pocket costs for additional countermeasure
candidates to reach the 90% goal (intrinsic drug-development inflated 2008 dollars).
All additional candidates are assumed to start development at the beginning of Phase I in
the year 2009, so this is a maximum cost (see Letter for discussion). The out-of-pocket
costs per single countermeasure derive directly from the Markov Process analysis of
19
drugs moving through the development process starting with the base costs for 2008 in
Table S8. Costs are in millions of dollars.
______________________________________________________
If we repeat the calculation in Table S10 using the number of required additional
countermeasures determined by Matheny, et al, assign Cethromyin to pre-clinical
development in 2008 and use constant 2008 dollars, we closely match their estimate of
$9.9 billion dollars. Thus, in this case as in the case of 2009 BARDA funding needs, our
methods are the same, save for likely small differences in assumptions.
20
Appendix S1. Derivations of equations used in the analysis
Derivation of equation for Nadd
Let Pi be the probability of approval for a drug that is at the beginning of Phase i in clinical trials.
Here i = I, II, III or NDA filed.
And let
Pcurrent be the probability at least one countermeasure from those now in trials will be approved,
and
PD be the desired probability that at least one drug is approved
We wish to find
Nadd = additional candidates beginning at Phase I required to reach the desired PD
Probability that a drug entering Phase i is eventually approved = Pi
Probability that a drug entering Phase i is not approved = 1 - Pi
Probability of no approved drug if Ni drugs in phase i are under development for i = I, II, III
= (1 - PI)NI x (1 - PII)NII x (1 - PIII)NIII
Probability of at least one approved drug =
Pcurrent = 1 -[(1 - PI)NI x (1 - PII)NII x (1 - PIII)NIII]
Assume we already have NI, NII and NIII candidates in trials in phases I, II and III.
How many new phase I drugs, Nadd, must we develop to reach PD
PD = 1 -[(1 - PI)NI+Nadd x (1 - PII)NII x (1 - PIII)NIII]
Solving for Nadd
log (1-PD) = (NI + Nadd) x log (1-PI) + NII x log(1-PII) + NIII x log(1-PIII)
Nadd = {log (1-PD) -[ NI x log(1-PI) + NII x log(1-PII) + NIII x log(1-PIII)]} / log(1-PI)
The probabilities for successful launch from the beginnings of each phase Pi are different from
the phase transition probabilities in Table S1, and are presented below in Table A1.
21
Appendix S2. Additional tables of general interest
Traditional Pipeline/Vaccines
Number of required countermeasures to attain probability PD
of at least one successful countermeasure
BARDA
Funds at
Beginning
Probability
of Phase:
of Launch (Pi)
I
II
III
21.5%
30.3%
68.5%
PD =
0.7
0.8
0.9
0.95
0.99
5.0
3.3
1.0
6.6
4.5
1.4
9.5
6.4
2.0
12.4
8.3
2.6
19.0
12.8
4.0
Biologics
Number of required countermeasures to attain probability PD
of at least one successful countermeasure
BARDA
Funds at
Beginning
Probability
of Phase:
of Launch (Pi)
I
II
III
30.3%
36.1%
64.2%
PD =
0.7
0.8
0.9
0.95
0.99
3.3
2.7
1.2
4.5
3.6
1.6
6.4
5.1
2.2
8.3
6.7
2.9
12.8
10.3
4.5
Supplementary A1. Number of candidate countermeasures required to reach
various probability goals, PD, that at least one successful countermeasure will be
developed. The body of the table displays the numbers of countermeasures required.
______________________________________________________________________
For example, for the reasonable goal of 0.9 or 90% for traditional pipeline
countermeasures, 9.5 candidates all starting in Phase I must be started to be developed, or
6.4 candidates all starting in Phase II must be started to be developed, and only 2.0
candidates starting in Phase III. For biologic countermeasures, less candidates will need
to be developed because of the higher probability of successful launch starting at phase I.
The equation used to calculate the numbers, N, of required candidates is:
Eq(A1)
N = log{1-PD}/log{1-Pi}
where Pi is the probability of successful launch of a countermeasure for phases i = I, II, or
III.
22
Clinical trial phase
I
II
II
NDA
Totals:
Sources:
Number Personnel
2003
Number Personnel
2006
5,421
6,879
16,317
5,604
4,242
8,119
16,921
3,625
34,221
32,907
Pharmaceutical Research and Manufacturers of America,
Pharmaceutical Industry Profile 2008, (Washington DC: PhRMA, March 2008)
Pharmaceutical Research and Manufacturers of America,
Pharmaceutical Industry Profile 2005, (Washington DC: PhRMA, March 2005)
Supplementary A2. Decrease in numbers of clinical trials personnel in PhRMA
members R&D between 2003 and 2006.
___________________________________________________________
Lynn C. Klotz1 and Alan Pearson2
1
Senior Science Fellow, Center for Arms Control and Non-Proliferation; and
Independent Consultant in Biotechnology and Bio Business; 5 Duley Street, Gloucester
Massachusetts 01930 (lynnklotz@live.com)
2
Director, Biological and Chemical Weapons Control Program, Center for Arms
Control and Non-Proliferation, 322 4th St., NE, Washington, D.C. 20002
(apearson@armscontrolcenter.org)
Jason Matheny, Michael Mair, and Bradley Smith , “Cost/success projections for US Biodefense
Countermeasure Development,” Nature Biotechnology, 26, No. 9 (September 2008) p981-983
2
Ibid
3
Joseph A. DiMasi, Ronald W. Hansen, Henry G. Grabowski, "The price of innovation: new estimates of
drug development costs," Journal of Health Economics 22 (2003) 151-185; Joseph A. DiMasi, Henry G.
Grabowski, "The cost of biopharmaceutical R&D: is biotech different?" Managerial and Decision
Economics, 28 (2007) p469-479
4
Inclusion of out-of-pocket cost for the NDA phase could add 5% to 15% to total cost
5
DiMasi, et al. (2003)
6
DiMasi et al. (2007)
7
DiMasi, et al. (2003)
8
From Table 2 in Joseph A. DiMasi, Ronald W. Hansen, Henry G. Grabowski and Louis Lasagna, “Cost of
innovation in the pharmaceutical industry,” Journal of Health Economics 10 (1991) 107-142
9
DiMasi, et al. (2003)
10
From Table 2 in Joseph A. DiMasi, Ronald W. Hansen, Henry G. Grabowski and Louis Lasagna, “Cost
of innovation in the pharmaceutical industry,” Journal of Health Economics 10 (1991) 107-142
1
23
“Vaccine R&D Development Times and Success Rates,” Mark-M Struck, Nature Biotechnology, 14,
November 1996, p591-593.
12
DiMasi, et al. (2003)
13
DiMasi, et al. (2007)
14
DiMasi, et al. (1991)
15
DiMasi, et al. (1993)
11
24