The Biopharmaceutical Pipeline: New Mechanisms, New Revenue

A new report from The Analysis Group created with PhRMA’s support highlights how biopharmaceutical industry strategy is shifting from a “me-too” to a “me-first” paradigm.

There are more than 5400 products in clinical development in the biopharmaceutical industry, according to a new report developed by The Analysis Group and released by PhRMA, including drugs that have multiple indications. Nearly 70% of the drugs in the pipeline are first-in-class drugs, meaning that they use a new and unique mechanism of action to fight disease.

First-in-class drugs approved in 2012 covered a wide range of illnesses, including Aubagio (teriflunomide) for multiple sclerosis, Erivedge (vismodegib) for metastatic basal cell carcinoma, and Kalydeco (ivacaftor) for cystic fibrosis. Often labeled as “breakthrough” medications, these novel molecules can prove extremely important for “patients who have not responded to existing therapies, cannot tolerate the side effects associated with existing therapies, or have developed resistance to current medicines,” noted the report. Although not all first-in-class medications are necessarily classified as specialty medications, most of the molecules approved in 2012 as new molecular entities fell into this category.

Another evolving trend in the drug discovery process is the development of orphan drugs. There are nearly 3 times as many orphan drugs in the pipeline now than there were 10 years ago, and this may be attributed, in part, to the financial incentives created by the Orphan Drug Act. Of the 86 orphan drugs analyzed in a 2012 Thomson Reuters study, 25 (or 29%) generated annual sales exceeding $1 billion. Conditions where there is substantial unmet need are also a high priority for drug developers, especially in the disease areas where there have not been approvals in the last 10 years. Conditions that meet these criteria include, but are not limited to: Lou Gehrig’s disease (amyotrophic lateral sclerosis), Alzheimer’s disease, and cervical cancer. There are 158 total distinct molecule-indication combinations in development for ovarian cancer; this is the condition that is the top priority among those with few effective treatments.

When promising medications fail in clinical trials, an opportunity arises for these drugs to be developed in smaller subsets of patients with specific genetic abnormalities, noted the authors of the report. The pipeline is being shaped by personalized medicine, and from 1993 to 2008, 155 trials utilized biomarkers in their studies. The researchers also noted that the FDA currently has 100 medications with pharmacogenomic biomarkers included in their drug labels, and cited research from Tufts Center for the Study of Drug Development which found that 94% of pharmaceutical companies were investing in personalized medicine. The researchers explained that 3 personalized medicines, all of which were coupled with companion diagnostics, have recently emerged from the pipeline: Zelboraf (vemurafenib), Xalkori (crizotinib), and Kalydeco. These therapies, to treat melanoma, lung cancer, and cystic fibrosis, respectively, are all high-cost, specialty medications.

Graph from the report,“Innovation in the Biopharmaceutical Pipeline: A Multidimensional View," by Genia Long and Justin Works. © Analysis Group, Inc. 2012

Although a majority of the approved drugs highlighted in the report that were developed using the aforementioned strategies were specialty medications, Genia Long, managing principal at The Analysis Group, Inc, told Specialty Pharmacy Times that the report accounted for both biologics and small molecule drugs. “Drugs that might be characterized by payers as specialty drugs, either because of their mode of administration, their distribution approach, their price, or other factors were included,” Long noted, but it was not possible to discern “how some of these factors such as price, distribution approach, and payer management would play out many years in the future.” Even so, Long contends that at least some of the examples highlighted in the report, “such as therapies which reflect certain types of novel scientific approaches,” might likely be classified as specialty therapies.

Drugs manufactured through the use of new scientific approaches, including medications developed through antisense RNA interference, cell therapy, gene therapy, conjugated monoclonal antibodies, and transgenic products, could potentially be key R&D cost drivers over time—which, in turn, could potentially play a role in drug company pricing strategies. Indirectly, an increase in the use of these experimental methods could factor into future “specialty pharmacy” designations.