The economic return for a program designed to encourage drug manufacturers to conduct more pediatric clinical trials by granting extensions of patent protection or marketing exclusivity generates lucrative returns for blockbuster products and produces more modest returns on investment for many others, according to a study in the February 7 issue of JAMA.
In 1997, Congress authorized the U.S. Food and Drug Administration (FDA) to provide an additional six months of patent protection, or marketing exclusivity, in return for companies performing studies to obtain more data on the use of medications in children. The Pediatric Exclusivity Program is due to expire in 2007. In background information the authors note that the program has been successful in generating more than 300 pediatric studies and that more than 115 products have undergone labeling changes for pediatric use. "Despite this increase in pediatric drug studies, critics of the Pediatric Exclusivity Program contend that it has provided a 'windfall to the prescription drug industry' because the profits enjoyed by the companies from the patent extensions are perceived to greatly exceed the cost of conducting the studies." Government and industry sources estimate that study costs can range from $1 million to more than $35 million. "In a study based on a survey of drug companies, the cost of pediatric studies was estimated to average $3.87 million per written request," in which the FDA lists required elements for pediatric exclusivity.
Jennifer S. Li, M.D., M.H.S., from the Duke Clinical Research Institute, Durham, N.C., and colleagues analyzed data to determine the costs of the pediatric trials and if the incentives provided by the Best Pharmaceuticals for Children Act of 2002 are disproportionate to the costs of the studies. The authors evaluated studies submitted from 2002 to 2004 and selected one product from each of the following clinical areas: allergy/immunology, cancer, central nervous system, cardiovascular, psychiatry, endocrine, gastrointestinal, infectious disease and other (e.g., osteogenesis imperfecta and kidney transplantation).
"For each product, we estimated the net economic return to industry from participation in the exclusivity program, and calculated the resulting net return-to-cost ratio. The following definitions were used: net economic return is the difference between after-tax cash inflows and outflows associated with the additional period of patent exclusivity; cash inflows represent estimates of product sales (net of production, marketing and distribution costs) during the period of extended patent exclusivity; and cash outflows are estimates of the costs of performing pediatric studies," the authors explain.
"The distribution of net economic return for six months of exclusivity varied substantially among products (net economic return ranged from – $8.9 million to $507.9 million and net return-to-cost ratio ranged from – 0.68 to 73.63)," the authors found.
In conclusion, the authors write: "From the policy perspective, our study shows that the Pediatric Exclusivity Program overcompensates blockbuster products for performing clinical trials in children, while other products have more modest returns on investment under this program. Further understanding and modeling are necessary to ascertain what constitutes adequate economic return to manufacturers in return for their risk. Clearly, however, the greatest return of the exclusivity program is the benefits derived in obtaining new information relevant and applicable toward the care of children, and this benefit should not be compromised."
(JAMA. 2007;297:480-488. Available pre-embargo to the media at www.jamamedia.org.)
Editor's Note: This work was supported by grants from the National Institute of Child Health and Human Development and the National Center for Research Resources and the National Institutes of Health. Please see the article for additional information, including other authors, author contributions and affiliations, financial disclosures, funding and support, etc.
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