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Executive Summary Pharmacotherapy for the treatment of drug addictions has received far too little attention, despite the clinical success of methadone, which dates back to the 1960s. Over the last 30 years, only two additional medications have been approved for the treatment of opiate addiction naltrexone and levo-alpha- acetylmethadol (LAAM:and it is important to note that both those medications were developed in the 1960s and early 1970s. There is still no approved medication for the treatment of cocaine addiction. During the same 30 year period, however, serious medical and social problems have evolved as drug addiction has become a route for spreading the acquired immune deficiency syndrome (AIDS) through the sharing of contaminated needles and the trading of sex for drugs; multiple-drug-resistant tuberculosis has become common in immunocompromised, human immunodeficiency virus (HIV) infected drug- dependent individuals; an association between illicit drug use and increasing violent crime has become clear; and the medical consequences for infants exposed in utero to cocaine have become evident (Chapter 1~. It is for those reasons and others (Chapter 3) that the committee focused its attention on medications to treat opiate and cocaine addictions, although it recognizes that the two addictive drugs that are most important with respect to morbidity, mortality, and economic costs are alcohol and nicotine. 'Drug addiction is defined as the compulsive use of a drug despite adverse consequences. This report focuses on opiate and cocaine addictions and does not address alcohol and nicotine addictions.

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2 DEYELOPAJENT OF MEDICATIONS Given the magnitude of the illicit-drug-use problem (there are an estimated 0.5-1 million heroin-dependent individuals and 2.1 million cocaine-dependent individuals) and its economic and public-health consequences, addressing the issue requires a dedicated effort not only to develop pharmacotherapies but also to foster prevention, education, and the use of other treatment approaches. Yet, pharmacotherapy, as a viable adjunct to other treatment modalities, has not received widespread support from the federal government, nor has the private sector been active in developing anti-addiction medications. It was in-this climate of a near absence of private-sector and government activity in the development of anti-addiction medications that Congress estab- lished the Medications Development Division (MDD) in the National Institute on Drug Abuse (NIDA). The division began in 1990 to coordinate and encourage academic, private, and federal regulatory involvement in developing and bringing to market new medications for the treatment of drug addiction. In 1992, the Congress stipulated in the Alcohol, Drug Abuse, and Mental Health Administra- tion (ADAMHA) Reorganization Act (P.L. 102-321) that the Department of Health and Human Services contract with the National Academy of Sciences to establish a committee in the Institute of Medicine (IOM) to examine the current conditions for the development of anti-addiction medications. This report by the IOM Committee to Study Medication Development and Research at the National Institute on Drug Abuse responds to the Congressional mandate by examining the progress of NIDA's Medications Development Division and exploring the scientific, marketplace, regulatory, and other factors that adversely affect the development of anti-addiction medications. The committee met with representa- tives of the IOM Drug Forum, the pharmaceutical industry, and federal agen- cies NIDA, the Food and Drug Administration (FDA), and the Drug Enforce- ment Administration (DEA:conducted a survey ofthe pharmaceutical industry, and sponsored a Workshop on Policies to Stimulate Private Sector Development of Anti-Addiction Medications. As a result of the committee's deliberations, meetings, and workshop, it became evident that the major disincentives to pharmaceutical R&D for anti- addiction medications include: an inadequate science base on addiction and the prevention of relapse (especially for cocaine); an uncertain market environment which includes such issues as: treatment financing, lack of trained specialists for the treatment of drug addiction, federal and state regulations, market size, pricing issues, societal stigma, liability issues, difficulties in conducting clinical research; and a lack of sustained federal leadership.

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E9fECUTIl'E SUMMARY STATE OF THE SCIENTIFIC KNOWLEDGE ON ADDICTION 3 The initiating event leading to drug addiction is the administration of an agent, such as heroin or cocaine, to obtain a pleasurable effect. Addiction is characterized as the compulsive use of a drug despite adverse consequences. Key problems in addiction are how to prevent the onset of compulsive drug use and how to prevent relapse and the craving that leads to relapse (Chapter 21. In the past, much medical attention has been given to treatment (detoxification) for the symptoms of acute abstinence. Yet, knowledge about the pathophysiology of the syndromes of protracted abstinence and conditioned withdrawal or relapse is still rudimentary and presents an important challenge to development of anti-addiction medications. Since the 1960s, it has become clear that the effects of opiate drugs are mediated through interaction with opioid receptors and interference with actions at those receptors presents a rational strategy for developing medications for opiate addiction. The mechanism of cocaine addiction is not well characterized, however, it is understood that the major pharmacological effect of cocaine is on the dopaminergic system of the brain. Unfortunately, the potential involvement of a wide range of neurotransmitter systems in cocaine's actions makes the development of a treatment medication difficult because no single target site is immediately apparent. In fact, an optimal strategy might require the use of several drugs that have different mechanisms of action. In response to the absence of a well-defined mechanism of action or a compound for the treatment of cocaine addiction, MDD has developed the Cocaine Treatment Discovery Program (CTDP) to screen candidate compounds through a tiered strategy that uses both in vitro biochemical assays and in viva behavioral tests. However, several factors limit the effectiveness of the screening protocols and their predictive value in humans, including the lack of knowledge of the mechanism of cocaine addiction; the lack of animal models for addiction, craving, and relapse; and the small number of compounds supplied to NIDA for screening. In its report, the committee makes several specific recommendations to MDD regarding the CTDP program. Because the state of scientific knowledge of addiction is rudimentary, the committee believes that it is imperative to foster NIDA's basic-research efforts in the mechanism of cocaine addiction and in the molecular, cellular, and behavioral bases of chronic drug effects and the genetics of vulnerability to addiction. There is also a need for basic research to develop laboratory models of behavioral characteristics of the addictive process. The committee strongly believes that unless basic research is supported at an appropriate funding level, it will be difficult to make the necessary progress in the scientific knowledge base. The lack of such knowledge would continue to hamper the private sector and MDD in the development of a medication.

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4 DEVELOPMENT OF MEDICATIONS In relation specifically to MDD, the committee recommends two mechanisms to address the critical issue of supporting basic science: The committee recommends that MDD be given a high priority for funding. Although MDD was authorized at $95 million in FY 1994, its appropriation of $40 million was considerably short of its authorization and is far below what is needed for research and development. The committee is aware, however, of the budget constraints on the institutes of the National Institutes of Health (NIH); as a possible mechanism for increased support, the committee suggests the use of funds from the Special Forfeiture Fund in the Office of National Drug Control Policy (ONDCP).2 Utilizing a portion of those funds for basic research not only would provide additional money to MDD, but would demonstrate executive-branch support. The committee recommends that NIDA designate national drug abuse research centers, subject to congressional appropriations, as described in the ADAMHA Reorganization Act [P.L. 102-321, Section 464N (a)l, "for the purpose of interdisciplinary research relating to drug abuse and other biomedical, behavioral, and social issues related to drug abuse." Those centers would be engaged in and would coordinate all aspects of drug-abuse research, treatment, and education. The paucity of basic knowledge is best approached through a coordinated effort, and the committee intends that such centers serve as focal points for all 2The ONDCP Special Forfeiture Fund results from the transfer of money from the Federal Asset Forfeiture Fund (described below). In FY 1990, the Federal Asset Forfeiture Fund transferred $117 million to federal law-enforcement agencies. Deposits of $17 million were also made to the Special Forfeiture Fund to supplement ONDCP program resources and of $115 million to support Federal prison construction. The use of the Special Forfeiture Fund is at the discretion of the director of ONDCP. The Federal Asset Forfeiture Fund is a sum of money resulting from the sale of assets used in criminal activity that have been seized by the government. In 199O, DEA seized assets valued at more than $1 billion. About two-fifths of the assets seized by DEA was currency valued at almost $364 million. In addition, DEA seized $346 million worth of real property, 5,674 vehicles worth over $60 million, 187 vessels valued at over $16 million, and 51 airplanes worth over $25 million. Almost two-thirds of DEA's seizures during 1990 resulted from cocaine investigations. DEA seizures that were ultimately forfeited are valued at more than $427 million in 1990.

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EXECUTIVE SUMMARY aspects of drug-abuse research and their designation would have the added benefit of encouraging new investigators to enter the field; the centers would also serve as sites for clinical trials and for training clinicians. With the designation of such centers, the committee believes, progress will be made in basic and clinical research on the treatment of drug addiction (Chapter 2~. NIDA'S MEDICATIONS DEVELOPMENT DIVISION In recognition of the need to stimulate the availability of medications to treat drug addiction, the Anti-Drug Abuse Act of 1988 (P.L. 100-690) authorized funds for a drug discovery and development program in NIDA. Beginning with an appropriation of $8 million in 1988, NIDA launched a Medications Development Program in its Division of Preclinical Research. Building on this program, NIDA formally established the Medications Development Division in 1990. The primary strategy adopted by MDD is to work with industry to perform the research and development necessary to secure FDA marketing approval for new medications to treat drug addiction. MDD does not operate inhouse laboratories or clinical-development programs to fulfill its mission. It manages this work through multiple external instruments, such as contracts, grants, and interagency and collaborative agreements (Chapter 3~. While the current budget of $40 million and staff of 33 full-time equivalents (FTEs) might be adequate to support the development of a small portfolio of products based on drugs that are already in use, the committee believes that they are insufficient to support basic research. Additionally, MDD has had difficulty in stimulating private-sector interest, in acquiring industry partners, and in obtaining a suitable number of compounds for screening. MDD had originally developed a screening agreement in which a compound's structure is made public after a 3-year period of confidentiality. That agreement has hindered MDD's ability to acquire compounds and affected MDD's capability to develop its screening program adequately because many companies did not want their confidential data to be made public. Thus, in 1994 MDD revised their original screening agreement and now all screening data from industry compounds will remain confidential. That change in policy should have a beneficial effect on MDD's screening program. Although the committee commends MDD for the establishment of anti- cocaine and anti-opiate screening programs, the lack of established in vitro screening methods and validated animal models that are predictive in humans, especially for anti-cocaine medications, limits the utility of the screening program. The committee feels that there is a need for basic research to develop laboratory models of critical behavioral characteristics of the addictive process.

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6 DEVELOPMENT OF MEDICATIONS Improvement of such methods and models should be given a high priority for grant and contract support by MDD. It became apparent to the committee, during its review of MDD and numerous meetings with industry representatives, that strong leadership is needed in promoting pharmacotherapy as an important component of our national strategy. Leadership must come from many sources, especially from the highest levels of the federal bureaucracy. However, an important leadership role belongs uniquely to NIDA and especially to MDD. MDD must view itself as the leader in stimulating private-sector interest in developing anti-addiction medications. The committee views this national leadership role as one of the key functions of MDD. Consequently, it should be empowered to lead, as well as to fulfill, a scientific and technical mission. The committee recommends that NIDA and MDD, in determining how to improve MDD's relationship with industry, evaluate the applicability of the techniques already in use by the Developmental Therapeutics Program of the National Cancer Institute, the National Cooperative Drug Discovery Groups on Acquired Immune Deficiency Syndrome of the National Institute of Allergy and Infectious Disease, and the Anticonvulsant Drug Development Program of the National Institute of Neurological Disorders and Stroke. Those are all programs (Appendix E) of similar mission within NIH that have established effective working relationships among leading academic and government scientists, FDA, and individual drug companies through a combina- tion of scientific communication, mutual technical assistance, cooperative agreements, and licenses. In the committee's view, the primary policy responsi- bility of MDD should be to provide such leadership as a complement to its scientific responsibilities (Chapter 31. EFFECTIVENESS OF TREATMENT There is strong consensus that methadone maintenance treatment is effective for the treatment of opiate addiction (IOM, 1990; OTA, 1990; Anglin and Hser, 1992; Prendergast et al., in press). Treatment is effective in reducing opiate use, criminal activity, and intravenous drug use. The evidence of treatment effective- ness is not as strong for cocaine treatment, yet there is an accumulating body of research pointing to the effectiveness of psychosocial treatment modalities. As yet, there is not a pharmacologic agent for the treatment of cocaine addiction or a medication to reduce cocaine craving.

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EXECUTIVE SUMMARY 7 Treatments for opiate and cocaine addiction are cost-effective (Chapter 41. When the cost of opiate and cocaine treatment is compared to the benefits in reduced crime, the result is unambiguous: every dollar invested in treatment yields at least two and up to four dollars, and sometimes more, in societal benefits (Gerstein et al., 19941. Treatment also averts other health care costs. In short, current treatments for opiate and cocaine addiction, while variable in nature and cost, are both effective and cost-effective. Clearly the federal government should make every effort to expand the treatment capabilities of the states. New medications, especially for cocaine addiction, do hold the potential to reduce some of the need for counseling, which forms the largest share of treatment charges. With lower overall treatment costs, treatment can prove to become even more cost-effective. The committee strongly recommends expanding the treatment capabilities of the states for opiate- and cocaine-dependent individ- uals to ensure that all those seeking treatment obtain it without delay. The recommendation may be implemented by: Providing additional money to increase treatment in states where there are waiting lists. Shifting money from supply control programs to treatment programs. TREATMENT FINANCING The financing3 of treatment is often cited by the pharmaceutical industry as yet another deterrent to the development of anti-addiction medications (Chapter 51. Prominent reasons are the fact that so few patients have private insurance and there is a concomitant need to rely on direct public subsidy to pay for their treatment (IOM Workshop, June 13, 1994~. The annual payments for methadone maintenance treatment are estimated at $480 million in PY 1993. There are an estimated 117,000 patients for whom annual expenditures are about $4,100 each. Currently the financing of methadone treatment is deeply dependent on the public sector, primarily in the form of federal block grants and state alcohol and drug agency funds. Despite the sizeable public role in financing, neither state agencies or the federal government have 3Financing is generally defined as the payment or reimbursement for the cost of treatment made by private insurance, Medicaid, the patients themselves, or other sources. Financing is important to pharmaceutical investment because it has a critical effect treatment supply and the demand of treatment (Rogowski, 1993~.

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8 DEVELOPMENT OF MEDICATIONS consolidated their potential market leverage to secure discounts on large volume pharmaceutical purchases. Private insurance payment is almost insignificant. Patients are willing to pay their share, but were treatment to become more costly, patients are not likely to have the resources to absorb increased costs. State financing has been and is expected to be a major impediment to the sale of LAAM, according to both BioDevelopment and clinic operators. State financing practices can be so rigid that they effectively block the introduction and adoption of a new medication. The flow of funds to clinics is dictated by the policies and regulations of two separate state agencies: the state alcohol and drug agency, which administers state funds and federal block grants, and the state Medicaid agency, which administers state and federal Medicaid dollars. There is widespread variation in funding practices (IOM, 1995), but either state agency can erect financial barriers to the adoption of a new medication. New York set a flat daily or weekly fee per patient (which usually includes all services without specifying the amount for medication and dispensing), and other states have set a flat fee for a "dosing visit," the dispensing of one dose of medication. California, authorizes ceilings on the number of publicly funded patients that can be treated at each clinic (Goldstein, 1989~. Under these funding practices, LAAM is at a disadvantage because it is more expensive than methadone, the medication for which reimbursement rates have been structured over the past 20 years. To obtain better reimbursement, clinics must petition the appropriate agency for more favorable rates. Financing and regulatory obstacles are contributing to the stalled market penetration of LAAM. LAAM's higher price may have exacerbated the problem, but the rigidity of the financing and regulatory structure antedates its introduc- tion. This is unfortunate as LAAM is potentially more effective therapeutically. Even one of LAAM's selling points for public health the prospect of increasing clinic patient loads- has become a disincentive for state alcohol and drug authorities struggling to find additional funding not just for LAAM, but for the higher costs of counseling and comprehensive treatment for possibly more patients. If BioDevelopment Corporation succeeds in securing adequate financing, that will serve as an incentive to other pharmaceutical companies. If not, the fixture for other opiate medications does not appear encouraging. Therefore, the committee strongly urges state and federal agencies to work together, not only to provide an incentive to pharmaceutical companies, but in the interest of public health, to facilitate the availability of newly approved anti-addiction medications. Possible mechanisms that the states and federal government might consider include requiring all Substance Abuse Block Grant recipients to offer those medications to patients and assuring appropriate financing of new medications by state alcohol and drug agencies and their counterpart Medicaid agencies. Those actions would have the additional benefit of providing a strong signal to

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EXECUTIVE SUMMARY 9 pharmaceutical companies demonstrating state and federal commitment to the development of ar~ti-addiction medications (Chapter 5~. TRAINING AND EDUCATION Although the limited availability of scientists and clinicians specializing in drug abuse research and treatment has direct consequences for the delivery of health care services and research on new treatments, it has a less obvious, but equally important, effect on pharmaceutical R&D investment. Pharmaceutical companies traditionally market their products to health care professionals and promote their products through personal visits by sales representatives, through journal and mail advertising, and through support of scientific symposia and continuing medical education. Pharmaceutical companies distribute their products through hospital and community pharmacies, pharmacy chains, and distributors. To the extent that the treatment of drug dependence is often delivered outside that system by specialized clinics (e.g., narcotic treatment programs, typically with part-time physicians and limited marketing opportunities for pharmaceutical companies), and to the extent that drug abuse treatment involves many fields of medicine (e.g., family practice, internal medicine, psychiatry), pharmaceutical companies see greater difficulty in marketing anti-addiction medications than in marketing other products. Pharmaceutical firms also rely on academic clinical investigators and practicing clinicians to advise them on drug development issues such as current therapeutic trends, the role of drugs in the overall treatment strategy, unmet medical needs, indications to be evaluated, clinical trial design, and appropriate therapeutic endpoints. The committee believes that a long-term national effort is needed to strengthen the substance abuse education and training of both specialists and primary care physicians. That effort will strengthen the infrastructure needed for research arid treatment arid will encourage pharmaceutical investment in this field (Chapter 61. The committee recommends that the federal government increase its efforts to attract researchers and clinicians to the field of drug addiction treatment. That may be accomplished by implementing one or all of the following options: NIDA's training budget could be increased, but not at the expense of their research programs. Requests from NIDA for large increases in its training budget have not been filled in FY 1993 or FY 1994, and NIDA has received a lower percentage of training funds than several other institutes. Increasing NIDA's training

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10 DEVELOPMENT OF MEDICATIONS budget such that it will enable NIDA to offer fellowships that are competitive with private sector salaries, and therefore, more attractive to potential candidates would "jump-start" the expansion of the field of drug addiction treatment and research; it could have nationwide impact by increasing the numbers of scientists and physicians recruited, trained, and working in the field of drug addiction. An educational loan repayment program in return for work in drug abuse-related clinical research could attract young physi- cians with substantial educational debt into careers as clinical investigators. . Mid-career programs could be developed to encourage a cadre of practicing physicians and scientists to enter the field of drug addiction treatment and research. The committee recommends an increased emphasis on drug abuse education throughout medical school and primary care residency programs. To accomplish this, the following could be implemented: Drug abuse education could follow a systematic, integrated approach to coordinate the curriculum across specialty depart- ments. Training institutions could develop affiliations with community-based treatment centers, where feasible, to provide student access to multiple treatment settings. The National Board of Medical Examiners4 and the primary care specialty boards of the American Board of Medical Specialties (ABMS) could pay increased attention to drug abuse issues, skills, and knowledge on their examinations for certification. Faculty development programs could receive increased federal support. The Center for Substance Abuse Prevention's Faculty Development Program which trains medical school faculty members to serve as role models, educators, and mentors in the field of drug abuse research and treatment is a good model. The committee recommends that comprehensive drug abuse centers be developed to engage in and coordinate all aspects of drug-abuse research, treatment, and education. Further, the committee recom 4The National Board of Medical Examiners prepares and administers to medical students a two-part examination that is accepted by individual states as part of licensing.

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EXECUTIVE SUMMARY mends that NIDA and the Substance Abuse and Mental Health Services Administration (SAMHSA) work together to coordinate the effective and efficient use of existing centers by adding, where feasible, research, training, and/or treatment components. FEDERAL REGULATORY ISSUES Food and Drug Administration 11 Clinical testing and market approval of any new medication requires compliance with the regulatory requirements of FDA. In recent years, the traditional approval process has undergone changes designed to expedite FDA review and to expand the use of experimental treatments under some circum- stances. The recent changes to the traditional drug-approval process might provide additional opportunities for encouraging and expediting the development of anti-addiction medications. Of particular importance are three initiatives intended to expedite the availability of drugs to treat serious and life-threatening diseases for which no adequate therapeutic alternatives exist (Chapter 7~. First, under the treatment-IND (investigational new drug) regulations, FDA may approve the distribution of an investigational drug outside the context of controlled clinical trials to treat patients with serious or immediately life- threatening diseases for which no comparable or satisfactory alternative therapy is available. A second mechanism, known as parallel track, also extends the availability of investigational drugs. Under parallel track, "promising" investiga- tional agents may be provided to patients who are not able to take standard therapy or for whom standard therapy is no longer effective and who are not able to participate in clinical trials. The third important development is FDA's accelerated-approval-program. Adopted in its final form in December 1992, accelerated approval is available for drugs that offer "meaningful therapeutic benefit compared to existing treatment" for serious or life-threatening illnesses. As an incentive to the pharmaceutical industry and because drug addiction should qualify as a serious and life-threatening disease, The committee recommends that FDA make the treatment-IND route, the parallel-track mechanism, and accelerated approval available for anti-addiction medications.

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EXECUTIVE SUMMARY 15 the federal level is prolonged for all newly approved drugs that are controlled substances (Chapter 71; this regulatory delay can become years when the rescheduling process requires both state and federal action and cannot begin until NDA approval, e.g., LAAM. The committee believes that the public health would be best served by an interpretation of the "currently accepted medical use" clause in the Controlled Substances Act that would recognize the use in humans under an IND and permit the scheduling process to begin at the time of NDA submission. The information required for scheduling a drug is already required to be in a self-contained section of the NDA. That section could be reviewed on a fast-track basis by FDA, and a scheduling recommendation could be sent to DEA well ahead of NDA approval. Scheduling could be done contingent upon final FDA approval. That approach would permit states to reschedule schedule I drugs closer in time to final FDA approval, minimizing delays such as the one now affecting LAAM, and have no negative drug control implications. Furthermore, it would remove a significant regulatory disincentive at the federal level that affects all scheduled drugs, not just schedule I substances. The committee concludes that if the current situation continues unchanged, it will have a chilling effect on private sector investment for any medication that may potentially meet the legal definition of a narcotic. The committee recommends that the Office of National Drug Control Policy (ONDCP) direct DEA, in consultation with FDA and NIDA, to revise its policy on determining when a drug has a currently accepted medical use in treatment so that, for new therapeutic drugs that are also controlled substances, the process of scheduling can begin as soon as possible after submission of the NDA. The committee believes that additional steps should be taken by federal agencies within the existing system to reduce future state obstacles. The committee proposes a two-step set of actions, interim and long-term. There are two interim steps federal agencies (ONDCP, FDA, SAMHSA, NIDA, and DEA) should take under existing authorities to ameliorate the delays, complexity, and lack of uniformity at the state level. Interim Actions The committee recommends that federal agencies (ONDCP, NIDA, SAMHSA, FDA, and DEA) work more closely and actively with state regulatory authorities early in the drug development process

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16 DEVELOPMENT OF MEDICATIONS to prepare the path for new anti-addiction medications. That recommendation can be implemented as follows: Identification cf a regulatory point of contact in each state; Basic information could be given to the state contact early in the drug development process (preferably no later than the sub- mission of an NDA) about the medication, with emphasis on characteristics that would be of most interest to state regulatory authorities (diversion potential, target populations, or any special characteristics that would affect how the drug would be dispensed, such as dosing frequency). To the extent that any of the information is proprietary and confidential, the developer's permission for such disclosure would have to be obtained. As the medication moves closer to FDA approval, federal agencies could ensure that the necessary state regulatory processes begin immediately after approval, or, if state regulations permit, even before, such as upon the issuance of an approvable letter. Federal agencies could work with the state contact, as the product moves through the state regulatory process, to correct any problems as they arise. . The committee recommends that ONDCP, in cooperation with FDA, DEA, SAMHSA, and NIDA, take an active role in compiling relevant information about state regulatory processes for anti- addiction medications that are categorized as narcotics and educat- ing state regulators and pharmaceutical company representatives about the processes and their practical consequences. To implement that recommendation, the following steps may be taken: Conduct a comprehensive study of state laws and regula- tions pertinent to the development of anti-addiction medications that are controlled substances, and develop a step-by-step manual for pharmaceutical companies explaining the mechanisms involved in launching an anti-addiction medication. . Establish and maintain on-line access to the comprehensive study, as well as to state regulatory information of a practical nature (for example, a directory of relevant state officials) to facili- tate pharmaceutical company access. Sponsor nationwide or regional educational meetings for state authorities and clinic administrators to disseminate infor- mation about potential anti-addiction medications.

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EXECUTIVE SUMMARY 17 Long-Term Actions Ultimately, close attention should be given to reforming the current patchwork of state regulations. The committee considered total federal preemp- tion of state controlled-substance laws and regulations insofar as those authorities affect the development of anti-addiction medications, but it concluded that such a proposal would go beyond what is strictly necessary, and could also be politically unrealistic. The committee does believe, however, that the initiative for reform must come from the federal government, and will have to involve some form of legislative change. The committee recommends, on the basis of the comprehensive study recommended above, that ONDCP, in coordination with other relevant federal agencies, develop a series of specific actions encouraging states to reform their laws and regulations to facilitate the availability of new anti-addiction medications that are con- trolled substances.6 Those actions should give particular attention to: Modifying state laws and regulations for narcotic treatment programs to remove the need to reopen and amend the laws or regulations to accommodate each new product. Imposing specific deadlines for state regulatory action in response to FDA approval of a new anti-addiction medication that requires state action to be dispensed to patients. Developing flexible, alternative means of controlling the dispensing of anti-addiction narcotic medications that would avoid the "methadone model" of individually approved treatment centers. Finally, the committee urges that Congress, in cooperation with the National Conference of Commissioners on Uniform State Laws, draft legislation requiring states to implement needed changes, rather than preempt outright the relevant state laws or regulations. The legislation could establish regulatory benchmarks (such as the length of time allowed after FDA approval for the state to take legislative or other action; types of alternative dispensing controls). That legislation could be freestanding or as an amendment to NATA. 60NDCP as previously drafted and put forth model state legislation on numerous topics, thus there is a precedent for model legislation on research and development of anti- addiction medications.

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18 DEVELOPMENT OF MEDICATIONS If the federal government wishes to remove regulatory obstacles to the development of anti-addiction medications, then significant changes in current policies, laws, and regulations are necessary (Chapter 8~. MARKET OBSTACLES AND CREATING INCENTIVES Size of the Market From the pharmaceutical industry's point of view the size of the potential market for determining investment in research and development (R&D), is not estimated simply from the absolute number of patients with a given condition. For example, there are about 2.1 million cocaine-dependent individuals and 500,000 to 1 million opiate-dependent individuals in the United States (Hunt and Rhodes, 1992; Kreek, 19921. Those numbers are high enough to be attractive, yet there is significantly more pharmaceutical activity in other areas with comparable or much smaller patient populations. Approximately 25,000 individuals have amyotrophic lateral sclerosis (ALS or Lou Gehrig's disease), for which several pharmaceutical companies have compounds in various stages of clinical development (Samotin, 19941. Similarly, the market for medications to treat the 2.1 million epilepsy patients is well established at $400 million to 500 million, and three new products have been or are about to be approved (Samotin, 19941. The pharmaceutical industry appears willing to invest in R&D for markets that are smaller in size or approximately the same size as the cocaine user market, yet reluctant to enter the field of anti-addiction products. There are several reasons for this apparent paradox. First, there is a perceived lack of a market, by the pharmaceutical industry' in terms of true medical demand, access to patients, and motivation of patients. It is believed that a portion of the population is either not interested in treatment or erratic in compliance. Second, one segment of treatment providers is committed to a "drug-free" concept. Third, any particular medication is likely to be useful for a particular indication (such as reducing the craving for cocaine) and not for treating the entire drug-dependent population. The result is greater uncertainty in predicting the demand or true market size for new anti-addiction medications than for drugs intended for more established markets (Samotin, 19941. However, those niches represent opportunities, especially for small pharmaceutical companies, biotechnology companies, and those already involved in the development of central nervous system (CNS) compounds, that have not been fully explored by the industry. Furthermore, an uncharted market coupled with the limits in the basic science of addiction present a significant obstacle in the discovery and delivery of anti-addiction medications.

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EXECUTIVE SUMMARY 19 The Orphan Drug Act (P.L. 97-414) was enacted to stimulate the market in the development of medications for rare diseases by granting market exclusivity to companies who developed those compounds (Chapter 7~. The standard for orphan status is whether a drug is intended to treat a disease or condition that affects fewer than 200,000 persons in the United States or that affects more than 200,000 but for which there is no reasonable expectation of recovering development costs from sales in the United States. Since the passage of the Orphan Drug Act in 1983, the pharmaceutical industry has marketed 60 medications for orphan diseases, and FDA has granted 488 orphan drug designations (Sanders, 1993~. The Orphan Drug Act could similarly be used as a mechanism to provide market exclusivity to companies with FDA approved anti-addiction medications. The committee believes that the FDA should consider the actual patient population likely to be treated, rather than that potentially treatable, as there is probably a large segment of the drug-dependent population that will never present for pharmacotherapy. It is illogical and counterproductive to the purposes of the Orphan Drug Act to count those patients against the 200,000 threshold. The committee recommends that FDA interpret the Orphan Drug Act broadly with the intent of granting orphan drug status to FDA- approved anti-addiction medications whose potential market can reasonably be judged to meet the 200,000 patient criterion stipulat- ed by law. Alternatively, new legislation similar to the Orphan Drug Act could be drafted specifically for FDA-approved anti-addiction medications. The committee believes that the designation of orphan or orphan like status for approved anti-addiction medications is necessary to stimulate market investment because the financial return is limited, given the nature of the anti-addiction market (Chapter 9~. Drug Pricing and Intellectual Property Rights In 1986, the Congress passed the Federal Technology and Transfer Act (P.L. 99-502) to encourage private companies to commercialize federal inventions. The statute authorizes federal laboratories to enter into cooperative research and development agreements (CRADAs) with nonprofit institutions and private companies. CRADAs enable government agencies to negotiate exclusive commercialization licenses with industry partners. In 1989, NIH made an

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20 DEVELOPMENT OF MEDICA TIONS administrative decision to adopt a reasonable (or fair) pricing clauses into its CRADAS in response to complaints about the introductory price of AZT (zidovudine), an AIDS medication, which was deemed excessive at $10,000 per patient per year. AZT was developed through a cooperative agreement. Such pricing provisions are also included in NIH exclusive licensing agreements. The potential impact of CRADAs on pricing of products aIld patent rights has been an important issue of concern for the pharmaceutical industry. Industry representatives have noted that the "reasonable pricing clause" is an important deterrent to a long-term, effective partnership between the government and the private sector. It views the provisions as too broad and too threatening to proprietary interests (U.S. DHHS, 19931. The committee also heard from industry that the CRADA process is lengthy and complex, often taking about a year for final approval and requiring many layers of review (Chapter 9~. Industry officials noted their frustration with the process required to establish a CRADA which, rather than encourage innovative research, acts as another disincentive. NIH is fully aware of the controversy, and is currently reassessing its CRADA policy. There have been two public meetings (July 21 arid September 8, 1994) on the issue. Inasmuch as the language of the "reasonable pricing clause" was adopted by administrative action within NIH and is not legislatively required, NIH could resolve the controversy by administrative action, and, at the same time protect the interests of the public. The committee recommends that administrative action be taken by NIH to resolve the issue of reasonable pricing in CRADAs. Howev er, if NIH is unsuccessful in stimulating the industry to form cooperative agreements, then the committee recommends legislative action to remove or modify the reasonable pricing clause. In the absence of a definition of "fair or reasonable price" and in light of NIH's lack of expertise to undertake meaningful analyses of private-sector pricing decisions (OTA, 1993; U.S. DHHS, 1993), the committee believes that this obstacle should be removed. Additionally, NIH should take steps to streamline the CRADA process. NIH could assign additional staff members or establish a centralized committee, to eliminate the need for multiple levels of Section 8.3 of the NIH Patent Policy Board's Model CRADA states, "NIH have a concern that there be a reasonable relationship between the pricing of a licensed product, the public investment in that product, and the health and safety needs of the public. Accordingly, exclusive commercialization licenses granted for NIH intellectual property rights may require that this relationship be supported by reasonable evidence."

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EXECUTIVE SUMMARY 21 review and provide a single site for negotiating and approving CRADAs (IOM Workshop, June 13, 1994). Societal Stigma The societal stigma of developing and marketing a medication for the treatment of drug-dependent patients is a concern for pharmaceutical companies. They fear that, once a medication is approved for use in the treatment of drug addiction, the market for other indications will diminish or disappear. Eli Lilly's experience with methadone illustrates the point. Methadone was developed as an analgesic, but its use for pain relief significantly diminished once it became widely used as a treatment for heroin addiction. Patients do not want to take a medication associated with drug addiction. Thus, the pharmaceutical industry is understandably reluctant to develop compounds specifically for drug addiction, if other medical uses for the compound are possible. There is no easy solution to the problem of stigma associated with drug addiction and its treatment. However, the committee stresses the need for national leadership in support of pharmacotherapy and continued emphasis on prevention and treatment. The sense of stigma is most likely to diminish as a result of public education and broader acceptance of addiction as a treatable disease (Chapter 9~. NEED FOR FEDERAL LEADERSHIP The committee has considered and attempted to bring clarity to the multiple components involved in the development of anti-addiction medications. Such development depends critically on cooperation between the public and private sectors. Yet the number of federal agencies involved, current agency funding and staffing levels, regulatory requirements, remaining scientific questions, and other issues present difficult challenges to successful partnership and cooperation. Although many of the challenges are addressed in this report, it is important to recognize that government policies have not provided a strong emphasis on pharmacotherapy for the treatment of drug addiction. This lack of federal leadership represents an additional disincentive to industry, in that it affects the public sector's ability to establish clear guidelines, enhance interagency cooperation, and provide research programs with the stability necessary for medication discovery and development (Chapter 9~. In addition to its role in developing medications for drug addiction, the government is likely to be the major purchaser of those medications. Thus, government policies are critical in determining the environment in which such medications are developed and are

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22 DEVELOPMENT OF MEDICATIONS necessary for supporting pharmacotherapy as an important and accepted form of treatment. The committee applauds the current emphasis on treatment in the 1994 National Drug Control Strategy and suggests an additional action to underscore the importance of treatment and strengthen federal leadership. One option might be for the President to issue an executive order assigning a high priority to the development of medications for drug-abuse treatment. This, or some other explicit action, would enhance cooperation among the government agencies involved, focus their activities, and aid in the removal of existing institutional barriers. Explicit action at the Presidential or cabinet level would have the added benefit of signaling to the private sector that the development of anti-addiction medications is a matter of high national priority. The committee further believes that progress in this area should be monitored. Thus, any action taken should include a provision for reporting by the involved agencies regarding their efforts to coordinate with other agencies and remove barriers identified. Examples of specific ways in which cooperation could expedite development of anti-addiction medications are formalization of agreements between NIDA and the Department of Veterans Affairs for support of clinical trials, and encouragement of all agencies to promote cooperation with the private sector. Other strategies, including the use of executive-level task forces and commissions, may also be options to strengthen federal leadership and give the issue high priority in the eyes of both the public and private sectors. CONCLUSIONS In reviewing the obstacles presented to the pharmaceutical industry for the development of anti-addiction medications, it is clear that, the disincentives outweigh the incentives. The formidable scientific and marketing issues, regulatory complexities, and financial uncertainties add up to an unattractive picture to the pharmaceutical industry, which tends to enter R&D investment from a high risk-high reward perspective. Although it is possible to envision incentives that would interest some pharmaceutical companies (e.g., small pharmaceutical companies, biotechnology companies, or those companies already involved in the development of CNS compounds) without strong federal leadership, in establishing the role of pharmacotherapy and a long-term federal commitment to research, the committee believes all other efforts are likely to falter. As the federal government considers

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EXECUTIVE SUMMARY 23 policies that will remove obstacles, the committee suggests a tiered approach of incentives, allowing each tier of incentives time to produce the desired effect (Chapter 9~. For example, the first action may be the removal of disincentives, then the creation of modest incentives, and finally the development of extraordi- nary incentives. The removal of disincentives includes many of the committee's administra- tive recommendations: use of orphan drug and fast track mechanisms for anti- addiction compounds; removal of adverse effects on clinical research of DEA requirements under the Controlled Substances Act; and counting DEA review time as part of the regulatory process for purposes of patent term extension for controlled substances. The creation of modest incentives should include broad interpretation of the Orphan Drug Act to include anti-addiction medications or similar legislation to stimulate the market in the development of anti-addiction medications; a strong federal leadership role in support of treatment of drug-dependent patients; funding of basic research and training; adequate funding of treatment; and a modification or elimination of the "reasonable pricing clause" in CRADAs. Finally, the committee considered two extraordinary incentives that the executive branch and the Congress may wish to consider. They are presented below as options for consideration, and they are not committee recommendations. OPTIONS FOR FURTHER CONSIDERATION The committee discussed whether the overall strategy (i.e., strong federal leadership, regarding drug abuse treatment and support of research) coupled with removal of obstacles to anti-addiction medication R&D would be likely to result in activity by the pharmaceutical industry. Additionally, the committee considered whether a considerable economic incentive specifically intended to reward the development of new anti-addiction medications was needed. The committee did not reach a consensus on that issue and has no formal recommen- dation for such an extraordinary incentive. Nevertheless, the committee wishes to include in this report a brief description of two incentives that were supported by a majority of its members, recognizing that the committee has not provided details for implementation of those incentives (Chapter 9~. Both of the following proposals are limited to medications developed for cocaine addiction and are intended to create a guaranteed market in view of the limited potential for return on investment of anti-addiction medications as perceived by the pharmaceutical industry. Option I would offer developers of the first few (e.g., two or three) FDA- approved medications for the treatment of cocaine addiction for 3 years after approval a federal subsidy of a maximum of $50 million for purchase of the

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24 DEVELOPMENT OF MEDICATIONS drug. The subsidy could be given, for example, through reimbursement of the copayment portion of medications for patients with health insurance and the full cost of medications for those patients without medical insurance. Option 2 would allow for standing federal purchase orders for prearranged quantities and at art adequate price of one or more new cocaine treatment medications to begin at the time of FDA approval. The purchase orders would establish unambiguous confirmation of a market demand for those products, thereby stimulating investment and commercialization. The options presented above were favored by a majority of the committee. Most committee members also favored implementation of those extraordinary incentives only if the first two tiers of recommendations fail to stimulate progress in the anti-addiction medications market. A majority of the committee agreed, however, that the above options should be deliberated by the executive branch and Congress as they develop policies to stimulate this area of research and development (Chapter 9~. REFERENCES Anglin MD, Hser Y. 1992. Treatment of drug abuse. In: Watson RW, ed. Drug Abuse Treatment. New York: Humana Press. Vol. 3, Drug and Alcohol Abuse Reviews. Gerstein DR, Johnson RA, Harwood HJ, Fountain D, Suter N. Malloy K. 1994. Evaluating Recovery Services: The California Drug and Alcohol Treatment Assessment (CALDATA). Sacramento, CA: California Department of Alcohol and Drug Programs. Goldstein HM. 1989. The Availability of Methadone Maintenance in California. Drug Abuse Information and Monitoring Project (DAIMP) White Paper Series 9. Los Angeles: UCLA Drug Abuse Research Center, DAIMP. Prepared for the California Department of Alcohol and Drug Programs. Hunt DE, Rhodes W. 1992. Characteristics of Heavy Cocaine Users Including Polydrug Use, Criminal Activity, and Health Risks. Prepared for the Office of National Drug Control Policy by Abt Associates, Inc. IOM (Institute of Medicine). 1990. Treating Drug Problems. Gerstein DR, Harwood HJ, eds. Washington, DC: National Academy Press. IOM (Institute of Medicine). 1995. Federal Regulation of Methadone Treatment. Rettig R. Yarmolinsky A, eds. Washington, DC: National Academy Press. Kreek MJ. 1992. Rationale for maintenance pharmacotherapy of opiate dependence. In: O'Brien CP, Jaffe JH, eds. Addictive States. New York: Raven Press. 205-230. NCJA (National Criminal Justice Association). 1991. Guide to State Controlled Substances Acts. Washington, DC: NCJA. OTA (Office of Technology Assessment). 1990. The Effectiveness of Drug Abuse Treatment: Implications for Controlling AIDS/HIV Infection. Washington, DC: OTA. OTA-BP-H-73. AIDS Related Issues Background Paper 6. OTA (Office of Technology Assessment). 1993. Pharmaceutical R & D: Costs, Risks and Rewards. Washington, DC: Government Printing Office. OTA-H-522.

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EXECUTIVE SUMMARY 25 Prendergast ML, Anglin MD, Maugh TH, Hser Y. In press. The Effectiveness ot Treatment for Drug Abuse. Draft manuscript prepared April 7, 1994 for NIDA Treatment Services Research Branch. Los Angeles: UCLA Drug Abuse Research Center. Rogowski JA. 1993. Insurance Coverage for Drug Abuse: Private Versus Public Sectors. Santa Monica, CA: RAND. Prepared for the Drug Policy Research Center. MR-166- DPRC. Samot~in S. 1994. Size of the Cocaine Market. Presentation to the IOM Workshop on Policies to Stimulate Private Sector Development of Anti-Addiction Medications. June 13, 1994. Washington, DC. National Academy of Sciences. Sanders CA. 1993. The Orphan Drug Act: should it be changed? Archives of Internal Medicine 153 :2623-2625. U.S. DHHS (U.S. Department of Health and Human Services), Office of Inspector General. 1993. Technology Transfer and the Public Interest: Cooperative Research and Development Agreements at NIH. OEI-01 -92-01100.