Kid Tested, Government Approved? - Pharmaceutical Executive

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Kid Tested, Government Approved?
Critics claim pharma is too richly rewarded for studying drugs in children. Now, several proposals are on the table that just might change that.


Pharmaceutical Executive

As the industry focuses its attention on the upcoming renewal of the Prescription Drug User Fee Act (PDUFA), there is a tendency to overlook two other significant pharmaceutical programs coming up for renewal and a related piece of legislation that has been introduced:

  • The Pediatric Exclusivity Program, which grants pharmaceutical companies additional marketing exclusivity in exchange for performing needed research on the use of their products in children, is up for renewal and possibly permanent extension. Senator Chris Dodd (D-CT) introduced the legislation in early March.
  • The Pediatric Research Equity Act, which gives the Food and Drug Administration (FDA) the ability to require pediatric drug studies under certain circumstances, is up for renewal, and Senator Hillary Clinton (D-NY) has introduced legislation (the Pediatric Research Improvement Act) to renew nad modify it.
  • Dodd has also introduced the Pediatric Medical Device Safety and Improvement Act of 2007, which brings the research-for-market-exclusivity concept to the realm of devices.



Extending the patent life of a drug in exchange for clinical information about how it works in children has helped improve the practice of pediatric medicine. But the approach remains controversial, and it is reasonable to expect that key elements of the programs will come up for debate in the weeks to come. The criticism that you will hear most often is that pharma spends too little—and makes too much—on pediatric studies.

Incentives for Research

FDA doesn't require prescription-drug manufacturers to test their products in children. The historical result has been that most prescription therapies in the United States do not have labeling for pediatric uses and do not contain specific recommendations for dosing in children. To remedy this lack of information, the FDA began requesting more data on pediatric medication use on a voluntary basis in 1994—but this effort had little impact. In 1997, Congress took up the issue when it authorized the FDA to offer financial incentives to pharma companies to develop pediatric data on their drugs as part of the FDA Modernization Act (FDAMA). This effort was augmented by Congress in 2002 in the Best Pharmaceuticals for Children Act (BPCA), which expires on September 30, 2007.

The outlines of these programs are similar: FDA decides which already marketed drugs require more research and asks the patent holder to conduct the studies. If the company completes the research, it receives six months of additional market exclusivity. If the company declines, FDA has the option of requesting that the research be performed under a grant from the Foundation for the National Institutes of Health—with no reward to the company.

The Pediatric Exclusivity Program has yielded important new information about uses of medications in children. By the end of 2006, findings from clinical studies initiated under the program resulted in new pediatric labeling for 122 drugs, according to Dianne Murphy, director of FDA's Office of Pediatric Therapeutics. These label changes included new child-safety information for 35 drugs, new or altered pediatric dosing information for 25 drugs, new dosing and instructions for younger pediatric populations for 82 drugs, and findings of a lack of efficacy for 24 drugs. By comparison, according to a US Government Accountability Office (GAO) study of the effects of BPCA, in the six years prior to FDAMA, only 11 studies of marketed drugs were completed—though 71 studies were promised.

At a hearing conducted by the Senate Committee on Health, Education, Labor, and Pensions this past March, pediatrician Richard Gorman, representing the American Academy of Pediatrics, pointed out cases in which research performed under BPCA had led to real improvements in the care of children. During his testimony, Gorman said the act had:

  • given pediatricians the ability to give the correct dose of pain-relief medicine, such as Neurontin, to children with chronic pain who previously received inadequate doses
  • warned intensive care–unit physicians that a drug (Propofol) used for sedation in ICUs had twice the mortality rate as another drug combination
  • given pediatricians and child psychiatrists important information on both the relative effectiveness and serious side effects of antidepressant medications, like Prozac and Paxil, in adolescents
  • given children increased relief of pain through medicines taken by mouth, breathed into the lungs, given through the vein, and absorbed through the skin
  • alerted both pediatricians and parents about unexpected side effects of medications that have allowed for a more complete discussion of both the risks and benefits of a particular therapeutic course.

Criticism, a Long Time Coming

Despite its benefits, the Pediatric Exclusivity Program has faced criticism almost from the start.


Richard Gorman, MD
Labeling Though FDA quickly reviews the data generated by pediatric testing, label changes—the necessary bridge to disseminate information to doctors and parents—can come slowly. Some label changes, for example, took more than 1,000 days, according to a recent GAO study. It's also important to note that not all studies led to label changes (though about 87 percent did, according to the government report).

Inability to enforce The Best Pharmaceuticals for Children Act of 2003 does not include adequate mechanisms to encourage pediatric testing of off-patent drugs. After all, the program is voluntary for pharmaceutical companies. (In theory, the Pediatric Research Equity Act of 2003 gives FDA the ability to require pediatric studies of an already marketed product when a company declines to perform them under BPCA. In practice, as Sen. Hillary Clinton noted in introducing the Pediatric Research Improvement Act in March 2007, the provision is so complex that it has never been used.)

Dissemination of information Another potential problem with the Pediatric Exclusivity Program was highlighted last September by Daniel K. Benjamin of Duke University, et al, in the Journal of the American Medical Association (JAMA). BPCA requires FDA to issue summaries of data submitted under the Pediatric Exclusivity Program, even if the data do not lead to label changes. (Compare that with the policy that requires FDA to keep data secret when a company applies for, but fails to obtain, a new indication for an existing drug.) However, publication in peer-reviewed journals is not a requirement of the Pediatric Exclusivity Program as currently constructed.

Benjamin and colleagues reviewed data submitted to the Food and Drug Administration as part of the Pediatric Exclusivity Program to assess the public dissemination of the data resulting from new clinical studies that tested drugs in children. They found that less than half—only 45 percent—of the 253 studies submitted to FDA for pediatric exclusivity between 1998 and 2004 were published in the peer-reviewed literature. That needs to change if one goal of the clinical-research enterprise is to broadcast this information to physicians and the public.

Incentive terms The most frequently cited objection to pediatric exclusivity is that it provides excessive incentives to some manufacturers. Because the program offers manufacturers a fixed incentive, products with a larger sales volume may yield returns to manufacturers that vastly exceed the cost of performing pediatric studies—regardless of the actual uses of these products in children. For example, several manufacturers have received exclusivity for products used mainly in adults, such as atorvastatin (Lipitor), pravastatin (Pravachol), celecoxib (Celebrex), and a variety of anticancer agents. Indeed, since the point of the program is to generate data rather than increase drug use, a product can gain the full six months of exclusivity even if pediatric studies demonstrate that the drug should never be used by children.

Deconstructing the Reward

Are the rewards of pediatric exclusivity too large? A recent article in the JAMA sheds further light on this important question. Jennifer S. Li of Duke University and colleagues examined the likely costs of clinical studies under the Pediatric Exclusivity Program. The researchers looked at 59 products submitted to FDA for pediatric exclusivity from 2002 to 2004. During that time period, 137 pediatric clinical trials were completed, and almost 23,000 children were included in these studies. The selected medications included drugs for depression and generalized anxiety disorder, high blood pressure, asthma and allergy, osteogenesis imperfecta, bacterial infection, gastroesophageal reflux, type 2 diabetes, attention-deficit hyperactivity disorder, and a medication used on difficult-to-treat tumors. About 22 percent of these medications were considered blockbusters, meaning that they had more than $1 billion in sales annually for both adults and children. Forty-eight percent of the drugs had sales between $200 million and $1 billion, and 30 percent of the drugs in the sample had sales of less than $200 million.

For a subset of the products, the researchers estimated the cost of clinical studies by examining study protocols. They then compared the costs to the net after-tax contribution margin for each product resulting from an additional six months of product sales. They found that the net return-to-cost ratios varied widely, from negative returns for products with relatively small sales volumes to a 73-fold return for a blockbuster drug. In a sensitivity analysis, they estimated that a three-month program of patent exclusivity would have reduced returns to 36-fold at the upper end of the distribution.


Footing the Bill
The JAMA study found that the median investment, or cash outflow, needed for the pediatric studies was $10.4 million. However, with the additional six months of exclusivity, the median net economic benefit to the drug manufacturer was $134 million. Overall, the study results suggest that the Pediatric Exclusivity Program overcompensates for the costs of pediatric studies of products with sales greater than $1 billion. Financial incentives for most products are substantial but less extreme, and incentives for some products are negative.

The economic impact of the Pediatric Exclusivity Program has fallen largely on the private sector through the delay of generics coming to market. Until 2006, the only costs to the federal government were the costs to Medicaid (which are shared with the states) and the costs to federal providers, such as the Departments of Defense and Veterans Affairs.

However, with the passage of the Medicare Prescription Drug, Improvement, and Modernization Act of 2003, the federal government may face the costs of pediatric exclusivity more directly. As the US government begins to pay a larger proportion of costs for prescription drugs through the Medicare drug benefit, there are likely to be additional challenges to renewing the Pediatric Exclusivity Program.

What the Future Holds

In the current Congress, renewal of the Pediatric Exclusivity Program may be subject to pay-as-you-go provisions, whereby lawmakers will have to address the costs of the program directly as part of the legislative process. Should the current program be considered too expensive, lawmakers could consider a number of options to reduce the costs of the program. These alternatives could include adjusting the incentives to spur more timely data collection on pediatric uses after product launch; prioritizing data collection for pharmaceutical therapies that are most likely to be used by children, which would require determinations of the need and the potential public health impact of the new data on children's health; and reducing the size of the financial incentive to pharma manufacturers.

Restructuring the incentive could include reducing the term of the exclusivity, implementing a tiered incentive structure based on product sales, and restricting access to the program to drugs for which there is a primary pediatric indication. A tiered program could cap returns for products with annual sales over a prespecified threshold, say $1 billion, while maintaining the current six-month incentive for drugs with sales below the threshold. This would require some consideration of product life cycle and likely sales in the additional exclusivity period to account for product trajectory in the market. Approaches that reduce the incentive must be sensitive to the limited financial benefits of the program to pharma companies with drugs that have smaller annual sales.

As an alternative, Congress could consider a grant program allowing the Food and Drug Administration to fund pediatric clinical research directly so that it can address outstanding pediatric data needs. Because the program affects products that are already on the market, this approach would augment the expanded safety program likely to be funded by the reauthorization of the Prescription Drug User Fee Act. However, there is limited infrastructure at FDA for such a grant program and no funding available of the magnitude needed. Finally, Congress could simply mandate pediatric studies as part of all new drug applications in the United States.

Until very recently, pediatricians simply had to do without the necessary information about many—even most—of the pharmaceutical products they prescribed to their patients. In that way, it is clear how significant an impact the Pediatric Exclusivity Program has had on the practice of medicine in children. However, over the next year, Congress will have to determine how best to accomplish the goal of ensuring the safe usage of drugs in children within the broader framework of the renewal of the Prescription Drug User Fee Act.

Kevin A. Schulman, MD, is a professor of medicine and business administration at Duke University and the director of the Health Sector Management Program at Duke's Fuqua School of Business. He can be reached at

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