Cost Challenges in Developing New Oncology Drugs

Oncology Business News®, November 2013, Volume 2, Issue 4

The increased cost of new branded oncology drugs continues to receive much negative press. Recent editorials have criticized the high cost of new cancer therapies, and their less than stellar improvements in efficacy, over already existing, lower-cost treatment options. Such critics have argued that little or no correlation between drug efficacies and pricing exists.

Joseph DiMasi, PhD

The increased cost of new branded oncology drugs continues to receive much negative press.1-4 Recent editorials have criticized the high cost of new cancer therapies, and their less than stellar improvements in efficacy, over already existing, lower-cost treatment options. Such critics have argued that little or no correlation between drug efficacies and pricing exists. One editorial, in particular, explained the decision of Memorial Sloan-Kettering Cancer Center to exclude the recently approved Zaltrap [ziv-aflibercept; Sanofi/ Regeneron] from its formulary due to its high cost, and because major clinical practice guidelines agreed that it is no more effective than the already existing, lower cost drug Avastin [bevacizumab; Genentech] for patients with advanced, metastatic colorectal cancer.1 Zaltrap had been priced at an average of about $11,000 a month, while Avastin costs less than half that at around $5000 per month. Subsequently, Sanofi discounted the net cost of Zaltrap by 50% in the United States in response to market resistance.5

Amid concerns with the high cost of new oncology drugs, a relevant question is what does it actually cost to bring a new innovative oncology treatment from its infancy stages to commercialization? During the 1990s, the research and development cost per approved oncology drug was estimated to be 20% higher than non-oncology drugs: around $1024 million for oncology versus $868 million for all drugs.6 In the past decade, prices for new branded oncology drugs have nearly doubled from about $5000 per month to over $10,000 per month. As recently as 2003, the cost of developing a new drug in all therapeutic areas was estimated at nearly $1 billion.7

In 2007, a review of the economics of new oncology drug development found that 71% of oncology drugs received priority review status from the Food and Drug Administration versus 40% of other new drugs receiving priority status (from 1997 to 2005).8 The oncology drugs had longer clinical development times from start of testing to market approval and were likely to be tested in many more uses before first marketing approval than the other categories. Before original approval for marketing, 57% of oncology drugs were investigated for multiple indications, with 32% tested in at least four indications. These factors affect the full-capitalized cost per approved drug.

According to Joseph DiMasi, PhD, of Tufts Center for the Study of Drug Development, robust data specific to current oncology drug development costs are lacking. Given the generally large expenses of oncology drug treatment, according to DiMasi, most economic experts believe that per patient costs for oncology drug trials are relatively very high. “However,” he said, “the net effect on relative costs is unclear as costs depend on how many indications are pursued.”

Challenges of Phase III Trials

Generally, phase III trials are the most expensive development phase for any drug. Oncology drugs, in particular, are plagued by a high failure rate after entering phase III, which leads to higher average development costs. From 2004 to 2011, the overall rate of transitioning from phase I to FDA approval was 6.7% for oncology, while it was 12.1% for all other therapeutic areas.9 The big drop in phase III success for oncology trials is the primary driver of this two-fold difference. As little as 45% of oncology therapeutics progress from phase III to NDA/ BLA versus 64% for all other areas.

Gisela Schwab, MD

One challenge in oncology drug development is that endpoints in phase II trials are not welldefined and do not readily translate into phase III designs, which is very different from other therapeutic categories such as infectious disease or lipid-lowering drugs.9 While areas like infectious disease have highly quantifiable markers like viral load that have direct, predictive value for phase III, oncology allows phase II trials to be set up to only gain initial evidence to justify more rigorous, quantitative investigation.

“The difference in endpoints between phase II and phase III account for a large number of failures in phase III since response rate or progression-free survival (PFS) does not always predict for benefit in overall survival,” explained Mohammad Azab, MD, MSc, MBA, Chief Medical Officer of Astex Pharmaceuticals. Although overall survival (OS) is considered by payers, especially, as the gold standard endpoint, it is rare to get solid OS data in phase II.

Emphasizing the importance of appropriate design for phase II trials, Gisela Schwab, MD, Executive Vice President and Chief Medical Officer at Exelixis said, “The design of phase II trials should be tailored to the mechanism of action of the drug in development.” For example, if a drug is expected to result in cytostatic rather than cytoreductive activity, a time to event endpoint such as PFS or OS may be preferred. This may be best addressed in a randomized phase II trial or a randomized discontinuation study to understand the impact on these relevant endpoints. For compounds showing very high response rates due to cytoreductive activity, data from a single arm phase II study may be appropriate to support a phase III trial.

According to Schwab, “Study populations between phase II and phase III should be consistent, and statistical assumptions for the phase III trial should not overestimate the drug’s activity.”

Biomarkers Affect Costs

Hopes are high that biomarkers may aid in taming the costs of developing new oncology drugs. Azab stated that the cost to develop a companion diagnostic is about $15 to $20 million. “This could be largely offset by a smaller size clinical program based on a wellselected patient population.” An example is the FDA approval of Xalkori [crizotinib; Pfizer] where the drug was developed in a carefully selected group of lung cancer patients that had the ALK translocation in their tumor. In contrast to the usual phase III study in oncology which could reach to close to 1000 patients, Xalkori’s accelerated approval was based on two phase II trials that had a combined number of only 255 patients.

For oncology drugs with biomarkers, 90% progressed from phase I; 69% progressed from phase II; and 85% progressed from phase III, versus those without markers, 74% progressed from phase I; 47% from phase II, and 51% from phase III.10 This indicates that markers raise the probability of transitioning through the phases of clinical trials, and it suggests that markers may lower development costs.

Nonetheless, the majority of non-orphan drugs (67% among phase I agents) are currently being developed without markers.11 Furthermore, less than 30% of cancer drug FDA approvals that occurred from 2006 through 2011 had genetic or protein expression mentioned in their labeled indication. “Unfortunately, for the average oncology drug that does not have a careful patient selection strategy based on a wellvalidated biomarker and on the presence of a validated target, the cost is certainly going up and the timelines are being extended,” said Dr. Azab.

The value of using a therapeutic/companion diagnostic package to optimize the value of a drug platform through better defining a development path is explained by Barry Selick, PhD, CEO, Threshold Pharmaceuticals. Threshold has recently acquired an investigational hypoxia PET imaging agent from Siemens. According to Selick, the agent has a clinical data package supporting its safety profile and has the potential to identify and quantify the degree of hypoxia in patient tumors. “This is really about using a therapeutic/companion diagnostic package to optimize the value of our hypoxia-targeted drug platform. With the therapeutic/diagnostic combo, we hope to better define the development path in tumor types that are more heterogeneous with respect to our hypoxia target,” he said.

Discussing Efforts to Control Costs

In discussing efforts to reduce costs in oncology drug development, Azab pleaded for more efficient initiation of oncology clinical trials. He explained that the time from final study protocol to first patient has gone from 2 to 3 months (10 to 20 years ago) to 6 to 9 months (or even 12 months) in some academic oncology centers. The main driver of those long times is the multiple protocol reviews that each institution undertakes and the legal negotiations. “A concerted effort in these academic oncology centers to introduce efficiencies in their review process and legal contract negotiations go a long way in running faster trials and in providing quicker access for patients to new potentially beneficial therapies,” he said.

Additionally, the cost of developing any successful new drug must be calculated to include the cost of trying to develop those drugs that ultimately do not get approved. “To the extent that the industry can develop predictive biomarkers or otherwise target drugs to patients who will derive benefit early in the development process, the sooner ineffective drug candidates can be identified and culled. This will preserve dollars and resources for candidates with greater promise,” offered Selick. In other words, fail fast and fail cheap.

Echoing Selick’s sentiment, Azab agreed, “Since the cost per drug approved is heavily influenced by the allocation of costs from failed drugs, the sooner we kill bad drugs with minimal cost the better the overall cost per approved drug would be.”


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