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MUb 1G 7- t0• D -1 r, i --%i v1.n . iv- • SAYING YES TO DRUGS by Sam Kazman TRAFFIC BACK-UPS AND DRUG DELAY In 1984 John Nestor become notoriously famous in Washington D.C. Mr. Nestor hod adopted a unique way of driving on the Bettway, the major highway which encircles the city. He would get into the left lane of the Beltway, set his cruise control at 55 mph, and drive at that speed come hell or high water. -. Mr. Nestor liked the left lane because it had the smoothest road surface, and it allowed him to avoid the slower traffic entering and leaving-the highway on the right. He also liked it because it enabled him to force others to obey the 55 mph•speed limit. Cars and trucks whose drivers thought less of that law would crowd up behind him, honk their horns and flash their lights. None of this fazed him in the least. John Nestor stayed In his lane, going at _ precisely 55 mph. In his words, 'Why should I inconvenience myself for someone who - wants to speed?', For this practice, which he proudly announced lo newspaper reporters, Mr. Nestor was applauded by some and denounced by others. One commenter coined the term 'nestoring' to designate this form of driving treachery. There is more than a passing similarity between the traffic back-ups caused by 'nestoring' and the effect of the U.S. Food and Drug Administration (FDA) on drug development in this country. A substantial body of research demonstrates that the 1962 Kefauver-Harris Amendments to the Food and Drug Act, which dramoticaily Increased FDA's power over pharmaceuticals, are seriously Impeding the Introduction of new drugs In the U.S.2 The amendments, passed in the wake of the thalidomide tragedy, expanded FDA's drug approval criteria to include efficacy as well as safety, and made agency permission a prerequisite for human testing of new drugs. As a result, by 1967 FDA's average review time for new drug applications (NDAs) had more than quadrupled, from 7 to 30 months. The average total development time for a new drug, which was flve years in the early 1960s, is now a decade. And whereas the U.S. Sua Ksanan is Genrsal Co=el of the CompecitiYe Entagrise Iasdazce, a free masket advocwy orbmizacion hesdquuused 'm Washingtanu D.C. Mr. Kumm is s graduate of Comell [hiiversiry tnd SLlNYJSuf falo Law School. He has 1osE been sotive in pub}ie inurest law rpeeislizing in property rights ard hesleh and safcsy regulaiiori. S Copyright ®1992 National Chamber Foundation 1

• • was once the leader in pharmaceutical innovation, since the mid-1960s it has lagged behind Great Britain in new drug introductions. John Nestor's le€t-lane adherence to a littie respected law did little more than inconvenience those unfortunate enough to encounter him in traffic. FDA-induced delays In drug development, on the other hand, are a for more serious matter. Medicines save lives; consequently, any delay in their availability has lethal effects. But, in fact, the relationship between John Nestor and FDA is more than one of anology. Long before John Nestor became a personality on the Beltway, he was a personai'riy at FDA. Mr. Nestor worked at FDA, in its cardio-renal-pulmonary products division. In 1972 he was transferred out because, according to an FDA official, his - division had 'approved no new chemical entities... from 1968 to 1972. an experience that contrasted with the experience of every other medical modern natiori~^with the, experience of other divisions of the FDA.03 Nestor's transfer was fought, and eventually overturned, by such-' public infierest' champions as Ralph Nader's Health Research Group, which characterized him as having an 'unassailable record of protecting the public from harmful drugs.' Yet while public interest groups, and much of the public itself, support FDA's function of guarding against unsafe drugs, the AIDS crisis and other developments have in recent years focused increasing attention on the drug lag issue. THE aDMINfSTRATlON'S REFORM PACKAGE in November 1991, the Bush Administration unveiled a major set of proposals which were intended 'to expedite the rapid development of safe and effective therapies necessary to save lives and eliminate suffering and to enhance U.S. competitiveness.' The proposals were developed by the President's Council on Competitiveness, chaired by Vice President Dan Quayle. They set forth two specific targets for 1994: ...reducing by 80 percent FDA's average approval time for NDAs for drugs aimed at 'serious or Gfe-threatening diseases' or 'diseases for which there Is no effective atternative therapy', to a 1994 gool of b months. Drugs forthese diseases would be reviewed under a new'accelercrted approvai' process: abo percent reduction in average NDA approval time for non-accelerated drugs, from the current 30 months to 12 months. These speed-ups, coupled with Improvements in other aspects of the review ~ process, would result in a 40 percent reduction in average development and approval time for all new drugs, from the current 9.75 years to 6 years. Copyright ® 1992 Nadonal Chamber Foundation 2

The proposal presented a number of specific reforms: 1. External Review: FDA would begin to experiment with using outside reviewers to evaluate the clinical data in selected NDAs. This extemal review, conducted under contract to FDA by parties screened for conflicts of interest, would be at the option of the NDA's sponsor. External review of the data would hopefully be quicker than internal agency review. The external reviewer would neither approve nor disapprove the NDA, but its report to the agency would form the basis for FDA's own final decision. 2. Reduced FDA Involvement in Human Testing: Institutional review boards, which currently monitor human testing of new drugs in conjunction with FDA, would be empowered to authorize many of these tests on their own; 3. A More Flexible Efficacy Standard:. FDA would attempt to`interp.ret•the statutory requirement of efficacy for new•drugs : . 'in a manner that maximizes rather than limits a drug's potential'tor approval and takes Into account the rtsks to human life and health that may result from detay of new treatments.' As one example of this risk-benefit interpretive approach, FDA would develop 'surrogate endpoints' for measuring efficacy... that Is; when possible, FDA would replace such factors as patient survival rates, which may take years to ~ measure in clinical tests, with more quickly determined indicators such as blood cell counts for AIDS treatments or tumor shrinkage for cancer therapies. 4. Accelerated Approval: FDA would attempt to significantly reduce approval time for drugs used to treat serious diseases and diseases that currently have no satisfactory treatment. FDA would accomplish this through the use of surrogate endpoints as well as post-marketing studies, which would provide data that might normally be required prior to approval. 5. Foreign Approvals: FDA would seek to harmonize U.S. drug approval policies with those of foreign countries by working toward the establishment of reciprocity, common standprds, and uniform NDA formats. Among the other specific proposals were expanded use of advisory committees, improved agency computerization and management, and a new NDA classification system. . THE USUAL SUSPECTS RESPOND AS USUAL Media treatment of the reform package ranged from neutral to negative, with the proposals often portrayed as a Republican favor to industry. A campaign against the reforms was not long in geffing started. On the same day that the ~ proposals were Issued, Senator Edward Kennedy (D-MA) and Representatives John Dingell (D-1(rM!) and Henry Waxman (D-24-CA) issued a joint statement expressing their Copyright 0 1992 National Chamber Foundation 3

concerns. They were particularly troubled by the proposals for external review, for acceptance of foreign approval, and for private review boards to authorize human tests.' In December the Public Citizen Health Research Group issued a poll of FDA medical reviewers concerning the same three proposals criticized by the lawmakers. Less than 40 percent of the 121 reviewers responded, with the vast majority of responses in the negative. The reviewers predicted longer, rather than shorter, review times; industry influence on outside reviewers; a lowering of American standards in the face of foreign approvals: and a demand to `stop the rope of FDAI'5 Finally, in January, news reports leaked memoranda from Commissioner Kessler, disputing some of the Vice President's statements on the need for FDA reform. Also, a congressional panel was reportedly investigating whether the- Office of,Management and Budget had pressured FDA to support the reforms.° The courseof events seemed depressingly similar to the fate of OMB's 1987 reform proposcil, when FDA opposition, coupled with a hostile congressional committee, effectiveiy scuttled OMB's attempt to fundamentally change the drug approval process.' THE AGENCY JOINS THE ADMINISTRATION--MAYBE ~ In April, events took a turn for the better as FDA took several major steps to implement the new reform package. It issued proposed rules on accelerated approval and final rules on 'parallel tracking' - a procedure under which experimental AIDS drugs can be made available to patients before clinical tests are completed. FDA also announced its selection of a private contractor for a pilot external review program. And, finally, the agency issued draft guidelines to harmonize animal testing for drug safety among the U.S., the European Community and Japan. The goal was that test results from any one country should be accepted by the others. FDA's move to implement the reform package within five months of Its issuance was hailed by Health and Human Services Secretary Louis Sullivan as demonstrating the agency's commitment. While five months Is not a breathtakingly short time period for these steps, neither was it exceptionally sluggish, especially since FDA was acting on several proposals at once. • Moreover, FDA had been taking some steps of its own to accelerate certain drugs. For example, in October, 1991 the agency had used surrogate endpoints to approve DDI, the second drug authorized for AIDS treatment. Clinical tests to show increased survival rates had not yet been completed, but the available data did demonstrate that DDI delays a generally lethal decline in certain immune system cell ~ counts. FDA viewed this data as an acceptable surrogate for mortality data, and on that basis approved DDI. The agency made it clear, however, that the drug would be withdrawn if subsequent tests did not support its effectiveness. Copyright 0 1992 Nadonal Chamber Foundation 4

To date, FDA's response to the Administration's proposals seems to be moderately encouraging. But, given the history of past FDA reform efforts and the agency's attitude toward i'ts current efforts, there are a number of reasons to be less optimistic. First, FDA seems to regard Its steps toward faster drug approval as being extraordinarily risky, and it displays a timidity about them that Is far different from the attitude it takes in its enforcement mode. Consider, for example, the certitude exhibited by FDA Commissioner David Kessler when he swept marginally mislabeled containers of Citrus Hill orange juice from supermarket shelves iast year, or when he more recently imposed severe restrictions on breast Implants. In contrast, Kessler gave a strangely tenuous characterization of the DDI approval, stating that `an extrapolation was made and we are taking.some risks in that~extrapolation:'8 Most people would not question in the least this sort of,'extrapQiafion' by those stricken with AIDS; people facing death and unable to tolerate AZi' do not have the luxury of waiting for lengthy clinical trials to be completed~ Hence, Kessler's near-ambivalence about approving DDI on the basis of surrogate endpoints seems hard to understand. After ail, his action doesn't force DDi on patients; it only gives them a choice that they did not have previously. ~ Secondly, there is the fact that It would be institutionaily dangerous for FDA to embrace the Administration's reform proposals too enthusiastically. Such a response would throw Into question the extent to which FDA has promoted public health In the past. Suppose, for example, that FDA were to reinterpret its statutory mandate in the manner urged by the V~ce President: that is, in a manner that 'takes into account the risks to human frfe and health that may result from delay of new treafiments.' Wouldn't this be an admission that, until now, FDA had folled to take these risks of delay into account? Similarly, FDA explains the purpose of accelerated approval as allowing the marketing of important new drugs 'at the earliest time in their development at which safety and effecitveness could be reasonably estabtished...' ° The implication, of course, Is that until now FDA hos been withholding approval until safety and effectiveness were 'unreasonabty' estabiished. That FDA does unreasonably delay drug approval Is precisely the condusion of the literature on drug log, and it foliows from the basic incentives under which FDA operates. • FDA con err by approving a drug that turns out to have unexpectedly bad side effects, or it can err by dekrying a badly needed drug. The first type of error often resuits in highy visble ~ ~ victims whose trcgic-experiences are the subject of intensive news stories and congressional rr~ oversight. The second fyype of error generally results in 'invisible' victims; people who iTlow `~ Ettfe or nothing about regulatory delay, but who do know that their doctors cannot help w ~ them. These people are only rarely the subject of news stories, and almost never the ~ subject of congressional attention. r.CAO vz Copyright 0 1992 NariQnal Chamber Foundaiion 5

The result of this asymmetry is that FDA does Its best to avoid erroneous approvals, but little to avoid erroneous delays. Drug delay may be the subject of sincere FDA pronouncements, but unless FDA's underlying incentives are changed it Is unlikely that this problem will be solved. FDA's own recent reform attempts suggest the scope of this problem. In 1985, the agency Issued its 'NDA rewrite' to streamline the application and review process. in 1987, it Issued Its ' IND rewrite' to simplify the review of clinical tests. In 1988, it Issued new regulations to expedite the approval of breakthrough drugs.1° Despite these reform efforts, regulatory approval times continued to increase during the 1980s, with a particularly sharp increase In the 1988-90 period." And for every DDI that the agency approves quickly, another breakthrough drug languishes in the review process. Consider interteukin-2, which was approved in May for1reafiing metastatic kidney cancer, a fatal and, until now, untreatable disease. interleukin-2 hos ~evere and sometimes fcrtol side-effects, but it has been found to benefit 15-2C} percent of patients. The NDA for interleukirr2 had been filed in 1988, and by the time FDA acted the drug had become available in nine European countries. FDA's approval was viewed in the press as relatively quick, because it came four months after an FDA advisory commiitee recommended approval. An earlier advisory ~ committee had recommended against approval in 1990, a setback which some blamed on a poor presentation by the firm that had developed the drug. Regardless of that claim, the regulatory approval process for lnterleukin-2 accounted for an additional delay of 3.5 years and on estimated 3,500 deaths. The fact that no news story cost the issue in these terms demonstrates the relative invisibiiity of drug lag's victims. For oil FDA's tolk of acceierating the approval process for breakthrough drugs, doing so requires a two-fold dMne power - the ability to pick winners In advance, and the ability to avoid the pressures that beset all politicol processes. Absent celestial Intervention, acceleration will remain the exception, not the rule. Even when It occurs, it will impose some degree of lethal delay. In the words of Dr. William Grace of St. Vincent's Hospital in New York, 'We are a third world nation when it comes to developing drugs.' . THE PROSPECTS FOR SUCCESS z1z Whether the latest reform package can improve this situation is an open ~ question, The history of post reforms, coupled with the fact that FDA's incentives rn toward overcoution remain unchanged, argues against the likelihood of radical C° ~ improvement. But some improvement is possible even in the current structure, and the a~ i clear numerical targets for 1994 that are set forth in the reform package may ~ themselves become a source of pressure on FDA. C~ Copyiignt m 1992 Naaonal Chambu Foundadon 6

Moreover, as discussed below, the Administration's proposals may have their most important Impact in a liftle noted fashion - not by directly changing FDA, but by opening it up to competitive pressure from outside. EXTERNAL REVIEW AND OPTIONAL USER FEES: THE "TOLL ROAD" APPROACH The reform package calls upon FDA to develop, by early 1993, an option that would give 'companies the opportunity to use FDA approved, non-governmental organizations to review their clinical data for a fee.' While not apparent on its face, this proposal contains the germ of a solution to the long-running debate over NDA user fees, a debate that in the post has split the phorma-ceutical industry. - Advocates of NDA user fees argue that.they would.provide funding for the staff and equipment required to clear up and prevent NDA backlogs.; On the other hand, certain segments of the industry would be severely burdened,by -such fees. Some firms believe that user-fee revenues would simply offset general revenue funding without necessarily Increasing FDA's budget. Another concern is that the agency would apply user fees to fund other areas of FDA's operation. There is also the perverse possibility that the fees would worsen an already dubious regulatory ~ process that restricts new drug development. _ Mom-fundomentally, there are serious questions regarding the propriety of government levies for permission to engage in octivities which citizens ought to be able to do by right. For example, it is costly for police agencies to obtain search warrants, but it does not follow that user fees should be imposed for this exercise of one's Fourth Amendment right against warrantless searches. And as more and more activities become subject to government regulation, user fees can become an overly attractive source of government revenue, rifietorically exempt from political promises not to raise taxes. However, If drug companies are given the choice of either paying for external review or using free internal review, then much of this debate becomes moot. External review would hove to attract paying customers with such advantages as faster turn-around, greater consistency, and increased access to the reviewing staff. Those firms that could not afford the fee, or that viewed the process as not worth its- price, could sfiill choose to have their NDAs reviewed in the conventional free t~ manner. © ~ At the same time, FDA's internal process would Improve as some NDA o~ applications were diverted to external review and the agency's internal workload ~D lightened. Moreover, the agency would, for the first time, come under competitive ~ ~ ~ pressure. Unless FDA was content to give up all internal review of clinical data, it would have to Increase its internal productivify in order to attract at least some NDAs. ~ Copysight m 1992 Nadocsai Chambcr Foundaion 7

in a sense, optional NDA user fees would hove the same effect as the opening of a toll road next to a congested free highway-users of both facilities benefit. COMPETITTON AT HOME AND FROM ABROAD The second promising aspect of the reform package involves fhe possibility of eventually decentralizing FDA's control over new drugs. From the standpoints of science, moraiity, and practicality, there are serious questions about the very notion of federal across-the-board drug standards for millions of individuals with varying needs and values.1z There is much to be said for a system under which FDA would certify drugs rather than approve them; that Is, FDA's safety and efficacy criteria would remain unchanged, and those patients and physicians who trust them could continue to rely on them. But unapproved drugs, rather than being banned outrlght, might be available on a prescription basis, with informed consent documentcrtion and clear warning of their risky status. One can well imagine that, under this arrangement, private certifying entities would arise to compete with FDA. ' The Administration package does not propose anything like this, but its external review and foreign approval provisions do open up the long-range possibility of movement in this direction. External review may lead to the development of a ~ network of outside reviewing entities, In time, those reviewers with exceptional reputations might become politically plausible candidates for sharing in FDA's approval authorrty, or for developing their own certification criteria. Similarly, If foreign approvals were to trigger automatic FDA approval, one can envision the approval criteria of certain countries winning substantial professional and public followings in the U.S. Scenarios like this are, of course, highly speculative. But given the smashin9 failure of central economic planning, is there really that much reason to trust central pharmaceutical planning in this country? Like poiitical entities, seemingly rock-solid regulatory structures can sometimes crumble overnight, t • ENDNOTES ''John Nestor Strife In the Fast Lane'. Washington Post, Nov. 21, 1984. 2 Among the major writings on this issue ore: Petfzrnan, S.. Regulation of Phormaceuticol lnnovotion (1974); Wordell, W.M. & L Lasagna, Regulation and Drug Development (1975); Grobowsld. H.G. & J.M. Vernon, The Regulotion of PhormviceutlcoLs (1983). For a dtscussion of this Ilterature, see S. Kazman.'Deady Overcaution: FDA's Drug Approval Process' Joumcl of Reguleidn ond Social Cost. Volume 1. Number 1(1990). A recent onalysis of trends In drug approval !n FDA opprovol times con be found in D1Masi. J.A., N.R. Bryant & L Losagnc, 'New Drug Development In the untted States From 1963 to 1990,' 50 CGn. Phormocotogy & Ther'opevflcs p. 471 (Nov. 1991). ' t2oss, W.. The LifelDeoth Ratio (1977), at 195. 4 Letter to FDA Cornmissioner David Kessler. Nov. 13,1992. Copyright ®1992 National Chamber Foundation 8

RUG 1~-' ":~4 1 r~ r1J r, i'1, w~r~rcr„ ~"„ S a Public Cit¢en Heatth Research Group. 'FDA PhysiciarLS Oppose Whtte House Pian Which W'pE Endanger Miliions Of Americans By Weakening The Drug Approval Process' (Dec. 19, 1991). 6Washington Post. 'Drug Approval Process Debated'. Mor. 24.1m, at A17. ' See 'Experimenta! Drugs, Power and the Ltmits of Deregulat3on', Washington Past. July 15, 1987, atA21. ''S6cond AIDS Drug Given Conditiono! Approvo!', Washington Post. Oct. 10, 1991, at A4, •'Accelerated Approva!', FDA Statement, Apri{ 9, 1992. '~ These and other FDA reforms are summar¢ed in the agency's accelerated approval proposal, 57 Fed. Reg. 13,235 (Apri! 15. 1992). " See Most et a!, supro note 2, at 480-85. '= See Kazman, supra note 2, at 51-52. S Copyright 0 1992 Naticnal Chamb®r Foundasion 9

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