Would Publicly Financed Clinical Trials Be Good?

March 12th, 2008 11:11 am By Ed Silverman

What if the cost of clinical studies was covered by reduced payments for drugs under Medicare Part D and other government programs? And what if the approach could save $120 billion over ten years? Would it be worth considering? That, of course, depends upon how such a gambit is structured. In a paper, Dean Baker of the Center for Economic Policy and Research offers some ideas that, he argues, will ultimately lead to improved public health.

To accomplish this goal, private firms would be contracted to run trials, which could be recovered by paying lower prices for drugs purchased through Medicare, which negotiate prices. “Removing the conflict of interest inherent in the current system of clinical trials and bringing drug prices closer to marginal costs would eliminate much of the inefficiency of the current system,” Baker writes.

He argues that publicly funded trials would eliminate the incentive and the opportunity to conceal evidence that a drug may have harmful side effects or to exaggerate evidence of the drug’s effectiveness, and could lead to lower costs because it would eliminate the incentive to carry duplicative drugs through the trial process in the hope of recovering sunk research costs.


Baker also maintains “publicly funded trials may be conducted at a lower cost…since there would be no incentive for independent contractors to overpay participating docs as a way to encourage them to prescribe a company’s drugs,” and that research could advance more quickly since all trial results would be immediately and fully disclosed allowing other researchers to benefit from the info. He also argues such trials would eliminate data exclusivity which, he says, raises prices in many developing countries, and that lower prices would eliminate the incentive for most industry marketing.

You can read the full report here.


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14 Comments

March 12th, 2008 at 12:26 pm Tom
Missing from this charming excursion into economic fantasy is mention of the probability that the American consumer will still pick up the drug development bill for the entire world and underwrite free drug to any nation that either can’t or won’t pay for it. Indeed, there is a ’60s-era caveat in the paper that we should find ways to share these costs with nations altruistically disposed toward helping out. But if foreign countries that can afford to pay for drug development aren’t pitching in now, is there any chance that they’ll pony up to fund a system that’s in effect run by the U.S. government? The current model for drug development is flawed and it’s economically unsustainable - let us hope there are better ideas than this to replace it.


March 12th, 2008 at 3:01 pm jeff
There would likely not be a single pragmatic head to head trial, thus never any real evidence as to best in class.


March 12th, 2008 at 3:20 pm Sam
The idea is a good one if policy and procedure for this activity is completely
ethical and countries contribute to the cost in proportion to its population.
The American public is paying for the cost of these drug studies performed
and designed by PHARMA so that positive outcome reports can convince
physicians “their” drug is the best. The hundreds of millions of dollars spent
by PHARMA on the studies and the $4.8 Billion spent on direct to consumer ads are simply passed on to the consumer and health care soars.
I would add one more responsibility that the FDA does not do. If the “new drug” does not significantly show a more therapeutic effectiveness than drugs already on the market, it should not be approved by any country’s FDA for marketing.


March 12th, 2008 at 3:34 pm Matt
The Case for Public Funding and Public Oversight of Clinical Trials

Tracy R. Lewis, Duke University
Jerome H. Reichman, Duke University
Anthony D. So, Duke University

http://www.bepress.com/ev/vol4/iss1/art3/


March 12th, 2008 at 4:58 pm Nathan
Sam says:
“If the “new drug” does not significantly show a more therapeutic effectiveness than drugs already on the market, it should not be approved by any country’s FDA for marketing.”

This is a topic we’ve addressed recently in other threads. The problem with your statement is twofold:
1) All drug risk is not known up front. We often don’t learn of a drugs problems until after it has been on the market and taken by thousands of people. Therefore, a “equally effective” drug may have a much better profile than the existing drug once these minor side effects come to light.
2) Drugs that are equally effective create competition amoung drugmakers and keep prices down. If you only approve superior drugs then every drug will essentially be a monopoly and command very high prices.


March 12th, 2008 at 5:09 pm pharma pr hack
Some clinical trial costs are picked up by the government- Medicare/Medicaid will pay for usual and customary treatment even if it is being sought as an offshoot of a clinical trial. Medicare and Medicaid won’t pay if the sponsor of the trial is already paying for it or providing it free. Also Medicare/Medicaid pays for treatment when an adverse event during a trial occurs.


March 12th, 2008 at 5:17 pm Jack2
What if two drugs offer approximately equal efficacy and overall tolerability, but the specific adverse event profile varies. Would you not approve the second drug?


March 13th, 2008 at 7:54 am Atlex
Adding to what Jack2 and Nathan wrote…if one drug is 60% effective and the second 50% effective, based on this system, the second one may not get approved. However, it is entirely possible that the second drug is effective in the 40% of patients who are not helped by the first drug. This may be hard to determine a priori and may best be determined in the market place.


March 13th, 2008 at 8:34 am Former pharma Marketing Exec
What I LIKE ABOUT THIS!!

I hope those who comment/commented have taken the time to read the report. It speaks exactly to the points I have been raising here on other threads.

Key Points are:
1.) “In the years from 1990 to 2004, almost 80 percent of the drugs approved by the FDA fell into the standard classification, meaning that they provided no significant advance over existing drugs.”

2.) “Many of the drugs receiving standard classification probably would be still be approved under the system of publicly funded trials outlined here.”

3.) “It may also be beneficial to bring some drugs with standard classifications through the FDA approval process if the existing drug(s) are known to have harmful side effects or to react badly with other drugs that some patients may be taking.”

4.) “This would discourage pharmaceutical companies from testing drugs that they did not believe offered significant benefits over existing drugs; however, in cases in which they believed that the publicly financed testers had overlooked an important new drug, they would still have incentive to carry through the necessary tests to gain FDA approval.”

5.) “The full public disclosure of research results should also help to advance the research process. If all the information from drug trials is made fully accessible to other researchers, it will vastly increase the amount that can be learned from these trials. Researchers will be able to readily analyze data within and across studies to determine the relative effectiveness of different drugs and the frequency of side effects for specific demographic groups and for those suffering from medical conditions, in addition to the condition being treated by a specific drug. This system of full disclosure sharply contrasts with the current system under which companies release only the data that they choose and the FDA strictly prohibits sharing any data without the approval of the company that submitted it.”

6.) “Another potential benefit of a publicly financed system of clinical trials is that it eliminates the potential for inappropriate payments to doctors for participating in drug trials.”

7.) “While it is appropriate that other countries share with U.S. taxpayers the cost of paying for clinical
trials, it is possible to devise far more efficient mechanisms for sharing these costs that do not
jeopardize the life and health of people in developing countries (e.g. Hubbard and Love, 2004).”

In Short, this has my full support


March 13th, 2008 at 10:41 am Outside the Box
Interesting thoughts; I’d just like to ask a couple of questions:

1. Given that the paper proposes that drugs be selected for inclusion in the system based upon preclinical data, who is going to come up with the models that allow us to predict this success at the preclinical stage?

2. Given that preclinical models that can reliably predict which compounds are going to be effective do not exist for virtually every disease known to man (if they did the failure rates would already be much lower and much of this conversation would be moot), in what way does this system significantly reduce the number of products being tested?

3. Given that all publicly funded systems in all walks of life are resource constrained, which branch of Government is going to be responsible for determining which diseases do not get researched?

4. Given that a stated objective of this system would be to ensure that all new approved drugs must be beneficial, how will the selection criteria be determined, who will police this process, and how many lawyers are going to be needed to manage the plethora of appeals against decisions made?

5. Who would own the intellectual property rights to aspects of a drug’s performance that were discovered during publicly funded trials that were not expected when the trial began?

These are just the first few things that came into my head. I’m not against the idea in principle, but I fear for any system that requires ingenuity, creativity, original thought and an entrepreneurial spirit being managed by the Government.


March 14th, 2008 at 12:26 am Nick Evans
The major flaw in this proposal, like most similar suggestions, is that it makes a completely unrealistic assessment of the willingness of governments to assume the risks of drug development.

Even if the political will existed to take drug development out of the hands of Pharma (which it doesn’t, and won’t) there is no liberal democracy in the world that would dare to take the political risk of a late stage drug failure.

Can you imagine what would happen to a government that spent a couple of hundred million dollars shepherding a drug through the clinical trial process (even based on the study author’s numbers, which I think are very low), only to have it bomb out in Phase 3?

They’d be crucified - and even though (with apologies to my American friends), successive US governments seem much able to waste taxpayers money without paying a political price than most other Western governments, I think even the US government would baulk at taking the political risks inherent in running a large scale drug development process.

And what happens in the case of a Vioxx? Every side effect, adverse reaction and death would be sheeted publicly home to the administration that authorised the trials - whether the adverse events were foreseeable or not.

You want to complain that the FDA isn’t approving enough new molecular entities now? You wouldn’t be able to get bread approved if the government was directly assuming the risks developing it…

I think there’s a lot to be said for divorcing the trial process from the funders - but compulsory (worldwide) trial registration and result disclosure would go further towards this than suggesting that governments take over the entire development process.


March 14th, 2008 at 8:16 am Nathan
Outside the Box:
#1 and #2 (I quote you below) are great observations. That hadn’t even occured to me… FPME, do you have any response to these issues?
———————-
1. Given that the paper proposes that drugs be selected for inclusion in the system based upon preclinical data, who is going to come up with the models that allow us to predict this success at the preclinical stage?

2. Given that preclinical models that can reliably predict which compounds are going to be effective do not exist for virtually every disease known to man (if they did the failure rates would already be much lower and much of this conversation would be moot), in what way does this system significantly reduce the number of products being tested?


March 14th, 2008 at 11:13 am Former pharma Marketing Exec
These are good comments.

My thought is that this would all provide for more transparency in the process. With this in mind:

1.) An expert panel of key research thought leaders including senior members from each pharma company.

2.) We find out what is missing and set up a separate task force to come up with those models while we carry forward with what we have.

As for the comments from Nick; my thoughts are that the failure rate would be significantly decreased just precisely because of this transparency. We can’t possibly predict what would happen when in fact the entire paradigm would be shifted.

Since you brought up Vioxx, I remind you that Merck knew the potential for cardiotoxicity - they took a gamble, not only did they lose, patients lost. Had they been more transparent doctors would have been able to monitor patients closely. Those who really benefited from the drug would still have had access to it. My feeling is that a system being proposed like this would greatly reduce situations like this. Another savings in the system: reducing legal fees and settlements.

The other opportunity here is to reach out and educate the public better. The public has got to be better informed on how this works and understand the responsibility they as patients have, when on treatment of any kind.

There could be much done with disease prevention, healthier lifestyle promotion and greater awareness of health issues and how to improve outcomes. Particularly in the cases where there is a direct link to lifestyle choices and disease.

The changes being proposed here herald many important opportunity’s to shift ourselves towards a healthier public.

Additionally, we should include the WHO and have representatives from all countries. They should pay their way as well.

However, I do have a concern about orphan diseases. We would need to be very careful not to neglect them.


March 14th, 2008 at 11:49 am Sam
Nathan says
This is a topic we’ve addressed recently in other threads. The problem with your statement is twofold:
1) All drug risk is not known up front. We often don’t learn of a drugs problems until after it has been on the market and taken by thousands of people. Therefore, a “equally effective” drug may have a much better profile than the existing drug once these minor side effects come to light.
2) Drugs that are equally effective create competition amoung drugmakers and keep prices down. If you only approve superior drugs then every drug will essentially be a monopoly and command very high prices.

#1 If you are dealing with financial concerns and and the safety of human lives, the FDA and procedures for safe testing a drug via controlled studies and not the quick approval of the drug for the financial concerns of PHARMA.
Recently the FDA ruled that a non approved use of an FDA approved drug
need not get FDA approval for the new indication. I objected to ruling on the
grounds that the new indication may require a much higher dose of the drug
that may cause significant adverse reactions to the patient. When Claritin was approved by the FDA, it did so because it was the only non-sedating
antihistamine on the market. When this drug was covered by insurance with
a co-pay of $10.00, every body wanted it. When this $3 pill went OTC and insurance would not cover it, no one wanted to spend $90 for a month supply. Also, later studies also that Claritin was only effective for 40% of the users.
#2 -Competitive drugs = competitive prices - surely you josh! There are 5
Rx proton pump inhibitor drugs(PPIs) -Aciphex, Nexium, Prevacid, Prilosec,
and Protonix. Each company used their chemistry set to make a slightly
different drug with slightly different doses. The average cost per dose is
approximately $4.60 + or - 35 cents. The only competitive price was the
generic OTC prilosec at about $1.25 a dose.

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http://www.bepress.com/ev/vol4/iss1/art3/


The Case for Public Funding and Public Oversight of Clinical Trials
Tracy R. Lewis, Duke University
Jerome H. Reichman, Duke University
Anthony D. So, Duke University


Download Tell a Colleague Print Submit a letter about this article

Summary
Clinical drug trials are public goods and should be publicly funded to avoid undersupply, the suppression of adverse results and other problems, according to Tracy R. Lewis, Jerome H. Reichman and Anthony D. So.
Recommended Citation
Lewis, Tracy R.; Reichman, Jerome H.; and So, Anthony D. (2007) "The Case for Public Funding and Public Oversight of Clinical Trials," The Economists' Voice: Vol. 4 : Iss. 1, Article 3.

Available at: http://www.bepress.com/ev/vol4/iss1/art3