Making the CA$E for Drug Company Independence
Marketing of Medicines (MoM)
Pharmaceutical Development and Regulation
Name brands, generics and the FDA
Introduction
The following presentation contains some items that are covered by copyright and are
used under Fair Use for education and the federally legislated TEACH Act. Any use for other
purposes must follow U.S. copyright rules.
Case
You arrive at work to find a message from a patient who is taking Gudaznu [good-asnew], a pain medication that has been on the market for about 2 years. The patient is concerned
about a news report that the FDA has issued a warning and is considering pulling the drug from
the market. The patient wants to talk to you.
Pharmaceutical Development and Regulation
This module will address pharmaceutical development and regulation, name brand drugs,
generics, and the FDA.
Objectives: Pharmaceutical Development and Regulation
By the end of this module, prescribers should be able to: Describe key steps in the
pharmaceutical approval process, outline key laws and regulations impacting pharmaceutical
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development; understand the differences between generic and branded drug development;
explain patents, exclusivity, and intellectual property. As in all modules, our goal is for you to
use this information in your patient care.
Case
We return to our case. You know this patient pretty well, and anticipate questions about
the safety of Gudaznu [good-as-new]. You had heard concerns about Gudaznu [good-as-new] in
the past, and rarely prescribed the drug, but do have a few patients taking it. You anticipate
more patient questions in the coming weeks, and are starting to wonder yourself how it could
have been approved by the FDA. You decide to bone up on your knowledge of the role of the
FDA and the pharmaceutical development cycle.
Pharma and the FDA
There are two main groups involved in drug development, the pharmaceutical industry,
sometimes called pharma, and the Food and Drug Administration, or FDA.
Pharma is a profit driven industry; with portions of this profit being reinvested in research
and development, which brings new or varied drugs to the market. Pharma has three main
stakeholders: consumers of its products, prescribers of its products, and investors in its
companies.
The FDA is a government entity funded by taxes, as well as fees paid by users. Their
main mission is to protect the public’s health; and their client is the public. The FDA will
approve drugs only for specific conditions after they have been deemed safe and effective.
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Understandably, these two missions sometimes conflict with one another. Pharma’s
interest is in bringing new drugs to market as quickly as possible while the FDA’s mission is to
protect the public’s health by evaluating safety and efficacy before products go onto the market.
Overview of the Pharmaceutical Industry
It may seem somewhat simplistic to say that pharma is important to the healthcare
industry, let’s review some of the statistics.

In 2003, Pharma spent $24.9 billion on promotion of prescription drugs
•
In 2004, 23 major pharmaceutical companies employed over 291,000 people in the U.S.
and 450,000 worldwide

The total number of U.S. prescriptions sold between October 2004 and September 2005
was 3.6 billion

In 2006, Pharma spent $55.2 billion on research and development, compared to $28.5
billion spent by the National Institutes of Health
Food and Drug Administration
Now we’ll look at the FDA in more detail.
The FDA is made up of six centers and employs over 9000 people. The Center for Drug
Evaluation and Research is the branch that regulates human drugs and biological products.
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Food and Drug Administration
In the US, attempts to regulate drugs began as early as 1820; though, the original Food
and Drug Act didn’t pass until 1906 which prohibited interstate commerce of misbranded and
adulterated drugs; with it came the birth of the FDA as we know it today. The federal Food,
Drug and Cosmetic Act of 1938 required that new drugs be shown to be “safe” before they’re
marketed. And, in 1962 the Kefauver-Harris [Key Fah Ver - Harris] drug amendments added
“proof of efficacy” as a requirement prior to a new drug’s marketing.
What is a Drug?
But, what is a drug? According to the Federal Food and Drug Cosmetic Act of 1938, a
drug is any product you use to diagnose, cure, mitigate, treat, or prevent a disease. Any product
that is considered a drug must receive approval by the FDA. Vitamins, minerals, and other
supplements are considered food items, not drugs, and thus are not regulated in the same way as
pharmaceutical products.
Stages of Drug Development and Review: The Drug Discovery, Development, and Review
Process
We have seen that both pharma and the US government spend tens of billions of dollars
on drug development each year. Let’s review this process.
Stage one is the drug discovery process, during which up to tens of thousands of
compounds may be evaluated by a pharmaceutical company.
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Once a concept has been developed, the compounds are filtered out in the preclinical
stage, or stage two, where about two hundred and fifty compounds are tested for efficacy. Those
compounds then have to show at least some desired effect in living animals.
Once compounds have been further narrowed, an investigational new drug application is
submitted to the FDA; applications must be approved before clinical trials can begin.
During clinical trials, compounds are tested for the first time in humans. Phase one
clinical trials have small groups of volunteers, anywhere between twenty and one hundred; in
phase two the number of volunteers increases to one to five hundred, and in phase three between
one and five thousand volunteers will participate.
Once a product goes through the three trial phases and seems safe and effective, a New
Drug Application can be submitted to the FDA. The FDA then reviews the product data and
makes a decision about approval. This entire process can take up to 15 years.
Once the product is on the market, companies may perform phase four studies, or post
marketing studies. These are used to measure safety in large and varied populations, as well as
to test different delivery methods or to determine if the product may be used to treat another
condition.
Clinical Trial Phases
To review, there are four phases of clinical trials. Phase one has a small number of
volunteers and is the first time a product is tried in humans. The product is being tested for
safety and tolerability.
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Phase two is a proof of concept phase. The number of volunteers increases and doses
may be checked as well as the safety of special, or at-risk populations.
Phase three clinical trials are large and multi-centered. They are also usually placebo
controlled and replicated in a number of locations. These studies provide the most important
information that is submitted to the FDA to support approval of the drug.
It is important to note that drugs are generally tested in very select patient groups, usually
younger adults without co morbidities, and for relatively short periods, typically several weeks.
Many products are dropped during clinical trial phases as they prove ineffective.
Phase four post marketing studies which are performed after a drug is on the market, are
therefore important ways to measure safety and learn about long-term risks, or to test the product
in different populations, such as children. However, drug companies do not have to conduct
these studies. Sometimes the FDA can make phase four studies a condition of approval to
further evaluate the drug’s effectiveness in even larger populations.
Business Model for Selecting Targets for Drug Development
Pharmaceutical manufacturers generally select drugs that are easy to develop, with a
large market that will produce a large return on investment. A common strategy is to develop
blockbuster drugs, which will be used by large patient populations and have the potential to
reach at least $1 billion in annual sales. This strategy diminishes the resources available and
lessens the priority to develop therapies for smaller patient populations and less visible diseases.
Another strategy is to produce drugs that require little risk but offer potential for high revenues.
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“Me too” drugs are drugs with very similar chemical formulation to drugs already on the market.
This strategy may increase competition but also reduces resources for innovation.
“Me too” drugs
These graphs from CNN money illustrate the two strategies. The first bar in each
represents a blockbuster drug and the others are the “me too” drugs. Note how much money can
still be made.
FDA Approval of New Drug Applications
This graph illustrates the number of new medicines, vaccines, and biologics approved by
the FDA over approximately ten years. On first glance it appears that the FDA is approving
sixty to one hundred twenty-five new drugs a year. However, if we plot the number of new
molecular entities, or drugs that contain an active substance that has never been approved in the
US, you can see that only about one third of new drug approvals each year are actually for new
substances.
New drug applications
This table shows a listing of all the new drug applications approved by the FDA in July
2007. We see that only 1 is for a new chemical entity, while 3 are for new formulations of
existing drugs.
In the case of Allegra, this patent approval is for an orally disintegrating tablet. Allegra
was already available as a capsule, an oral tablet, a sustained release oral tablet, and an oral
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suspension. It was also available with or without a decongestant. Each of these formulations of
Allegra has a separate patent.
Of course, some new formulations improve the clinical profile of a medication by
increasing its efficacy or decreasing side-effects. However, many new formulations are merely
strategies to extend the life of the patent and increase profits.
PDUFA
The pharmaceutical company’s patent time clock begins counting down from the moment
a new drug application is approved by the Patent and Trademark Office, limiting the number of
days their product will be on the market exclusively with patent protection. Thus there is an
incentive for manufacturers to get products to market as quickly as possible. In the late 1980’s
and 90’s, pharma and patient advocacy groups (for instance, those interested in seeing HIV
treatments brought to market more quickly), pushed Congress to pass the Prescription Drug User
Fee Act. This act gave the FDA the authority to collect fees from pharmaceutical companies.
PDUFA Tension
Under these new guidelines, manufacturers pay fees which increase FDA resources, and
in turn the FDA is able to speed up the approval process. Since 1992, drug approval times have
been cut in half from 2 to 2.5 years to 1 to 1.5 years by 2003. These use fees cover
approximately ½ of all resources required to review drug applications. The FDA may be reliant
on industry fees to conduct its business-a fact that may lead to undo influence.
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Selected Drug Safety Provisions of the FDA Amendments Act
In crafting the FDA Amendments Act of 2007, Congress used many of the Institute of
Medicine’s committee recommendations as a blueprint. These amendments provide for new
resources for drug safety, new authorities and enforcement tools, an active post marketing
surveillance system, expanded clinical trials registration, new requirements for public disclosure
of trial results, and improvements in transparency and communications with patients and
physicians.
As you recall, your patient wants to speak with you about the safety reports concerning
Gudaznu [good-as-new].
Case
You discuss the function of the FDA and medication safety with your patient. Together
you and your patient decide to discontinue the Gudaznu [good-as-new]. You propose an
alternative medication that has similar properties and comes in a generic form. The patient
accepts the new prescription.
What would you do?
You may decide to discuss generic and name brand medications with your patient and
nurse.
Case
Later that day your nurse tells you the patient called back and was concerned that the
generic medication would not control the pain as well as a brand name, because it is a generic.
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Your nurse tried to reassure the patient and also reports that she has heard similar queries from
other patients. Since this patient appreciates technical information, you review the process of
generic drug approval prior to returning the patient’s call.
Hatch Waxman Act
The approval of generic drugs has not always been expeditious; previously
pharmaceutical manufacturers had gone through the same rigorous process of drug development
and clinical trials for generics as for new drugs. As a result, very few generic choices were
available. In 1984, the Hatch Waxman Act was passed, which allows for faster FDA approval of
generic pharmaceuticals. The manufacturer must now prove that the generic drug is
bioequivalent to the brand drug. As a result, about ¾ of all branded pharmaceuticals have a
generic counterpart.
Generics
A generic manufacturer must prove that its drug has been produced with the same
standards as the branded drug to receive FDA approval. These include the same active
ingredients, dosage form, standards for purity and quality, processes for manufacturing, and the
same amount of drug absorbed over time. With few exceptions, there is no difference between
the safety or efficacy profile. Generic drugs are equivalent to their brand name counterparts.
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Generics
This 1997 study compared different formulations of thyroid medication. The study found
no significant difference in the bioequivalence but did note differences in preparation. The
interchangeability of generic and brand name products was formally tested in the study.
Generics
Some have argued that prescribers should be more cautious about making changes in
drug therapies within classes with narrow therapeutic ranges such as seizure medications. They
posit that similar bioequivalence does not necessarily lead to therapeutic equivalence, and that
bioavailability tests are often completed in small groups of healthy volunteers. This is an
untested idea.
Generic Drug Review Process
The FDA still approves generic drugs but the process is much simpler than that for
branded drugs. The application is submitted to the office of generic drugs, which conducts a
bioequivalence review, a plant inspection, and chemistry and drug label reviews. Generic
manufacturers do not need to complete the chemical pre-testing or the three phases of clinical
trials.
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Generic versus Therapeutic Substitution
Generic substitution is different from therapeutic substitution. These 3 agents can all
reduce cholesterol. Changing from Zocor to generic Simvastatin would be a generic substitution.
Changing from Lipitor to generic Simvastatin would be a therapeutic substitution.
Cycle of Innovation and Competition
In the final slides we will address issues of patent and exclusivity. With both branded
and generic pharmaceutical drugs on the market, there is a cycle of innovation and competition.
Branded pharmaceutical companies innovate to create new products and are rewarded with a
monopoly position by receiving a patent. Once their patent expires there is increased
competition from generic versions. Branded companies may try to stall the efforts of generic
companies using patent extension techniques. Branded companies’ sales decrease and they are
driven to innovate by creating new drugs and the cycle repeats itself.
Patents and Drug Exclusivity
It is important to define the difference between drug patents and exclusivity. Drug
patents are granted by the Patent and Trademark Office to be granted at any time during
development of a drug. As clinical trials are public knowledge, pharmaceutical companies may
file for a patent early in the developmental process to protect its intellectual property. Patents
last for 20 years from the date of filing. A drug patent can expire before the drug is actually
approved, be issued after a drug’s approval, or anytime in between. Drug exclusivity, on the
other hand, is the exclusive marketing rights granted to a drug upon its approval by the FDA.
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Exclusivity can run from six months to seven years depending on the type of drug. Exclusivity is
not added to the life of a patent. Some drugs have both patent and exclusivity protection, others
have just one, or neither.
“Marketplace” Techniques for Extending Patent and Exclusivity Rights
Brand name drug patents and exclusivity are initially limited but can be extended through
several mechanisms. These extensions limit competitive generic entry into the market place,
thereby increasing brand exclusivity and profits. Stockholder’s interests are preserved if drug
companies can extend their exclusivity and maintain market share at non-competing pricing for
the branded product.
Agreements between brand name and generic manufacturers
One method of extending exclusivity is to create agreements between brand name and
generic manufacturers. Brand name companies attempt paying generic manufacturers to stay off
the market. Drug manufacturer Cephalon, INC, made licensing payments totaling $146 million
to four generic drug manufacturers to drop patent challenges of its sleep disorder drug Provigil.
The generic drug companies agreed to stay out of the market until 2011.
Drug Company Tactics for Extending Patents
There are other ways for drug companies to extend their patents such as improving or
designing new delivery systems. For instance, altering a three times daily product to a once daily
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product. The FDA can also give six months of additional exclusivity to a drug company that
performs studies of one of its drugs on children since most clinical trials are done on adults.
Key Points
To review the key points covered in the module: new pharmaceutical development is
time consuming and costly, but many newly approved drugs are not really new. Approximately
one third of all new products brought to the market are actually new chemical entities never
before seen on the market. Federal regulation has attempted to make the initial drug
development and generic approval process faster. This may offer advantages to some patients,
but can raise concerns regarding product safety. Generic and prescription drugs are
bioequivalent with few known exceptions. Finally, profit-making plays a large role in the entire
drug development process.
Recommendations for Prescribers
Our recommendations to you as prescribers are to use generic medications when
available. This lowers the cost for the individual as well as overall healthcare cost. Talk to your
patients about the equivalency in safety and efficacy of generic and brand name drugs to ease
their concerns. In many states pharmacies will automatically substitute a generic product unless
a prescriber designates otherwise. Prescribers should incorporate an understanding of the profit
motives of pharmaceutical manufacturers into their decision making
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Case
We return again to our case. You reach your patient the next day, and are able to make a
convincing argument that the generic drug has bioequivalence to the name brand drug, and if it
does not work well there are a number of other options available in addition to Gudaznu [goodas-new]. You feel good about the fact that you can also provide information which may help
improve your patient’s understanding of their treatment.
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