Financial Incentives to Encourage Development of Therapies That Address Unmet Medical Needs for Nervous System Disorders: Workshop Summary (2015)

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1 Introduction and Overview1 Our brains control a vast array of processes that are central to life, health, and identity, but malfunctions in the central nervous system (CNS) instigate a wide range of devastating symptoms. The associated illnesses include developmental, psychiatric, and neurodegenerative ill- nesses, many of which are chronic and cause serious and long-lasting disabilities. Together, they are extremely prevalent and have an enor- mous impact from cradle to grave. These conditions generate great human suffering and impose a tre- mendous economic load. According to 2014 estimates from the Society for Neuroscience, nearly 100 million Americans suffer from nervous sys- tem disorders, and associated annual expenses exceed $760 billion (Choi et al., 2014). Furthermore, falls and road injuries, both of which rank high in causes of disability, can arise from various brain disorders and are not included in the numbers above. Real costs include not only the price of treatments, but also lost productivity of patients and their care- givers. Between 2011 and 2030, mental health conditions will account for 35 percent of projected loss of global economic output from noncommunicable diseases (Bloom et al., 2011). Several national initiatives have been launched to better understand the brain (e.g., Brain Research through Advancing Innovative Neurotechnolo- gies [BRAIN] Initiative2), yet large pharmaceutical companies are divest- 1 The planning committee’s role was limited to planning the workshop, and the work- shop summary has been prepared by the workshop rapporteurs as a factual summary of what occurred at the workshop. Statements, recommendations, and opinions expressed are those of individual presenters and participants, and are not necessarily endorsed or verified by the Institute of Medicine, and they should not be construed as reflecting any group consensus. 2 See http://braininitiative.nih.gov (accessed May 8, 2015). 1 

2 FINANCIAL INCENTIVES ing from their neuroscience research programs (see, e.g., Pankevich et al., 2014). Despite the tremendous market potential, CNS drugs are relatively unattractive because of perceived high risk. The underlying science re- mains a challenge, and clinical trials can be lengthy and expensive, result- ing in high development costs. Furthermore, demonstrating product safety and efficacy in the regulatory review process can be a costly and timely process. These factors, combined with a patent system that rewards treat- ments with short development times, collude to create a situation that makes it challenging to develop innovative therapies, therapies for chronic or early-stage disease, or preventive therapies—all of which are highly relevant in the world of nervous system disorders. Consequently, many patients have few, if any, treatment options, and drug pipelines in this sec- tor are tightening rather than expanding (Wegener and Rujescu, 2013). WORKSHOP OBJECTIVES The Institute of Medicine (IOM) Forum on Neuroscience and Nervous System Disorders, in collaboration with the IOM Forum on Drug Discovery, Development, and Translation, convened a workshop on January 20–21, 2015, to explore policy changes that might increase private-sector invest- ment in research and development (R&D) innovation that fills unmet medi- cal needs for CNS disorders (see Box 1-1 for the Statement of Task). Workshop participants strategized about how to incentivize companies to fortify their CNS drug development programs, shrinking obstacles that cur- rently deter ventures. Representatives from academia, government agencies, patient groups, and industry gathered to share information and viewpoints, and to brainstorm about budget-neutral policy changes that could help widen the pipeline toward drugs that address unmet needs for CNS disorders. Pull Incentives: Improving Market Protections and Regulatory Processes This workshop concentrated on “pull” incentives that might maintain and strengthen private-sector investment in CNS R&D innovation by increasing market returns. Many elements were considered, including the importance of patient involvement when weighing the risks and benefits of any possible program. Discussions focused on market protections and regulatory pathways, and the workshop participants tried to strike a bal- ance between theoretical, ideal solutions and those that are slightly ahead 

INTRODUCTION AND OVERVIEW 3 of current practices and thus, likely within reach. Many participants em- phasized the need for drugs that have high medical impact, rather than those that are similar to existing agents. The incentives discussed at the workshop do not require significant public funding. For example, additional market protection for break- through drugs that address unmet medical needs, adaptive trial design in which companies have the ability to modify ongoing studies, and condi- tional regulatory approval of drugs that demonstrate substantial im- provements early during clinical development. They are changes that can be implemented through policy and regulatory changes alone. The goal is to improve the risk−benefit calculus so that nervous system drugs will once again compete for the attention of large pharmaceutical companies. Several participants acknowledged that financial risks cannot be reduced to zero, but increasing the reward side of the equation might improve outcomes for people who live with nervous system disorders. BOX 1-1 Statement of Task • Examine opportunities and barriers to increasing investments for the development of novel therapeutics to support unmet medical needs for nervous system disorders. • Explore potential incentives that might lead to a significant reinvest- ment in research and development (R&D) within the neuroscience sector, while considering the resources needed for implementation. For example, o Explore how extending intellectual property (IP) protection and patent life exclusivity might promote R&D. o Discuss regulatory changes, such as increased use of intermedi- ate endpoints and conditional approval pathways for therapeutics targeting specific diseases (e.g., Alzheimer’s disease, stroke, and schizophrenia). • Discuss specific considerations for combination therapies and disease-modifying treatments that might require extensive, long-term prevention trials. • Consider the impact of potential policy changes on patients. o Discuss how potential changes in policy may benefit patient out- comes (e.g., access to therapeutics that may delay or prevent the onset of a disorder). o Consider the negative implications of such policy changes to pa- tients (e.g., higher out-of-pocket expenses due to the delay of generics). 

4 FINANCIAL INCENTIVES Push Incentives: Improving the Science Many factors hinder development of drugs for the nervous system, most of which do not fall under the umbrella of pull incentives. The fol- lowing section acknowledges some of these factors and directs the reader to previous work in this area by the IOM Forum on Neuroscience and Nervous System Disorders, but is not comprehensive. Although re- searchers are steadily uncovering disease mechanisms that might suggest new intervention strategies, progress is slow (Pankevich et al., 2014). No amount of economic reward will succeed if the science is not in a posi- tion to move forward, said Dennis Choi, professor and chair of the de- partment of neurology, and director of the Neurosciences Institute at Stony Brook University School of Medicine. Identification of molecular targets that are “druggable” has proved challenging, as has validating targets that have nonetheless emerged (IOM, 2013a). Researchers have struggled to uncover biomarkers that can facilitate clinical trials by pin- pointing patients who are most likely to benefit from a particular drug or that can serve as endpoints for studies that otherwise would take years or even decades to complete (IOM, 2011). Using animal and other models to understand the human brain poses significant challenges; for example, appropriate animal models do not exist for many human diseases or are difficult to develop, and many aspects of brain biology depend on neu- ronal networks that cannot be reassembled out of the body (IOM, 2013b). Numerous groups and institutions are addressing these issues and, despite the impediments, researchers are continuing to expose disease pathways and improve methods for drug discovery and development (Pankevich et al., 2014). To increase efficiency in clinical trials, move- ments are afoot to create standing clinical trial platforms that are global in nature and that characterize patients the same way, so drugs can be run through the platforms more quickly in Phase II and Phase III trials, said George Vradenburg, chairman and founding board member of USAgainstAlzheimer’s, and Janet Woodcock, director of the Center for Drug Evaluation and Research, Food and Drug Administration (FDA). Those drugs that show signs of a positive clinical impact can proceed to Phase III trials, and those that fail have not exhausted large amounts of money. Journals and funding agencies are tackling some of the reproduc- ibility and data-related issues. Although significant challenges are inher- ent to the field of human neuroscience, the discoveries and technical 

INTRODUCTION AND OVERVIEW 5 advances that will drive drug discovery in this arena are pressing forward and can support innovation (Pankevich et al., 2014). Recognizing the importance of improving the science in the field to help “de-risk” drug development, several participants emphasized the need for more “push” incentives. “Push incentives are the powerful ones,” said Choi, as they de-risk industrial R&D by providing resources that directly promote research in the form of grants, tax credits, or build- ing infrastructure, for example. However, push incentives cost money. Pull incentives, by contrast, increase market returns without requiring up-front financial output. They might complement and enhance the ef- fects of additional investments in research. ORGANIZATION OF THE REPORT The following report summarizes many of the presentations and dis- cussions from the workshop. This chapter outlines the motivation for the workshop and provides context. Chapter 2 reviews current market pro- tections and offers possible ways to extend existing legislation. Chapter 3 provides an overview of current regulatory pathways, and the challenges and opportunities in this sector. Chapter 4 describes the critical role of patients in the overarching enterprise of encouraging CNS drug devel- opment. It also discusses how patients as well as caregivers would bene- fit from effective treatments, and it articulates how public−private partnerships, advocacy groups, and health organizations might help ad- vance pull incentives for drug development in neuroscience, several par- ticipants said. Although this topic is presented after the concepts related to market protections and regulatory pathways, the benefit to patients and caregivers was the driving force for this workshop, and many partici- pants emphasized that patients need to be engaged in all these discus- sions from the beginning. Cited references, the workshop agenda, a list of registered attendees, and the participant biographies can be found in the appendixes of this report. UNMET MEDICAL NEEDS IN NERVOUS SYSTEM DISORDERS Nervous system disorders impose a heavy weight on society, said Steven Hyman, director of the Stanley Center for Psychiatric Research at 

6 FINANCIAL INCENTIVES the Broad Institute of Massachusetts Institute of Technology and Harvard University. Brain illnesses are common and often chronic or recurrent. Because the brain controls cognition, emotion, and executive functions such as planning, people whose brains perform suboptimally often can- not do well in school or the workplace. If the condition is severe enough, individuals cannot operate in the home either. Premature mortality affects economies and so does healthy life lost to disability (Bloom et al., 2011). Brain disorders influence mortality through lethal events such as stroke and suicide, but they exert their greatest effects on disability. Many illnesses strike early, so they can ex- tract huge lifetime tolls. Measuring disability is not easy, said Hyman, in part because it requires comparisons among different symptoms—for example, those associated with psychosis, dementia, paraplegia, and blindness. To address this issue, the concept of disability-adjusted life year (DALY) was developed. DALY is the sum of years lost to prema- ture mortality and years of healthy life lost to disability (US Burden of Disease Collaborators, 2013). In 2010, mental and behavioral disorders accounted for 22.7 percent of all years lived with disability in the United States (Vos et al., 2012). The prevalence of brain disorders is climbing, in part because the population is aging. Illnesses such as Alzheimer’s disease (AD), Parkin- son’s disease (PD), and other neurodegenerative disorders that dispropor- tionately strike elderly people are on the rise. Hyman translated this fact into expenses associated with dementia: In 2010, the total cost of care purchased in the marketplace was $109 billion; by 2040, it is projected to be $259 billion (Hurd et al., 2013). The aging population is not the only source of the growing weight of nervous system disorders. Rapid urbani- zation and conflict/post-conflict situations in, for example, Asia, Africa, and the Middle East are increasing the risk of posttraumatic stress disor- der (PTSD), depression, and substance use disorders (Lund et al., 2010). The American Psychiatric Association measured general medical care costs of people who have a mental health or substance use disorder and those who do not, said Paul Summergrad, chair of psychiatry at Tufts University and president of the American Psychiatric Association. According to the Milliman and American Psychiatric Association 2014 report, “patients with behavioral health conditions cost an estimated $525 billion in health care expenditures annually” (Melek et al., 2014, p. 20). Insurance data in the United States for 2012 revealed that insured pa- tients with a treated mental health or substance use disorder accounted for more than 30 percent of total health care spending, and on average 

INTRODUCTION AND OVERVIEW 7 had medical costs that were two to three times more than those without a behavioral condition (Melek et al., 2014). This line of reasoning contrib- utes to the economic argument that mitigating these conditions would provide a huge benefit to society. Furthermore, these diseases carry with them the additional burden of stigma, Summergrad said. This factor adds to psychological suffering associated with them and to their underappreciation and misunderstand- ing. Summergrad asked two questions: How can the severity of nervous system disorders best be characterized, beyond the science and economic burdens? What is the influence and associated costs of such disorders in other sectors, such as the justice system? At the moment, many people with CNS disorders are suffering be- cause of the gap between their medical needs and effective treatments, said Hyman. Disease-altering therapies do not exist for neurodegenera- tive disorders, nor do treatments for the core symptoms of autism or the cognitive aspects of schizophrenia (Pankevich et al., 2014). In addition, contemporary medicines provide little benefit to many people with epi- lepsy, depression, brain injury, and PTSD, added Hyman. The Honorable Patrick Kennedy, former U.S. Representative, Rhode Island, co-founder of One Mind, and founder of the Kennedy Forum, said, “At a time when the burden of all brain-related disorders is at an all-time high, when our understanding of the disability and the impact personally on every single family in this country and around the world is profound, it is time that we actually put forward bold ideas to try to make sure that we fix this problem.” Resolution of this predicament depends on the development of new treatment and prevention strategies. The market for such therapies is huge, he added. Why the Corporate Retreat from Neuroscience R&D? Despite this opportunity to address the current and growing need, in- dustry is disinvesting in brain disorders, especially psychiatric illnesses (Abbott, 2011; Miller, 2010; Stovall, 2011). Six of the 10 largest phar- maceutical companies, based on 2013 global sales, have cut back dramat- ically in this area (Choi et al., 2014). The number of publicly visible clinical CNS programs in 11 large pharmaceutical companies dropped by 50 percent between 2009 and 2011 (Choi et al., 2014). In addition, ven- ture funding for novel drug R&D (new chemical entities) decreased by 56 percent for psychiatry and 39 percent for neurology in two 5-year pe- riods (2004–2008 versus 2009–2013), compared to a less than 5 percent 

8 FINANCIAL INCENTIVES decline for oncology (Thomas and Wessel, 2015). Historically, large companies have played an especially important role in optimizing lead molecules and thus turning them into drugs; these outfits have also led in funding the large Phase III clinical trials that establish drug safety and efficacy, an essential step in bringing drugs to market. Furthermore, the disinvestment is rippling into academia and start-up companies, and dis- rupting discovery and development programs there, said Choi. The full impact of this loss will become more apparent in the future, as lack of cur- rent research will translate into fewer products in the pipeline, he added. Not all companies have pulled back, however; many promising ideas are percolating, and concerted national programs are focusing on brain research, so rich prospects in the field seem likely, said Choi. Even now, drug development is feasible, although challenging. More than 1,800 medicines are in development globally for mental health and neurologi- cal disorders (PhRMA, 2015). Several pharmaceutical companies are continuing to engage in neuroscience drug development, and venture capital and other seed investors continue to support CNS biotech compa- nies (Korieth, 2014). The departure of large companies, however, could destabilize the enterprise by decreasing potential partnership opportuni- ties and the ability to sell products or the entire start-up venture to bigger drug makers. Such changes might make the area less appealing for inves- tors (Choi et al., 2014). Furthermore, maintaining a well-populated pipe- line is crucial for the future, noted several participants. Overall success rates in pharmaceutical drug development have fall- en, and the cost to discover and develop new drugs has reached the range of $1.8 to $3.9 billion (Choi et al., 2014). Even taking these factors into account, Choi noted that companies are withdrawing disproportionately from neuroscience. The main driver of company departures appears to be the perception that the balance between risk and reward is unattractive, he added: The financial uncertainties are insufficient to justify the poten- tially large markets and significant benefits to society. This situation reflects in part a relatively low probability that any given agent will achieve medical or financial success, said Choi. Although 8.2 percent of CNS drugs that entered the clinic between 1993 and 2004 gained regulatory approval—similar to the success rate for car- diovascular drugs (8.7 percent), gastrointestinal/metabolic drugs (9.4 percent), and respiratory drugs (9.9 percent)—any difference can point company decision makers in more fruitful directions, especially as ap- proval rates only partly reflect a broader definition of product success (DiMasi et al., 2010). Other elements that are typically associated with 

INTRODUCTION AND OVERVIEW 9 CNS drug development, such as especially long clinical trials and regula- tory agency review times, further contribute to the lackluster appeal of this area. The amount of time for clinical trials plus FDA review of CNS drugs approved between 1996 and 2010 averaged 32 months (35 percent) longer than for non-CNS drugs (TCSDD, 2015). Of new compounds ap- proved by FDA between 1999 and 2013, drugs for neurological and psy- chiatric conditions required a mean review time of 19.3 months, approximately 31 percent longer than the review time of non-CNS ap- provals (TCSDD, 2015). Analogous times for drugs to treat cardiovascu- lar conditions, immunological/infectious disease, and cancer required 17.7 months, 12.5 months, and 8.1 months, respectively. These trends stem from the scientific reality that studying nervous system disorders poses challenges, said Hyman, given the current state of knowledge and laboratory tools. For example, new molecular targets are scarce, and their validation tends to be difficult. Current animal models and laboratory assays do not always predict therapeutic efficacy; the hu- man brain is inaccessible to direct study; and robust biomarkers are scarce (IOM, 2013b). Hyman pointed out that current drugs for psychiat- ric disorders have the same targets as their 1950s’ prototypes, except for lithium, which was first used earlier (Hyman, 2013). Nonetheless, the time is ripe for progress, said both Hyman and Choi. A recent working group of the Advisory Committee to the National Institutes of Health (NIH) Director concluded that we are now at “a mo- ment in the science of the brain where our knowledge base, our new technical capabilities, and our dedicated and coordinated efforts can gen- erate great leaps forward” (NIH, 2013, p. 9). Understanding of brain bi- ology and disease mechanisms is advancing, and large national initiatives are cultivating and coordinating research in this area (e.g., BRAIN Initia- tive). These ventures promise to open avenues toward future therapeu- tics. According to several workshop participants, if the CNS drug development enterprise is reinvigorated, it could take advantage of such forthcoming information and put existing knowledge to clinical use. “We are in the middle of the early stages of a national and inter- national call for investments in brain research,” said Choi. “This is not the right time to unplug the effort.” 

10 FINANCIAL INCENTIVES TOPICS HIGHLIGHTED DURING PRESENTATIONS AND DISCUSSIONS In summary, advances in the neurosciences have placed the field in a position where it is poised to significantly reduce the burden of nervous system disorders. Many workshop participants emphasized that CNS drug development is difficult, but feasible. Although the path forward ultimately lies in enhanced understandings of disease mechanisms, many promising therapeutic approaches have already been identified. Some companies recognize that idea and are staying the course even now. The objective of this workshop was for participants to discuss approaches for incentivizing R&D that will produce therapies that target unmet medical needs and significantly improve lives in the area of CNS diseases by strengthening market protections and regulatory processes. The intent was not to encourage development of drugs whose structures closely re- semble existing agents and that act by the same mechanism of action (“me too” drugs), even though these types of medications can benefit patients by reducing drug prices. Throughout the workshop, participants discussed a number of central themes. Market Protection • Several participants argued that rebalancing the underlying risk/reward calculus could help keep companies engaged in mak- ing CNS drugs. For example, increased market protections might help increase CNS drug investment. • Enhanced market protections increase drug costs, and therefore, a few participants stated that it will be important to ensure that new therapies are accessible to patients. Otherwise, the financial incentive will not address unmet medical needs. Regulatory Pathways • According to many participants, existing regulatory pathways or moderate adjustments to existing pathways could be used more in the CNS arena to decrease development time. Such pathways include priority review, accelerated review, breakthrough thera- py designation, and fast-track designation. Harnessing some of these pathways (e.g., accelerated approval, which allows for FDA approval based on surrogate endpoints) might expose pa- 

INTRODUCTION AND OVERVIEW 11 tients to greater risk. In addition, several participants suggested other proposals, such as adaptive trial design and conditional ap- provals, to get therapies to patients faster than current processes. To address this issue, a few workshop participants emphasized that patients have a critical role in conversations about how to balance uncertainty and potential benefits when considering how and when to use these options. Patient Benefit and Advocacy • Several participants noted the importance of involving patients and caregivers early on in discussions about strategies that might increase incentives for CNS drug development. • According to many participants, developing and using mecha- nisms to define values for drugs might help inform stakeholders in the pharmaceutical and biotechnology industry decisions about which risks, benefits, and associated costs will be appro- priate. Several participants stressed that patients and caregivers can make important contributions in these areas. • Stakeholders across all sectors (e.g., government, nongovern- ment organizations [including patient and disease advocacy or- ganizations], and academia) might benefit from collaborating and presenting a unified front to advocate for change, several participants said.