Independent Innovation
by Lisa Zamosky
January 2008
The wealth of knowledge, talent and capital at the U.S. National Institutes of Health is a tremendous resource for the drug development community.
The filing of an Investigational New Drug (IND) application with the U.S. Food and Drug Administration (FDA) is a necessary early step on the road to conducting clinical studies on human subjects. And according to a 2006 report by the U.S. Government Accountability Office (GAO), “About one out of every 10,000 chemical compounds initially tested for their potential as new medicines is found safe and effective, and eventually approved by FDA.” Yet, IND submissions have steadily increased since 1986, with a 45 percent increase starting in 2004, according to the GAO report. The increase in IND filings, coupled with the high failure rate of clinical studies, leaves volumes of closed INDs and the compounds they represent languishing in files, many of them at the U.S. National Institutes of Health (NIH). With so many INDs in its possession, the NIH is sitting on a mountain of untapped scientific potential, leaving some to question what the government intends to do with it.
Government as Drug Developer
The notion of government getting into the business of drug development is one that has been floated—if only theoretically—over time, particularly in the not-for-profit sector, where the belief that government can do as well as industry is perhaps strongest. It has been argued that with the NIH supporting and producing the majority of early biomedical research that government should own the entire process, rather than transferring technology to industry for further development, manufacturing and marketing.
The relationships between the public and private sectors have become increasingly interwoven, particularly since the enactment of the Bayh-Dole Act in 1980, which altered the economic association among academia, industry and government. Still, all parties maintain that they possess unique strengths, suggesting that their differences are to be respected.
Mark L. Rohrbaugh, Ph.D., J.D., director, Office of Technology Transfer at the NIH, in Rockville, Md., USA, acknowledges that the subject of government as drug developer comes up occasionally, but says he finds the notion unworkable. “No one says ‘industry isn’t doing a great job of manufacturing cars, so let’s have the government manufacture cars.’ I can’t imagine people saying that, so then why would people entertain the idea that the government can do a better job manufacturing drugs?”
Rohrbaugh believes that because the government is responsible for funding the early science that has led to countless biologic breakthroughs, the relationship between government and industry is minimized and poorly understood by the general public. “What does it mean to say that government funding plays a critical role in the development of many drugs? If you’re talking about the very basic research, that’s true,” Rohrbaugh says. “But we’re only talking about very basic research findings that still require a lot of developmental expertise. The government does not have expertise on the commercial development side, which requires a lot of skill and experience—not just technical but also financial and administrative—to scale up production and bring a drug through clinical trials. I’ve never heard anyone say that the government could do a cheaper and faster clinical trial than industry.”
Carol Nacy, Ph.D., CEO of Sequella Inc., a biotechnology company based in Rockville, Md., USA, agrees that the idea of government as drug developer is not practical, nor is it in the best interest of public health. “NIH is designed to conduct and fund basic research and to find an underlying biology that would enable a furtherance of understanding of biological function. They are not set up to deliver drugs or products to a population. That’s not their mission and it is not what we want them to do,” she says. What the U.S. public wants, Nacy says, is to have excellent science underpinning any product development that can happen in industry.
The ability to weed out drugs that are going to be unsuccessful commercially and develop drugs that will achieve commercial success is critical for public health. Getting a product through development to market, where it can make an impact, is an area that most experts agree is better handled by the private sector. “It’s that experience that the NIH counts on and the basic science that is the underpinning of the products that the industry side counts on. It’s an excellent partnership, and when it works well, it works beautifully,” Nacy says.
Courting Collaboration
The U.S. National Cancer Institute (NCI) conducts a lot of early clinical research and begins looking for an industry collaborator during that phase. Once a compound gets to the point of licensure, a company is needed to bring it through the FDA approval process to market. According to Jan M. Casadei, Ph.D., acting chief of the regulatory affairs branch cancer therapy evaluation program at the NCI in Washington, D.C., USA, pharmaceutical and biotechnology companies are better equipped to move a potential product forward once the evidence of activity and the safety of the basics has been obtained. “Up to this point, we’ve not been in the business of bringing products all the way through to licensure. However, by conducting clinical trials that further elucidate the merit of a drug, we do help companies with clinical trials to help them get certain drugs licensed.”
The NCI will initiate advanced studies on compounds it believes have potential and are important for public health, but have not yet gained the interest of industry. Compounds that have reached a later stage in which a clearer potential has been identified naturally hold a greater appeal for industry. In such instances, the NCI may partner with a private company under a collaborative agreement to conduct such studies, which, if successful, could be used by the company in support of a licensing application to the FDA for approval of a compound.
NIH recently launched a Web-based resource called Pipeline to Partnerships. It offers companies that have licensed NIH technology or received small business grants opportunities to register on the NIH Web site as a way to find investors and strategic partnerships.
Necessary Involvement
Naturally, developing drugs for many of the diseases that pose a serious risk to global public health worldwide doesn’t offer industry the kind of financial return it typically looks for when committing time and resources to the development of a new drug. Research and development associated with diseases such as tuberculosis represent an important part of the NIH portfolio by necessity and enable the government to take an active role in filling a gap left open by industry. “There is more government research going on for TB or malaria because these are diseases of a greater burden to the poor and developing world, so there is less development in industry than there might be for a hypertension drug,” Rohrbaugh says.
However, even when government is involved in later stage clinical trials, Rohrbaugh says it still utilizes industry for areas of expertise the government lacks. Bio-defense and the development of anthrax and Ebola vaccines, for example, are unlikely to be picked up by industry because the risk and liability is high. Also, there is no market beyond the government. “In such cases, the government may have to do those clinical trials, but it doesn’t produce the materials used. The government hires a company to manufacture [the drug],” Rohrbaugh says.
For Sequella—a biopharmaceutical company that works to develop novel therapeutics for some of the most acute illnesses—the partnership between industry and government is particularly critical. Sequella’s researchers worked alongside the NIH under a Cooperative Research and Development Agreement to identify novel TB therapies. “Without the NIH it would be very hard for biotech to do this kind of rigorous work, and it would be very difficult for biotechnology companies to get funding on their own if the NIH was not interested in this as a therapeutic area,” Nacy says.
Blurring the Lines
With all the talk of innovative drugs overwhelmingly stemming from the government’s work or support, in a 2003 GAO study, it was identified that the government had licensing rights in “only six brand name drugs associated with the top 100 pharmaceuticals that the VA [ Department of Veterans Affairs ] procured and in four brand name drugs associated with the top 100 pharmaceuticals that DOD [Department of Defense] dispensed.”
However, in all likelihood these numbers fail to tell the whole story about how many drugs may have benefited from very early science either conducted or funded by the NIH. Also consider critical drug combinations, such as the three-drug cocktail used to treat HIV and so many cancer agents, which may work more effectively in combination than on their own. More often than not, these drugs are products of multiple private companies that would not typically come together without the involvement of the NIH. “For a variety of legal and business reasons, it’s hard for companies to get together to sponsor a clinical trial for drugs in which they have a proprietary position. The government plays an important neutral role in brokering those kinds of trials,” Rohrbaugh says.
The development work done by the NIH is aimed at helping companies leverage their resources. For no NIH agency is this more true than at the NCI. “We do complementary studies. We don’t do duplicative work,” says Sherry Ansher, Ph.D., coordinator of research and development, agreements regulatory affairs branch of the cancer therapy evaluation program at the NCI in Bethesda, Md., USA.
According to Ansher, the NCI has approximately 100 active investigational agent combination studies presently ongoing. “One of the most important aspects of what we’re currently doing is investigational drug agent combinations,” she says. “And because we have such a large portfolio of INDs, we can put together combinations of investigational agents that make sense along pathways much sooner and much more easily than a company could on its own.” All of the agreements NCI holds with industry have a multi-party data provision so that NCI can look at possible combinations of the investigational agents in its portfolio.
Set the Stage
The Bayh-Dole Act of 1980 along with the Federal Technology Transfer Act (FTTA) of 1986 permitted NIH-funded inventions to be patented and licensed to industry. Under the act, the NIH Office of Technology Transfer retains titles to inventions developed by NIH laboratories and the NIH grantees retain title to inventions developed by the Institutes. The act also allows for licensing to ensure that the invention is used, commercialized and made available to the public. The FTTA enables the government to retain ownership rights to inventions it creates and allows the government to receive royalties from companies that go on to develop and commercialize products.
According to Rohrbaugh, most of the technology developed by NIH will initially be licensed to small companies. “The technologies we have may be very early stage,” he says. “We may not have animal data, and it’s very unusual for us to have human clinical data.” As a result, these products require a company to be willing to take a high level of risk and invest a lot of money.
Once a patent is filed, the NIH will begin to look for companies interested in licensing it. When a match is made, the negotiation as to whether an exclusive or non-exclusive license will be granted begins. “If it seems useful for five different cancers and the company is only interested in three cancers, we’ll want to reserve the other two for someone else,” Rohrbaugh says. “We want the pie to serve as many as possible, but understand that we can’t carve it up into 100 pieces. If it’s too small, no one will want it.”
Nacy says that a dynamic tension between the technology transfer office and industry exists when the time comes to negotiate a license with NIH. The government needs to ensure the technology gets developed and tends to lean toward granting non-exclusive licenses to ensure it remains available to companies best suited to get that done. But the needs of industry often are different. “Our need is to ensure that we control that technology over time so we’re always looking for the worldwide exclusive rights,” Nacy says. “There is a dynamic tension and it’s probably useful.”
Most of these inventions, if successful, end up with large pharmaceutical or biotechnology companies in the end. “But they don’t start there,” Rohrbaugh says. “Over the last 10 years we’ve found the business model big pharma has adopted is to look [for new technology] at biotech.”
Even as the lines between public and private functions have blurred, the respective roles of government and industry remain fairly distinct, and the relationship is decidedly symbiotic. Rohrbaugh sums up the relationship between government and industry this way: “The role of government is to build the highway so that people can drive down with their company truck. We don’t own the company truck, but we built the highway. Did we facilitate the development of the truck? Absolutely. But we didn’t build it.”
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