Six-Month Market Exclusivity Extensions To Promote Research Offer Substantial Returns For Many Drug Makers

Transferrable Market Exclusivity Extensions to Promote Antibiotic Development: An Economic Analysis

BACKGROUND

To address the growing threat of multidrug-resistant organisms, policymakers are seeking ideas to promote development of novel antibiotics. In 2018, the REVAMP Act was proposed in Congress to reward manufacturers of certain novel antibiotics with transferrable market exclusivity vouchers.

METHODS

We estimated the economic impact of this proposal by identifying antimicrobial drugs approved by the FDA from 2007-2016 that would likely have qualified for an exclusivity voucher and matching each drug to the highest-revenue fast-track drug facing generic entry within 4 years after the antibiotic was approved. Assuming a spending decrease of 75% after generic entry, we calculated the per-drug and total societal costs of these transferrable market exclusivity extensions over a decade.

RESULTS

We identified 10 antimicrobials that would have qualified for an exclusivity voucher, each of which was matched with 1 of 17 fast-track drugs facing generic entry through July 2019. These 10 drugs had a median annual revenue before generic entry of $249 million (range, $26 million-$2.7 billion). Accounting for a 75% spending reduction after generic entry, the median excess spending associated with 12 months of extended exclusivity was $187 million, for a total of $4.5 billion over 10 years.

CONCLUSIONS

While market exclusivity extensions are a politically appealing mechanism to encourage novel antibiotic development, this approach would cost public and private payers billions of dollars over the next decade.

Labeling Changes and Costs for Clinical Trials Performed Under the US Food and Drug Administration Pediatric Exclusivity Extension, 2007 to 2012

Importance

Pharmaceutical manufacturers can receive 6 additional months of market exclusivity for performing pediatric clinical trials of brand-name drugs widely used in adults. Congress created this incentive in 1997 because these drugs were being used off-label in children without such trials.

Objective

To review updates to drug labeling and the cost to consumers of extending market exclusivity related to the pediatric exclusivity program.

Design

From government records, we identified 54 drugs that earned the pediatric exclusivity incentive between 2007 and 2012. We evaluated labeling changes from the pediatric studies. We then extracted trial details from clinical review documents and used industry estimates of trial costs on a per-patient basis to estimate cost of investment for trials (with a 10% cost of capital). To calculate the net return and cost to consumers during the 6-month exclusivity period, we estimated additional revenue for the 48 drugs with available information.

Main Outcomes and Measures

For each drug, we evaluated labeling changes and costs associated with pediatric trials under the Best Pharmaceuticals for Children Act and the cost to consumers of 6-month market exclusivity extensions.

Results

The 141 trials in our sample enrolled 20 240 children (interquartile range [IQR], 2-3 trials and 127-556 patients per drug). These trials led to 29 extended indications and 3 new indications, as well as new safety information for 16 drugs. Median cost of investment for trials was $36.4 million (IQR, $16.6 to $100.6 million). Among 48 drugs with available financial information, median net return was $176.0 million (IQR, $47.0 million to $404.1 million), with a median ratio of net return to cost of investment of 680% (IQR, 80% to 1270%).

Conclusions and Relevance

Clinical trials conducted under the US Food and Drug Administration's pediatric exclusivity program have provided important information about the effectiveness and safety of drugs used in children. The costs to consumers have been high, exceeding the estimated costs of investment for conducting the trials. As an alternative, policymakers should consider direct funding of such studies.