CROs in the Face of Reform

CROs in the Face of Reform

ACRO notes key issues in U.S. health reform

By Kristin Brooks

In the face of healthcare reform in the U.S., an already strained pharma/biopharmaceutical industry with R&D pressures galore—not to mention a down economy—what repercussions do these changes and challenges have on the CRO industry? The Association of Clinical Research Organizations (ACRO), which represents clinical research organizations (CROs), advocates clinical outsourcing as a way to improve the quality, efficiency, and safety of re-search. ACRO works with stakeholders globally to explore new models for R&D in an effort to promote a better and more efficient clinical trial process.

Most recently, ACRO has been focusing on issues such as the globalization of clinical trials and the need for increased funding for the FDA’s Office of International Programs, as well as Health Reform and how comparative effectiveness research (CER) and biosimilar legislation might impact the pharma/biopharma industry, and in turn CROs. I spoke with John Lewis, vice president of Public Affairs at ACRO, about these and other pressing issues facing an industry that has seen better days. —KB

Contract Pharma: What is the potential impact that Healthcare reform and new regulatory mandates may have on the pharma/biopharmaceutical industry?

John Lewis: The big picture is that some 30 million more Americans — approximately the population of Canada — will now have health insurance coverage and coverage for prescription drugs. The legislation also closes the Medicare “doughnut hole,” ensuring that more seniors will have continued coverage for, and access to, medications. These are both victories for the pharmaceutical industry and, now that there is certainty in the political and business environments, we expect R&D spending to flow more easily.

For CROs specifically, we potentially gain a sizable new population of covered individuals who may be interested in participating in clinical trials. The legislation also makes clear that insurance companies cannot deny routine coverage to people who have volunteered for a clinical trial, thanks to Sen. Sherrod Brown of Ohio. We think this may help improve participation rates in the U.S.

In the short-term, CROs can clearly benefit from government’s interest in funding comparative effectiveness research, which CROs are highly qualified and well-positioned to conduct. We should also benefit from the new biosimilars legislation that establishes high thresholds for similarity and interchangeability that will translate into extensive clinical testing. Obviously, this is a plus for the CRO industry but ACRO advocated for a stringent approval pathway because of a real concern over patient safety if biosimilars were allowed on the market without the evidence to support their efficacy and safety.

Longer-term, however, especially with CER, we do not know the impact this may have on biopharma pipelines and the development process. For example, some drug candidates may by killed earlier in the R&D process because they cannot show superiority to existing treatments, rather than simply the current standard of efficacy. ACRO is concerned this could stifle innovation. Also unclear is what role, if any, the FDA will play in CER. If comparative studies become mandated for approval, this would establish a new paradigm that might benefit CROs in the short-term but could have deleterious effects on research and innovation in the long-term.

I should also note that ACRO is distressed that during the entire healthcare debate, there was no discussion of the important role the FDA plays in public health. There is nothing in the healthcare legislation that benefits the FDA, just as there was nothing in last year’s stimulus bill to help FDA. A strong, well-resourced FDA is critical to a vibrant drug development enterprise.

CP: What role will the industry play with CER?

JL: CER is a very complex endeavor and ACRO is pleased with the outcome of the healthcare legislation that creates a public-private entity to prioritize, design and fund this research. We need all the stakeholders, including patients, involved in CER policy. That said, we will be monitoring this process very closely to ensure the private sector plays a major role in conducting the research. Whatever the merits of the Agency for Healthcare Research & Quality (AHRQ) and the National Institutes of Health (NIH) may be, they remain government entities. ACRO believes that, with extensive expertise and efficient research processes, the private sector should play the leading role in CER, rather than government agencies or academic researchers.

CP: In what ways might CER might impact innovation?

JL: There is concern about innovation in that pharma companies are feeling more and more pressure to prove the superiority of their drug, or superiority of their drug for some portion of the population, as they go through the development process. They’re determining if the drug is better, what the sales expectations are, if the drug is marketable, or if they can’t show it’s superior, they’re not going to get the market share they thought they would. Pharma companies are looking at these questions much earlier in the development process and so there’s the potential that some very promising drug candidates will be abandoned because early research doesn’t show superiority. As a result, pharma companies will prioritize the drugs they’re going to develop. Aside from orphan drugs, they’re going to develop the drugs they feel will perform best in the market.

The other potential impact on innovation is the one-product, small biotech company. They’re going to have a lot more pressure on them to show that their product is going to be superior or significantly better than what is already on the market. If you only have one product, that’s a big issue. Some of those products may not make it to market, yet they might be very good treatments for a large number of people. In turn, that could affect the funding for that company and their ability to carry out the trials. If there are less drugs being developed because there’s concern or it’s unclear whether it’s going to be superior, then we could be missing out on some potentially very good drugs.

CP: What are some essential components needed for a regulatory pathway for the development of follow-on biologics/biosimilars?

JL: In terms of the regulatory pathway, it’s unclear right now. Obviously we need a set of rules to come out of the FDA following the healthcare reform legislation, which included the biosimilar provision. Although no one is quite sure what those rules are going to be, congress has made it very clear that there need to be high standards for defining similarity and interchangeability, as those are the two key components. Because biologics are much more complex than chemical-based drugs, there needs to be a lot of definition and attention paid to what we actually mean by “biosimilar” and also how we ensure the biosimilar is interchangeable with the innovator product in terms of patient safety, efficacy, and purity of the biologic. That needs to be very well defined and there needs to be a balance in the regulations so that we have a pathway that encourages the development of biosimilars, but at the same time ensures safety and efficacy. That’s going to be a challenge for the FDA to get that balance right. You don’t want to make the pathway so burdensome that either you discourage the development of biosimilars, or they become too costly to develop and subsequently as expensive as the reference/innovator product, but you also want to make sure there is integrity and assurance in the pathway and that the appropriate safety and efficacy considerations are made.

CP: What role might CROs play in the development of biosimilars?

JL: We expect CROs to be very involved with the development of biosimilars. This is going to be a much different development and approval process than a generic pharmaceutical, and it’s going to be much more costly. That’s good for CROs, but we need to make sure the most efficient clinical research process is pursued that ensures the safety and efficacy, as well as the interchangeability. It has to be much more streamlined than the standard innovator drug development process, but it’s also going to be much more involved than the standard/traditional generic process. I think it’s a big opportunity for CROs to develop those processes and some of our member companies have been building the capabilities and expertise, both on the regulatory side and the scientific side, to achieve that.

Another challenge for the FDA is that Commissioner Peggy Hamburg has made a big issue out of regulatory science in the agency and one of the areas she often sites (and other people site) as lacking some expertise is the FDA’s ability to examine biosimilars. So there’s also a challenge within the FDA to make sure that they build the required expertise within the agency or can somehow access that expertise, whether it’s through NIH or some other government entity or partnership, so that they are able to appropriately establish the pathways for individual drugs with some level of flexibility, and ultimately evaluate the applications for biosimilars.

CP: With the globalization of drug development into emerging markets, what sort of presence is needed from the FDA to ensure compliance?

JL: For the past year, as we’ve been in appropriations season in the U.S. congressional cycle, ACRO’s top legislative priority is trying to get additional appropriations for the FDA’s Office International Programs. We think that it’s critical to the development industry and to the CRO industry for the FDA to have a much-expanded role internationally. If you think about the FDA’s role internationally, and the less than $17 million requested for the international operation, as a proxy for the FDA’s international presence, that’s a very small amount of money for the responsibility that the FDA has globally.

If you look at drug manufacturing, which is a very high priority for the agency, they’ve got inspectors that oversee drug manufacturing internationally. Then you have food safety internationally, which is another high priority; so for the FDA to get to the level of clinical trial oversight and audits of clinical trial investigative sites, it’s at best the number three priority. The limited budget is not adequate for the level of global clinical research activity. We would very much like to see more FDA capabilities internationally, especially in emerging markets like India and China, as well as Russia, Brazil and a number of other markets.

It may strike people as a little odd that the industry wants more regulation in this case, but we really do. We want more oversight, not so much regulation, but certainly more oversight. ACRO members operate globally and have invested hundreds of millions of dollars establishing clinical trial infrastructure all around the world. Our members conducted trials in more than 115 countries last year. We are confident in the quality of the research that’s done globally, and because the FDA is regarded as the world standard in regulation, we would like to see more verification of the quality that we believe is there.

Also, the FDA’s resources should more closely match the distribution of where clinical research is being conducted. According to clinicaltrials.gov, 53% of clinical trials are conducted in the U.S., 24% in Europe, and 23% in the rest of the world. Although the FDA is not a global regulator, half of all trials are being conducted outside the U.S. and that data comes back to the U.S. for drug approval, therefore the FDA should be able to monitor and oversee that research to a greater degree than they do now.

CP: Eliminating drugs that don’t show promise early on has become essential to drug development. What are some evolving drug development models and trends being pursued by pharma/ CROs?

JL: Clearly among ACRO members we are seeing a move toward partnership models with sponsors that, more often than not, provide our members with insight into the sponsors’ pipelines. CROs are providing much broader services than simply Phase I-IV clinical trials. Several ACRO members now offer preclinical lab services and drug discovery capabilities on the front end of the development cycle and then span all the way through the process with various consulting services on issues like reimbursement strategies and commercialization, in addition to regulatory services. We are also seeing more discussion of risk sharing, either with the actual execution of the clinical trial or occasionally even in sharing the ownership of the compound itself.

CP: The pharmaceutical industry cycles through periods of highs and lows and fluctuating pipelines, how do CROs work through these? Also, how have the added troubles of a down economy impacted CROs?

JL: The economic downturn, some of the merger activity, and the uncertainty over healthcare reform, has made the past couple of years a bit challenging for the CRO industry. Yet the share prices of the publicly-held ACRO members have rebounded nicely recently, and as a group they have a very strong cash position. So, they have weathered the storm quite well.We expect to see continued growth in outsourcing as the industry expands its services and sponsors recognize our value proposition. While we may not see as much growth in R&D spending as we have in the past, we expect outsourcing to become much more prevalent as sponsors focus on their core competencies and outsource more functions to CROs, especially in partnership models.

Kristin Brooks is associate editor at Contract Pharma. She can be reached at kbrooks@rodpub.com.