Market Barriers to the Development of Pharmacotherapies for the Treatment of Cocaine Abuse and Addiction: Final Report. Case Study 1: LAAM



Drug Overview

LAAM (levo-alpha-acetylmethadol) is a synthetic opioid analgesic marketed under the trade name Orlaam by Roxane Laboratories for the treatment of opioid dependence. The clinical effects of LAAM, comparable to the effects of methadone, allow the medication to serve as a substitute for other opiates (e.g., heroin), suppressing craving and staving off withdrawal symptoms in opiate-dependent individuals. In contrast to methadone, LAAM is able to suppress withdrawal symptoms for forty-eight to seventy-two hours; therefore, the medication is only administered three times per week rather than daily. LAAM may only be administered at federally and state-approved opioid treatment programs (OTPs). In these programs, two treatment approaches are typically used: a) short term treatment (six months or less), or b) long term treatment (lifelong maintenance). Federal regulations require the treatment programs to provide "a comprehensive range of medical and rehabilitative services...that include medical evaluations, counseling, rehabilitative and other social programs...which will help the patient to become a productive member of society" (21 CFR 291).

Market Overview

In 1993, it was estimated that approximately 0.9% of young adults in this country had tried heroin and a significant percentage became dependent on the opiate (Johnston 1994). According to Abt Associates, in 1995, approximately 500,000 people were addicted to opiates. In the United States, there are approximately 1,000 FDA-approved opioid treatment programs (750 methadone maintenance programs and 250 - 300 inpatient hospital detoxification programs). SAMHSA reports that approximately 115,000 (25%) opiate addicts receive treatment from the maintenance programs.

Key Issues from the Case Study

LAAM had an extensive research cycle that lasted over twenty-five years with limited private investments and two unsuccessful New Drug Applications (NDAs). After finally obtaining FDA approval in 1993, the medication confronted severe market barriers largely pertaining to public policy (e.g., regulations on controlled substances, take home medications, reimbursement, treatment of pregnant women) and treatment issues (e.g., inertia of methadone providers, patient preference).

A few key points emerged repeatedly during the telephone interviews for this case study. Certainly, some private respondents believe that government agencies should continue to play an active role in the development of pharmacotherapies for substance abuse addiction. Indeed, LAAM may never have made it to the market without the government's participation, particularly in support of clinical development of the drug. However, given a choice between government funding for R&D with restrictions on marketing versus full control over their product, pharmaceutical companies would choose the latter.

Second, multiple sets of restrictions and regulations, which govern the distribution of the medication in opiate treatment programs, continue to be major barriers to the distribution of LAAM. These include:

  • Federal rescheduling of the medication;
  • Federal regulations for the OTPs;
  • State rescheduling of the medication;
  • State regulations for the OTPs; and
  • Reimbursement from state and private payers.

Respondents suggested that efforts should be made to streamline these barriers and thereby restore some of the marketing window and increase availability of medications. Alternatively, one respondent recommended maintaining the existing regulations and barriers but extending the period of market exclusivity through legislation (e.g., the Orphan Drug Act).

Third, respondents emphasized that the market for such medications as LAAM differs significantly from the market for traditional pharmaceutical products. Unlike the marketing of traditional pharmaceutical products, pharmaceutical companies marketing substance abuse medications face stringent regulations on distribution, delivery systems, and provider reimbursement. In the substance abuse treatment market, pharmaceutical companies cannot market to pharmacies or physicians; their medications are not prescribed by physicians or obtained over-the-counter. Pharmaceutical companies must market their medication to the opiate treatment programs and clinics throughout the country. These OTP clinics diagnose the patients, develop treatment plans, and administer the medications to the patients. The qualifications of the clinic personnel vary significantly from state to state; in certain cases, clinic managers have limited medical background and limited knowledge in pharmacotherapy. Therefore, pharmaceutical companies report having a difficult time introducing a new medication into these clinics.

Product History and Development Timeline

As shown in Figure 24 (below), LAAM was first developed as an analgesic in 1948. Fraser and Isbell (NIDA 1994) conducted the first clinical study of LAAM in 1952; their research demonstrated that LAAM had the capacity to suppress opiate withdrawal symptoms for over 72 hours. In 1968, Dr. Jerome Jaffe discovered the potential utility of LAAM in opiate maintenance treatment and initiated the clinical research on LAAM. The initial IND application for clinical studies on LAAM was submitted in 1969 by Dr. Jaffe. Clinical research on LAAM, funded mainly by the government, continued throughout the 1970s by various researchers. In 1979 and 1981, NDAs for LAAM were submitted to the FDA by NIDA contractors; however, these NDAs were not approved. On January 24, 1984, LAAM received orphan drug status for the treatment of opiate addiction. By receiving orphan drug status, the medication was granted a 7-year period of market exclusivity following FDA approval. Rosina Dixon, who was the sponsor of LAAM when it obtained its orphan drug status, conducted research on the drug for a period of time but never submitted an NDA. In the mid-1980s, only limited clinical research was conducted on LAAM. Clinical trials and research on LAAM resumed in late 1980s and early 1990s under the sponsorship of NIDA via a contract with Biometrics Research Institute (BRI) to prepare the NDA. In 1993, the FDA approved LAAM for marketing and the seven years of market exclusivity granted under the Orphan Drug Act began; the market exclusivity ends in July 2000.

Figure 24: Timeline for the Development and Approval of LAAM

Clinical Development and Product Positioning

Clinical Trials, Phases I - III

As discussed earlier, Fraser and Isbell conducted the initial clinical trials on LAAM at the Addiction Research Center in Lexington, Kentucky. These studies examined the clinical effects of LAAM in "post-addict" subjects and in subjects who were dependent on significant doses of morphine. In addition, these Phase I studies demonstrated that following parenteral administration, withdrawal symptoms were suppressed for 48 hours. The Phase II clinical studies were conducted in the late 1960s and 1970s by Irwin et al. and Blachly et al. (NIDA 1994). These studies focused on the dose response, clinical pharmacology, and safety of the medication. Research from these studies demonstrated that, in contrast to daily administration of methadone, LAAM was to be administered every 48 to 72 hours.

In the late 1960s and early 1970s, the federal government funded two major Phase III clinical studies of LAAM under the sponsorship of the Veterans Administration and the White House's Special Action Office for Drug Abuse Prevention (SAODAP). These two clinical studies were conducted to determine the efficacy and safety of the medication in a treatment setting. Concurrently, Jonathan Whysner of MRA, Inc., was also conducting Phase III clinical trials under an Investigational New Drug application (IND) in 1973 in preparation for the submission of his NDA for LAAM (NIDA 1994).

Initial IND and NDA Applications

During the 1970s, NIDA assumed responsibility for LAAM and contracted with two companies to submit the NDAs. In 1979, the initial NDA was submitted by NIDA in conjunction with Jonathan Whysner of MRA, Inc. The FDA declined to review this NDA based on insufficient documentation in the Chemistry and Manufacturing sections. After the FDA declined to review the application, NIDA purchased it from MRA and revised the application for resubmission. The NDA was resubmitted to the FDA in 1981 by NIDA; once again, this request was denied due to inadequacies in the application (Medications Development Division 1997).

Funding cuts in NIDA research budgets in the early 1980s led to a hiatus in research on LAAM. However, with the advent of the HIV/AIDS epidemic and the realization that needle sharing was placing addicts at high risk for contracting disease, NIDA once again focused their energies and funding on researching LAAM. In 1990, the Medications Development Division (MDD) was created at NIDA. This division became responsible for LAAM and sent out a request for proposal (RFP) for the preparation and submission of an NDA. The RFP received responses from seven different companies including Biometrics Research Institute (BRI); in 1990, NIDA contracted with BRI for $3 million to develop and submit the NDA.

Contract between NIDA and BRI

According to respondents, BRI initially became involved in the development of pharmacotherapies for the treatment of substance abuse addiction in the 1970s. BRI had a contract with NIDA to assist with the collection of data on naltrexone; it worked with NIDA on the medication up to the Phase III clinical trials at which point DuPont became the primary party responsible for naltrexone. Concurrent with BRI's involvement in naltrexone, one of its patients was conducting research on LAAM. After BRI ended its contract with NIDA for naltrexone, it assisted its client, Jonathan Whysner, with the research and development of LAAM.

After receiving NIDA's RFP for the submission of the LAAM NDA, BRI conducted an initial market analysis that examined the number of clinics and patients. Their calculations estimated the percentage of patients that were suitable for LAAM and the percentage of those that would switch from methadone to LAAM. According to officials at BRI, the theory in the 1970s and 1980s was as follows: (i) patients off the street would receive methadone for a period of time; (ii) after the patients stabilized on methadone, patients would then begin receiving LAAM in the clinical setting; (iii) once the danger of relapse was minimized, patients would receive naltrexone and progress to becoming drug-free (Bradford 1997).

Under BRI's contract with NIDA for the submission of the NDA, BRI was responsible for collecting data from past research, conducting any necessary new research, and preparing and submitting the NDA. Government funds ($3 million) were to cover costs for collecting research on LAAM and conducting any new studies. BRI would fund the manufacturing and marketing costs of the medication.

In 1991, after gathering the past data, BRI submitted an IND Application to the FDA. Upon review of the IND, the FDA requested that two additional studies, a pharmacokinetic study and a labeling study, be conducted prior to submission of an NDA. In June 1992, the Labeling Assessment Study (the final clinical study prior to FDA approval) was initiated.

The NIDA contract required BRI to market and distribute the medication upon submission of a successful NDA. BRI's greatest strengths were in clinical trials and data management associated with NDA development and not in product marketing and distribution. Therefore, BRI elected not to engage in the marketing of the drug. In August 1992, officials from BRI left the company in order to create BioDevelopment Corporation (BDC) for the purpose of marketing and distributing LAAM. BDC was created by three principals who raised the funding for their company through private channels. After its creation, BDC assumed the contract from NIDA. BRI remained a subcontractor and continued to assist with the preparation of the NDA. In June 1993, BDC submitted an NDA for LAAM to the FDA; this application was approved by the FDA in July 1993, eighteen days after submission. After the medication received FDA approval, the DEA and FDA worked quickly to reschedule LAAM. In August 1993, one month later, the FDA and DEA agreed upon the rescheduling of LAAM to a controlled substance II (CSII) with a "no take-home" policy. FDA incorporated this policy into the labeling of the medication, a labeling that also restricted the use of the medication by women of childbearing age. After obtaining FDA and DEA approval, BDC was now permitted to market the medication to the opioid treatment programs.

Product Marketing Strategy and Sales

Before BRI responded to NIDA's RFP, BRI conducted a market analysis to ascertain the potential market size and the number of potential patients for LAAM in this market. Prior to FDA approval, BDC conducted its own market analyses to project its return on investment. According to their calculations, 715 public methadone maintenance clinics were in operation and serving approximately 90,000 - 110,000 patients daily. Officials at BDC hypothesized that 50 to 60 percent of the current patients were possibly suitable for treatment with LAAM. BDC believed that the advent of LAAM could potentially reduce the costs of treatment by decreasing the number of patient visits per week and thereby decreasing administrative costs. Officials at BDC therefore believed that the clinics would now be able to serve 10,000 - 20,000 new patients on the same budget for treatment services (Bradford 1997).

However, during the market analysis in 1993, BDC and BRI did not fully account for the existing regulations and restrictions that had to be met prior to medication distribution. BDC assumed that virtually no state or local regulatory barriers existed. For example, BDC assumed that once the DEA had rescheduled the medication, states would quickly follow suit and reschedule LAAM. However, by August 1993, BDC began to perceive the barriers that had to be overcome prior to distribution of LAAM.

Barriers to Distribution

In contrast to traditional pharmaceutical products, LAAM had to overcome many barriers after FDA approval. To permit the distribution of LAAM to treatment programs, states first had to reschedule the medication from a Schedule I drug (permitted only for clinical research) to a Schedule II drug (permitted for restricted use in treatment settings). Certain states, such as Texas, have "automatic rescheduling" where medications rescheduled by DEA are immediately rescheduled by the states 30 days after the DEA decision. Other states, such as Michigan, have pharmacy boards that convene periodically to review the rescheduling of controlled substances. Finally, in some states such as California and Florida, the legislature must pass legislation authorizing the rescheduling of medication. Such legislative efforts may require significant time and may require the drafting and enactment of legislation, delaying market entry in states by months and/or years (NIDA 1994).

Even after rescheduling the medications, many states had to revise or amend existing regulations for OTPs. The OTPs must adhere to strict guidelines established by the federal, state, and, in some instances, county governments. In many states, the restrictions were specifically directed toward "methadone maintenance programs." Therefore, to allow clinics that administer LAAM to operate legally, states had to revise the laws so that the regulations applied generally to opioid treatment programs rather than to a particular type of treatment program (e.g., methadone maintenance).

Following each state's own approval process for the medication, BDC had to focus its energies on the issues of reimbursement for the medication. Many OTPs received funding for their clinics from state general appropriations. The funds were directed toward covering the operating costs of the OTPs and for the reimbursement of the administration of the medication. Costs of the medication were and continue to influence clinics' decisions to distribute LAAM. According to the 1996 Drug Topics Red Book, methadone dosage costs approximately $0.50 per day while LAAM costs approximately $2.00 per day (accounting for LAAM being taken three times per week). According to data collected by Capital Consulting Corporation, methadone purchasing costs per patient per day ranged from $0.32 to $0.55 compared to LAAM costs that ranged from $0.71 to $1.53 per day. In certain states, Medicaid would reimburse clinics for the cost of methadone but would not cover the cost of LAAM. Therefore, clinics either had to negotiate with the state to receive greater funding or the clinics had to absorb the additional costs associated with LAAM. This uncertainty regarding medication reimbursement and state funding as well as costs have served as major barriers to the distribution of LAAM in many clinics.

Another barrier to the distribution of LAAM at the clinic level (besides costs and reimbursement) may be the inertia of the methadone providers. Respondents acknowledged that the personnel in many clinics seemed resistant to change and to the implementation of a new medication. The introduction of a new medication in the clinical setting demands new protocols, new training, and new reimbursement mechanisms and negotiated rates. Staff acceptance and their positive support for the medication are an important step toward patient acceptance. Prior to staff acceptance, personnel need to undergo training to understand the medication and its differences from methadone. Once the barriers at the state and clinic levels are overcome, the medication may become an integral component of treatment in clinics.

Patient acceptance of the medication is integral to the distribution of the medication in the clinics. Initially, patients had strong negative perceptions about LAAM and had heard rumors about the medication including the following:

  • Women were concerned that LAAM would impact their menstrual cycle.
  • Men were worried that LAAM would reduce their sex drive.
  • Patients associated LAAM with cancer, liver problems, nervousness and other major medical difficulties.
  • Patients recalled hearing of problems with LAAM from 1970s clinical research, in which some patients were thought to have died from the medication (Feldman 1994).

In the past three years, patient perceptions of LAAM have changed significantly. Many patients report that they feel "more normal" on LAAM than they have in a long time, including their time on methadone. Despite increased patient support for LAAM, patients have also voiced their opposition to LAAM's "no take-home policy" which is inconvenient and a marked difference from methadone. Take home methadone may be given only to a patient who, in the reasonable clinical judgment of a program physician, is responsible in handling narcotic drugs. In determining whether a patient is responsible for handling narcotic drugs, a physician may consider the following: absence of recent abuse of drugs, regularity in clinical attendance, absence of serious behavioral problems, and length of time in maintenance treatment. According to the FDA regulations, a patient who has satisfactorily adhered to the program rules for at least 3 months and who has "made substantial progress in rehabilitation" may receive no more than a 2-day take-home supply of medication. A patient who has adhered to the program rules for at least 2 years may receive no more than a 3-day take-home supply of medication. Clinics throughout the country vary in the stringency of their take-home policy.

Marketing Strategies

One marketing strategy employed by BDC was to capitalize on LAAM's infrequent administration and the subsequent decreased administrative costs, relative to methadone. BDC marketed this advantage to the staff of OTPs, expecting a positive response. However, staff and clinic personnel became upset, fearing that their funding could be cut with the advent of LAAM; clinics also believed that states would compel the clinics to treat a greater number of patients with the same funding.

Realizing the negative response to this marketing approach, BDC sought to highlight LAAM as an alternative to methadone. Methadone must be administered daily and patients have to take methadone home if clinics were not operating over weekends. In contrast, LAAM only requires administration three times per week and operates under a "no take-home" policy. Patients do not need to interrupt their daily schedule in order to receive medication; communities do not need to be concerned with the diversion of LAAM on the streets. However, emphasizing the strengths of LAAM over methadone as a marketing strategy did not seem to improve the market penetration of the medication. While a "no take-home policy" was a positive attribute of LAAM in the eyes of people in the communities, clinics often viewed the "no take-home" policy of LAAM as a disadvantage. The following example illustrates the complex market interactions at the local level.

In one small Western city, LAAM was introduced into one of the city's two private methadone clinics. The availability of LAAM produced a significant increase in patients (and revenue) for this clinic (clinic A), since patients were attracted to the reduced visit schedule offered by LAAM. The city's other clinic (clinic B) responded to the loss of patients (and revenue) by liberalizing its take home methadone policy, so that patients would be less attracted to the availability of LAAM in clinic A. The liberalization of the take home policy was such a successful marketing strategy that a dramatic increase in the enrollment in the clinic B resulted. Many of the clinic A patients transferred to clinic B. Clinic A responded to this loss of business by increasing its availability of take home methadone. According to[a] survey respondent in clinic A, "with LAAM the only positive is a reduced visit schedule. With take home methadone, patients get a reduced visit schedule and some extra income (i.e., illicit take home sales) to help pay for clinic fees." (Rawson 1996)

As highlighted by this change of events, it was not profitable for clinic A to administer LAAM given the resulting activity of clinic B, namely the liberalized take-home methadone policy. On the other hand, creating an OTP that administers LAAM in a city with no treatment programs may be profitable for a clinic. However, distributing LAAM in one clinic in a city with other OTPs may generate a loss for the LAAM clinic.

Market Revenues

As discussed above, BDC did not anticipate the barriers to market penetration following FDA and DEA approval. Prior to the creation of BDC, its principals raised $2 million to cover the initial start-up costs. An additional $2 million was raised during the first 12 to 18 months of the company. According to officials at BDC, it was anticipated that the start-up funding would need to last for 18 to 24 months before the sales of LAAM would reach "break-even" and begin to generate a profit. BDC had estimated that approximately 20,000 patients would be receiving LAAM at 24 months (Bradford 1997).

Figure 25 (below) highlights the difference between the projected number of patients receiving LAAM and the actual number of patients over the last four years. As demonstrated by the following graph, the sales from LAAM fell well short of BDC's expectations and its threshold values. After 24 months, only approximately 2,000 patients were taking LAAM, significantly lower than the projected 20,000 patients. After 48 months, it is estimated that approximately 5,000 patients (less than 5 percent of persons in OTPs) are receiving LAAM daily (Roxane and BDC estimates).

Figure 25: Expected and Actual Number of Patients Receiving LAAM

Source: Industry estimates.

Acquisition of LAAM by Roxane Laboratories

After 12 months in the market, BDC realized that its funding was insufficient to support the continued marketing and distribution of LAAM. In the fall of 1994, BDC began looking for a pharmaceutical company with which to merge. Offers were received from three small firms and two larger pharmaceutical companies, Roxane Laboratories and Mallinkrodt. Roxane had already established itself in the field of substance abuse with the acquisition of methadone from Lilly. BDC decided to join Roxane in part due to this experience. In January 1995, Roxane Laboratories acquired BDC and the marketing and distribution rights to LAAM.

Prior to acquiring BDC, Roxane conducted its own internal market analysis. The focus of the market analysis was not the overall potential magnitude of the market but rather the percentage of the potential market that could be realized and the time required to realize that market. In an effort to further market penetration of LAAM, Roxane has conducted extensive training of clinic staff to facilitate the introduction of LAAM into the clinical setting. Staffs have been educated on the positive attributes of LAAM and have heard testimonials from patients already receiving the medication.

The penetration of LAAM has increased slightly since Roxane's acquisition of BDC, and Roxane Laboratories holds the medication in high regard and will continue to distribute the medication to clinics throughout the country.

Experience of LAAM in the VA clinics

In contrast to other public clinics, the VA has been successful at distributing LAAM. It is estimated that approximately 10% of the patients taking LAAM are receiving the medication in clinics funded by the VA. According to Dr. Richard Suchinsky, Associate Chief of Addictive Disorders at the VA, the hospitals have introduced the medication into all 33 OTPs within their systems and approximately 10 - 15% of their patients are receiving LAAM. Certain VA clinics in the larger cities are even directly inducting patients onto LAAM rather than transferring patients from methadone to LAAM. The successful distribution of the medication in the VA system may be attributable to three different factors. First, the VA clinics have a strong medical presence with physicians who understand the pharmacokinetics of the medication. Second, the VA clinics have not had to confront the same number and level of regulations and restrictions as other public OTPs. Third, in contrast to the state and local OTPs, the VA clinics have not had significant difficulties obtaining reimbursement for the medication. Finally, the VA hospitals were involved in the LAAM Labeling Assessment Study conducted in 1993 prior to FDA approval.

Policy Interaction in Product Development and Distribution

The interaction of policy with LAAM product development and distribution occurred throughout the thirty year period.

Government Involvement in Clinical Development

The federal government's role as a major financier of research on LAAM during the 1970s was instrumental in promoting earlier clinical trials. The Phase III studies of note funded by the government, the VA and SAODAP studies, were conducted to determine the safety and efficacy of the medication. The government was also instrumental in reinvigorating the research on LAAM in the late 1980s. NIDA funded the Labeling Assessment Study and contracted with BRI (and subsequently with BDC) to submit the NDA for LAAM that was subsequently approved by the FDA in July 1993.

Government Involvement in Product Marketing and Distribution

While government involvement during clinical trials was supportive, government involvement following FDA approval was more restrictive. As discussed above, many of the market barriers confronted by the medication pertained to federal and state policies (e.g., regulations on controlled substances, reimbursement issues, and take-home restrictions). Prior to FDA approval, the government had granted LAAM orphan drug status that gave the medication 7 year market exclusivity after FDA approval; the market exclusivity does not conclude until July 2000. However, the government restrictions and market barriers have significantly shortened this period by increasing the time required for the product to penetrate the market.

Marketing to Public Clinics

The marketing of LAAM has been directed exclusively to state approved public programs and to programs within the VA. The pharmaceutical companies have not directed their marketing energies toward private clinics because there is little data available on the number of private clinics and the number of patients receiving treatment. According to BDC, it was difficult to ascertain the size of the market but BDC believed that the market was not substantial. Due to the absence of concrete data and statistics, BDC and Roxane have focused their time on the public and VA clinics.

Likely Future of Product

At this point in time, LAAM has captured less than five percent (approximately 5,000) of the patients in the OTPs. An additional barrier to market penetration is the existing cap on the number of patients that may be treated in the individual OTPs. To establish an opioid treatment program, the clinic must obtain approval from the state authority and local government planning boards. In approving these clinics, these officials often examine the proximity of other clinics and the size of the treatment population. Depending on these and other circumstances, clinics may have a difficult time obtaining approval from the state or the local boards. The budgets for the OTPs have effectively established a de facto cap on the number of patients that may be treated in OTPs. Therefore, to further LAAM's market penetration, patients would have to be shifted from methadone to LAAM (CSAT 1994).

Clinical Trials and New Indications

Currently, Reckitt & Colman Pharmaceuticals, Inc. (in collaboration with NIDA), is developing buprenorphine and buprenorphine combined with naloxone as treatments for opiate dependence. Once approved, these products will compete with methadone and LAAM in the existing system, challenging methadone and LAAM's current market share.

In addition to the clinical trials being conducted on a new medication for opiate addiction, academic-based research on LAAM is continuing. Dr. Walter Ling of the Friends Research Institute and the University of California at Los Angeles (UCLA) is conducting a study on the efficacy and safety of take-home LAAM; the results of this study may be utilized in an effort to change the labeling concerning LAAM's "no take-home" policy. In addition, Dr. Doug Anglin at UCLA is conducting research comparing the effectiveness of methadone to LAAM in reducing of HIV transmission (Medications Development Division 1997). At this point in time, however, Roxane Laboratories is neither conducting nor sponsoring any research on take-home LAAM or the possible effects of LAAM on women of child-bearing age.

The Behavioral Pharmacology Research Unit at The Johns Hopkins University recently completed a study on the dose-related efficacy of LAAM for opioid dependence. According to the researchers, "the results indicate that LAAM's efficacy as an opioid dependence pharmacotherapy is related to dose and that high-dose LAAM is safe and efficacious for male and female drug abusing patients." These results support earlier data regarding the safety of the medication for women of child-bearing age, an issue addressed in LAAM's labeling (Eissenberg 1997).


Since its approval by FDA in 1993, LAAM has captured less than five percent of the patients in OTPs. Despite its ability to suppress withdrawal symptoms longer than methadone and despite its ability to make the patients feel "more normal," LAAM has only penetrated the market to a limited extent for various reasons. According to respondents from the private sector, it has been difficult to introduce LAAM into the market in part because methadone has existed as the sole medication for opiate addiction for over 25 years. Also, it has been difficult to break the virtual monopoly that methadone has established in the market, especially given the higher cost of LAAM. Aside from methadone's hold on the market, the main barriers to the marketing and distribution of LAAM have been the following:

  • Rescheduling of LAAM to a Controlled Substance II by state agencies. The process for rescheduling the medication varies significantly from state to state. Certain states automatically rescheduled the medication after the DEA while other states have required legislation to approve LAAM. This process has often taken prolonged periods of time. Indeed, three states have yet to approve the medication for their OTPs.
  • Amendments to state licensing regulations for opioid treatment programs. Many states had regulations that applied to "methadone maintenance programs". To authorize the use of LAAM in licensed clinics, those regulations needed to be amended to incorporate all opioid treatment programs.
  • Reimbursement for LAAM by states. Securing reimbursement for the medication has been especially difficult because on average, LAAM costs more than methadone.
  • Staff resistance to change. Staff at clinics have resisted the medication in part due to their negative perceptions of it. In addition, the introduction of a new medication requires new training and new protocols, and raises potential resource constraints on many clinics that are already underfunded.
  • Patient resistance to the "no take-home policy" on LAAM. While patients have stated that LAAM makes them feel "more normal," the no take home-policy still serves as a major deterrent to LAAM given the availability of take-home methadone.

These barriers have served as formidable obstacles for market penetration and have significantly reduced the value of the 7 year market exclusivity period of LAAM extended by its orphan drug status. According to respondents from the private sector, the existence of these barriers and the relatively small size of the potential market will continue to deter pharmaceutical companies from investing funds in the R&D and marketing of pharmacotherapies for the treatment of opiate addiction.