The Pharma Revolution Recalibrated

There has been much hand-wringing about the decade-long drop in pharmaceutical innovation and productivity. Reading the many reports of a precipitous decline in new drug approval trends, one would be excused for assuming that there truly is a shortfall of innovation and creativity within the pharmaceutical industry.

Josef Bossart

Industry pundits like to point to the FDA list of new molecular entity (NME) and biological (BLA) approvals as proof that pharmaceutical industry innovation is on the wane. From a high of 56 in 1996, there has been a consistently steady drop in approvals, to a low of 18 in 2007. Since then, things have improved only slightly, with about 23 annual approvals on average. On the bright side, though, approvals through the end of August are up dramatically on a year-to-date basis.

But are new approvals really the only yardstick to measure productivity and innovation? By looking only at new molecule approvals, we overlook a lot. Many of the most important pharmaceutical product approvals are not found on the list of FDA-approved NME and BLA, but rather on the list of approved combination products and drug delivery enabled/enhanced pharmaceuticals. Individually, these products often match or exceed the therapeutic and commercial value of new molecular products, and, as we will see, the development of these products has managed to fill the gap created by the drop in new molecular approvals.

A good example of the discrepancy in standards is evident in the assessment of innovation by an electronics sector company such as Apple Computer. Despite the success of products like the iPhone, iPad, and MacBook Air, the argument can be made that there really has been no innovation at Apple since the introduction of the iOS operating system that powered the first iPhone. There have certainly been important improvements and enhancements of the iPhone since then, but they are incremental, and built on the company's innovative iOS architecture. Similarly, the iPad is merely a line extension of the iPhone and the iPod Touch. Move along; there is no innovation here. With Macintosh computers, swap a solid state drive for a spinning hard drive, use the smallest components available, and voila!—the 'breakthrough' MacBook Air. Innovative or incremental?

The Pharma Standard of Innovation

As it now stands, the pharma standard of innovation is the approval of NMEs. By this yardstick, therapeutically and commercially important products like Advair and Duragesic are not innovative. Advair, a combination product, doesn't receive the innovation label because it incorporates previously approved active ingredients. But what a difference Advair has made to the lives of patients with asthma and COPD, and with cumulative sales of over $60 billion, Advair has financed much of the company's investment in innovation. Duragesic, another breakthrough product and huge commercial success, also fails the innovation test because it is a drug-delivery-enhanced formulation of a previously approved active ingredient.

Examples of other 'non-innovative' drug-delivery-enhanced pharmaceuticals (DDEPs) include Procardia XL, Concerta, and Suboxone. These products all incorporate well-validated pharmaceutical active ingredients put to different or better use through the creative application of drug delivery technology.

True Pharmaceutical Productivity: 2000 to 2010

Considering combination product and DDEP approvals along with NME and BLA approvals provides quite a different view of pharmaceutical sector productivity (see chart). From a total of 52 combined approvals in 2000, the total approval numbers have remained largely consistent on a year-to-year basis through 2010. Even 2005 and 2007, which represented relative droughts for NME and BLA approvals, prove to be just about average when including combination product and DDEP approvals.

The figures reveal the increasing importance of drug-delivery-enhanced products in terms of the total creative output of the pharmaceutical sector. While annual DDEP approvals lagged behind NME/BLA approvals early in the last decade, the availability of more advanced technologies has pushed their total approvals closer to parity. At the same time, there has been a substantial increase in the number of approved combination products. Together, combination products and DDEPs now account for the majority of new therapeutic product approvals.

The State of Innovation

The real standard for pharmaceutical innovation should be whether a new therapeutic provides better patient outcomes through greater efficacy, safety, or tolerability. All three benefits can be provided by new molecules, new combination products, and DDEPs. While DDEPs are often considered most useful for improving convenience by reducing dosing requirements, this feature often translates into better efficacy by virtue of improved dosing compliance. Extended to new indications, DDEPs have also been able to deliver novel therapeutic solutions using new and previously approved active ingredients. Well-known examples include the treatment of chronic non-oral pain relief with a transdermal patch (Duragesic; fentanyl), the reduction of restenosis following angioplasty (Taxus; paclitaxel), and the inhalation treatment of asthma (Flovent; fluticasone).

Repurposing approved and validated pharmaceutical actives not only offers new therapeutic and commercial opportunities, but also enables companies to better manage risk. Combination and drug-delivery-enabled/enhanced pharmaceuticals may present development risks related to efficacy, but they're much less likely to present safety issues. These products are not without their own challenges, however; notably market exclusivity. Regulatory exclusivity in the US is limited to three years for a product incorporating a previously approved active. Even with the demonstration of improved safety or efficacy, securing durable patent protection can be difficult. Too often, it's a case of three years and out for DDEPs and combination products, despite providing innovation and improved therapeutic outcomes.

Inhalation DDEPs, both single active and combination, are an exception. Products such as Advair and Spiriva can expect to enjoy an extended period of exclusivity because there is no FDA-sanctioned abbreviated new drug approval pathway for inhalation products. This does not eliminate competitors incorporating the same active, but these products are required to go through a more demanding development program to demonstrate safety and efficacy. Furthermore, they are not substitutable for the innovator products.

A common criticism when comparing drug-delivery-enhanced and combination products to NME products relates to the relative degree of benefits they provide. There is no question that an NME able to treat an aggressive cancer for the first time is an innovative breakthrough product. But how innovative is the fifth SSRI antidepressant, or sixth proton pump inhibitor? These products incorporate NMEs, but are they any more innovative than a DDEP that enhances clinical outcomes by improving dosing frequency and patient compliance? Perhaps the criticism is unfounded; each product provides a benefit in its own way.

The Future of Innovation

The pharmaceutical industry, physicians, patients, and payers all depend on innovation to improve therapeutic and commercial outcomes. There is no room for intellectual snobbery. Rather than simply looking at DDEPs and combination products as part of lifecycle management, the industry can profit by embracing the innovation they deliver. With vision and creativity, these agents are able to deliver enhanced therapeutics along with improved profits—all at lower risk. And if companies can develop new strategies to extend market exclusivity, DDEP and combination product profits can help to fuel further discovery. Innovation can be defined in many ways, and the numbers for the last decade suggest that there is no lack of it in the pharmaceutical industry.

Josef Bossart is managing director, The Pharmanumbers Group. He can be reached at jbossart@pharmanumbers.com.