Science and Technology

Analytical Framework for Examining the Value of Antibacterial Products. 3.6.3 Percentage Increase in Disease Duration for Patients Not Responding to Existing Commonly Used Antibacterial Drugs

There are no publicly available estimates of how long each of the different types of illnesses last in patients who do not respond to existing commonly used antibacterial drugs. Thus, for analysis purposes, we assume that those patients who do not respond to existing drugs have an average duration of illness 50 percent longer than those who do r

Analytical Framework for Examining the Value of Antibacterial Products. 3.6.2 Percentage of Patients not Responding to Existing Commonly Used Antibacterial Drugs

The percentage of patients that do not respond to existing commonly used antibacterials is difficult to estimate on a nationwide as well as on an indication basis. Antimicrobial resistance varies widely by hospital and geographic region, depending on local resistance patterns and standard prescribing practices.

Analytical Framework for Examining the Value of Antibacterial Products. 3.6.1 Real Annual Social Rate of Discount

In accordance with the Office of Management and Budget (OMB) guidelines for economic analysis, we use a real social discount rate of 3 percent in the analysis. The social discount rate is assumed to have a triangular probability distribution with a lower bound of 1 percent and an upper bound of 7 percent in the sensitivity analysis. Table 15

Analytical Framework for Examining the Value of Antibacterial Products. 3.6 Antibacterial Drug Social EPV Model Parameters and Assumptions

Table 15 presents the point estimates for the social EPV model parameters and assumptions. The following sections discuss the basis for these estimates in further detail.

Analytical Framework for Examining the Value of Antibacterial Products. 3.5 Expected Present Value (EPV) Framework for Evaluating Social Returns

In addition to estimating the private expected net present value (ENPV) of a new antibacterial drug to the sponsor, we also need to consider the expected net present value (ENPV) of the new antibacterial drug to society as a whole. The social ENPV considers the societal costs and benefits of these drugs. From the perspective of economic efficien

Analytical Framework for Examining the Value of Antibacterial Products. 3.4 Threshold Analysis of Incentive Options

We considered each incentive identified in Section 2 in the context of our private ENPV framework. This threshold analysis involved calculating the level of each incentive (in dollars) that would equate the private ENPV to $100 million for a drug sponsor that is at the start of pre-clinical phase. This threshold represents the developer’s op

Analytical Framework for Examining the Value of Antibacterial Products. 3.3 Private ENPV Estimates by Indication

Figure 3 presents the estimated private ENPVs by indication for a new antibacterial drug. As can be observed from the figure, the private ENPVs for both ABOM and HABP/VABP are lower than zero, indicating that expected returns from developing new antibacterials for the treatment of these indications are lower than development costs. According t

Analytical Framework for Examining the Value of Antibacterial Products. 3.2.15 Market Uptake for a New Antibacterial Drug over Time

Table 11 presents sales data on Cubicin (daptomycin,) an antibacterial drug launched in the U.S. in 2003. Cubicin is indicated for the treatment of complicated skin and skin structure infections (cSSSI) and Staphylococcus aureus bloodstream infections, including cases caused by methicillin-resistant Staphylococcus aureus (MRSA). As can be

Analytical Framework for Examining the Value of Antibacterial Products. 3.2.14 Expected Market Share at Peak Year Sales

The rate and extent of market penetration for pharmaceutical products depend on the maturity of the market as well as product characteristics (IMS Health, 2010). Significantly, innovative products that face no or little competition enjoy quicker sales growth compared to commoditized products. According to data from IMS Health, a differentiated

Analytical Framework for Examining the Value of Antibacterial Products. 3.2.13 Total Market Size

As noted in Section 1.3, we obtained data on drug expenditures from IMS Health through FDA’s third party agreement. Based on antibacterial drugs approved for the treatment of each of the six indications, IMS Health provided data on total sales of these drugs across all indications by formulation (oral or IV) for the years 2007 to 2011. Using

Analytical Framework for Examining the Value of Antibacterial Products. 3.2.12 Product Launch Success Probability

According to Griffin (1997), only about 60 percent of new product launches end up being commercially successful. Using this as our basis, we assume that there is a 60 percent chance that the novel antibacterial drug market share would be 27.1 percent and a 40 percent (= 1 – 0.60) chance that it would be 12.3 percent. For sensitivity analysis

Analytical Framework for Examining the Value of Antibacterial Products. 3.2.11 Total Product Life

Similar to DiMasi et al. (2004), we use 20 years to characterize the average life cycle of a new drug upon market approval. Even though the expected revenues from sales in years beyond 20 contribute very little to private ENPV due to discounting, the model allows the user to vary this parameter for what-if scenario analysis if needed.

Analytical Framework for Examining the Value of Antibacterial Products. 3.2.10 Percentage Reduction in Revenues due to Generic Competition

According to Berndt & Aitken (2010), brand name drugs lose between 5 to 45 percent of their market to generic competition within their first full calendar year after generic entry into the market. Other reported estimates in the published literature range from 25 percent to as high as 75 percent reductions in sales revenue after generic entr

Analytical Framework for Examining the Value of Antibacterial Products. 3.2.9 Average Time to Generic Entry upon FDA Approval

We estimate the average time to generic entry upon obtaining FDA approval for the drug at 12 years based on a recent study by Grabowski et al. (2011). For sensitivity analysis, we employ a triangular distribution with endpoints of 10 and 14 years, respectively.

Analytical Framework for Examining the Value of Antibacterial Products. 3.2.8 Post-approval Pediatric Pharmacokinetic/Pharmacodynamic and Safety Study Costs and Duration

The Pediatric Research Equity Act (Public Law 108-155) (PREA), requires the conduct of pediatric studies for certain drug and biological products. Specifically, PREA requires new drug applications (NDAs) and biologics licensing applications (BLAs) (or supplements to applications) for a new active ingredient, new indication, new dosage form, new

Analytical Framework for Examining the Value of Antibacterial Products. 3.2.7 Non-clinical Work Costs and Duration

Sponsors also need to conduct non-clinical work starting with the beginning of Phase 2 through product launch. These involve toxicological studies in up to 2 species that include qualification of final synthetic processes, reproductive toxicity studies, and susceptibility test development. According to experts and drug sponsors, the cost of al

Analytical Framework for Examining the Value of Antibacterial Products. 3.2.6 Costs of Supply Chain Activities

The drug sponsor needs to undertake a variety of additional activities concurrently with clinical development, including sample preparation, process research, process development, process design, and plant design and construction. As was depicted in Figure 1, sponsors initially need to focus on preparing sufficient amount of drug sample for use

Analytical Framework for Examining the Value of Antibacterial Products. 3.2.5 Pre-clinical, Clinical, NDA/BLA Submission Success Probabilities

Table 8 presents the different phase success probabilities (also referred to as phase transition probabilities) reported in the literature and gleaned from discussions with experts and drug sponsors. Estimates reported in DiMasi et al., (2004) and DiMasi et al., (2010) are applicable to anti-infectives whereas the remaining figures from publishe

Analytical Framework for Examining the Value of Antibacterial Products. 3.2.4 Pre-clinical, Clinical, and NDA/BLA Submission Phase Durations

Private ENPV is dependent on the duration of each phase and the distribution of out-of-pocket costs throughout each phase. Often times, there are overlaps as well as gaps among phases. For example, while Phase 1 may last for nearly 20 months, a company may initiate Phase 2 trials after having completed its single ascending dose tier studies wi

Analytical Framework for Examining the Value of Antibacterial Products. 3.2.3 Clinical Phase and NDA/BLA Submission Costs

There is very limited data on phase costs by therapeutic class in the public domain. The most widely cited estimates are from DiMasi et al (2004) and are based on confidential data collected from 10 pharmaceutical companies. For anti-infectives, DiMasi et al (2004) report mean clinical trial phase costs of $23 million, $20 million, and $137 mi

Content by Keyword: Science and Technology