Three keystones of pharmaceutical market authorization are quality, safety and efficacy. The required standards for market authorization are set out by regulatory authorities, such as the US FDA and the EMA in Europe. The objective of drug regulation is to protect and promote public health. Drug regulation protects public health by keeping low-quality, unsafe and inefficacious drugs from entering the market, and promotes public health through facilitating needed drugs to enter the market without unnecessary delay Citation[1]. These objectives are reached through hundreds of guidelines that structure both drug development and postmarketing surveillance.
However, the pharmaceutical industry is struggling. It takes pharmaceutical companies many years to discover and develop new products and to generate all the required data for market authorization. Moreover, the costs of pharmaceutical R&D have been increasing exponentially during the last four decades Citation[2], and the costs of pharmaceutical R&D are directly related to compliance with regulatory requirements. The drug regulatory framework may have contributed substantially to public health. However, drug regulation could also hinder public health by setting unnecessary hurdles for much-needed drugs entering the market through ineffective and costly regulatory requirements. Until now, the potential negative impact that drug regulation might have on the costs and output of pharmaceutical R&D has received relatively little attention in the literature, even though the need for an efficient and effective drug regulatory framework has been stipulated before Citation[1]. If regulatory requirements do not result in promoting health by ensuring that more safe and efficacious drugs reach the market, but do yield substantial costs, they should be revoked from the drug regulatory framework.
The WHO’s 2002 report ‘Effective Drug Regulation’ provided an elegant framework for evaluating the efficiency and effectiveness of drug regulation by identifying all relevant parts of drug regulation that should be examined, but concluded that “ideally, an assessment of drug regulation should begin by studying regulatory outcomes to judge overall performance and identify problem areas … [yet] outcomes are often not readily measurable” Citation[1]. We believe that it is not only possible but also essential to measure drug regulatory outcomes, as drug regulation serves a societal objective and therefore should be subjected to social scrutiny. Health technology assessment (HTA), a method that enables assessment of the cost–effectiveness of any intervention aimed at increasing health, should be used to determine the value of drug regulation.
Drug regulation
The ‘cautious regulator’ problem has been named as one of the four main causes of increasing R&D costs and declining R&D efficiency Citation[3]. Often, the regulatory ratchet is tightened after incidents that ignite the development of new regulatory requirements so as to prevent a similar incident from occurring in the future. A well-known example is the instigation of modern-day drug regulation after the thalidomide disaster in the 1960s. More recent examples include the rofecoxib (Vioxx®; Merck) withdrawal (owing to an increased risk of heart attack and stroke) in 2004, which has been named a ‘wake-up call’ for regulatory authorities Citation[4] and created a greater public and regulatory awareness of drug safety. TeGenero’s infamous 2006 TGN1412 clinical trial, in which six healthy volunteers developed life-threatening complications after administration of the compound, resulted in adapted regulatory requirements for first-in-man trials Citation[5]. In addition, a Phase I clinical trial devoted to studying a compound’s QT interval-prolonging abilities (the ‘thorough QT/QTc study’) has been a mandatory part of drug development since 2005, after the QT-prolonging and torsadogenic potential of several pharmaceuticals was the most common cause of drug withdrawal during the 1990s Citation[6]. New requirements are frequently added to the regulatory framework but requirements are rarely removed, even if removing the regulatory requirement would not result in a significant risk to drug safety Citation[3]. A risk-averse society might prefer such a ‘better safe than sorry’ regulatory approach. However, if this risk-averse approach significantly increases R&D costs without resulting in meaningful promotion of public health, a new view on the drug regulatory framework is warranted, especially if by revoking pointless regulatory requirements from the regulatory framework, savings could be achieved without health losses.
HTA & the value of drug regulation
Drug regulation serves a societal function. Society pays for it through consumption of medicines, through taxes that are used to finance regulatory authorities and medical expenses, and through health insurance to cover the costs of medicines. Consequently, if drug regulation is not cost effective, this will result in substantial opportunity costs for society. HTA assesses the added value of health interventions by weighing incremental effects against incremental costs. Although predominantly used to assess the cost–effectiveness of medical interventions, any policy aimed at increasing public health, including drug regulation, can be subjected to a cost–effectiveness analysis. Furthermore, if all regulatory requirements were cost effective, drug regulation would be highly efficient in producing good health outcomes at acceptable costs.
The structures and processes that are in place in the drug regulatory framework produce regulation outcomes that can be assessed by the availability of safe, effective and good-quality drugs, rational prescribing and appropriate dispensing Citation[1]. However, drug regulation outcomes should also produce actual health outcomes, in the form of better treatment of illness, increased prevention of disease and decreased morbidity and mortality Citation[1]. Cost–effectiveness analysis could identify whether the costs of drug regulations produce acceptable returns in the form of increased public health.
We have performed a cost–effectiveness analysis of the guideline requiring a thorough QT/QTc study to assess a product’s QT-prolonging ability during clinical development, which was adapted by the regulatory authorities of the USA, Europe and Japan in 2005. This guideline intends to increase patient safety by minimizing the risk of products that could cause drug-induced sudden cardiac deaths from entering the market. Our results show that it is very unlikely that this regulation is cost effective Citation[7]. Health gains achieved through its implementation result in incremental cost–effectiveness far beyond what is considered acceptable for medical interventions. If this guideline is withdrawn as a clinical development requirement, total R&D costs would decrease (a thorough QT/QTc study costs between €1 and 5 million) and a modest reduction in clinical development times could be achieved.
Society seems to value safety-related regulatory actions. In a recent willingness-to-pay (WTP) study, we found that the general public was willing to accept a small increase of their annual health insurance premium (median WTP of €10, total annual premium of ±€1100) in order to protect epoetin users from the risk of pure red cell aplasia Citation[8]. However, our study also shows that WTP for regulatory actions is not unlimited. Therefore, it is important to also determine the cost–effectiveness of safety-related regulatory requirements postapproval.
Cost–effectiveness analysis of drug regulation is not without challenges. In particular, when using quality-adjusted life years in a study, patient-specific life expectancy and health-related quality-of-life estimates based on published sources will have to be used. However, a paradox that has been encountered in the cost–effectiveness analysis of drug regulation is of greater concern. Drug regulation should, directly or indirectly, protect or promote public health, as is also stated by regulatory authorities. Nevertheless, identifying the actual mechanism through which health gains from a regulatory requirement are to be achieved proves to be daunting in reality. This mechanism is often indirect, nonexistent or unclear, but is essential in assessing a regulatory requirement’s cost–effectiveness. Therefore, regulators developing new guidelines should define directly how the guideline will contribute to public health. Such a definition is needed for an ex-post evaluation of a guideline after implementation.
The impact of drug regulation on the current crisis in the pharmaceutical industry has long been overlooked. Therefore, the assessment of the effects of drug regulation on the development of innovative drugs is necessary. Systematically evaluating the cost–effectiveness of drug regulation in order to determine whether adding a requirement to the development process offers value for money would be an essential step toward a more sustainable system of drug development.
Financial & competing interests disclosure
This work was performed in the context of the Escher project (T6-202), a project of the Dutch Top Institute Pharma (TI Pharma). TI Pharma is a consortium of public partners, private partners and the Dutch government. TI Pharma did not play a role in the design, conduct or analysis, or interpretation of the data, or in the writing or review of the manuscript. H Schellekens has participated in meetings and publications sponsored by the pharmaceutical industry. His work on this study did not include a third party in any way. The authors have no other relevant affiliations or financial involvement with any organization or entity with a financial interest in or financial conflict with the subject matter or materials discussed in the manuscript apart from those disclosed.
No writing assistance was utilized in the production of this manuscript.
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