Many companies have recently experienced delays in getting substantive and complete advice from the FDA on submissions aimed at getting initial authorization for clinical trials in the U.S. We have also seen the FDA take a considerably more conservative approach to certain safety signals from pre-clinical studies or even initial clinical studies conducted elsewhere, which has delayed clinical development in the U.S. for a significant period of time, or increased the cost of clinical development. For these reasons, coupled with the increasing pressure on drug pricing in the U.S., there is increasing industry dialogue around the question of whether developers should at least consider as part of their strategy whether to commence development or launch first outside the U.S., at least for some products.
Following the exit of the UK from the EU, the Medicines and Healthcare Products Regulatory Agency (MHRA) has introduced a new regulatory pathway that aims to accelerate the time to market by providing companies with access to a toolkit to support all stages of the design, development, and approvals process and coordinated advice for products in development by all the key government stakeholders — that is, the regulatory authority assessing the quality, safety, and efficacy of the product (the MHRA), a health technology authority (e.g., National Institute for Health and Care Excellence, or NICE), and the payers (National Health Service, or NHS England). This change may make the UK a more attractive jurisdiction before for first and early launch destinations. Indeed, in the first 18 months of being introduced, 71 applications for participation in the program have been accepted, out of 120 received.
Since 2017, China has been introducing incentives for innovative drugs and biologics that are new to the world and first approved in China. Though Chinese law is still developing, eligible products can likely benefit from a patent term extension of up to five years for the validity period and up to 14 years of patent protection postapproval, plus regulatory exclusivity for up to six years. This, coupled with an inherently large market, provides a potential incentive for companies to consider prioritizing development first in China, particularly in therapeutic areas where there may be a significant unmet need.
Pharma and biotech companies face an incredibly complex set of considerations when trying to determine which global jurisdiction presents an optimal set of opportunities and challenges with respect to pricing and reimbursement.
Some companies and their investors are starting to ask whether they should turn away from the U.S. as the first market in light of the Inflation Reduction Act and other recent federal and state laws that target prescription drug costs. These laws, however, do not uniformly target all companies and products. Some products (including high-expenditure drugs or certain single-vial products) will face greater regulatory and financial hurdles, while others (e.g., orphan and small biotech drugs) will be shielded from the burdens, and yet others (e.g., biosimilars and vaccines) may benefit from certain provisions incentivizing investment in such products in the years to come. Needless to say, this new patchwork of laws raises the need for careful analysis of development and launch considerations.
Real-world evidence (RWE) is accepted for both marketing authorizations and pricing. In May 2022, NICE restructured its entire method and process of product review, including its acceptance of interim recommendations based on RWE while the final data set is being generated. This new approach from NICE will particularly benefit products that are authorized under an accelerated procedure for unmet medical needs or life-threatening conditions, where the full set of scientific clinical data is not available.
Pricing and reimbursement decisions with respect to the EU market are complicated by the fact that market access is driven by national authorities. Partial harmonization of health technology assessments (HTAs) will not be phased in until 2025, and the market remains highly fragmented. For the moment, companies still conduct sequencing analyses with respect to the EU on a country-by-country basis, which has led many companies to launch in the top five European markets (UK, France, Germany, Italy, Spain) before expanding (if at all) to other markets. In addition, difficulties in securing a sustainable reimbursement price for some innovative products has led a number of companies not to launch in the EU. By the end of March 2023, the European Commission is expected to publish new pharmaceutical legislation which could reduce IP and regulatory rights in the future, or could make certain rights conditional on launching the product in all EU Member States (‘launch conditionality’). These proposals may affect the attractiveness of EU Member States as launch markets.
Innovative drugs launched first in China will benefit from a reimbursement incentive that results in the inclusion of the product on the national reimbursement list with two years of market exclusivity. In addition, patent term extensions will also be available for qualifying drugs. Importantly, however, only “drugs and biologicals that are new to the world” — that is, Class 1 products — will be considered innovative drugs and thus eligible for these incentives under Chinese regulations. While all life sciences companies prefer having their products approved in China as Class 1 products, they may not always succeed in obtaining this classification. They can be impeded by reasons as diverse as global development strategies, differing pace of developments outside China, or the specific therapeutic areas targeted by the product candidates.
To fully account for these and other issues that may affect any particular product, biotech companies should consider the regulatory incentives and burdens in first and early launch jurisdictions outside the U.S. for opportunities to expedite development or commercialization. We suspect the balance of considerations will continue to evolve as the FDA proceeds to prioritize novel therapies and medical devices and as drug pricing remains a dominant issue on the U.S. political landscape.
Marie Manley and Zina Chatzidimitriadou explain how the UK has created a raft of new pathways, collaborations, and novel approaches to evidence, meaning new treatments are likely to be approved and launched in the UK sooner than in the rest of Europe.