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From page 109... ...
Figure 5-1 provides an overview of the actors that can improve alignment between investment and unmet needs along the drug development cycle, as well as the different levers that can be used to drive changes by these actors. Although this figure depicts the cycle as linear, it is really a cycle that feeds back on itself.
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From page 110... ...
110 ALIGNING INVESTMENTS IN THERAPEUTIC DEVELOPMENT Discovery Development Regulatory Delivery Reimbursement Players Venture capital/Private equity Public/NIH Nonprofit/Private philanthropy Pharmaceutical industry FDA CMS CMS Health care systems Other payers Levers for change Science funding Industrial policy Regulatory capacity and standards Health policy FIGURE 5-1 Framework of the drug development cycle, mapped with players and levers for change.
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From page 111... ...
. In addition to funding most early-stage biomedical research in the United States, NIH also funds some later-stage development, including translational research and clinical trials.
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From page 112... ...
By including considerations of disease burden and unmet need in this scoring criteria, investigators would at least be incentivized to consider how the research they are undertaking meets these important criteria. As noted in prior chapters, one key barrier to addressing unmet need is gaps in scientific knowledge.
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From page 113... ...
Although NIH does currently have a program through the Common Fund for high-risk, high-reward research (Box 5-1) , this program does not explicitly take disease burden and unmet needs into account.
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From page 114... ...
. Nondilutive funding is advantageous for early-stage companies because it provides capital without requiring companies to give up equity, and thus aligns financial incentives for teams involved in innovation.
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From page 115... ...
, SBIR/STTR programs support commercialization planning, market assessment, and organizational development in addition to scientific research. NIH has several SBIR/STTR grant programs located in ICs across the agency, and 24 of the 27 ICs provide funding to small businesses (SEED, n.d.)
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From page 116... ...
Finding 5-1: SBIR/STTR programs have shown promise in providing nondilutive funding to advance the commercialization of promising medical products and technologies, although more evaluation is needed. The programs could have more impact by focusing on high-risk areas that are not covered by academic grants or private investment.
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From page 117... ...
2024. Strategies to better align investments in innovations for therapeutic development with disease burden and unmet needs.
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From page 118... ...
As discussed later in this chapter, FDA exercises a great deal of regulatory flexibility to approve promising drugs that address unmet needs. Furthermore, without a strong understanding of the pathophysiology of disease, it is difficult to know what mechanisms to target, so drug development lags or clinical trials fail.
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From page 119... ...
Conclusion 5-1: Diagnostics to characterize and detect disease states are critical for developing innovative therapies, targeting therapeutics to those who will benefit, and ensuring that patients have access to therapeutics early enough in their disease progression for therapeutics to be effective, and they are an important component of addressing unmet clinical need. Further incentives for development of innovative and accurate diagnostic tests that are necessary for drugs that address unmet medical needs could help resolve the mismatch among therapeu tic investment, disease burden, and unmet need.
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From page 120... ...
Market exclusivity completely blocks FDA approval of generic drugs even if the subsequent manufacturer conducts its own clinical trials. Owing to the cost of conducting clinical trials, in practice, data exclusivity has the same effect as market exclusivity in excluding most competitors (Congressional Research Service, 2017)
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From page 121... ...
estimates that this combination of incentives caused a 69 percent increase in the number of clinical trials for rare diseases. As he notes, however, some of these clinical trials for rare diseases may reflect rent-seeking, such as strategic relabeling of drug indications to fit rare disease categories.
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From page 122... ...
It is possible that orphan drugs have been, in some instances, as profitable for manufacturers as nonorphan drugs because of the incentives offered in the ODA. Furthermore, in some instances where the drug was not initially intended for orphan indications, ODA incentives can yield clinical trials resulting in labeling changes rather than providers prescribing these agents off-label.
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From page 123... ...
. Because pharmaceutical patents are typically filed early in the development process, before beginning clinical trials, many years of patent term often occur during the time spent completing clinical trials and obtaining FDA approval.
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From page 124... ...
However, when PRVs expanded from neglected tropical diseases to pediatric rare diseases, it became clear that the value of the PRV is tied to the number of vouchers available in the market. While originally estimated to be valued at $325 million per drug, vouchers are now being sold for $100 million, on average (Barrie, 2024; Kesselheim, 2020)
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From page 125... ...
. Yet, when GAO spoke with seven drug sponsors for the report, all of them stated that "PRVs were a factor in drug development decisions." Another consideration is that in an earlier GAO report evaluating PRVs for pediatric rare diseases, FDA officials raised concerns about their ability to set public health priorities because the PRV program requires FDA officials to give priority reviews to new drug applications that would not otherwise qualify (Armstrong, 2025b)
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From page 126... ...
Conclusion 5-2: The committee did not find sufficient evidence to recommend expansion of priority review vouchers, orphan drug exclu sivity, or patent term extensions in their current form to support drug development to better meet unmet needs. Efforts to Address Broad Scientific Challenges In addition to efforts to encourage investment, FDA has undertaken a variety of initiatives to mitigate scientific barriers to drug development in areas of unmet need -- barriers ranging from insufficient incentives to pursue data in certain populations, to a lack of appropriate endpoints that could speed trials, to the need for close collaboration with regulators to ensure that scientific standards can be satisfied in challenging areas.
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From page 127... ...
launched the Accelerating Rare disease Cures (ARC) program to 12 Obtaining timely pediatric studies of and adequate pediatric labeling for human drugs and biologics, 67 FR 20070 (April 24, 2002)
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From page 128... ...
ARC's scientific and regulatory initiatives focus on "strengthening platforms that facilitate natural history studies for rare diseases; developing, testing, and validating methodologies to construct novel endpoints; expanding the utilization of drug/disease modeling; establishing efficient approaches to dose selection for drugs for small population diseases; and expanding efforts in translational medicine approaches for individual rare disease programs" (FDA, 2024a, p.
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From page 129... ...
. START has informally been described as "Operation Warp Speed" for rare diseases, in reference to the COVID era program that put industry and regulatory stakeholders in close collaboration to move drug development as quickly as possible by, in some instances, resolving barriers that limit efficiency and progress (Floersh, 2024)
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From page 130... ...
Similarly, the Rare Disease Endpoint Advancement (RDEA) pilot program, announced in October 2022, is designed to support novel efficacy endpoint development for drugs that treat rare diseases (FDA, 2022b)
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From page 131... ...
, and • rare disease drug development regulatory considerations (providing more detailed information about using expedited programs for rare diseases)
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From page 132... ...
FDA has already established several expedited programs for drugs intended to address unmet need, which use a variety of tactics, including increased opportunities to meet with FDA throughout drug development, acceptance of alternative endpoints to speed clinical trials, and efforts to speed FDA's review of submitted applications (or portions thereof)
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From page 133... ...
. Of note, the effects on reducing clinical development time were stronger among privately held drug developers; the authors wrote that this highlighted the benefits of the breakthrough therapy designation on "smaller (or less resourced)
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From page 134... ...
. Separately, as discussed above, some drug sponsors have been able to obtain priority review vouchers (after receiving approval for a drug for neglected tropical diseases and pediatric rare diseases)
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From page 135... ...
This section reviews the formal process for flexibility, known as accelerated approval, as well as informal FDA flexibility that applies to both accelerated approval products and products receiving regular approval. The section ends with some of the challenges and limitations with these flexible approval standards.
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From page 136... ...
. Further more, as noted in a recent National Academies report on rare diseases: Although the accelerated approval pathway is not used as frequently for nononcology rare diseases as it is for rare types of cancers, if applied appropriately, it can be a beneficial tool for bringing safe and effective drugs to patients who suffer from serious and life-threatening conditions and for whom there are no meaningful alternative treatment options.
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From page 137... ...
In 2022, the Food and Drug Omnibus Reform Act was passed, which confirmed FDA's authority to require confirmatory studies to be underway prior to granting accelerated approval, required confirmatory study terms to be set by the date of accelerated approval, increased the frequency of progress reports on confirmatory studies, and adjusted the process for involuntary withdrawal.17 For its part, FDA is increasingly requiring confirmatory studies to be underway before accelerated approval is granted (FDA, 2025a) , which has been demonstrated to speed both conversion to regular approval and withdrawal depending on study outcome (Fashoyin-Aje et al., 2022)
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From page 138... ...
. Although regulatory flexibility can be appropriate, especially for rare diseases, it is important that the associated uncertainty be rapidly resolved.
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From page 139... ...
Conclusion 5-3: Additional resources are needed for FDA programs that successfully support endpoint development and validation, innova tive trial design, and the resolution of other broad scientific challenges that impede drug development for unmet needs, as well as programs designed to support communication between sponsors and FDA to quickly resolve challenges arising in specific development programs. Conclusion 5-4: Given important concerns about the accelerated approval pathway, recent adjustments need to be carefully monitored and further adjustments may be needed to promote rigor and confi dence that accelerated approval drugs will, as quickly as is possible, confirm meaningful clinical benefit for patients or be withdrawn.
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From page 140... ...
In the case of the federal government and the private sector, these take many forms depending on the type of partnership sought. Two examples of these bilateral agreements are targeted drug development grant programs, such as the Network for Excellence in Neuroscience Clinical Trials (NeuroNEXT)
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From page 141... ...
Unlike NExT, which focuses on cancer projects, BrIDGs is not disease specific and can be used to advance high-risk therapies for both common and rare diseases. Cooperative Research and Development Agreements Established under the Federal Technology Transfer Act of 1986, C RADAs have become a vital mechanism for fostering public–private partnerships, driving innovation, and ensuring that federally developed technologies benefit society (NIH Office of Technology Transfer, n.d.)
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From page 142... ...
. While there any many examples of drug approvals that have resulted from CRADAs, there are some real successes for HER2+ breast cancer treatment developed using CRADAs between industry and NCI: Herceptin (trastuzumab)
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i) These nonprofit organizations exist for federal agen cies focused on health, agriculture, energy, and veterans.
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OWS pursued multiple candidates with varying technologies to expand the likelihood of success. Two of the vaccine candidates sponsored by OWS completed clinical trials in just 10 months, four of the candidates received Food and Drug Administration (FDA)
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From page 145... ...
. To expedite clinical trials for disease areas of high unmet need, or to prepare for another public health emergency, a clinical trial infrastructure that can be built and maintained would allow for more rapid engagement and for better efficiency instead of running smaller -- and therefore likely less informative -- trials.
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From page 146... ...
Across the 10 AMP partnerships, there are 34 industry partners, 16 NIH institutes and centers, and 37 nonprofit organizations. Although there are not yet any drug candidates that originate from the AMP programs, they have potential benefits for drug development that are true of other PPPs, including: 1.
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From page 147... ...
This playbook will be validated through up to eight clinical trial test cases, providing insights that can be used to streamline the regulatory process for future gene therapy development. By focusing on a single gene therapy platform -- the adeno-associated virus vectors, known for their safety in gene delivery -- BGTC seeks to make this technology more accessible for treating a broader range of diseases (FNIH, 2025a)
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From page 148... ...
context to developing more PPPs. First, PPPs often spring from federal agencies wanting to expand therapeutic development in a specific area and approaching industry about entering a PPP to contribute financial support or in-kind resources and assets.
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From page 149... ...
For example, a network for rare disease trials could help incentivize industry to conduct trials in these populations. The need for better clinical trial infrastructure was a consistent theme in the National Academies' workshop on Envisioning a Transformed Clinical Trials Enterprise for 2030 (NASEM, 2022b)
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From page 150... ...
also found that the strongest and most immediate R&D response to Part D's passage was for clinical trials that represented less scientific novelty, with a more modest and delayed response for potential scientific breakthroughs. Other empirical work on pharmaceutical markets similarly shows that firms respond to financial incentives by increasing R&D on products that are expected to receive larger returns (Vernon, 2005)
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From page 151... ...
Medicare provides coverage to individuals 65 years of age or older, younger populations who qualify through Social Security disability insurance as meeting criteria for long-term disability, and those with either end-stage renal disease or amyotrophic lateral sclerosis. Medicare is the primary payer for drugs in the United States, accounting for a third of retail drug spending.
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From page 152... ...
, CMS, the federal agency that provides coverage through Medicare, Medicaid, and the Children's Health Insurance Program, was unable to negotiate drug prices for Medicare beneficiaries directly. Instead, this role was assigned to pharmacy benefits managers and insurers tasked with operating the Medicare Part D benefit.
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From page 153... ...
The extent to which the drug and its alternatives address unmet needs for a condition that is not adequately addressed by available therapeutics 6. The extent to which the drug represents a therapeutic advance compared to existing alternatives 7.
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From page 154... ...
The effect that CMS's new authority to negotiate drug prices will have on innovation is not yet clear. Though there is limited anecdotal evidence of individual pharmaceutical companies attributing decisions to cancel investment in individual products to the IRA (Goldman et al., 2023)
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From page 155... ...
Finding 5-14: Many countries negotiate drug prices and set reimburse ment terms based on the product's cost-effectiveness, including consid erations of unmet need. CMS already has some limited existing authority to use comparative effectiveness and unmet needs when conducting Medicare price negotiations.
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From page 156... ...
https://phrma.org/ blog/congress-needs-to-fix-the-iras-pill-penalty (accessed April 28, 2025)
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From page 157... ...
2025b. Rare disease biotechs left in a lurch as Congress fails to renew priority review program.
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From page 158... ...
2016. The Orphan Drug Act: Restoring the mission to rare diseases.
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From page 159... ...
2012. Appendix G: Discussion Paper: Developing a Clinical Trials Infrastructure, in Envisioning a Transformed Clinical Trials Enterprise in the United States: Establishing an Agenda for 2020: Workshop Summary.
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From page 160... ...
2024k. Support for Clinical Trials Advancing Rare Disease Therapeutics (START)
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From page 161... ...
2024. Denali, Neurogene and more picked by FDA's ‘Operation Warp Speed' for rare disease.
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2010. Rare diseases and orphan products: Accelerating research and development.
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2020. Congress should support development of new treatments for pediatric rare diseases, but not with priority review vouchers.
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From page 164... ...
2021. NIH, FDA and 15 private organizations join forces to increase effective gene therapies for rare diseases.
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From page 165... ...
2025. NeuroNEXT: Network for excellence in neuroscience clinical trials.
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From page 166... ...
2020. Assessment of clinical trials supporting U.S.
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