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From page 83... ...
SCIENTIFIC CHALLENGES Lack of Understanding of Underlying Pathophysiology One of the factors driving a misalignment of investment with disease burden and unmet need is a lack of understanding of the underlying pathophysiology of certain diseases. Public funding for basic and translational research is critical for understanding the basic mechanisms of disease and thus for developing potential molecular targets for drug discovery and development (see Chapter 3)
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From page 84... ...
Furthermore, when potential molecular targets are identified, such as for AD, the lack of a detailed understanding of the pathophysiology and disease progression deters investment in moving such molecular targets forward owing to the uncertainty in whether the target will ultimately lead to an innovative, disease-modifying therapeutic. Thus, identifying validated molecular targets for drug development is a key consideration.
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From page 85... ...
It is estimated that innovation in drug discovery that could delay onset of AD by even 5 years would drastically reduce the cost per person and would extend both life-years and quality of life for those living with AD and their caregivers. Unmet Need Despite its high prevalence and cost, there are relatively few ap proved treatments for AD.
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From page 86... ...
. Second, strict eligibility criteria for the clinical trials for these medications may mean that they will show reduced efficacy when used by a broader pa tient population, which often has comorbidities and mixed pathologies (Walsh et al., 2022)
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From page 87... ...
Platforms represent highly versatile approaches for developing innovative therapeutics, which are to varying degrees independent of molecular targets. Examples of platform technologies include viral vectors for gene therapy, CRISPR for gene editing, small interfering RNAs, antisense oligonucleotide technologies, structurebased drug design, mRNA therapeutics, and intracellular targeted protein degradative platforms.
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From page 88... ...
Many conditions lack objective biomarkers that could help characterize the disease more precisely and provide early signals of treatment efficacy, thereby derisking investment and accelerating drug development. Chronic pain is a prototypical example of this type of challenge (see Box 4-2 for more detail)
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From page 89... ...
For some, pain is caused by injury or accident, while others experience chronic pain because of an underlying disease, such as fibromyalgia. Unmet Need Because pain is unique for every person, it is difficult to develop ef fective treatments, and the general approach to pain management is to treat the pain itself, not the underlying cause of the pain.
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MARKET FORCES Bringing a new drug to market is an expensive and lengthy process. Only about 12 percent of drugs that enter phase I clinical trials ultimately demonstrate effectiveness and safety and thus are granted FDA approval (Congressional Budget Office, 2021)
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From page 91... ...
Patient Population Size Traditionally, the ability of manufacturers to recover R&D investments is particularly limited for disease states with small patient populations. Rare diseases, as discussed earlier in the report, by definition affect small populations.2 Current estimates indicate that about 30 million people have been diagnosed with a rare disease, also known as an orphan disease, and 2 The Orphan Drug Act definition of rare disease also includes a disease that "affects more than 200,000 in the United States and for which there is no reasonable expectation that the cost of developing and making available in the United States a drug for such disease or condition will be recovered from sales in the United States of such drug." 21 U.S.
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From page 92... ...
depending on the controls needed to prove safety and efficacy.b Only class III products require premarket ap proval before they can be sold.c Many diagnostics on the market did not require premarket approval, which results in the presence of a variety of diagnostic tests of varying quality and efficacy. Companion diagnostics, which are diagnostics tied to the approval of a certain medication (for example, a genetic test to identify a mutation that a companion therapeutic targets)
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From page 93... ...
For example, many rare genetic diseases have poorly understood or complex pathophysiological mechanisms, highly heterogeneous presentations of disease, inadequate diagnostic approaches, and limited information about disease progression, creating an initial barrier to drug development. Conducting initial clinical trials for these drugs is especially challenging because of the small pool of eligible patients who may also be geographically dispersed, a financial burden that deters investment in this area (Kempf et al., 2018)
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From page 94... ...
market is the world's largest and generally accounts for over half of global product revenues and 64–78 percent of profits, making U.S. assumptions about pricing and access key drivers of investment decisions regarding drug development (ASPE, 2024; Goldman and Lakdawalla, 2018)
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. Because PBMs have greater negotiating leverage in competitive drug classes, this can serve as a barrier to innovation in disease states where available therapeutic options are able to only partially address disease burden, thus leading to residual unmet need.
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From page 96... ...
. The prices of drugs that are largely paid for by Medicaid are consistently lower than in M edicare and commercial insurance because of the Medicaid Drug Rebate Program, which requires manufacturers of branded products to provide a base discount of 23 percent off of the average manufacturer price or the best price provided in the market, in addition to an inflation rebate that penalizes increases in drug prices above inflation (Dolan, 2019)
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From page 97... ...
Furthermore, states with balanced budget requirements (35 states require the budget to be balanced at year end) make it challenging for state programs, such as Medicaid, to pay such a large sum up front (Tax Policy Center Urban Institute & Brookings Institution, n.d.)
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From page 98... ...
Therefore, as Box 4-4 describes, there are few market incentives to develop these critically important therapies because of their limited use profiles. Length and Cost of Clinical Trial The duration, and therefore the cost, of clinical trials can also affect investment decisions in certain therapeutic areas.
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From page 99... ...
drug development, a 2023 World Health Organiza tion review of clinical and preclinical development in this area identified "a glaring insufficiency in novel approaches in the R&D pipeline to ef fectively combat the increasing emergence and spread of antimicrobial resistance" (Global AMR R&D Hub and WHO, 2023; Third World Network Berhad, 2024)
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From page 100... ...
. One potential solution to these lengthy clinical trials is to expeditiously develop
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From page 101... ...
Pediatric drug development has lagged behind research to address adult conditions. In addition to heightened ethical scrutiny, pediatric clinical trials require specialized expertise to properly evaluate pharmacokinetics, pharmaco dynamics, and efficacy in children as they age (IOM, 2012)
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From page 102... ...
All of the market forces covered in this section contribute to continued unmet needs for diseases and conditions that have high disease burdens. These market forces contribute to the misalignment discussed in Chapter 3.
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From page 103... ...
and inter national market size and average pricing for prescription drugs, 2017-2022. https:// aspe.hhs.gov/sites/default/files/documents/4326cc7fe43bc11770598cf2a13f478c/ international-market-size-prices.pdf (accessed April 21, 2025)
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https://www.fda.gov/media/180803/ download (accessed April 14, 2025)
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Mortality in the Uunited States, 2022. https://www.cdc.gov/nchs/ products/databriefs/db492.htm (accessed April 14, 2025)
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2023. Effect of reduction in brain a myloid levels on change in cognitive and functional decline in randomized clinical trials: An instrumental variable meta-analysis.
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From page 107... ...
2024. Unlocking the full potential of rare disease drug development: Exploring the not-for-profit sector's contributions to drug development and access.
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From page 108... ...
Intractable & Rare Diseases Research 12(4)
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