In Search of Meaningful GAIN in Renewal of Prescription Drug Act

7/11/12

The repercussions of the Supreme Court’s recent ruling on the Affordable Care Act have largely overshadowed another key healthcare milestone—President Obama’s signing Monday of the Prescription Drug User Fee Act, also known as PDUFA V. Originally passed in 1992, PDUFA V re-authorizes the FDA to collect fees from drug sponsors to speed the review and approval of new drugs, and has been cited as a key reason why the U.S. is considered a world leader in providing patients access to innovative medicines. PDUFA is one of the rare pieces of legislation that has broad support among patients, the government, industry, and academia. Its timely reauthorization strengthens the U.S. healthcare system and facilitates access to potentially life saving new medicines.

One important area of life saving medicines highlighted in PDUFA V focuses on antibiotics, which I’ve followed closely as the CEO of San Diego’s Trius Therapeutics (NASDAQ: TSRX). The “Generating Antibiotic Incentives Now,” or GAIN Act, contains provisions that provide industry with incentives to develop innovative antibiotics to treat life-threatening infections caused by drug-resistant pathogens.

Why, you might ask, do we literally need an act of Congress to provide incentives to drug developers, especially in a political environment in which such actions have been viewed as “corporate welfare”? The answer lies in a near-perfect trifecta of ominous trends: the alarming growth of multidrug-resistant bacterial pathogens; the abandonment of antibiotic drug development by large pharmaceutical companies; and challenging capital markets that make it nearly impossible for small biotech companies—the true innovators in this therapeutic area—to finance the late-stage development of new antibiotics under current regulatory guidance.

While the GAIN Act provides advantages for antibiotic drug developers, will it truly accomplish the goal of stimulating the development of new antibiotics that work against drug-resistant pathogens? Such antibiotics are called “Qualified Infectious Disease Products” or QIDPs under the GAIN Act. Let’s look at some of the key provisions:

1. Market exclusivity. QIDPs would get an additional five-year period of market exclusivity beyond the standard periods of exclusivity for which they would qualify. In the U.S., new small molecule drugs are granted 5 years of Hatch Waxman market exclusivity, so this provision could convey a total of 10 years of market exclusivity to a sponsor with a new drug application (NDA) for a QIDP. What this means is that, for a period of 10 years from FDA’s approval of a sponsor’s NDA application, a potential competitor would not be able to use the data generated by a sponsor of the QIDP in a regulatory filing for a generic version of the sponsor’s antibiotic. While not the same as a patent term extension, an additional 5 years of market exclusivity would be advantageous for a drug with a current patent expiry within 10 years of NDA approval. Also, for a drug with a patent expiry currently beyond 10 years from approval, the additional 5 years of market exclusivity provides a safety net in the event of a patent challenge and invalidation. As an example, under this provision of the GAIN act, coupled with the current Hatch-Waxman extension, a new antibiotic approved in 2014 could have guaranteed market exclusivity through 2024 even in the absence of a valid patent.

2. Priority review. Under the GAIN Act, NDAs for QIDPs would qualify for Priority Review by the FDA. As the FDA’s current goal for Priority Review is six months, this provision could cut in half the time to approval compared to the 12-month Standard Review goal most antibiotics are currently afforded.

3. Fast track review. Sponsors of QIDPs would be provided with early and frequent communications with the FDA, in addition to the typical review and communication opportunities, to expedite the review and potential approval process.

4. Updated guidance. The GAIN Act provides for a specific timetable for the FDA to develop and issue draft and final guidance, and provides sponsors with the opportunity to request written recommendations from the Secretary of Health and Human Services on the guidance for antibiotic trials if such guidance is lacking from the FDA.

5. Pathogen-focused drug development. Requires the FDA to issue guidance on pathogen-focused antibacterial drug development.

While all of these provisions are welcome improvements that will facilitate the development of drugs currently in the development pipeline, they are not sufficiently game-changing to encourage large pharmaceutical companies to re-enter antibiotic development—nor will they likely incentivize private or public institutional investors to create new companies or to double down on their current investments in biotech companies developing antibiotics.

Here’s why:

First, the market for hospital-based antibiotics does not scale appropriately to the growth needs of large pharmaceutical companies. The perverse reason for this is that antibiotics cure acute diseases, which limits their sales compared to drugs needed to treat chronic ailment.

For example, growing the nearly $67 billion in revenue that Pfizer reported last year by 5 percent would require an additional $3 billion in new revenues. Peak sales for a hospital antibiotic would likely top out at about $1 billion before patent expiry. Pfizer’s linezolid (Zyvox), approved to treat pneumonia and skin infections, generated $1.3B in revenues last year, but this was achieved relatively slowly and has flattened with only 3.5 years of patent life left. Compare this with the situation at Cubist, which reported about $800 million in revenues last year, largely from the sales of daptomycin (Cubicin). Growing Cubist’s revenue by five percent would necessitate generating only about $40 million in new revenues. That can be achieved by the second year on the market for a reasonably differentiated hospital antibiotic. Daptomycin generated $59 million in revenue in its second year on the market in 2004). With approximately another six years of patent life left, Cubicin could generate revenue growth for Cubist that scales appropriately with the company’s size. Scaling revenue potential to the market is critical to companies and their investors.

Secondly, under the current FDA regulatory paradigm, achieving that $1 billion in peak sales would require any company to make an enormous investment in multiple sets of expensive, global Phase 3 trials. Antibiotics are the only therapeutic area in which multiple sets of registration-quality Phase 3 trials are necessary to gain full market potential. As an example, under the current regulatory paradigm in the U.S., a new agent for treating methicillin-resistantStaphylococcus aureus (MRSA) would have to undergo 6 Phase 3 trials—2 each in skin, lung and bacteremia—to be labeled for those indications even though MRSA is the common pathogen in each. Is there any wonder why large pharmaceutical companies have backed out of this area when they can deploy their development dollars in more lucrative therapeutic areas? The GAIN Act does not address this critical issue.

Nevertheless, there is a glimmer of hope in terms of addressing this issue in provision 5, “Pathogen-focused drug development.” Should the FDA truly revamp the antibiotic approval process in a manner that is more consistent with how clinicians treat patients—i.e. by the type of pathogen causing the infection rather than by what body part the pathogen happens to reside in—we would likely see an enthusiastic response from clinicians, patients, companies and investors. There is precedence for this in Japan where, in the case of MRSA, a single “all comers” Phase 3 trial is conducted that enrolls patients with MRSA skin, lung and bacteremia infections. This single trial enrolls much faster, is significantly less expensive to conduct and gets new antibiotics in the hands of clinicians and their patients much faster.

Are Japanese regulatory authorities more cavalier about the treatment or safety of patients? Of course not. As part of the approval process, all prior clinical and non-clinical supportive data are reviewed and must be consistent with efficacy and safety in the targeted indications. One important advantage that antibiotics have is that such early nonclinical data are highly predictive of Phase 3 results. If this is recognized and adopted in the FDA’s guidance in time to address the growing epidemic of multidrug-resistant infections, the U.S. populace will experience a truly meaningful “gain.”

Jeff Stein is the president and CEO of San Diego's Trius Therapeutics. He also has served as a Kauffman fellow and venture partner with Sofinnova Ventures, and as director of venture development at UC San Diego. Follow @

By posting a comment, you agree to our terms and conditions.

  • mgw6

    If the need is for antibiotics to treat these resistant strains then one
    of the biggest challenges for antibiotic development is not just
    finding new antibiotics but finding new antibiotics that can prove they
    are better against these pathogens, with clinically meaningful better
    outcomes, than currently available antibiotics. Providing incentives to
    develop another mediocre (“me too”) antibiotic merely because it has
    MRSA or some other resistant pathogen in its in vitro (lab) spectrum is a
    waste of money. For new antibiotics to qualify for the benefits of
    GAIN, for example, shouldn’t they be required to demonstrate (in the
    clinic, not just in the lab) that they actually can treat multi-drug
    resistant pathogens that are resistant to currently available
    antibiotics?

    • Jeff Stein

      You are certainly correct about the importance of clinical demonstration of efficacy and safety and this is why the FDA is updating guidance for antibiotic clinical trials. Keeping guidance up to date with the current science is a key objective. The challenge in an antibiotic clinical trial setting, however, is how to design a trial that is ethical, feasible and generates statistically meaningful results. For example, as much as we would like to design a trial that targets patients with linezolid resistant strains, to demonstrate that tedizolid is effective and linezolid is not, we cannot ethically conduct such a study knowing that 50% of the patients in the double blind linezolid controlled study will likely fail treatment. However, we can conduct animal studies to demonstrate this and there is ample evidence that the results of such studies for antibiotics translate to human clinical efficacy. With respect to your question about the GAIN Act, the QIDP designation is only given to drugs that have an approved new NDA based on clinical efficacy, not in-vitro activity against MRSA (in this example). In the article, I advocated for a clinical trial design that is more consistent with how clinicians treat infections and this is entirely consistent with your comments. Points well taken.