How to get drug companies to put needs before profits

Pharmaceutical companies undertake clinical trials to determine whether a potential new drug meets the requirements for market authorisation. Chain of figures photo from

New medicines must be approved as safe, efficacious and of good quality before they can be prescribed. But authors of two recent articles in the British Medical Journal argue that governments should introduce new criteria to the approval process.

In Australia, ensuring the safety and efficacy of medicines is the responsibility of the Therapeutic Goods Administration (TGA). A drug is efficacious if it cures or alleviates the disease or condition experienced by the patient.

Pharmaceutical companies undertake clinical trials to determine whether a potential new drug meets the requirements for market authorisation. The final stage of the clinical trial process entails administering the drug to a large number of people. The effect on these patients is then compared to a control group given a placebo.

This type of trial is designed to establish whether it’s better for the patient to take the drug in question than not to do so. But it’s not possible in this type of trial to determine whether the new drug is better (and, if so, how much better) than already available medicines (or other therapies).

Zen Cupcake/Flickr

Raising the bar

The BMJ articles argue that regulators, such as the TGA, should raise the bar for marketing approval – a new drug should be approved only if it’s found to be at least equivalent to an existing alternative in terms of criteria such as efficacy and safety.

If no such alternative is available, then a new drug providing even a small positive effect may, of course, be valuable to patients. But it’s rare for a new medicine to address a condition for which no drug therapy was previously available.

The first of the articles notes that most new medicines provide only marginal benefits; of the 218 new drugs approved by the United States Food and Drug Administration (FDA) between 1978 and 1989, only 34 (15.6%) brought important therapeutic benefits.

The authors argue that pharmaceutical companies should be made to spend less on research and development in areas where several drugs are already available, and more in areas where the need is greater. This would require spending more on basic research, and less on trivial product modifications for the purpose of extending patent protection.

It would also be socially beneficial if less money was spent on marketing, which at present is a much bigger cost than basic research. The authors show that major drug companies spend only 1.3% of revenue on basic research to discover new molecules. More than 80% of funding for this type of research comes directly or indirectly from the public sector.

Esther Dyson

Marketing rules

Pharmaceutical companies would have to change their research and development priorities if they were required to demonstrate comparative efficacy when applying for marketing authorisation. The authors of the second article point out that the criteria for marketing approval have not changed much since the early 1960s, when the FDA was mandated to establish proof of efficacy and safety following the thalidomide calamity.

The pharmaceutical industry considers comparative efficacy a regulatory requirement detrimental to innovation. Clinical trials would become more expensive and fewer new drugs would be launched. But the authors of the first article show that innovation over several decades, as measured by the number of new drugs approved by the FDA has remained unaffected by regulatory changes.

Over several decades now, the FDA has approved between 15 and 25 new medicines annually. In the authors’ view, there’s no problem of innovation in terms of the number of new drugs becoming available. Rather, the fact that new drugs typically don’t bring significant health benefits is the problem. Comparative effectiveness would provide an incentive for research and development to be focused less on disease areas already well served by many drugs, and more on those with poor treatment options.

Companies must to some extent already consider comparative effectiveness, at least in countries where public or private insurers pay a high proportion of the cost of medicines. The aim of health technology assessments undertaken when deciding whether new products should be listed on the Pharmaceutical Benefits Scheme (PBS), and similar assessments undertaken by agencies such as the National Institute for Health and Clinical Excellence in the United Kingdom, is precisely to determine comparative efficacy.

Tim Cigelske

For payers, such as the PBS, it makes no sense to accept higher prices for a new product than for an already available alternative, if the existing product is only equally effective. Or even to accept paying anything at all if it’s not as good as the existing alternative.

Empowering consumers

The researchers argue that there “is a need to align the evidence needs of regulatory bodies, country level payers, and health technology assessment agencies” to ensure that as complete information as possible is available to prescribers and consumers. The absence of such alignment sometimes results in a drug becoming available for prescribing (being approved for marketing) while not eligible for reimbursement by the insurer (such as the PBS), causing confusion among both prescribers and patients.

Raising evidence standards for market authorisation to include comparative efficacy in Australia or the United States could also be beneficial in countries with less developed regulatory systems. In much of the developing world, patients not only have to pay the full cost of medicines themselves, but markets are typically swamped by large numbers of brands including many irrational drugs, causing confusion and harm.

Irrational products could more easily be weeded out if regulatory agencies, such as the TGA and the FDA, were to approve of new drugs only if they are equal or better than existing alternatives. And that would ultimately be good for everyone.