The Role of Europe in Drug Development

1
The Role of Europe in Drug Development

• London, Friday 19th October 2007
• Charles Benson, M.D., Ph.D.
• Eli Lilly Company
• Medical Advisor

2
The Role of Europe in Drug Development

• History (brief)
• Current -- Diminishing Role of Europe in Drug
  Development?
• Future
• What is being done to maintain/ revitalize Europe
  for Drug Development.
• What else could still be done?

3
Europe has long played a critical role in Drug
Development

• 1805 -- Friedrich Serturner of Germany isolated
  the pure active ingredient of opium
• He named the chemical morphine, after Morpheus,
  the Greek god of dreams.
• This was the first isolation of an active
  ingredient.
• 17th century -- Jan Baptista van Hellemont,
  physician in Brussels proposed a method to settle
  a dispute over wound treatments.
• Vitriol (metallic sulfates) versus blood letting
  treatments were to be assigned by lottery to
  several hundred patients.
• Results were to be judged by number of funerals.

4
Europe has long played a critical role in Drug
Development

• The first double blind curative trial with
  concurrent controls in the general population in
  modern times.
• A few years after the discovery of penicillin, a
  London biochemist reported that a product he had
  extracted from another penicillium, Penicillium
  patulinum, was beneficial in the common cold
• Headlines were More valuable than penicillin?
• 1943-4 U.K. Medical Research Council undertook a
  randomized, placebo controlled study using over
  1000 patients
• Results were negative
• The second trial, carried out in 1947-8 by the
  U.K. Medical Research Council to evaluate
  streptomycin in tuberculosis, is widely accepted
  as the first randomised curative trial.

5
The Role of Europe in Drug Development is still
important

• European-based pharmaceutical industry makes a
  major contribution to the EU, not just in
  economic terms but also in terms of high quality
  employment, investment in the science base and in
  terms of public health1.
• In 2004, with a value of output of about 160
  billion (including a trade surplus of 32 000
  million), a contribution to RD amounting to 21
  100 million and more than 612 000 jobs in Europe
  (including 102 200 in RD units), the
  pharmaceutical industry is a key asset for the
  European economy.
• The pharmaceutical industry is fundamental for
  the goals set in the Lisbon strategy, which aims
  to turn Europe into the most competitive and
  dynamic knowledge-based economy in the world by
  2010.  

1Erkki Liikanen, Member of the European
Commission, responsible for Enterprise and the
Information Society. "Progress on the G10
recommendations for the pharmaceutical sector.
Opening of the Public Forum on the European
Pharmaceutical Sector Brussels, 3 June 2004
6
Current -- Diminishing Role of Europe in Drug
Development?

• Two decades ago, Americans worried about the
  transfer of RD efforts from the United States to
  Europe2.
• Currently, the opposite is the concern.
• During 1996-99, RD spending by the
  pharmaceutical industry in the United States rose
  by 14.1 percent per year in Europe the rate was
  just 8.3 percent.

2N Mattison, AG Trimble and L Lasagna, New Drug
Development in the United States, 1963 through
1984, Clinical Pharmacology and Therapeutics,
March 1988, 43290-301
7
Current -- Diminishing Role of Europe in Drug
Development?

• High value-added jobs - the US created 42 more
  high value-added pharmaceutical jobs than Europe
  from 1990 to 2001.
• Corporate research centers - both US and European
  RD expenditures were approximately 10 billion
  in 1992. From 1992 to 2002, US pharmaceutical RD
  expenditures grew by 11 (compounded annually)
  while European expenditures grew by just 8,
  resulting in a substantial shift to the US.

2N Mattison, AG Trimble and L Lasagna, New Drug
Development in the United States, 1963 through
1984, Clinical Pharmacology and Therapeutics,
March 1988, 43290-301
8
Current -- Diminishing Role of Europe in Drug
Development?

• In 1987-89, 20 percent of the drugs on the market
  in the United States were marketed there first
  most came to market first in Europe.
• By 1996-98, the percentage marketed first in the
  United States more than doubled, reaching 46
  percent.

9
The Role of Europe in Drug Development
The figure shows the time from approval in the
first market to approval in the second market for
the 71 drugs that received marketing clearance in
both the European Union and the United States
between 2000 and 2005. Adapted from the Tufts
Center for the Study of Drug Development Impact
Report 9, 3 (2007). On average, the FDA approval
came 1 year ahead of clearance by the European
Medicines Agency (EMEA).
10
Current -- Diminishing Role of Europe in Drug
Development?

• This 'drug gap' is not due to faster FDA
  processing both agencies have an identical mean
  approval time of 15.7 months.
• Drugs hit the US market first because the
  sponsors choose to submit them there first.

11
Current -- Diminishing Role of Europe in Drug
Development?

• The advantage of the US is almost wholly due to
  its lack of price controls
• Investors tend to invest in places where there is
  less control over prices
• It is always better to do your clinical trials in
  the countries where you plan to market.
• In 1992, 6 of the top 10 biggest selling
  medicines in the world originated in Europe with
  4 from the USA. In 2002 the situation had
  reversed with 8 of the top selling medicines
  coming from the USA and only 2 from Europe.
• In 1999, the United States accounted for 57
  percent of the sales from drugs new to the market
  since 1995 Europe accounted for less than half
  that at 25 percent.

12
Diminishing Role of Europe in Drug Development?
2005 Europe population 728 Million 2005 US
Population 298 Million
13
Diminishing Role of Europe in Drug Development?

• Europe spends 60 less per capita on
  pharmaceuticals than does the US - a gap that has
  roughly doubled since 1992, when European
  governments spent about 30 less per capita than
  the US.
• US market, which represents the largest and
  fastest-growing share of the global profit pool,
  now 62.

The World Economic Forum For Healthcare Annual
Meeting 2004 Addressing The Innovation Divide,
J Gilbert, P Rosenberg, Bain Company, Inc.
14
Cost Savings? Bain Model

• In 1992, Germany and the US spent virtually the
  same amount per capita on pharmaceuticals 275
  versus 288.
• 10 years later a large gap had developed, driven
  by the German government's set reference prices.
• 2002, Germany spent just 421 per capital -
  nearly 40 less than the US, which spent 685.
• Bain's model calculated the difference between
  Germany's actual 2002 performance and how it
  would have performed in a system where the
  government exerts less control over drug prices.
• In effect, it showed whether Germany enjoys a net
  gain or suffers a net loss under the "free rider"
  model.
• In 2002, Germany saved 19 billion because it
  spent significantly less per capita on
  pharmaceuticals than did the US.

The World Economic Forum For Healthcare Annual
Meeting 2004 Addressing The Innovation Divide,
J Gilbert, P Rosenberg, Bain Company, Inc.
15
Cost Savings? Bain Model

• Germany lost 3 billion in 2002 as RD investment
  in that country increased by a mere 52 from 1992
  to 2002, while investment in the US increased by
  184.
• Lost patent values and "network effect" benefits
  equated to an additional 1 billion in total RD
  losses.
• High value-added jobs - cost Germany 3 billion
  in lost wages (taxes and other multiplier
  effects) in 2002
• From 1990 to 2001, high value-added employees in
  Germany's pharmaceutical industry fell by 26
  while the US increased by 52.
• Additional losses related to the loss of high
  value-added jobs, namely economic multiplier
  effect losses, totaled an additional 5 billion.
• Corporate centers - lost profits totaling 3
  billion in 2002 would have accrued if Germany's
  pharmaceutical industry had kept pace with its US
  counterparts.
• In 1980, two German firms - Bayer and Hoechst -
  ranked among the world's top 10 drug makers.
  They've now disappeared from the top-ten list.
• Other related losses, e.g., taxes, corporate
  formation benefits, would bring the aggregate
  loss from the shift in corporate centers to
  approximately 5 billion.
• Health outcomes - Bain's analysis suggests that
  in 2002, Germany lost nearly 5 billion from
  poorer health outcomes driven by less patient and
  physician access to the most innovative drugs,
  contributing to higher comparable hospitalization
  rates and absence rates from work.

The World Economic Forum For Healthcare Annual
Meeting 2004 Addressing The Innovation Divide,
J Gilbert, P Rosenberg, Bain Company, Inc.
16
Cost Savings? Bain Model
17
Current -- Diminishing Role of Europe in Drug
Development?

• Other factors
• TGN1412 trial disaster -- delayed approval for
  biologics trials and induced companies to look
  elsewhere to conduct them.
• Clinical Trials Directive -- Member countries
  added extra provisions when interpreting the
  Directive into law
• Increase in bureaucracy and uncertainty
• Potential extra costs and delays for clinical
  approvals have driven multinational studies
  outside Europe

18
Current -- Diminishing Role of Europe in Drug
Development?

• Not new news
• 2001 Europe is losing ground in its ability to
  generate, organise, and sustain innovative
  processes.3
• Primary causes are lack of competitive national
  markets, fragmented research systems and low
  investment in RD and in the new technologies.
• 2006 Competitiveness report by the European
  Commission's high-level Pharmaceutical Forum
• US has established itself firmly as the key
  innovator in pharmaceuticals since 2000.
• "That dominant position continues to expand... a
  disproportionate share of pharmaceutical RD is
  performed in the US

3Global competitiveness in pharmaceuticals - A
European Perspective. Gambardella, Orsenigo and
Pammolli. Published as Enterprise Paper No 1
2001.
19
Role of Europe in Drug Development What is
being done?

• G10 process instituted 2001 to review how current
  Community and national pharmaceutical, health and
  enterprise policies can achieve
• Innovation and competitiveness
• While ensuring satisfactory delivery of public
  health and social imperatives.
• The Pharmaceutical Forum was formed as a
  ministerial-level discussion of how to keep
  innovation alive
• This group was asked to examine some of the most
  crucial and outstanding issues of the G10 process
• Information to Patients
• Pricing/Reimbursement
• Relative Effectiveness

20
Role of Europe in Drug Development What is
being done?

• The Pharmaceutical Forum
• Control of expenditure Pricing/Reimbursement
• Several factors have generated significant
  changes in the pricing and reimbursement
  mechanisms of most Member States during the last
  years
• Rising expenditure on medicines
• Inequity of access to medicines
• Lack of early access to innovative medicines.
• The progress report seeks to identify, explore
  and exchange information and data on alternative
  mechanisms.
• The objective of finding a balance
• Controlling expenditure
• Improving access to medicines
• Rewarding innovation

21
Role of Europe in Drug Development What is
being done?

• The G10 High Level Group on Innovation and
  Provision of Medicines
• Recommended to examine ways to shorten periods of
  decisions allowing rapid access for patients as
  well as control over the healthcare budget for
  Member States.
• "The Commission and Member States should, as a
  priority, examine the scope for improving time
  taken between granting of a marketing
  authorisation and pricing and reimbursement
  decisions in order to reduce this time to the
  absolute minimum. The Commission will, in
  parallel, launch a reflection on finding
  alternative ways of controlling national health
  care expenditures including the option of letting
  manufacturers set the prices of new products,
  while negotiating appropriate safeguard
  mechanisms for Member States to contain
  expenditure in compliance with EU competition
  rules". European Commission

22
Role of Europe in Drug Development Pricing and
Relative effectiveness

• Historically, European payers (governments,
  insurance funds, social security systems) simply
  dismissed industry demands for higher prices
• Industry response was to introduce patient
  benefit into the public debate
• Prices were not simply about profits but to
  ensured that ever-better medicines would be
  developed.
• The payers had a bit of a dilemma
• They could not respond that they did not want
  better medicines.
• They could not tell the people that they are
  going to get only the oldest and cheapest drugs.
• Payers new approach
• We want better medicines, but if we are going to
  pay for them, we have to be sure they really are
  better.
• Industry has traditionally wanted to limit the
  criteria for product authorization to safety and
  efficacy and has so far succeeded
• However, Industry is grave danger of losing this
  limitation in respect of pricing and
  reimbursement
• The debate is now underway, in a serious fashion,
  of how to measure not just the efficacy but the
  relative efficacy of a new medicine.

23
Role of Europe in Drug Development Relative
effectiveness

• The Pharmaceutical Forum
• Relative effectiveness assessing the
  effectiveness of medicines in comparison with
  other treatment options
• The progress report makes a series of
  recommendations on how to support Member States
  applying relative effectiveness systems in order
  to allow containment of pharmaceutical costs as
  well as a fair reward for innovation.
• Relative effectiveness assessment systems are
  relatively new for many Member States and rather
  complex.
• Nevertheless, the outcome of relative
  effectiveness assessments is promising as they
  will help identify the most valuable medicines,
  both in terms of clinical efficiency and
  cost-effectiveness, and will help set a fair
  price for these medicines.

24
Relative effectiveness of Osteoporosis Medications

• Currently, fracture prevention trials are
  required for registration of medications for the
  treatment of osteoporosis.
• For head-to-head fracture trials, the sample size
  is influenced by the expected incidence of
  fractures and other factors, including the
  analysis objective (an equivalence or
  non-inferiority trial versus a superiority
  trial).
• Because both active treatments may reduce both
  the overall incidence of fracture and the
  difference between treatment groups, sample sizes
  will be considerably larger than in a
  placebo-controlled trial.
• For a superiority trial Power of 80 and a
  typical fracture rate
• To show a difference of 10 in efficacy --
  235,000 participants would be required
• To show a difference of 30 in efficacy 18,080
  would be required
• Even if the fracture rate in one group were 15,
  14,700 participants would be needed to
  demonstrate a difference.
• In an equivalence trial (non-inferiority), sample
  sizes in the 30,000 to 40,000 range are required.
  
• Head-to-head trials could examine endpoints that
  are well-validated surrogates for fracture
  events, such as BMD and bone turnover. These
  trials can be considerably smaller and more
  quickly completed than fracture trials, and a
  large number of studies have documented the
  strong, graded association between fracture
  incidence and these surrogates.

25
Role of Europe in Drug Development -- Proposals

• European Federation of Pharmaceutical Industry
  Associations (EFPIA)
• Position Paper Barriers To Innovation In The
  Development Of New Medicines In Europe And
  Possible Solutions To Address These Barriers
• Improved dialogue with regulators during
  development and with payers prior to regulatory
  approval
• Increased acceptance by regulatory authorities of
  biomarkers and surrogate clinical end points.
• Increased involvement of other stakeholders such
  as patients in the regulatory review process
• Consideration should be given to developing
  methods to collect data on risks and benefits of
  medicines once they are available in a real-world
  setting

26
Role of Europe in Drug Development -- Proposals

• European Federation of Pharmaceutical Industry
  Associations (EFPIA)
• Position Paper Barriers To Innovation In The
  Development Of New Medicines In Europe And
  Possible Solutions To Address These Barriers
• Pricing and reimbursement models that reward
  innovation should be encouraged.
• Member States should allow free pricing for
  medicines that are not reimbursed by the public
  purse.
• Consumers should be made aware of new medicines
  and have the choice of paying for them if they
  are not reimbursed by governments.
• Price competition in the generic sector should be
  fierce to allow savings made from the use of
  generics to be reinvested through the use of
  patented, innovative medicines.
• Governments should explore alternative funding
  options including increasing private sources of
  funding which are compatible with principles of
  social security systems.
• Governments should ensure that public money is
  spent on healthcare interventions that work, but
  evaluation mechanisms aimed at ensuring this must
  be independent, transparent and scientifically
  robust. This is not currently the case in many
  countries.
• The European Commission should encourage Member
  States to view health technology assessment as a
  means to achieve better health outcomes rather
  than a means to delay or even exclude innovative
  medicines from reaching patients.
• Dialogue between payers and companies should be
  initiated earlier allowing healthcare payers to
  establish, for example, if there are any specific
  data requirements that the payers would be
  looking for in order to reimburse a medicine.

27
Role of Europe in Drug Development -- IMI

• The Innovative Medicines Initiative proposes
  clear practical paths to accelerate the
  development of safe and more effective medicines
  by joint public and private collaborations.
• Aim To remove major bottlenecks in drug
  development, acting where research is the key

• Long term objectives -- To increase
  competitiveness of European pharmaceutical sector
  and foster Europe as the most attractive place
  for pharmaceutical RD, thereby enhancing access
  to innovative medicines for patients

28
Role of Europe in Drug Development What is
being done?

• The Seventh Framework Programme for research and
  technological development (FP7)
• is the European Unions main instrument for
  funding research in Europe.
• Is the result of years of consultation with the
  scientific community, research and policy making
  institutions, and other interested parties.
• Since their launch in 1984, the Framework
  Programmes have played a lead role in
  multidisciplinary research and cooperative
  activities in Europe and beyond.

29
Conclusions

• European-based pharmaceutical drug development
  has strong history and continues to make a major
  contribution to the European Union economics and
  public health.
• Unfortunately, the role of Europe in Drug
  Development is rapidly weakening secondary to
  flawed financial decisions by member states.
• Proposals and activity are taking place to begin
  to address the complex issues around the balance
  of innovation and competitiveness while ensuring
  satisfactory delivery of public health .