HEALTH REPORT

BY LINDA E. DEMKOVICH

Three years had come rations prom

hree years have come and gone, and

ise of regulatory relief for the drug industry has not come to pass. If anything, say some critics of the Food and Drug Administration (FDA), which has responsibility for assuring the safety of the drug supply, it seems to take longer to get new prescription drugs approved and on the market these days than it did during the Carter years.

But the prescription drug industry may soon realize some gains-ironically, through a legislative compromise it has reached with an old enemy-that may make the wait less painful. The key will be persuading Congress to buy the package.

The deal, which was negotiated between the Pharmaceutical Manufacturers Association (PMA), representing the larger, brand name drug firms, and Rep. Henry A. Waxman, D-Calif., a consumer ally who has frequently locked horns with the industry, would merge two measures that the separate sides have been working for.

It would allow drug manufacturers to recover part of the 17 years of patent protection that they lose in the regulatory review process.

In exchange, their generic competitors would be able to market "copycat" versions of any brand name prescription drug as soon as its patent expires. For consumers, advocates say, the compromise could save millions of dollars annually, by speeding the availability of lower-priced generic drugs.

Details of the compromise

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are far from being complete. But the fact that Waxman, who is chairman of the Energy and Commerce Subcommittee on Health and the Environment and sponsor of the generic drug bill on which half the compromise is modeled, reached an accord with the PMA, which has been on record against the measure, bodes well for the chances of winning broader congressional support.

SNAIL'S PACE

The drug industry's interest in finding an alternative to the regulatory reform route is understandable, given the snail's pace at which the FDA is making progress in pushing various reform proposals through the layers of its bureaucracy.

On average, the drug manufacturers association estimates, companies spend $85 million and 10.3 years developing a new drug, from the point of discovery to the marketing. That leaves them with only about seven years of market exclusivity and, the industry says, undercuts

their ability to recoup their investment and gives them few incentives to invest in other new-potentially important-drug discoveries.

To test a drug on humans, which accounts for the most of the time spent in the regulatory pipeline, companies must file an "investigational" application with the FDA. Once that phase is over, they must apply for permission to market the drug, which takes another 2-3 years.

Talk about expediting the drug approval process dates to the early 1970s. But when the Reagan team took over, promising to lighten the load of burdensome federal regulations on businesses generally, it appeared that the talk would finally be translated into action.

In June 1982, for example, thenHealth and Human Services (HHS) Secretary Richard S. Schweiker announced "the most significant revision" of the FDA's new drug application rules since 1962, when Congress required that drugs be proved effective as well as safe. Those

proposals, published that October, would have reduced the amount of paperwork required of companies, set up an appeals process and allowed approval of new drugs on the basis of foreign data.

But 16 months later, the new rules are still "under review" by the HHS hierarchy, a department official said, and a final decision by Schweiker's successor, Margaret M. Heckler, appears to be weeks, if not months, away. Other initiatives have met with similar delays. Steps that Schweiker announced in February 1983 to streamline the requirements for investigational applications are still under review. And an announced

Administration strategy to redesign the approval process for lower-cost generic drugs is still "under discussion," the HHS official said.

FDA and department officials stress that the Administration has not changed its mind about deregulation. But because of the complexity of the issues involved, they say, the process of rewriting the drug review rules has proved difficult and time-consuming.

The FDA's intent in revamping the rules, said acting commissioner Mark Novitch, is to make the drug review process more efficient, "without sacrificing safety and effectiveness."

A MIDDLE COURSE

Although progress on the regulatory front has been slow, FDA officials point with pride to changes they say have begun to turn around what had been an adversary relationship with the drug industry.

The tone set by former commissioner Arthur Hull Hayes Jr., who stepped down last September, emphasizing cooperation and playing down confrontation with both industry and consumer groups, still guides the agency, Novitch said.

In previous Administrations, he said, a drug company's only communication with the FDA often came late in the process, in a letter saying its product could not be approved. "Now, we stress coming in early, discussing during the investigation phase what is needed for a new drug approval," he said. As a result, "there's a better sense that each of us knows our obligation to the review."

Attitudes at the agency "have improved tremendously," and the informal meetings and guidelines it has issued have made life easier for the companies, said Jonah Shacknai, partner in the law firm of Royer & Shacknai, which represents several major drug firms.

But those gains have been offset, he said, by a shortage of professional and clerical personnel-"too few people, spread too thin"-and a failure to make adequate use of advisory committees, whose preliminary work is intended to clear the way for speedier review.

The chief problem is what an industry source described as "fewer warm bodies in the drug approval process, where it counts." In 1978, for example, the number of new drug reviewers totaled 164; by last year, it had dropped to 156. Over the same period, applications for "new chemical entities"-drugs considered "breakthroughs" because they represent an important therapeutical advance-nearly doubled, from 20 to about 40.

Over the same time, total new drug applications increased to 244, from 121 in 1978. That does not include thousands of

FDA acting commissioner Mark Novitch says the agency's intent in revamping the drug approval rules is to make the drug approval review process more efficient, "without sacrificing safety and effectiveness."

applications pending from previous years and has produced a substantial backlog.

Robert Temple, director of the FDA's drug regulation and review office, conceded that the trend "would be bad, if it continued." But he said the agency has recently hired more medical reviewers and chemists, which has restored the drug review teams to full strength.

FDA officials concede they have not been able to trim much time from the approval process. In 1982, for instance, the average review time for drug applications was 22.6 months; in 1983, it was 22.5 months. But they said they had made significant gains in reviewing priority applications involving breakthrough drugs. There, the time has been cut from 18.4 to 12.6 months.

The approval rate for breakthrough drugs has also been edging upward. In 1980, the FDA approved only 12 breakthrough drugs; in 1981, it approved 27 and in 1982, 28. Last year, the number fell to 14, a reflection of the smaller number of 1982 submissions.

But the companies remain skeptical of the claims of improvements. "Sure, they've approved drugs considered [medical] advances in pretty good time," said an industry source. "But who's to say what is an advance." And, he complained, the rest of the reviews are "just as slow" as they ever were.

The companies assign part of the blame to Temple, the drug review office's director. He succeeded Marian Finkel, who had become the target of the industry's wrath for her deliberate-critics

said foot-dragging-approach to the review process. Now, Temple is being similarly accused of reading and reviewing every piece of paper that crosses his desk.

"I'm obliged to do that," he responded. "Only a very foolish person would sign something without first making sure that it's adequate and accurate and that the job was done right."

Peter Barton Hutt, an attorney at the law firm of Covington & Burling, which represents the PMA, and a former FDA general counsel, is sympathetic to Temple's plight. The person who has to sign the new drug applications, he said, "had better know what's in them."

But Hutt criticized the FDA for failing to tackle "real" reforms. Reorganizing the agency and adding reviewers is not the answer, he said-"if you doubled the number of people, you'd probably double the amount of time they take. There would just be that many more questions they could raise." The proposed rules changes, he added, are little more than "a codification of existing practices. Nobody will notice the difference" if they are ever implemented.

Hutt said that may be the nature of an agency responsible for regulating health and safety. "You don't want to appear to be less stringent, so you do things on an ad hoc basis." And proposals to change policy and rules come out "right smack in the middle," he said.

CONSUMER CONCERNS

Temple does not disagree. "People want efficiency," he said, but at the same time, they do not want the safety of the food and drug supply compromised. The FDA is "probably lodged somewhere in the middle."

Safety concerns go to the heart of consumer organizations' complaints about the regulatory relief strategy. Efficiency in the drug approval process is one thing, they say; but lowering standards or taking shortcuts is a different story.

These concerns come to the surface when an unsafe drug reaches the market even if the FDA is not at fault. One of the most recent examples is Oraflex, an anti-arthritis drug sold by Eli Lilly & Co., that was pulled off the market after only 13 weeks after reports linked its use to deaths in the United States and in Great Britain.

Although the FDA has not been held culpable, the incident may have reinforced its fears about erring on the side of speed.

"As science advances, [reviewers] can easily be led by the technology to be all the more strict in what they require," an industry source said. What the FDA should do, he said, is balance its safety concerns against the benefits of getting

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potentially life-saving drugs to the public more quickly.

All drugs have a risk, and even the most vigilant system has little chance of catching low-incidence side effects in a drug tested in limited clinical trials.

To the consumer groups, that argues for stricter enforcement of the food and drug laws. Instead, said William B. Schultz, an attorney with the Public Citizen Litigation Group, enforcement activities have dropped by 50 per cent over the past five years.

Joseph P. Hile, associate FDA commissioner for regulatory affairs, said that there have been fluctuations in enforcement actions but that the trend has been downward "for the last 25 years." If it were not, the agency would not have been doing its job, said Hile, who has worked at the FDA for more than that quarter of the century.

But consumer advocates argue that de spite good intentions, the FDA, with its' $395 million budget, is simply no match for the $30 billion drug industry. "It's David against the Goliaths," a consumer spokeman said.

PATENT POLITICS

Despite their differences, the two sides have found a point of agreement that will make less expensive generic drugs available earlier to consumers and at the same time give more patent protection to the firms that developed the drugs.

Currently, the FDA allows generic firms to file "abbreviated" applications to market their copycat versions of drugs approved prior to 1962. In effect, they need only tell the FDA that they are duplicating approved drugs.

In 1981, after years of legal battling, the agency streamlined the application process for post-1962 drugs, allowing the firms to bypass the rigorous testing and regulatory requirements. Under that policy, the firms need only submit scientific documentation of the drug's safety and effectiveness and prove their capacity to manufacture an equivalent.

Consumer groups complain that the policy has been slow getting off the ground. As of last October, the agency had received 232 applications and had approved 67, for 16 separate drugs.

Temple explained that the applications are not as easy to handle as outsiders might think. "It is entirely a technical, legal review," he said. "We already know the [scientific] answers." But with millions of dollars at stake and companies prepared to sue, he said, the agency cannot afford to make a mistake.

The relatively few new drugs that have made their way onto the market under the agency's new system, coupled with PMA's strong stand last year against

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Rep. Henry A. Waxman has struck a deal with the brand name drug industry that would extend the life of drug patents and speed the marketing of "copycat" versions of brand name prescription drugs.

Waxman's generic drug bill, helps explain why the generic companies are interested in the compromise.

Under the terms of that compromise, modeled on the Waxman bill (HR 3605), a generic drug could be available the day the patent of the original drug expired. Companies could file the applications and do the testing in advance, much as they do now for pre-1962 drugs.

The exception would be brand name drugs marketed between 1982 and the time of the bill's enactment, whose patents are due to expire in the next several years. They would be given at least 10 years of patent protection.

Waxman said the package would yield immediate benefits to consumers, especially the elderly who use 25 per cent of all prescriptions. According to data compiled by his subcommitte- staff, the sales value of brand name drugs that come off patent this year is $484 million; by 1990, that figure will be up to $2.96 billion. All told, the FDA has estimated, consumers would save $925 million from 1983-93 if generic versions of post-1962 drugs were available to them.

Under the second part of the package, the brand name manufacturers would be able to recoup up to five years of patent life lost during the time it takes FDA to approve their drug, with an upper limit of 14 years of patent protection from the time the drug wins approval.

That is less than the seven-year extension that earlier versions of the patent restoration bill would have awarded them. But considering that they now av

erage only about 7 of the 17-year patent term after a drug clears the FDA, gains would still be considerable.

A patent extension bill came close to winning approval during the last session of Congress. In 1981, the Senate passed legislation sponsored by Charles McC. Mathias Jr., R-Md., chairman of the Judiciary Subcommittee on Patents, Copyrights and Trademarks. But the following year, a bill sponsored by Robert W. Kastenmeier, D-Wis., chairman of the House Judiciary Subcommittee on Courts, Civil Liberties and the Administration of Justice, lost by just five votes during a sus pension of the House rules. Waxman was then able to block efforts to put it on the House calendar. Last year, Mathias and Rep. Mike Synar, D-Okla., reintroduced the bills (S 1306, HR 3502) but they have failed to make headway.

Lewis A. Engman, PMA's president, explained why patent restoration is important to the industry. The current rules deny drugs half the patent life that other products get, he said. "Why should there be less incentive for the development of new life-saving drugs than for the development of a new floor wax?"

Patent restoration, Engman said, "will encourage more drug research" and in doing so, "will accelerate the development of new and better medicines that will save lives and cure illnesses." That, he said, will help contain health costs by providing an alternative to more expensive surgical and hospital care.

At this point, the compromise faces an uncertain fate in Congress. Four committees-two each in the Senate and House

share jurisdiction over the issues involved, and neither Waxman nor the industry want to leave them out of the process. Kastenmeier's subcommittee plans to hold hearings on the issue in early April.

There are also rumblings that some drug companies may be less than satisfied with the deal. The PMA "has given away the bank," an observer with ties to the industry said. "The association is telling its members, 'We're not going to get anything better,' and that's true. This is the only deal they'll get, because the PMA bungled it the last time around," by not keeping the industry united.

Officially, the PMA has taken no position on the compromise. But others think the deal is a good one. "The companies will be giving away [to the generic firms] something that would have happened anyway," an industry source said, and gaining "more than they had realistically hoped for on the patent side."

According to Waxman, the chances of cementing a compromise "look pretty good." Without saying anything at all, the PMA obviously hopes he is right. O