V O L U M E 2 5 䡠 N U M B E R 2 䡠 J A N U A R Y 1 0 2 0 0 7
`
`JOURNAL OF CLINICAL ONCOLOGY
`
`R E V I E W A R T I C L E
`
`From the Tufts Center for the Study of
`Drug Development, Tufts University,
`Boston, MA; Department of Econom-
`ics, Duke University, Durham, NC.
`
`Submitted September 5, 2006; accepted
`September 26, 2006.
`
`Authors’ disclosures of potential con-
`flicts of interest and author contribu-
`tions are found at the end of this
`article.
`
`Address reprint requests to Joseph A.
`DiMasi, PhD, Tufts Center for the
`Study of Drug Development, Tufts
`University, 192 South St, Suite 550,
`Boston, MA 02111; e-mail:
`joseph.dimasi@tufts.edu.
`
`© 2007 by American Society of Clinical
`Oncology
`
`0732-183X/07/2502-209/$20.00
`
`DOI: 10.1200/JCO.2006.09.0803
`
`Economics of New Oncology Drug Development
`Joseph A. DiMasi and Henry G. Grabowski
`
`A
`
`B
`
`S
`
`T
`
`R
`
`A
`
`C
`
`T
`
`Purpose
`Review existing studies and provide new results on the development, regulatory, and market
`aspects of new oncology drug development.
`Methods
`We utilized data from the US Food and Drug Administration (FDA), company surveys, and publicly
`available commercial business intelligence databases on new oncology drugs approved in the
`United States and on investigational oncology drugs to estimate average development and
`regulatory approval times, clinical approval success rates, first-in-class status, and global
`market diffusion.
`Results
`We found that approved new oncology drugs to have a disproportionately high share of FDA
`priority review ratings, of orphan drug designations at approval, and of drugs that were granted
`inclusion in at least one of the FDA’s expedited access programs. US regulatory approval times
`were shorter, on average, for oncology drugs (0.5 years), but US clinical development times were
`longer on average (1.5 years). Clinical approval success rates were similar for oncology and other
`drugs, but proportionately more of the oncology failures reached expensive late-stage clinical
`testing before being abandoned. In relation to other drugs, new oncology drug approvals were
`more often first-in-class and diffused more widely across important international markets.
`Conclusion
`The market success of oncology drugs has induced a substantial amount of investment in
`oncology drug development in the last decade or so. However, given the great need for further
`progress, the extent to which efforts to develop new oncology drugs will grow depends on future
`public-sector investment in basic research, developments in translational medicine, and regulatory
`reforms that advance drug-development science.
`
`J Clin Oncol 25:209-216. © 2007 by American Society of Clinical Oncology
`
`INTRODUCTION
`
`Although progress has been made in treating many
`forms of cancer, there remains a strong medical need
`for substantial improvement. This makes the com-
`plex economics of new oncology drug development
`an important area to research. In recent years, rising
`prices and growing expenditures on oncology
`drugs1 have caused significant concern among pay-
`ers and patients.2 At the same time, and likely due in
`part to expanded market opportunities, some data
`indicate that the development of new, often tar-
`geted, oncology therapies has recently been growing
`significantly.3,4 The extent to which markets will
`grow in the future, however, is uncertain because
`sponsors may face increasing resistance to what are
`perceived to be high and unsustainable prices, in-
`creasing competition if a substantial number of new
`therapies enter the market, and smaller market sizes
`for highly targeted therapies.4
`
`Incentives to develop new therapies also de-
`pend on the costs, risks, and length of new drug
`development. Pharmaceutical research and devel-
`opment (R&D) costs in general have been estimated
`to be high and rising substantially over time.5 Costs
`(at least clinical phase expenditures) have also been
`shown to differ by therapeutic class.6 Unfortunately,
`to date, not enough information has been available
`to reliably estimate R&D costs for oncology drugs. A
`good deal of information, however, can be gathered
`on other metrics of the drug development process
`for oncology drugs. This article will review informa-
`tion on the markets for new oncology drugs and
`present new data on the length and risks of new
`oncology drug development.
`
`METHODS
`
`To analyze various aspects of the development, regulatory,
`and market characteristics of new oncology drugs, we
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`DiMasi and Grabowski
`
`utilized a variety of data sources. Information on new drug US clinical devel-
`opment and approval times were obtained from public sources and company
`surveys, and were complied for a Tufts Center for the Study of Drug develop-
`ment (CSDD) database. The US clinical phase is defined here as the time from
`first filing of an investigational new drug application (IND) with the US Food
`and Drug Administration (FDA) to study a new drug in humans to first
`submission to the FDA of a new drug application (NDA) or biologic license
`application (BLA) for marketing approval of the new drug. The approval phase
`is the time from first submission of an NDA or BLA to approval of the
`application for marketing. With regard to these development and approval
`times, we focus attention on therapeutic drugs and biologics that had first
`obtained FDA approval for US marketing from 1990 through 2005. We exam-
`ined both new chemical entities and therapeutically significant new biologics.
`For the sake of brevity in expression, we refer to all of these compounds as new
`drugs. We have public NDA/BLA submission and approval dates for all of
`these new drugs, and dates of first IND filing (which have been validated with
`the FDA) for 95% of these compounds.
`We analyzed clinical approval success rates based on information ob-
`tained from a publicly available business intelligence database (IMS Health’s
`R&D Focus) for the 20 largest pharmaceutical firms in terms of pharmaceutical
`sales in 2005, with supplementary information from other commercial busi-
`ness intelligence databases. Given the lengthy development process, only com-
`pounds that had entered clinical testing through 2002 were included in the
`phase transition probability analyses. Their status was tracked through the first
`half of 2006. In addition, because a relatively large share of the compounds that
`initiated clinical testing during the latter half of the success rate analysis period
`are still active, a separate analysis for the 1998 through 2002 period would be
`questionable. Instead, to obtain a sense for the direction and extent of changes
`over time we compared results for the entire 1993 to 2002 period with results
`for the 1993 to 1997 period.
`A number of studies of drug industry success rates have used statistical
`inference techniques (mainly survival analysis) to account for the right-
`censoring of the data.5,11 However, given the relatively recent experience of the
`compounds we considered here and the length of the development process
`for many drugs, a significant number of compounds that we examined had
`not yet reached their final fate (abandonment or marketing approval),
`thereby making these statistical approaches somewhat unreliable. There-
`fore, we estimate success and phase attrition rates in a mechanistic manner.
`Specifically, we calculated phase transition probabilities by dividing the
`number of molecules that completed a given phase and entered the next
`phase by the difference between the number of molecules that entered the
`phase and those still in the phase at the time of the analysis. Such an
`approach should provide reasonable estimates of phase transition proba-
`bilities because the lengths of individual phases are short relative to total
`development times. The accuracy depends on an implicit assumption that
`those drugs that are still active at the time of analysis will proceed to later
`phases more or less in the same proportions as the estimated transition
`probabilities. The overall clinical success rate is then determined as the
`product of the phase transition probabilities. Clinical success is defined as
`US regulatory approval for marketing.
`Data on market and other characteristics of new drug launches were
`obtained from IMS Health’s New Product Focus database used for a study of
`the quality and quantity of worldwide new drug introductions.12 This
`database reports drug launches in 68 countries since 1982. The data exam-
`ined includes new biologic products, but it excludes diagnostic tests (ex-
`cept for radiopaques), radiologicals, over-the-counter drugs, combination
`vaccines, polyclonal antibodies, and biologic extracts. Launch dates were
`used to determine whether a new drug launch was for a first-in-class drug.
`Therapeutic classes for this analysis were chosen based on a unique com-
`bination of the four-digit level Anatomic Therapeutic Classification (ATC)
`and five-digit level Uniform System of Classification (USC) codes. The
`ATC and USC system are the same for many therapeutic classes, but when
`they differed, as a general principle the most disaggregate class from these
`two sources was used.
`
`RESULTS
`
`We first examined the number and regulatory characteristics of new
`oncology drug approvals in the Unites States since 1990. Table 1 lists
`the 68 new oncology drugs approved for marketing in the United
`States from 1990 to 2005, along with their NDA/BLA submission and
`approval dates. The FDA also approved 434 other new drugs (as
`defined herein) during this period. Seventy-nine percent of the ap-
`proved new oncology drugs are traditional small-molecule com-
`pounds (78% of the other new drugs approved during the study
`period are also small molecules). If we narrow the focus on large-
`molecule approvals to the most common types of approved “biotech”
`products (recombinant proteins and monoclonal antibodies [mAbs];
`excluding, for example, purified biologics), we find that 18% of the
`oncology drug approvals and 15% of the other drug approvals are
`biotech products under this definition. The biotech share of all drug
`approvals increased over time for both oncology and other drugs,
`although the rate of increase was faster for oncology drugs. The bio-
`tech shares were 8% and 9% during 1990 to 1993 for oncology and
`other drugs, respectively. However, the biotech shares rose to 29% and
`24% during 2002 to 2005 for oncology and other drugs, respectively.
`From a regulatory perspective, the oncology drugs differ mark-
`edly from other new drug approvals. As Table 2 indicates, 71% of the
`oncology drug approvals were given a priority review rating by the
`FDA, in contrast to 40% for other new drugs. Nearly half of the on-
`cology drugs were initially approved with an orphan drug indication,
`while less than one in five other drugs had orphan drug status at first
`approval. Finally, sponsors of oncology drugs were much more often
`able to take advantage of at least one of the FDA’s programs to speed
`development (subpart E, accelerated approval, fast track). Close to half
`of the approved oncology drugs had some expedited access status
`during development, as opposed to only 13% for the other new drugs
`approved during the study period.
`Oncology Drug Development Times
`As noted, oncology drugs are disproportionately given priority
`ratings by the FDA, which carries with it a performance goal for faster
`review of marketing applications. This is reflected in the approval
`phase means shown in Figure 1. The FDA reviewed oncology drugs,
`on average, 6 months faster than other drugs. We also noted that
`oncology drugs were more likely to be able to take advantage of FDA
`expedited access programs during development. However, despite
`this fact, difficulties in recruiting patients and longer times needed to
`establish efficacy (particularly if survival is an end point) for oncology
`drug clinical trials can help explain why we found US clinical develop-
`ment times to be a year and a half longer for oncology drugs. For the
`period analyzed, oncology drugs took, on average, 1 year longer to
`move from the initiation of clinical testing in the United States to US
`regulatory marketing approval. Development and approval phase
`times are lower for medians, but the comparative results are similar.
`Median approval phase times are 0.3 years shorter for oncology drugs
`(1.0 v 1.3 years), whereas median clinical phase times are 1.5 years
`longer for oncology drugs (7.8 v 6.3 years).
`Technical Success Rates for Oncology
`Drug Development
`To examine technical success rates and phase transition rates
`for investigational oncology and other drugs, we obtained data
`on the pipelines of the 20 pharmaceutical firms with the most
`
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`New Oncology Drug Development
`
`Table 1. New Oncology Compounds Approved in the United States, 1990-2005
`NDA Submission
`Date
`
`Trade Name
`
`Sponsor
`
`Plenaxis
`Proleukin
`Campath
`Uroxatral
`Panretin
`Hexalen
`Ethyol
`Levulan Kerastick
`Arimidex
`Emend
`Trisenox
`Vidaza
`Pacis
`Avastin
`Targretin
`Casodex
`Velcade
`Xeloda
`Erbitux
`Leustatin
`Clolar
`Ontak
`Zinecard
`Taxotere
`Anzemet
`Avodart
`Ellence
`Tarceva
`Aromasin
`Proscar
`Fludara
`Faslodex
`Iressa
`Gemzar
`Mylotarg
`Kytril
`Zevalin
`Idamycin
`Gleevec
`Camptosar
`Revlimid
`Femara
`Ergamisol
`Actinex
`Arranon
`Nilandron
`Eloxatin
`Taxol
`Kepivance
`Aloxi
`Oncospar
`Alimta
`Nipent
`Photofrin
`Elitek
`Rituxan
`Quadramet
`Nexavar
`Temodar
`Vumon
`Hycamtin
`Fareston
`Bexxar
`Herceptin
`Trelstar Depot
`Valstar
`Navelbine
`Zometa
`
`Praecis
`Chiron
`Berlex
`Sanofi-Synthelabo
`Ligand
`U.S. Bioscience
`U.S. Bioscience
`Dusa
`Zeneca
`Merck
`Cell Therapeutics
`Pharmion
`Biochem Pharma
`Genentech
`Ligand
`Zeneca
`Millennium
`Roche
`Imclone
`Ortho
`Genzyme
`Ligand Pharmaceuticals
`Pharmacia
`Rhone-Poulenc Rorer
`Hoechst Marion Roussel
`Glaxo Wellcome
`Pharmacia & Upjohn
`Osi/Genentech
`Pharmacia & Upjohn
`Merck
`Berlex
`Astrazeneca
`Astrazeneca
`Lilly
`Wyeth-Ayerst
`Smithkline Beecham
`Idec
`Adria Labs
`Novartis
`Pharmacia & Upjohn
`Celgene
`Novartis
`Janssen
`Chemex/Reed & Carnick
`Glaxosmithkline
`Hoechst Marion Roussel
`Sanofi
`Bristol-Myers Squibb
`Amgen
`Helsinn Healthcare
`Enzon
`Eli Lilly
`Warner-Lambert
`Qlt
`Sanofi-Synthelabo
`Genentech
`Cytogen
`Bayer/Onyx
`Schering-Plough
`Bristol-Myers Squibb
`Smithkline Beecham
`Orion/Schering
`Corixa
`Genentech
`Pharmacia
`Anthra Pharmaceuticals
`Burroughs Wellcome
`Novartis
`
`12/12/2000
`12/1/1988
`12/23/1999
`12/8/2000
`5/27/1998
`12/19/1988
`9/30/1991
`7/1/1998
`3/29/1995
`9/27/2002
`3/28/2000
`12/29/2003
`4/21/1995
`9/30/2003
`6/23/1999
`9/14/1994
`1/21/2003
`10/31/1997
`8/14/2003
`12/31/1991
`3/30/2004
`12/9/1997
`2/10/1992
`7/27/1994
`9/29/1995
`12/21/2000
`12/15/1998
`7/30/2004
`12/21/1998
`4/15/1991
`11/24/1989
`3/28/2001
`8/5/2002
`2/2/1995
`10/29/1999
`4/14/1992
`11/1/2000
`8/31/1989
`2/27/2001
`12/28/1995
`4/7/2005
`7/25/1996
`11/1/1989
`4/10/1989
`4/29/2005
`3/7/1994
`6/24/2002
`7/22/1992
`6/24/2004
`9/27/2002
`1/1/1991
`9/30/2003
`2/11/1991
`4/13/1994
`12/16/1999
`2/28/1997
`6/13/1995
`7/8/2005
`8/13/1998
`9/28/1990
`12/22/1995
`1/3/1995
`9/15/2000
`5/4/1998
`6/26/1996
`12/31/1997
`8/27/1993
`12/21/1999
`
`NDA Approval
`Date
`
`11/25/2003
`5/5/1992
`5/7/2001
`6/12/2003
`2/2/1999
`12/26/1990
`12/8/1995
`12/3/1999
`12/27/1995
`3/26/2003
`9/25/2000
`5/19/2004
`3/9/2000
`2/26/2004
`12/29/1999
`10/4/1995
`5/13/2003
`4/30/1998
`2/12/2004
`2/26/1993
`12/28/2004
`2/5/1999
`5/26/1995
`5/14/1996
`9/11/1997
`11/20/2001
`9/15/1999
`11/18/2004
`10/21/1999
`6/19/1992
`4/18/1991
`4/25/2002
`5/5/2003
`5/15/1996
`5/17/2000
`12/29/1993
`2/19/2002
`9/27/1990
`5/10/2001
`6/14/1996
`12/27/2005
`7/25/1997
`6/18/1990
`9/4/1992
`10/28/2005
`9/19/1996
`8/9/2002
`12/29/1992
`12/15/2004
`7/25/2003
`2/1/1994
`2/4/2004
`10/11/1991
`12/27/1995
`7/12/2002
`11/26/1997
`3/28/1997
`12/20/2005
`8/11/1999
`7/14/1992
`5/28/1996
`5/29/1997
`6/27/2003
`9/25/1998
`6/15/2000
`9/25/1998
`12/23/1994
`8/20/2001
`
`Generic Name
`
`Abarelix
`Aldesleukin
`Alemtuzumab
`Alfuzosin
`Alitretinoin
`Altretamine
`Amifostine
`Aminolevulinic acid
`Anastrozole
`Aprepitant
`Arsenic trioxide
`Azacitidine
`Bcg, live
`Bevacizumab
`Bexarotene
`Bicalutamide
`Bortezomib
`Capecitabine
`Cetuximab
`Cladribine
`Clofarabine
`Denileukin diftotox
`Dexrazoxane
`Docetaxel
`Dolasetron mesylate
`Dutasteride
`Epirubicin
`Erlotinib
`Exemestane
`Finasteride
`Fludarabine phosphate
`Fulvestrant
`Gefitinib
`Gemcitabine hydrochloride
`Gemtuzumab ozogamicin
`Granisetron hydrochloride
`Ibritumomab tiuxetan
`Idarubicin hydrochloride
`Imatinib mesylate
`Irinotecan hydrochloride
`Lenalidomide
`Letrozole
`Levamisole hydrochloride
`Masoprocol cream, 10%
`Nelarabine
`Nilutamide
`Oxaliplatin
`Paclitaxel
`Palifermin (kgf)
`Palonosetron
`Pegaspargase
`Pemetrexed
`Pentostatin
`Porfimer
`Rasburicase
`Rituximab
`Samarium sm 153 lexidronam
`Sorafenib
`Temozolomide
`Teniposide
`Topotecan hydrochloride
`Toremifene citrate
`Tositumomab-i131
`Trastuzumab
`Triptorelin pamoate
`Valrubicin
`Vinorelbine tartrate
`Zoledronic acid
`
`Abbreviation: NDA, new drug application.
`
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`DiMasi and Grabowski
`
`76.8
`
`67.1
`
`57.5
`
`59.4
`
`57.1
`
`50.0
`
`1993-1997
`1993-2002
`
`26.1
`
`19.3
`
`Transition Probability (%)
`
`Table 2. Regulatory Characteristics of New Therapeutic Oncology and
`Other Drugs Approved in the United States, 1990-2005
`
`%
`
`Characteristic
`
`Oncology Drugs
`
`Other Drugs
`
`FDA priority ratingⴱ
`Orphan drug designation
`Expedited access†
`
`70.9
`48.5
`47.1
`
`40.2
`18.5
`13.4
`
`ⴱTherapeutic new molecular entities approved by FDA’s Center for Drug
`Evaluation and Research (CDER).
`†Drugs that were developed under at least one of the following three FDA
`regulatory mechanisms: subpart E, accelerated approval, fast track.
`
`pharmaceutical sales in 2005. We were able to identify 838 drugs that
`had entered the clinical testing pipeline for the first time anywhere in
`the world from 1993 to 2002. Of these drugs, 175 (21%) were investi-
`gated for oncology indications. A somewhat higher proportion of the
`investigational oncology drugs are large molecules (28%) than is the
`case for the approved drugs noted herein. The oncology drugs tended
`to be investigated for more indications than was the case for other
`investigational drugs. Whereas 46% of other investigational drugs
`were tested for more than one indication before an approval for
`marketing, 57% of the oncology drugs were investigated for mul-
`tiple indications. More notably, nearly one third of the oncology
`drugs (32%) were tested in at least four indications, whereas only
`9% of the other drugs were examined in four or more indications
`before an original approval for marketing.
`Figure 2 shows estimated clinical phase transition probabilities
`for investigational oncology drugs that first entered clinical testing
`from 1993 to 1997 and 1993 to 2002. The results indicate that one half
`of the oncology drugs that entered the expensive phase III clinical
`testing phase never make it to US regulatory approval (although, the
`approval rate is somewhat higher when the longer timeframe for drugs
`entering clinical testing is considered). The product of the phase tran-
`sition probability estimates yields an estimate of the clinical approval
`success rate for drugs entering the clinical testing pipeline. The results
`suggest that approximately one in five of the oncology drugs that
`entered the pipeline during 1993 to 1997 will eventually attain mar-
`keting approval, while the estimate improves to approximately one in
`four for the longer 1993 to 2002 period.
`
`Phase I-II
`
`Phase II-III Phase III-NDA
`Approval
`
`Phase I-NDA
`Approval
`
`Fig 2. Clinical phase transition probabilities for investigational oncology com-
`pounds for the 20 largest firms by pharmaceutical sales (2005) by period during
`which compound first entered clinical testing. NDA, new drug application.
`
`The results in Figure 2 are for all oncology drugs that were in the
`firms’ clinical testing pipelines at some point. The data include com-
`pounds that were licensed in at some point in development by one of
`the firms and a smaller proportion of drugs that these firms licensed
`out to firms outside of the group of 20. Drugs that are licensed may
`have somewhat higher success rates than those that are developed
`entirely under the auspices of a given firm (self-originated) because of
`due diligence prescreening and because they tend to be licensed after
`the drugs had progressed to later clinical phases. Figure 3 shows
`estimates of phase transition probabilities and the overall clinical
`approval success rate for self-originated oncology drugs compared
`with the results for all oncology drugs. The self-originated com-
`pounds have a slightly lower approval success rate than is the case
`for all oncology drugs.
`Finally, we examined transition probability and success rate
`results for oncology drugs compared with all other drugs. The
`results in Figure 4 cover all drugs for the entire 1993 to 2002 period.
`Oncology drugs have a higher likelihood of progressing to later
`clinical phases, but the success rate once drugs reach expensive
`phase III testing is notably lower for oncology drugs. Overall,
`though, the approval success rates for drugs entering the clinical
`testing pipeline are essentially the same.
`
`76.8
`
`70.7
`
`69.2
`
`57.1
`
`59.4
`
`50.0
`
`Self-originated
`All
`
`24.5
`
`26.1
`
`Transition Probability (%)
`
`Other drugs
`Oncology drugs
`
`7.8
`
`8.1
`
`9.1
`
`6.3
`
`1.8
`
`1.3
`
`Years
`
`Approval Phase
`
`Clinical Phase
`
`Total
`
`Phase I-II
`
`Phase II-III Phase III-NDA
`Approval
`
`Phase I-NDA
`Approval
`
`Fig 1. Mean clinical development and regulatory approval times for new
`oncology and other therapeutic molecular entities approved by the US Food and
`Drug Administration from 1990 to 2005.
`
`Fig 3. Clinical phase transition probabilities for investigational oncology com-
`pounds for the 20 largest firms by pharmaceutical sales (2005) by source of
`compound. NDA, new drug application.
`
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`New Oncology Drug Development
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`involving new and established drugs.14 Significant drug progress oc-
`curs both by introduction of novel new classes and by the evolution of
`products in these classes after the first mover is introduced.15 How-
`ever, first-in-class drug introductions represent important milestones
`in documenting the extent of drug innovation over time.
`A second major finding of the Grabowski and Wang12 analysis is
`the increasing global character of new drug introductions. Grabowski
`and Wang found that nearly half (47%) of all 1993 to 2003 new drug
`introductions were launched in a majority of the G7 countries. (The
`G7 countries were chosen as a relevant benchmark because they con-
`stitute the largest seven drug markets in terms of sales. These countries
`are the United States, Japan, the United Kingdom, Germany, France,
`Italy, and Canada.) This compares to 37% for the 1982 to 1992 period.
`Furthermore, a prior study of new drug introductions for the 1970 to
`1983 period found that only 24% of new drugs were characterized as
`global entities.16
`Grabowski and Wang also found that biotech drugs account for a
`rising portion of all new drugs over the 1982 to 2003 period. The rapid
`growth of biotech compounds is reflected in the fact that biotech drugs
`accounted for only 4% of worldwide introductions in the period 1982
`to 1992, but this increased to 16% in the 1993 to 2003 period. Further-
`more, more than half of these biotech compounds originated in US
`firms. The growth of biotech drugs is particularly significant because
`they have been a major source of both first-in-class and global drugs.
`They also have a strong presence in the oncology class.
`In this review article, we are particularly interested in how oncol-
`ogy drugs compare with other therapeutic classes with respect to these
`drug industry attributes considered in the Grabowski and Wang anal-
`ysis. In this regard, Table 3 provides a breakdown of the distribution of
`new drugs by therapeutic areas and various subcategories using
`Grabowski and Wang’s sample of 919 worldwide introductions for the
`1992 to 2003 period. All therapeutic areas with 5% or more of the total
`number of new drug introductions total are listed separately. The
`remaining areas with small numbers of introductions are combined
`into the miscellaneous category.
`
`Table 3. Therapeutic Area Distribution of New Drugs for 1982-2003
`Worldwide New Drug Introductions8
`
`Therapeutic Area
`
`Central nervous system
`Cardiovascular system
`Systemic anti-infectives
`Oncology
`Alimentary tract and metabolism
`Musculoskeletal system
`Blood and blood-forming organs
`Respiratory system
`Dermatologicals
`Miscellaneous
`Total
`
`All New
`Drugs
`
`Global New
`Drugs
`
`First-in-
`Class New
`Drugs
`
`Biotech
`New Drugs
`
`130
`128
`127
`99
`86
`70
`59
`57
`49
`118
`
`57
`45
`62
`52
`29
`28
`24
`21
`21
`49
`
`12
`7
`12
`21
`13
`5
`9
`5
`7
`24
`
`1
`5
`6
`25
`9
`7
`15
`2
`3
`18
`
`NOTE. Worldwide introductions by year are obtained from the IMS New
`Product Focus database. A global new drug is defined as a new drug
`introduced in a majority of the G7 countries. A first-in-class new drug is
`defined as the first drug introduction in a specific five-digit Uniform System of
`Classification category or a four-digit Anatomic Therapeutic Classification
`category, based on information contained in the IMS databases. Biotech drug
`classification is based on IMS designation in its New Product Focus database.
`A few drugs are classified into more than one therapeutic area so category
`totals may not equal the sum of the specific therapeutic areas.
`
`76.8
`
`68.2
`
`59.4
`
`53.3
`
`68.4
`
`57.1
`
`Other drugs
`Oncology drugs
`
`24.9
`
`26.1
`
`Transition Probability (%)
`
`Phase I-II
`
`Phase II-III Phase III-NDA
`Approval
`
`Phase I-NDA
`Approval
`
`Fig 4. Clinical phase transition probabilities for investigational oncology and
`all compounds for the 20 largest firms by pharmaceutical sales (2005) for
`compounds that first entered clinical testing during 1993 to 2002. NDA, new
`drug application.
`
`Biotech products, particularly mAbs, have become increasingly
`prevalent in oncology investigational drug pipelines. The data for the
`20 firms examined here are too limited with regard to mAbs to
`provide reliable success rate estimates. However, for a recent anal-
`ysis of biopharmaceutical R&D costs, DiMasi and Grabowski13
`examined clinical approval success rates for 522 recombinant pro-
`teins and mAbs that first entered clinical testing from 1990 to 2003
`for what is likely either the population or something close to the
`population of such products. More than half (54%) of the mAbs in
`this data set were examined for oncology indications. The clinical
`approval success rate for the biotech products in aggregate was
`30%, but only 19% for mAbs. Further analysis of that data set
`shows that the estimated success rate for the subset of oncology
`mAbs is also 19%. The data do suggest, however, an increasing
`trend in success rates for mAbs in general.
`Market Attributes and Diffusion of Oncology Drugs:
`Comparative Trends
`In a recent article, Grabowski and Wang12 examine trends in
`various attributes of worldwide new drug introductions over the pe-
`riod 1982 to 2003. In particular, they consider trends in drug “inno-
`vativeness” as indicated by the number of first-in-class introductions.
`These are essentially new drugs with a novel mechanism of action.
`Second, they consider trends in the global diffusion of worldwide new
`drug introductions. In particular, they define a new drug as global
`when it is launched in a majority of the world’s largest drug markets.
`Global diffusion is an indicator of both commercial as well as thera-
`peutic importance. They also focus on the growth in biotech products
`and orphan drug products, two groups of products with increasing
`impact on the biopharmaceutical industry over the last two decades.
`One key finding of the Grabowski and Wang12 analysis is that the
`number of first-in-class drug introductions has been increasing over
`time. This contrasts with a downward trend in overall new drug
`introductions that has been discussed by many observers.14 This latter
`trend has been cited as evidence for the declining research productivity
`of the pharmaceutical industry in recent years. However, this view
`must be qualified by the positive trend in drug innovativeness, as
`reflected by the increasing number of first-in-class products. Of
`course, therapeutic benefits are also obtained from follow-on intro-
`ductions in a new drug class as well as by combination therapies
`
`www.jco.org
`
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`
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`Page 5 of 8
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`

`DiMasi and Grabowski
`
`Table 3 indicates that oncology was the fourth largest therapeutic
`area in terms of the number of worldwide introductions (99) behind
`the CNS, cardiovascular and systemic anti-infective categories. At the
`same time, the Table shows that oncology drugs had the most first-in-
`class and biotech drugs. It also ranked third in terms of global new
`drug introductions across all the therapeutic area categories. (The
`miscellaneous category is not included in this comparison, given that
`it’s a conglomerate of many smaller drug categories.)
`It is instructive to consider the share of oncology drugs that
`embody these various attributes compared with other major drug
`classes. Consider this information for the four largest therapeutic areas
`in Table 3: the CNS, cardiovascular, anti-infective, and oncology cat-
`egories. Oncology is particularly distinguished by the large percentage
`of its new drug introductions that were first-in-class. Over the 1992 to
`2003 period, 21% of oncology introductions were first-in-class enti-
`ties, as compared with less than 10% of the introductions in the other
`three classes. This figure also shows that more than half of all oncology
`introductions were classified as global drugs as compared with 35% to
`49% of the drugs in the other three therapeutic areas.
`The results in Table 3 demonstrate that the oncology therapeutic
`area has been a focal point for the introduction of innovative first-in-
`class compounds with a high rate of global diffusion. Oncology also
`has been an increasing focus of biotech drug R&D. As can be seen from
`the data in Table 3, 25% of oncology drug approvals are based on
`biotechnology techniques, compared with 5% or less in the three other
`major classes. This is a striking difference. Biotech products are an
`important driver of strong innovative performance observed for the
`oncology class in recent years.
`
`Orphan Drug Act and Oncology Drugs
`The oncology drug class has benefited from the passage of the
`Orphan Drug Act in 1983. The Act specifically applies to illness or
`conditions with a prevalence of less than 200,000 individuals. This Act
`created a number of incentives designed to spur R&D investment for
`rare conditions and illnesses.17,18 First, the Act instructed the FDA to
`implement new protocols to facilitate orphan drug approvals, or ad-
`vanced counseling to create a more effective R&D process. Second,
`Congress created a 50% tax credit for clinical trial expenditures for
`orphan drug designations. Third, a 7-year marketing exclusivity was
`granted for FDA-designated orphan drug indications, apart from any
`patent protection that existed on these drugs.
`These provisions have been an important catalyst for the devel-
`opment of oncology drugs for rarer forms of cancer. As noted herein,
`nearly half of the oncology drugs introduced had an orphan indication
`approved at the time of initial marketing approval. Once again, this is
`a much higher percentage than what is observed for other drugs. In an
`earlier analysis17 of the first dozen years of the US Orphan Drug Act,
`the authors found that a total of 502 approved drugs and clinical drug
`candidates obtained orphan drug designation from the FDA. The
`leading indication category was cancer with 89 drug entities (17.7% of
`all drugs that received an orphan drug designation).
`Grabowski18 has analyzed the distribution of sales for 27 orphan
`drugs introduced in the 1990 to 1994 period. While there are a few
`orphan products with large annual sales, the median orphan drug in
`this sample had peak annual worldwide sales of only $29.5 million.
`The median nonorphan introduction over this same period had peak
`global sales of $236 million.6
`
`The group of 27 orphan compounds introduced from 1990 to
`1994 included six cancer treatments (the largest indication category).
`All of these six drugs also received a priority drug rating from the FDA
`as well as orphan drug designation. (The six cancer drug introductions
`receiving orphan drug approval over the 1990-1994 period were al-
`tretamine, cladribine, fludarabine phosphate, idarubicin, pentostatin,
`and teniposide.) These six orphan therapies had peak global sales that
`ranged from $2 million to $103 million. The median and mean global
`peak sales for this set of orphan cancer treatments were $12 million
`and $27 million, respectively.
`The Orphan Drug Act clearly has been an important stimulant of
`new cancer treatments for small patient populations with correspond-
`ingly modest levels of sales. Orphan drugs can realize a positive return
`on investment with smaller sales levels than can non-orphan products
`given their very different economics. First, as discussed, they have
`much smaller up-