The Future of Biotechnology for Medical Applications in 2005, Governmental Issues
===Biotechnology for Medical Application and Policy in 2015 – Governmental and regulation issues (Daniel)===
Introduction
We will discuss Governments, lawmakers and authorities role regarding the future of biotechnology for medical applications by answering the following questions:
5. What political developments occur that try to reduce the significant growth of healthcare cost?
8. How will the FDA and EMEA authorities respond to the exponential growth of the biotech
industry and how will their guidelines develop?
18. What is the legal situation in those parts of the world which are relevant for biotech research?
19. To what degree can governments control on whether laws on biotech research are being
respected?
32. Can the biotech development be stopped by imposing (general and international) laws?
To answer these questions and discuss government’s role in biotechnology for medical applications in the future, we will evaluate the following points:
• Significance of biotechnology for governments
• Drug approval processes and security issues
• Impact of approval process on biotechnology funding
• Development of health cost and pressure for action
• Issues regarding Public funding of biotech research
• Possible biotechnology strategies for governments
• Competition among nations regarding biotechnology
Significance of Biotechnology for governments
Biotechnology is a key issue for many governments in the industrialized world and in emerging countries:
• The US are currently the leading nation in biotechnology, where the majority of biotech companies have their domicile.
• Target of EU’s Lisbon Agenda is, to make EU the most competitive and most dynamic region of the world. Biotechnology has been stated as one of the key and frontier technologies to harness in order to achieve this (European Commission, 2001).
• India has a biotech strategy under development with the target to achieve a multi billion industry by 2010 (Ernst & Young 2005)
• Japan is strong in (also government supported) biotech research and has a 200 bln market to offer (Ernst & Young 2005).
• Korea is number seven in the world biotech ranking and is a leading country in stem cell research (Ernst & Young 2005)
• Malaysia has defined biotechnology as a core technology for reaching the country’s target to be a developed nation by 2020 (Ernst & Young 2005)
• Singapore wants to increase its biotech output to 25bln (Ernst & Young 2005)
• Taiwan wants to invest 4.5 mln $ in biotechnology (Ernst & Young 2005).
So, biotechnology is considered as one of the most important drivers of economic growth by many governments. At the same time however more and more issues are arising regarding ethics and safety of biotechnology. Finally, issues regarding increasing healthcare costs, budgetary limits and problems with social security have an impact on governments’ ability to support and manage biotechnology in their countries. Fact is that countries and economic areas are competing against each other on biotechnology while geographical boarders are diminishing.
Approval of (biotech) drugs
1. Drug approval in the USA
In the US – the largest pharmaceutical market in the world - FDA (food and drug administration) approves drugs. FDA’s drug approval process (NDA = New Drug approval) is displayed in the chart below.
Source: FDA, 2005
The drug approval process consists of several Phases
a) Pre-Clinical Research (FDA 2005):
During pre clinical research a drug sponsor must provide data which underline, that the drug is prinipally save for use in small scale clinical studies. The drug’s effects must be evaluated in vitro and in viva laboratory animal testing (Source FDA).
b) Clinical Studies (FDA 2005)
Clinical studies follow the pre clinical research phase and consist of three phases. To get permission to enter this phase an applicant must submit FDA the results of the previous phase.
Phase 1 of the clinical studies consists of initial introduction of an investigational new drug into humans. These studies are closely monitored. During Phase 1, sufficient information about the drug's effects and risks should be obtained to get permission to enter well-controlled, scientifically valid, Phase 2 studies.
In Phase 1 a “clinical hold” (i.e., prohibition of the study from proceeding or stop of a trial that has started) can be imposed for reasons of safety, or because of a sponsor's failure to accurately disclose the risk of study to investigators.
In Phase 2 controlled clinical studies are conducted to obtain some preliminary data on the effectiveness of the drug for a particular indication (does it work??) and on side effects and risks of the drugs. Phase 2 studies are typically well-controlled, closely monitored, and conducted in a relatively small number of patients, usually involving several hundred people.
In Phase 3 – after having proved basic effectiveness of the drug in phase 2 - expanded trials follow. They also have the objective to raise more information about effectiveness and safety and the benefit / risk relationship of the drug. The studies include several hundred to several thousand people. Also during this phase a clinical hold can be implied, if the study is unsafe.
c) Review and Approval (FDA 2005)
Clinical Studies are followed by the NDA Review Phase during which the application for approval is formally filed and runs through a predefined review process during which a recommendation for approval or non-approval will be reached. Finally the respective division director of FDA has sign-off authority for drugs. Once the approval is signed, the product can be marketed in the United States.
d) Accelerated Process /Fast track (FDA 2005)
In specific cases the process can be accelerated, using the accelerated development/review. This is possible for drugs that promise significant benefit over existing therapy for serious or life-threatening illnesses for which no therapy exists, to make promising new drugs available to desperately ill patients as early in the drug development process as possible.
The fundamental element of this process is that the manufacturers must continue testing after approval to demonstrate that the drug indeed provides therapeutic benefit to the patient. If not, the FDA can withdraw the product from the market more easily than usual.
d) Parallel Track (FDA 2005)
Another mechanism to permit wider availability of experimental agents is the "parallel track" policy. Under this policy, patients with AIDS whose condition prevents them from participating in controlled clinical trials can receive investigational drugs shown in preliminary studies.
Approval of (biotech) Drugs in the European Union (EMEA, 2005)
The authority in charge of drug approval in the EU is EMEA. The committee that reviews drugs for human use (the CPMP) assesses the application, and then recommends whether a drug should have marketing authorization or not. There are 2 systems within the EMEA that pharmaceutical companies can use to license drugs. The first is the centralized system, the other is called the decentralized (or mutual recognition) system.
The centralized system (UKMi 2003):
Any drugs for AIDS, cancer, neuro-degenerative conditions or diabetes have to be licensed this way. The process of application via the centralised system involves the pharmaceutical company filing an application with the EMEA. This is then passed to the CPMP. A preliminary review is undertaken early on in the process. The result is revealed to the company who may decide to continue with or withdraw the application. Representatives from two member states are selected to consider the application, one of which is chosen by the pharmaceutical company. These are called ‘rapporteur’ and ‘co-rapporteur’ member states. Their assessments form the basis for the final approval by the CPMP. The CPMP work to a strict timetable laid down in EU law. An ‘opinion’ (positive or negative) has to be issued within 210 days of receipt of the application, although the company may stop the procedure at any time. If the opinion is negative the company must answer questions raised by the CPMP before the application can be progressed. If a positive opinion is issued, the EU Commission requests comments from other member states, which have 28 days to respond. Any objections to the rapporteur’s decision are considered by the CPMP, which then makes a recommendation for or against an EU-wide licence. If a licence is recommended a European Public Assessment Report (EPAR) is produced and marketing authorisation issued.
Picture: Centralized Procedure
Souce: UKMi (2003)
Decentralised (or mutual recognition) system (UKMi 2003):
Under this system the CPMP co-ordinates the system, but does not take any part in the decision-making process unless there is disagreement between member states. After receipt of an application, the CPMP contracts one member state of the EU to assess the application. The contracted state is called the reference member state (RMS). The RMS is contracted to grant a licence within a maximum of 210 days. Once the RMS has approved the product other member states have 90 days to ‘mutually recognise’ the approval. The other countries may raise objections if there are concerns about safety, or major scientific or public health issues. However, some voices say that some countries object on purely political grounds). In this situation the CPMP acts as arbitrator and currently has 30 days to make a decision. The advice of the CPMP to the EU Commission is binding and each country then issues its own marketing authorisation.
Once a product has a marketing authorisation it is then approved. The problem with this route is that it leads to different outcomes in different countries. Pharmaceutical companies believe that the mutual recognition procedure can, in some cases, offer a greater chance of approval as they simply avoid filing applications in member states where approval is doubtful. Historically, the UK licensing system has been one of the fastest in the world closely followed by the Swedish licensing system.
Picture: Decentralised system
Souce: UKMi (2003)
Accelerated approval or review (UKMi 2003): The EU system grants accelerated approval based on the seriousness of the disease, the absence or insufficiency of an appropriate alternative, and anticipation of high therapeutic benefit. Approval is often given on condition that actual clinical benefit is subsequently assessed. If a product has been assigned accelerated status, an opinion may be granted within 120 days of application. Following approval the company will be required to submit further data specifically requested by the licensing authority that may subsequently re-assess the application.
Trends in drug approval: Authorities are getting more strict
According to Earnest and Young (2005) it is key to biotechnology to bring innovative products to the market. Product approvals in Europe were up in 2004. However, safety issues especially in the US, have gained more and more visibility and this could represent a challenge in the years ahead. In November 2004 Merck withdrew Vioxx from the market, Biogenidec had to withdraw its MS drug. These withdrawals led to concerns about the safety of drugs, prompting even more thorough reviews especially by FDA but possibly – in the future – also by EMEA. Regulatory authorities have come under attack for having an insufficient focus on safety. Relevant parties were dismayed that and were claiming insufficient monitoring of drugs once they are marketed. All this could lead to even more restrictive approval processes and an increased development and opproval time period for new drugs.
Impact of Healthcare cost on Biotech research
Healthcare and Healthcare cost is a current issue in both public, i.e. governmental households as well as in private households. According to the WHO, healthcare costs have developed as follows:
Overall total Healthcare spending has increased significantly in several markets, especially in the US, but also in Japan.
Source (Data): WHO, 2005
Even more, especially in the US, governmental spending on Healthcare has increased significantly. The same is true for UK and Japan.
Source (Data): WHO, 2005
Finally, Governments have hardly managed to increase the percentage of healthcare costs beared by private persons, as the following graph shows.
Source (Data): WHO, 2005
To conclude we can say, that healthcare costs are becoming a huge issue in public spending and that their percentage of GDP is increasing in many markets. At the same time, governments have not managed to increase the privately borne part of healthcare cost. This will biring governments into a dilemma. Pressure on healthcare cost will increase and hidden subsidies on local drug development (like e.g. in the US but also in Switzerland – both countries, where durg prices often significantly higher than in the rest of the world) will continue. At the same time, governments’ capabilities to fund research will be limited due to tight budgets. All this will make funding of biotech research a major problem. It will have a significant impact on research spending if no other sources of finance can be made accessible. Private sponsoring of drug research might thus be more and more an issue.
===Government Strategies in biotechnology: ===
Budgetary issues will foster globalization: As countries like India and China are likely to improve their intellectual property laws and other emerging economies are forcefully pushing into the biotechnology market, outsourcing even of R&D development to less cost expensive places is getting more and more an issue. Consumers and governments are enforcing this trends, due to uncontrollably increasing healthcare costs. Geographical boarders for biotechnology are getting lower. At the same time ethics in the lawmaking process comes into the field. Countries are imposing laws on what research is allowed to be conducted in their borders and they are imposing laws on what research may be publicly founded. Fact is however, that biotechnology is about to go beyond any boarders.
So, overall countries have less control over the development of their biotech industry and some are running the risk of loosing highly qualified research labour and know-how. What cannot be done in one part of the world – for financial reasons or for legal reasons – could possibly be done in another. Research that is illegal in one place might be legal in another and research that is not publicly founded in one part of the world might get public founding in another.
There is one more thing to be said. A great amount of basic research has been conducted already. The time new companies in emerging markets need to develop a biotech drug will potentially be shortened as the basic research and the base on which these companies can be built is already set.
Trends in funding of biotechnological research
Fact is that the US biotechnology has been built upon venture capital to a large degree (Ernst & Young 2005). Currently, as approval regulations are likely to get stricter and development times thus might get longer, potential venture investors might search for other fields for investment which offer more foreseeable return. Government funding thus becomes an issue also in the US. However governments’ flexibility is limited from a financial point of view and at the same time governments are limiting themselves in the degree by which they can sponsor biotechnology by legal limitations.
In emerging economies, governments are indeed actively helping biotech industry to build up and grow. They are taking the role of venture capitalists.
===Legal environment and the next big thing ===
The next big thing in biotechnology will is stem-cell research and countries’ competitiveness in biotechnology especially for medical applications might depend on their respective legislation.
Some countries forbid stem cell research or forbid to use embryonic material to conduct it and only allow to apply existing stem-cell lines, others allow to use embryonic stem cell material and a small number of countries – especially Britain and South Korea are pretty permissive and even allow therapeutic cloning to create stem-cell material. The map below provides the respective overview:
Source: Minnesota Medical School (2005)
Countries marked in yellow have restrictive laws on stem-cell research and generally prohibit research with stem cells taken from embryos.
Countries market in light brown have “flexible” laws and permit and at least stem cell research with stem-cells derived form remaining and “unused” embryos from in vitro-fertilization
Countries marked in dark Brown have permissive laws and even allow therapeutic cloning
A special case is California, where – contradictory to the rest of the US, therapeutic cloning is being conducted – but where no public funding is allowed for research involving therapeutic cloning. A law legalizing it in the US has been surpassed by presidential veto.
Conclusion and answers to the research questions
5. What political developments occur that try to reduce the significant growth of healthcare cost?
Gowernments are less and less willing to allow significantly higher drug prices in their countries, than in the rest of the world (This is especially true for the US and has to do with increasing healthcare costs). Also, e.g. in western European countries and in Japan government’s budgets are under pressure due to increasing social security costs because of an aging population. All this will lead to pressure to allow parallel import of drugs and to pressure to outsource even biotech research and production of biotechnology drugs to other, parts of the world, where it can be conducted for lower costs.
8. How will the FDA and EMEA authorities respond to the exponential growth of the biotech industry and how will their guidelines develop?
On one hand, short track approval processes have been developed, on the other hand security concerns are increasing. At the moment it regulations, especially those of FDA seem to get more strict. Time needed to develop and especially to market new drugs could therefore increase and costs to get approval could do so too. In addition, guidelines regarding monitoring and control of drugs, after they have been introduced in the market are likely to get more strict too.
18. What is the legal situation in those parts of the world which are relevant for biotech research?
The hottest and most debated issue in correspondence with biotech for medical application is stem cell research. Many countries are restrictive in this context, not allowing stem cell research with cells taken from existing embryos. Others allow using cell material from “left over” embryos from in vitro fertilization and others are permissive and allow even therapeutic cloning. UK and South Correa are the leading and most permissive countries. In the US, attempts to allow federal- or state governmental funding of research on therapeutic cloning are currently blocked by presidential Veto.
19. To what degree can governments control on whether laws on biotech research are being respected?
Governments have 3 levers to control biotech research: (1) Public funding of biotech research, (2) prohibition of certain research and (3) approval respectively non-approval of certain drugs or therapies.
However it will be hardly possible to control that people of a certain country do not get a cure which involves biotechnological research or production processes or even drugs which are illegal within the borders of their country. People will go to other countries where the respective drug, cure or therapy is legal, if they can be cured from their diseases. The protagonist in the respective interview (Fortune, 2005) said, that, if he is a criminal, when he cures goes to another country with his son where he can be cured with something that is illegal in his country, so he is willing to become a criminal. Thus governments can limit research, they can limit access to certain future cures for the broad mass of people but they cannot limit it entirely: What cannot be done in one place can be done in another. And those who demand it and can afford it will get it.
32. Can the biotech development be stopped by imposing (general and international) laws?
Borders do less and less matter. What cannot be done in one country can be done in another. What cannot be done by one company can be done by another. What cannot or will not be sponsored in one place of the world might get public support and sponsorship in another. Consolidation in the industry will lead to the fact that companies are big enough to conduct their research in any place in the world they like. Also increased venture capital – from any place in the world – will flow to those places in the world where governmental conditions for research on biotechnology are most favorable. It is therefore virtually impossible to stop biotechnology research by imposing laws in specific countries.
International laws might slow biotechnology. However, we have seen that many countries, developed ones and emerging ones, consider biotechnology as one key focus of their economic strategy and that certain countries have gained an edge in biotech research which could not be conducted in other countries. It is therefore hardly imaginable, that international laws that ban certain research or techniques in biotechnology can be imposed on a worldwide basis.
It is thus hard to stop biotechnology.
References
UK Medicines Information (UKMi); 2003; The Licencing of Medicines; August
EMEA,European Medicines Agency, 2005, http://www.emea.eu.int; October
FDA, Food and Drug Administration; 2005 The new drug development process http://www.fda.gov/cder/handbook/develop.htm; October 10
WHO, World Health Organization; 2005; Country Information, http://www.who.int/countries/en/; October 10
University of Minnesota Medical Scholl; 2005; World Stem Cell Map, http://mbbnet.umn.edu/scmap.html; October 09
European Commission (Kommission der Europäischen Gemeinschaften); 2001; Eine Strategische Vision für Biowissenschaften und Biotechnologie; Brussels, September 4
Ernst & Young; 2005; Beyond Borders, Global Biotechnology Report 2005
Fortune Magazine, Betsy Morris, 2005; The Stem Cell War, September 5