Monday, October 20, 2008

Long Tail of the Law

Drug products are evolving long tails and they are going to carry costs for firms well into the future.

Drug safety commitments in the US and in Europe are developing into regulatory requirements that will stretch out for years, requiring time and resources from companies even after the products may have lost all commercial viability.

Two recent examples demonstrate this quirk of regulatory evolution.

Pfizer’s inhaled insulin, Exubera, was pulled from the market a year ago in October 2007; but a year later, FDA is imposing a formal Risk Evaluation & Mitigation Strategy on the product. That’s the authority that the agency received for controlling products in the post-market from the FDA Amendments Act in September 2007.

An article in “The Pink Sheet” (October 13) delves into the reasons for FDA’s belated regulatory requirements on the discontinued product. FDA says it expects Pfizer to undertake a supplemental NDA filing for Exubera to develop a medication guide and a communications plan to set a precedent for future inhaled insulin products that might try to come to market citing Exubera as a reference.

The legacy regulatory requirement is going to likely to cost Pfizer time and effort and stretch well past the commercial demise of Exubera.

FDA is also using its new legislated authority to further require Pfizer to submit data from Phase IV commitments. When Exubera was approved, the Phase IV commitments were part of an agreement reached by the company with FDA to conduct seven studies on 85,000 patients. FDA is converting that agreement into a mandatory requirement for six of the studies.

Pfizer says the studies have been terminated. FDA explains that it added the beyond-the-commercial-grave requirement to assure that any data that was collected by the sponsor would be submitted. As FDA says, “while the completion of the trials was not a mandate, the submission of data was.”

Shire also has had a recent experience with a withdrawn product that demonstrates the lingering costs and obligations even after a product is off the market.

At mid-year, Shire said it was discontinuing its overseas erythropoietin product, Dynepo, as a result of lower prices for the EPO class due to the introduction of biosimilars at prices 20-30% below branded levels. The company did not mention the general troubles in the ESA class from declining indications but that could not have helped the commercial prospects.

For commercial reasons, Shire decided to call it quits. But for regulatory reasons, the product will have lingering costs.

According to a late July briefing by the company on first half results, Dynepo will cost Shire about $6.5 million to warp up previous post-market study requirements. The company explains that “the costs are part of the commitments made to participants, centers, doctors, and clinical staff.” Like Pfizer, the company does not plan to finish the studies, but costs remain.

The situation of continued studies after market withdrawal is not new. With the post-market becoming more heavily regulated and with FDA having authority to require work (not just request it), companies should be prepared for long tails dragging behind dead products and holding back operating results.

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