Washington Editor

WASHINGTON - A study conducted by a Washington think tank with ties to managed care is challenging the pharmaceutical industry's claim that high-priced drugs are necessary to pay for the innovative research and development that produced them.

The National Institute of Health Care Management Research and Education Foundation (NIHCM) Tuesday released a 24-page report that says in the past 12 years, only 35 percent, or 361 out of 1,035 new drug applications approved, were innovative products with new active ingredients.

"I think the consumer message is that new drugs may not really be much different than older drugs," Nancy Chockley, president of NIHCM, told BioWorld Today. "That's not to say that is a bad thing, but it's not the innovator story that we hoped to find here. I think this is a wake-up call to the drug companies, because my guess is they were not aware of how increasingly reliant they were on these modified older drugs, and we are seeing this more and more, not less and less. These drug companies are going to end up spending more money to buy biotech companies because of their innovative research."

According to the report, "highly" innovative drugs, or medicines that contain new active ingredients and also provide significant clinical improvement, are so rare that from 1989 to 2000, just 153 out of 1,035 NDAs approved were for such drugs (i.e., Viagra, made by New York-based Pfizer Inc. was approved in 1998 and is classified as a highly innovative drug in the report).

Representatives from Pharmaceutical Research and Manufacturers of America (PhRMA) could not be reached for comment Wednesday, but according to The Washington Post, the organization criticized the study for being flawed and biased.

To that, Chockley said, "PhRMA really hates the findings of this report - if you don't like the message, kill the messenger - and I think that's what they are doing."

Biologics were not included in the study primarily because the industry is relatively young, and the FDA approval process for drugs and biologics is separate, Chockley said. "I would love to look at biologics in the future," she said. "I think it's a very exciting area that holds a lot of promise, but the promise is so great that it is easy to get excited about it, and the reality could fall short."

NIHCM is a non-profit group founded nine years ago to conduct research on health care issues. The group receives 40 percent of its funding from managed care companies, and 60 percent from the federal government.

Chockley said this particular study was conducted because, "this question has been nagging at me for a long time. I wanted to know just how innovative large drug companies have been and it is a very tough question to answer in a way that is not subjective. We kind of noodled on it until we found what we thought was a really clean, analytic path."

Of the 1,035 drugs approved during the term of the study, 674 medicines (65 percent of the total) contained active ingredients that were already available in marketed products. Of those, 558 drugs differed from the marketed product in dosage form or route of administration, or were combined with another active ingredient. These incrementally modified drugs (IMDs), which can receive three years of market exclusivity under the Hatch-Waxman Act of 1984, accounted for 54 percent of all approvals. The remaining 116 drugs (11 percent of approvals) were identical to products already available on the U.S. market, according to the report. (An IMD contains an active ingredient already on the market in another product. In most cases, the manufacturer has altered the original drug to make a product with new features, such as a different dosage form, etc.)

"I think having more products out there for physicians to choose from is certainly a positive thing," Chockley said. "But it is a far cry from being truly innovative. Does it have value? Yes. But is it tremendously innovative? No."

The Hatch-Waxman Act came under attack recently by a number of lawmakers who say loopholes in the legislation have enabled pharmaceutical companies to extend their exclusive patents, therefore costing state governments, seniors and businesses millions of dollars in prescription drugs. Sens. Chuck Schumer (D-N.Y.) and John McCain (R-Ariz.) recently introduced legislation to reform the act. (See BioWorld Today, April 29, 2002.)

The report touches on Hatch-Waxman, saying it provides incentives for companies to invest in modifying older products and patenting their new features.

"Acting rationally in response to these incentives, brand manufacturers have flooded the market with product line extensions that, in 85 percent of the cases, do not provide significant improvement over currently marketed therapies," the report said.