TCS Daily

Confessions of a Drug Killer

By Charles L. Hooper - May 8, 2007 12:00 AM

I'll just come out and say it. I'm a drug killer. I persuade companies to stop developing uneconomical new medicines. This is part of what my consulting company, Objective Insights, does to help pharmaceutical and biotech companies make good decisions about their business opportunities. Say that a drug company is developing a scientifically exciting new drug for breast cancer. We analyze that drug and tell the company whether it makes economic sense to continue development. In the past, we have suggested that drug companies pull the plug many times. We have helped kill drugs for brain cancer, ovarian cancer, melanoma, hemophilia, and other important conditions. It breaks my heart.

To understand how we work, you first have to understand how the Food and Drug Administration approves new drugs. In short, the FDA treats all new medicines as guilty until proven innocent. How does a sponsor company "prove" innocence for its new medicine? Well, the standards have certainly changed over the last 100 years. In the early days, there was no official proof needed. Yes, you could walk into a pharmacy and buy any crazy thing you wanted. Of course there were some disasters, but they were relatively minor. In one infamous case in 1937, the Massengill Company carelessly used the solvent diethylene glycol, which is a much less poisonous cousin of ethylene glycol ("antifreeze"), to make a palatable liquid version of its new antibiotic drug sulfanilamide. This Elixir Sulfanilamide killed 107 people, mostly children, before it was quickly recalled. Massengill was successfully sued and the chemist responsible committed suicide.

After this disaster, the FDA acquired, through the Food, Drug, and Cosmetic Act of 1938, the power to require that new medicines be proven safe prior to marketing. With the Kefauver-Harris Amendments of 1962, the FDA got the power to require that all new drugs be proven to work for their intended purpose. It is this modern environment which has driven the development costs for one new successful drug to a billion dollars. A study by Joseph DiMasi, an economist at the Tufts Center for the Study of Drug Development in Boston, found that the cost of getting one new drug approved was $802 million in 2000 U.S. dollars ($956 million in 2007 dollars).

Now consider the FDA's recent rejection of Arcoxia (etoricoxib), Merck's successor to Vioxx. You remember Merck, right? The conservative company that pulled Vioxx off the market a matter of days after it received its own clinical data showing that Vioxx increased the cardiovascular risk of some patients. Other patients were at no increased risk and even the patients at increased cardiovascular risk may have preferred Vioxx to drugs like naproxen (Aleve) or aspirin due to lower overall risks.

Why would anyone prefer Vioxx to NSAIDs such as naproxen or aspirin? Because NSAIDs have their own risks. The rate of major gastrointestinal (GI) problems typically seen in clinical trials for NSAIDs like aspirin is two to four percent of patients treated for a year. One researcher reported that at least 6,000 U.S. deaths per year result from NSAID-induced GI bleeding. Other experts have estimated that NSAID-induced GI complications result in 16,500 deaths and more than 100,000 hospitalizations per year in the U.S. Designed to address this problem, Vioxx reduced the risk of GI problems substantially. Even at twice the maximum recommended daily dose, Vioxx showed a 57 percent lower rate of serious GI bleeding than the rate for NSAIDs.

Dr. Sidney Wolfe, director at the Public Citizen Health Research Group, stated that, "Thousands, probably tens of thousands of patients have already had needless heart attacks because they took one of the marketed or previously marketed COX-2 [like Vioxx] drugs instead of clearly safer alternatives such as naproxen." Really?

For all the lawsuits and the hype on the cardiovascular risks of Vioxx, consider the results of Merck's VIGOR study of Vioxx compared to Dr. Wolfe's naproxen. VIGOR is the acronym for Vioxx Gastrointestinal Outcomes Research. In June 2000, Merck submitted the findings of this research to the Food and Drug Administration. It was a comparison of results for 4,047 patients given Vioxx and 4,029 given naproxen. The results: five patients on Vioxx died of heart attacks and four on naproxen died of heart attacks. In other words, there was one extra death from a heart attack out of 4,000 people on Vioxx. Making the risk of real-life usage even smaller is the fact that all the results were at double the maximum recommended daily dose for Vioxx.

Why limit ourselves unnecessarily? The FDA should allow both product classes on the market. If a patient is afraid of cardiovascular problems, the patient can choose an NSAID. If a patient is afraid of GI problems, the patient can choose a Cox-2 inhibitor.

On April 27, the FDA agreed with an outside FDA advisory panel to turn down Arcoxia. This FDA advisory panel had, on April 12, voted against Arcoxia by a vote of 20 to one, because the panel didn't like the risk of Cox-2 inhibitors in general and didn't see the need for another product on the market. This recommendation ignores two huge things.

One is that many patients don't do well on drug A but do well on drug B, while other patients do well on A but not B. The NSAID class of products has historically had very high adoption rates (the products grow to their peak sales quickly) because there is so much dissatisfaction and switching taking place. Take pretty much any product and ask around. You'll find one person who hates that drug and another who loves it. One patient, Kathleen Slocum, said that her life without Vioxx, or other drugs like it, was "misery." She also pointed out that while over-the-counter analgesics work well for pain relief, the main problem she has had with her severe arthritis is joint swelling and stiffness; OTC analgesics haven't helped her with these problems. This type of outcome is very personal and hard to discover through clinical trials.

The other point is that the FDA is supposed to judge whether a drug is safe and efficacious and that's all. Is it safe? Does it work? That's it. But this FDA advisory panel slyly added a third requirement: Is Arcoxia better than what's on the market? Robert Myer, director of the FDA's Office of Drug Evaluation II, told reporters after the meeting that, "simply having another drug on the market wasn't sufficient reason to approve the product unless there was a unique role defined." Although this decision breaks my heart, it fattens my pocketbook. How difficult and expensive would it be to show, to use a more familiar example, that Ford trucks are safe, efficacious, and better than Chevy and Dodge trucks? Drug killers like me will now kill even more drugs, not because the drugs are bad, but if they are considered guilty until proven innocent and the evidence is too costly, the system will convict them regardless of the facts. What would the FDA do with our truck example above? If Chevy and Dodge were on the market first, the FDA would probably reject Ford's application to sell trucks. "Why do we need Ford when we've already got Chevy and Dodge?" While un-American, it makes for a brisk business for drug killers like me.

In the unfortunate Elixir Sulfanilamide case, 107 people died. If that's all that factors into your decision calculus, you would agree that the FDA needs to be hyper conservative when considering new drugs. But that's considering only the classic type II, or false positive, error, allowing a dangerous drug to be marketed. There are also type I, false negative, errors when a lifesaving drug is kept off the market or delayed by years. Just imagine that penicillin had been kept off the market. If you or your loved one died from an infection that penicillin could have been cured, you'd have been just as dead as if you took a dangerous drug. Also, you would have been an invisible victim. Very few people would have even known that penicillin could have been used to save you. Few people would get have gotten upset and fewer would have protested.

This is one reason the FDA is so conservative. If it approves a drug later found to be dangerous (a type II error), bad things happen. As one former FDA employee, Henry Miller, put it, "This kind of mistake is highly visible and has immediate consequences-the media pounces, the public denounces, and Congress pronounces." If the FDA fails to approve a good drug (a type I error), few bad things happen-to the FDA. You and I would probably be just as conservative if we worked at the FDA because of the incentive structure. The FDA continually relearns its lessons to be conservative and it also learns that perceptions are what really matter. One Arcoxia FDA advisory panel member, Dr. David Egilman, commented, "Fool me once-Vioxx, shame on you. Fool me twice-Arcoxia, shame on me."

Don't be misled into believing that Arcoxia, which has been tested in over 34,000 patients, is a wildly dangerous drug. According to Merck, "there is more long-term safety data from controlled clinical trials, in terms of patient-years on treatment, for Arcoxia than for any other NSAID, including traditional NSAIDs and Cox-2 selective inhibitors." Do the English or Germans seem careless or inept? Those countries already allow patients to use Arcoxia, as do 61 other countries in Asia, Latin America and Europe. It's as if the FDA is our parent and, after a long drive to the beach, is telling us not to swim in the water because he/she isn't convinced the water is warm enough. We nod agreement and then look out to see 63 other kids happily swimming. Hmmm. Maybe we're old enough to decide for ourselves.

At the end of the day, it will be my company that kills a new drug. So, yes, I'm a drug killer. But the FDA is the true drug killer. I'm merely acting out the FDA's script.

Charles L. Hooper is president of Objective Insights, a company that consults for pharmaceutical and biotech companies. He worked at Syntex, which was the inventor of naproxen (the active ingredient in Naprosyn, Anaprox, and Aleve) He has worked at and consulted for Merck, but not on Vioxx, Arcoxia, or other Cox-2 inhibitor products. Charles is a visiting fellow with the Hoover Institution and coauthor, with David R. Henderson, of Making Great Decisions in Business and Life (Chicago Park Press, 2006).



Reforming the FDA
"Maybe we're old enough to decide for ourselves."

Consumers of health care products have been "old enough" to decide for quite some time. The FDA should be reformed the lines of...we Report you Decide.

Only 5% of the global market...
Admittedly, the US consumer market is wealthy and the pharmaceutical companies might extract extraordinary margins here. This constitutes one element of the financial incentive to seek FDA approval. In addition, however, Wall Street assigns a premium net present value multiplier to arrive at a target stock price when the company adds such a compound into its product mix.

Further, the actual process of submission (alone) regarding a product with immense potential is good for the stock. By the time a drug company realizes it is probably throwing good money after bad much of that $956 million is already sunk cost.

Of course, if the company did not think enough of its drug to submit it for FDA approval (in the first place) then the stock market would not have assigned it any upside value at all. Once this process is launched with a loser, therefore, the project becomes a "tar baby". The company cannot really let go but its every move makes more of a mess.

The smart business decision for many global companies could be to ignore the US market entirely regarding significant drugs where the additional investment of $1 billion to distribute into our market might not be justified.

Just as with the film industry, many projects get made today without US distribution projected at all. Foreign distribution alone and then immediately to CD/cable justifies many fine efforts that could not support the (competitive advertising) overhead costs over here.

95% of the global population lives outside the United States. These folks are getting more affluent every year. It is simply a matter of mathematics.

The first time a really significant drug with a peerless safety record in worldwide distribution is, nevertheless, not available on the American market because the mean old SOB, private owner of the drug company refuses to pony up his $1 billion...things will change.

For the boomers last gasp, I will predict the rules governing the FDA will soon be drastically changed.

Their narcissism will drive them to do whatever it takes to stay alive and try any drug or therapy that will extend their life.

That is, of course, if their socialistic tendancies don't drive the drug companies out of business.

killing drugs
It's one of the reasons I don't invest in Big Pharma anymore. Years ago euroland used to produce lots of new drugs, then they pretty much wiped out themselves, now the US is working on the same. And of course the commie coutries never produced anything. So who will take the trouble to invest so much, then to see it wasted? Or if it gets out, then you might have to give it away to african or asian countries who think they deserve everything for nothing. I just read today in an asian paper whereby Indonsesia won't even give samples of bird flu to the flu researchers because they say they don't want to pay so much for drugs that might be developed! So guys then go and invest in tobacco, booze and gambling etc.

Were here to help
Yet another example of government getting in the way. Deciding the market is yet another move towards the centeralized economy.

From the nice people who brought us the 1.6 gallon flush toilet...

Excellent article..
very interesting and well written, my compliments to the writer.

Now, a message to the free-market madmen round here. I've got this great new drug for the immune system that I think you should all take. It's called TGN1412. It's from Germany, so it must be good.....

free-market madmen
So if you don't advocate free-markets, then what, feudalism, mercantilism, socialism? What's your rationel for not letting people be free? Some guys say people don't deserve freedom, others say they are too stupid, so they need a patronizing, paternalistic strong government to dictate the terms of their existence. Re german drugs; do you claim that germany, or even all of europe combined prodecuing more innovative drugs these days, than the US? If it's declining, why? Also, why didn't the whole soviet block, where there was no freedom, not produce more and better drugs than the west? Give us an example of a place that has no economic freedom that produces good drugs.

re: free-market madmen
Never said, nor suggested that I didn't support free markets, so the rest of your post is superfluous.

If you can provide evidence, from a certified lab, to support your claims, I'm interested.
That's the approach people who care about their freedom take.

Others just assume that if the govt has signed off, it must be good, so there's no need to think for themselves.

you called those who believe in the free market mad
so why is it wrong to suppose you are no fan of the free market?

The depth of hatred for "boomers" that your post conveys is a little difficult to comprehend. It would make just as much sense if you replaced the word "boomers" with "babies".

Boomers have done more harm than good.
They continue to believe the world owes them a living and are the most selfish generation, in contrast to their parents who fought the war.

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