A new(ish) drug

MIT Sloan professor seeks policy changes to encourage innovation in drug development

August 18, 2014

Assistant Professor Benjamin Roin

Assistant Professor Benjamin Roin

In 2012, researchers at Case Western Reserve University announced that the cancer drug bexarotene showed signs of curing Alzheimer’s disease in mice. With excitement, others attempted to emulate the experiment.

The results have been mixed, but the road to drug development is paved with false hopes and unforeseen breakthroughs. If bexarotene is ever to become an Alzheimer’s drug, however, someone will have to pay for research and testing.

You might think Valeant Pharmaceuticals, which holds the U.S. rights to Targretin, or brand name bexarotene, would be willing to put up the cash in anticipation of a sizable payoff should bexarotene become an approved Alzheimer’s drug.

But that reward exists only in theory, due to an unenforceable patent law that prevents drug manufacturers from collecting on sales when a drug they own is approved for a new use, said MIT Sloan assistant professor Benjamin Roin.

Without a way to enforce patents on new uses for old drugs, pharmaceutical companies are unwilling to pick up the bill, Roin writes in a new paper proposing a solution to the problem.

In “Solving the Problem of New Uses,” which is pending publication, Roin calls for e-prescription software to require doctors to indicate what they are prescribing a drug for, and for drug companies to be provided that information—without identifying individual patients—so they can collect on their patents.

Today, drug companies are offered 20-year patents on new drugs. Once those patents expire, generic drugs can enter the market, driving the value of developing the drug close to zero. New patents are offered to the original developer of a drug when a new use is discovered. But if a doctor one day prescribes bexarotene as a generic drug, who is to say the prescription is for a cancer patient or an Alzheimer’s patient? That’s why Roin calls the dilemma an “information problem” that results in stifled innovation and missed opportunities to develop old drugs for new uses.

“Insurance companies have already solved that information problem,” Roin said. “They only cover drugs when they’re prescribed for certain indications. To enforce that, they use something called prior authorization, in which they require the physician to submit to them the indication—the medical use they are prescribing the drug to treat.” He believes a sort of prior authorization requirement could come from drug companies as well, allowing the companies to track the use of generic forms of their medication.

The valley of death

Drug development is an expensive, time-consuming, and risky proposition. Pharmaceutical companies spend more than $1 billion bringing a single product to market. The industry as a whole spends more than $100 billion each year on research and development. Development timelines can stretch on for nearly a decade. More than 80 percent of drugs that make it to clinical trials fail.

And when patents expire and generics hit the market, the drug’s original manufacturer loses 80 percent of its sales within the first four to six weeks, Roin writes.

Meanwhile, the National Institutes of Health pursues early-phase drug and drug repurposing research with government dollars, but is seeing regularly reduced budgets and has never been set up to see drugs through the particularly expensive and long Phase III trials. The NIH is developing promising breakthroughs with repurposed drugs, Roin said, but drug companies are not willing to take on the cost of development. The gap from research to development is known as the valley of death.

And then there is the slowing pace of drug innovation in general. Only about 30 new drugs are making it to market each year, and some researchers believe that “a significant percentage” of safe and useful drugs compounds have already been discovered, Roin writes.

“Drug repurposing is seen as the silver bullet for this problem,” he said.

Roin was on the faculty at Harvard Law School from 2008 until earlier this year, when he joined MIT Sloan. An attorney and Havard Law alumnus, he said he came to MIT Sloan because of his interest in “innovation policy” and the intersection of law and innovation. He is a member of the school’s Technological Innovation, Entrepreneurship, and Strategic Management group.

Presentations of his paper on new uses for drugs have garnered a positive reception so far, Roin said, especially with NIH scientists. Implementing his suggestion would require policy changes, though he believes it could be as simple as some regulatory revisions and might not require any changes to federal law or direct approval from Congress. He dismissed privacy concerns, pointing out that drug companies can already purchase “de-identified” medical information.

If anything, he said, it’s the drug companies that would need to do the most work to respond to the changes.

“From the drug companies’ perspective, the paper is a much bigger change than it is from the insurance company’s perspective or the NIH’s,” he said. “Because it’s imagining an entirely different way of pricing drugs. They would need to set up a division that monitored and paid attention to the indication part of their pricing. They’re the ones who would actually have to sit down and do a lot of thinking about exactly how this would be implemented and work.” But—along with patients, of course—they may have the most to gain.