BREAKTHROUGH BUSINESS MODELS

Drug Development for Rare and Neglected Diseases and Individualized Therapies

Workshop Summary

Theresa Wizemann, Sally Robinson, and Robert Giffin

Forum on Drug Discovery, Development, and Translation

Board on Health Sciences Policy

INSTITUTE OF MEDICINE OF THE NATIONAL ACADEMIES

THE NATIONAL ACADEMIES PRESS

Washington, D.C.
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Theresa Wizemann, Sally Robinson, and Robert Giffin Forum on Drug Discovery, Development, and Translation Board on Health Sciences Policy

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THE NATIONAL ACADEMIES PRESS 500 Fifth Street, N.W. Washington, DC 20001 NOTICE: The project that is the subject of this report was approved by the Govern- ing Board of the National Research Council, whose members are drawn from the councils of the National Academy of Sciences, the National Academy of Engineer- ing, and the Institute of Medicine. Support for this project was provided by the American Diabetes Association; Ameri- can Society for Microbiology; Amgen, Inc.; Association of American Medical Col- leges; AstraZeneca Pharmaceuticals; Blue Cross Blue Shield Association; Burroughs Wellcome Fund; Department of Health and Human Services (Contract Nos. N01- OD-4-2139 and 223-01-2460); Doris Duke Charitable Foundation; Eli Lilly and Company; Entelos, Inc.; Genentech; GlaxoSmithKline; March of Dimes Foundation; Merck & Co.; Pfizer Inc.; and UnitedHealth Group. Any opinions, findings, conclu- sions, or recommendations expressed in this publication are those of the authors and do not necessarily reflect the view of the organizations or agencies that provided support for this project. International Standard Book Number-13: 978-0-309-12088-3 International Standard Book Number-10: 0-309-12088-8 Additional copies of this report are available from the National Academies Press, 500 Fifth Street, N.W., Lockbox 285, Washington, DC 20055; (800) 624-6242 or (202) 334-3313 (in the Washington metropolitan area); Internet http://www.nap.edu. For more information about the Institute of Medicine, visit the IOM home page at: www.iom.edu. Copyright 2009 by the National Academy of Sciences. All rights reserved. Printed in the United States of America The serpent has been a symbol of long life, healing, and knowledge among almost all cultures and religions since the beginning of recorded history. The serpent adopted as a logotype by the Institute of Medicine is a relief carving from ancient Greece, now held by the Staatliche Museen in Berlin. Suggested citation: IOM (Institute of Medicine). 2009. Breakthrough business models: Drug development for rare and neglected diseases and individualized therapies: Workshop summary. Washington, DC: The National Academies Press.

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“Knowing is not enough; we must apply. Willing is not enough; we must do.” —Goethe Advising the Nation. Improving Health.

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The National Academy of Sciences is a private, nonprofit, self-perpetuating society of distinguished scholars engaged in scientific and engineering research, dedicated to the furtherance of science and technology and to their use for the general wel- fare. Upon the authority of the charter granted to it by the Congress in 1863, the Academy has a mandate that requires it to advise the federal government on scientific and technical matters. Dr. Ralph J. Cicerone is president of the National Academy of Sciences. The National Academy of Engineering was established in 1964, under the charter of the National Academy of Sciences, as a parallel organization of outstanding engineers. It is autonomous in its administration and in the selection of its members, sharing with the National Academy of Sciences the responsibility for advising the federal government. The National Academy of Engineering also sponsors engineer- ing programs aimed at meeting national needs, encourages education and research, and recognizes the superior achievements of engineers. Dr. Charles M. Vest is presi- dent of the National Academy of Engineering. The Institute of Medicine was established in 1970 by the National Academy of Sciences to secure the services of eminent members of appropriate professions in the examination of policy matters pertaining to the health of the public. The Insti- tute acts under the responsibility given to the National Academy of Sciences by its congressional charter to be an adviser to the federal government and, upon its own initiative, to identify issues of medical care, research, and education. Dr. Harvey V. Fineberg is president of the Institute of Medicine. The National Research Council was organized by the National Academy of Sciences in 1916 to associate the broad community of science and technology with the Academy’s purposes of furthering knowledge and advising the federal government. Functioning in accordance with general policies determined by the Academy, the Council has become the principal operating agency of both the National Academy of Sciences and the National Academy of Engineering in providing services to the government, the public, and the scientific and engineering communities. The Council is administered jointly by both Academies and the Institute of Medicine. Dr. Ralph J. Cicerone and Dr. Charles M. Vest are chair and vice chair, respectively, of the National Research Council. www.national-academies.org

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PLANNING COMMITTEE FOR THE WORKSHOP ON BREAKTHROuGH BuSINESS MODELS: DRuG DEvELOPMENT FOR RARE AND NEGLECTED DISEASES AND INDIvIDuALIzED THERAPIES1 NANCy SuNG (Workshop Chair), Burroughs Wellcome Fund LINDA BRADy, National Institute of Mental Health DENNIS CHOI, Emory University TIMOTHy COETzEE, National Multiple Sclerosis Society PETER CORR, Celtic Therapeutics Management, LLLP ELAINE GALLIN, Doris Duke Charitable Foundation MIKHAIL GISHIzKy, Entelos, Inc. STEPHEN GROFT, Office of Rare Disease Research, National Institutes of Health MARLENE HAFFNER, Amgen SuzANNE PATTEE, Cystic Fibrosis Foundation WILLIAM THIES, Alzheimer’s Association IOM Staff ROBERT B. GIFFIN, Director SALLy ROBINSON, Program Officer ANDREA KNuTSEN, Senior Program Assistant REBECCA REy, Health Sciences Policy Intern RONA BRIERE, Consulting Editor 1 IOM planning committees are solely responsible for organizing the workshop, identifying topics, and choosing speakers. The responsibility for the published workshop summary rests with the workshop rapporteur and the institution. v

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FORuM ON DRuG DISCOvERy, DEvELOPMENT, AND TRANSLATION1 GAIL H. CASSELL (Co-chair), Eli Lilly and Company, Indiana EDWARD W. HOLMES (Co-chair), National University of Singapore BARBARA ALvING, National Center for Research Resources, Maryland NAOMI ARONSON, Blue Cross and Blue Shield Association, Illinois HAL BARRON, Genentech, California LESLIE z. BENET, University of California–San Francisco CATHERINE BONuCCELLI, AstraZeneca Pharmaceuticals, Delaware LINDA BRADy, National Institute of Mental Health, Maryland ROBERT M. CALIFF, Duke University Medical Center, North Carolina SCOTT CAMPBELL, American Diabetes Association, Virginia C. THOMAS CASKEy, University of Texas–Houston Health Science Center PETER B. CORR, Celtic Therapeutics, New York JAMES H. DOROSHOW, National Cancer Institute, Maryland JEFFREy M. DRAzEN, New England Journal of Medicine, Massachusetts JOSEPH M. FECzKO, Pfizer Inc., New York GARRET A. FITzGERALD, University of Pennsylvania School of Medicine ELAINE K. GALLIN, Doris Duke Charitable Foundation, New York STEvEN K. GALSON, Office of the Surgeon General, U.S. Department of Health and Human Services, Maryland MIKHAIL GISHIzKy, Entelos, Inc., California STEPHEN GROFT, Office of Rare Disease Research, National Institutes of Health, Maryland MARLENE HAFFNER, Amgen, Washington, DC PETER K. HONIG, Merck & Co., Inc., Pennsylvania RICHARD JuSTMAN, UnitedHealth Group, Minnesota MICHAEL KATz, March of Dimes Foundation, New York DAvID KORN, Association of American Medical Colleges, Washington, DC RONALD L. KRALL, GlaxoSmithKline, Pennsylvania JOHN R. MARLER, National Institute of Neurological Disorders and Stroke, Maryland MuSA MAyER, AdvancedBC.org, New York MARK B. McCLELLAN, Brookings Institution, Washington, DC SuzANNE PATTEE, Cystic Fibrosis Foundation, Maryland JOANNE L. RHOADS, National Institute of Allergy and Infectious Diseases (retired), Maryland 1 IOM forums and roundtables do not issue, review, or approve individual documents. The responsibility for the published workshop summary rests with the workshop rapporteurs and the institution. vi

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JANET SHOEMAKER, American Society for Microbiology, Washington, DC LANA SKIRBOLL, National Institutes of Health, Maryland NANCy S. SuNG, Burroughs Wellcome Fund, North Carolina JORGE A. TAvEL, National Institute of Allergy and Infectious Diseases, Maryland JANET WOODCOCK, U.S. Food and Drug Administration, Maryland vii

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Reviewers This report has been reviewed in draft form by individuals chosen for their diverse perspectives and technical expertise, in accordance with procedures approved by the National Research Council’s Report Review Committee. The purpose of this independent review is to provide candid and critical comments that will assist the institution in making its published report as sound as possible and to ensure that the report meets institutional standards for objectivity, evidence, and responsiveness to the study charge. The review comments and draft manuscript remain confidential to protect the integrity of the deliberative process. We wish to thank the following individuals for their review of this report: Russell L. Bromley, Myelin Repair Foundation Scott Campbell, American Diabetes Association Mikhail L. Gishizky, Entelos, Inc. Greg Simon, FasterCures Although the reviewers listed above have provided many constructive comments and suggestions, they were not asked to endorse the final draft of the report before its release. The review of this report was overseen by Hellen Gelband, Resources for the Future. Appointed by the Institute of Medicine, she was responsible for making certain that an independent examination of this report was carried out in accordance with institu- tional procedures and that all review comments were carefully considered. Responsibility for the final content of this report rests entirely with the authors and the institution. ix

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Preface The research and development process for new drug and biologic prod- ucts has become extraordinarily expensive and time-consuming. Even for large pharmaceutical companies working to develop potential blockbuster drugs, many consider the current model to be unsustainable. While devel- oping drugs to treat rare and neglected diseases can be just as expensive and time consuming as it is for blockbuster drugs, the products are often far less commercially viable to certain sectors of the pharmaceutical indus- try. Recognizing that patient advocacy groups can play a vital role in the development of new drugs to treat rare and neglected diseases, the Forum held a workshop in September 2007 entitled “From Patient Needs to New Drug Therapies: Can We Improve the Pathway.” The workshop featured the work of four patient-focused organizations: the National Breast Cancer Coalition, the Cystic Fibrosis Foundation, the Arthritis Foundation, and the American Diabetes Association. To better understand the innovative approaches being used by these organizations to help advance drug development, the Forum hosted a public workshop on June 23, 2008, titled “Breakthrough Business Models: Drug Development for Rare and Neglected Diseases and Individualized Therapies.” Investors, policy makers, and companies seeking to develop therapies for smaller markets came together to discuss innovative strategies being implemented to expedite the development of products for these less commercially viable conditions. The intent of the workshop was first to raise awareness of these new models. Additionally, participants discussed approaches for reducing the risk of such investments by both filling critical xi

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xii PREFACE funding gaps along the drug development pathway and pursuing highly targeted approaches to early-phase development. The workshop had several objectives. The first was to lay a foundation for the discussions by describing the changes that have taken place in the translational research process over the past 10 years, such as the 10-fold increase in investment by philanthropic organizations since 2000. The second objective was to discuss successful “venture philanthropy” models for funding translational research. Beyond new funding models, some phil- anthropic organizations and for-profit groups have undertaken innovative strategies to help expedite the development of safe and effective drugs for rare and neglected diseases by, for example, funding trials directly, support- ing resources such as tissue banks, and negotiating intellectual property. A third objective was to explore whether such strategies are successful and could be implemented more broadly. Finally, workshop participants were asked to examine regulatory, legislative, and institutional policy tools cur- rently in place to help advance the development of therapies for rare or neglected diseases. The workshop provided an opportunity for participants to share ideas and identify potential collaborative activities. It is our hope that this work- shop summary will serve as a resource for all organizations interested in advancing the drug development process for rare and neglected conditions, as well as individualized therapies. Nancy Sung Workshop Chair and Member Forum on Drug Discovery, Development, and Translation Stephen Groft Member Forum on Drug Discovery, Development, and Translation

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Contents 1 INTRODuCTION AND OvERvIEW 1 Scope of the Workshop, 3 Key Themes, 4 Organization of the Report, 5 2 CuRRENT MODEL FOR FINANCING DRuG DEvELOPMENT: FROM CONCEPT THROuGH APPROvAL 7 Investors in Drug Development, 7 Current Status of Investments, 9 Ways to Facilitate Drug Development, 11 3 THE FOOD AND DRuG ADMINISTRATION’S ORPHAN DRuG PROGRAM 12 Strategies, 15 4 DIvERSE FuNDING MODELS 19 Institute for OneWorld Health: A Not-for-Profit Pharmaceutical Company, 19 Cystic Fibrosis Foundation Therapeutics, Inc. (CFFT): A Virtual Company for Managing Drug Discovery and Development Alliances, 24 Genzyme: Surviving and Thriving as a For-Profit Company in the Rare Disease Arena, 29 xiii

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xiv CONTENTS Celtic Therapeutics, LLLP: A Private-Equity Model for Addressing Global Health, 32 Panel Discussion, 37 Open Discussion, 39 5 STRATEGIES FOR FACILITATING SHARING OF RESEARCH MATERIALS AND DATA 42 Finding and Bargaining for Research Materials and Data, 42 The Alzheimer’s Disease Neuroimaging Initiative (ADNI): A Public–Private Partnership, 45 Genetic Alliance BioBank, 51 6 STRATEGIES FOR NAvIGATING INTELLECTuAL PROPERTy 55 Overview: Creating an Enabling Intellectual Property Environment for Rare and Neglected Diseases, 55 Innovation in Alliances and Licensing: Vertex Pharmaceuticals Transforming Now for the Future, 64 The Myelin Repair Foundation: Accelerating Intellectual Property Sharing to Facilitate Translation, 67 The University of California at Berkeley’s Approach to Management of Intellectual Property, 71 Open Discussion, 78 7 STRATEGIES FOR FACILITATING CLINICAL TRIALS 82 FDA Review and Regulation of Small Clinical Trials: Successes, Barriers, and Directions for the Future, 83 Approaches to Accelerating Clinical Trials, 91 Muscular Dystrophy Association’s Approach to Maximizing Assets in Clinical Trials, 94 Open Discussion, 97 8 SuMMARy 98 Scientific and Regulatory Elements of the Translational Research Process, 98 Diverse Funding Organizations, 99 Sharing of Materials and Data, 100 Intellectual Property Strategies, 101 Approaches to Facilitating Clinical Trials, 101 Areas for Further Discussion, 102 REFERENCES 104

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xv CONTENTS APPENDIXES A Agenda 106 B Speaker Biographies 113 C Resources 128

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Tables, Figures, and Boxes TABLE 5-1 Examples of Repositories of Materials and Data Supported by the National Institutes of Health, 43 FIGuRES 3-1 The number of products that received orphan designation and the number of new drugs approved from 1983 to 2005, 14 3-2 Diseases treated by orphan drugs, 2000 to 2006, 15 4-1 Breadth and depth of the Cystic Fibrosis Foundation Therapeutics pipeline as of April 30, 2008, 26 4-2 The Therapeutics Development Network of cystic fibrosis clinical care centers, 28 4-3 Defining the gap in biomedical research, from idea to patent expiration, 35 5-1 Worldwide use of ADNI data, 50 5-2 Sources of applications for use of the ADNI database, 51 5-3 PXE International, Inc., biobank model, 53 6-1 Duke University concept of how a technology trust might create an enabling intellectual property environment for rare and neglected diseases, 63 6-2 Vertex approach to maintaining strategic research alliances, 67 6-3 The Myelin Research Foundation’s collaborative research process, 70 xvii

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xviii TABLES, FIGURES, AND BOXES 6-4 Bridging the translational research gap between discovery and treatment, 71 6-5 UC Berkeley IPIRA intellectual property management models, 74 BOXES 4-1 Examples of Business Models for Funding the Development of Drugs to Treat Rare and Neglected Diseases, 20 5-1 Examples of Data Sharing Models for Biomedical Research, 46 6-1 Managing Strategic Alliances, Licensing, and Intellectual Property: Company, Foundation, and University Perspectives, 56 6-2 Examples of Serendipitous Dual Markets, 61 6-3 Gates Foundation Global Access Agreements, 62 6-4 Examples of Innovations Licensed and/or Funded Under the Socially Responsible Licensing Program (SLRP) at UC Berkeley, 76 6-5 Highlights of “In the Public Interest: Nine Points to Consider in Licensing University Technology,” 78 7-1 Examples of Disease Foundation Strategies for Facilitating Clinical Trials, 84 7-2 FDA Review: Opportunities to Facilitate the Drug Development and Approval Processes, 86