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Study: Longer data exclusivity for sponsors would increase innovation, extend life expectancy

Thursday, March 3, 2011

If drugmakers were able to extend their clinical trial data exclusivity to 12 years, it would result in 228 new drugs over the next 50 years and extend the average life expectancy of Americans by 1.7 months.

Those are the assertions of researchers at the University of Southern California’s Leonard D. Schaeffer Center for Health Policy and Economics who recently looked at what it might take to spur more innovation among drug developers. It turns out better profits would. But the down side of long-term innovation is that the cost of new drugs would have to rise in the short term.

John Romley, an economist with the Schaeffer Center and one of the study’s authors, said that makes sense.

“The general economic problem is that we want innovation and all of the benefits that it brings, but with innovation in the pharmaceutical markets, one has to reward, to some degree, the innovator with monopoly power so that the innovator can recoup the enormous cost of developing the drug,” he said. “If drug makers weren’t able to recoup their enormous investments, then they wouldn’t invest in the first place, and wouldn’t that be terrible?”

The report, titled “The Benefits From Giving Makers Of Conventional ‘Small Molecule’ Drugs Longer Exclusivity Over Clinical Trial Data” and published recently in Health Affairs, is the first study to calculate the costs of limiting access to trial data, according to Romley.

Data exclusivity is the period of time before generic drugmakers can use the drug developer’s clinical trial data in manufacturing and marketing generic versions of patented, brand-name drugs. In the U.S., when a pharmaceutical company brings a new drug to the market, it gets five years of exclusive access to the trial data it submitted during the approval process. An added three-year extension is available if new uses for the drug arise, and a six-month extension can be added if the drug is approved for use in pediatric patients.

Extending data exclusivity to 12 years would result in a 5% rise in profits for drug companies, said Romley, which in turn would result in more funds to invest in future innovation, leading to more new drugs and, ultimately, longer life spans.

But is an extra 1.7 months on one’s lifespan worth it? How does one attach a dollar amount to that? The study’s authors point to analysis by Richard Hirth and colleagues of attitudes and behavior related to mortality risk showing that the median value of a life-year ranges from $110,200 to $505,400 (in 2004 U.S. dollars). Further research by Kip Viscusi and Joseph Aldy referenced by the Schaeffer Center researchers indicates that the value of a life-year ranges from $150,000 to $360,000.

Even so, Romley and his colleagues’ assertions present a harsh tradeoff for those currently living with ailments.  “Americans further out in time would benefit, but Americans today would be harmed,” he said.

The authors don’t take a position. “How society makes the tradeoff is not up to us; this is for policymakers to decide,” Romley said. “But one could imagine that politicians might prefer short-term gain.”

So far, no policymakers have reacted to the study, said Romley.

The research was funded by INTERPAT, an association of the chief patent counsels at research-based drugmakers, and by the National Institute on Aging through its support of the Roybal Center for Health Policy Simulation, which is housed at the nonprofit think tank RAND Corp. Three of the study’s authors are principals in Precision Health Economics, a consulting firm that does work for drugmakers.

—Suz Redfearn

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