Clinical Trials Can Charge For Using Competitor Drugs Under FDA Proposed Rule

Clinical trial sponsors are permitted to charge for approved drugs obtained from competitors while conducting a clinical study evaluating an investigational drug under an FDA proposed rule.

The ¹ proposed rule on charging for investigational drugs, published in the Dec. 14 Federal Register, revises a 1987 regulation to clarify the circumstances under which charging in clinical trials is appropriate and describes criteria for charging for different types of expanded access programs.

Under the current rule, a sponsor may not charge a price "larger than that necessary to recover costs of manufacture, research, development, and handling of the investigational drug," the proposed rule notes. That model has led to varied interpretations and unrealistic cost calculations, according to FDA.

"Companies are permitted to charge under the treatment IND regulations, as well as for access in other circumstances. However, it is very unclear based on our current regulations what the charges might be," FDA Deputy Commissioner for Operations Janet Woodcock explained during a Dec. 11 media briefing.

In addition to the proposed rule on charging, FDA released a proposed rule on expanded access to investigational drugs for treatment use (see ² (Also see "FDA Expanded Access Proposals Too Narrow For Patient Advocates" - Pink Sheet, 18 Dec, 2006.)). Comments on both documents are due March 14, 2007.

Among the reasons the agency is revising the existing charging regulations is to "take into account circumstances that were not anticipated when the original rule was adopted in 1987," the proposal states.

FDA explains that while it anticipated requests to charge in a clinical trial would be limited to the sponsor's drug under investigation in that trial, "the agency has received few such requests."

"Far more common are requests to charge for approved drugs in trials when the drugs must be obtained from another company," the proposed rule states. "Even more common are requests to charge for approved drugs used in studies by a third party (not a manufacturer) that are intended to study new uses of the approved drug or to compare two drugs."

While those requests may be appropriate, they require different sets of criteria which are not described in the current rule, the agency says.

Under the proposed rule, when a sponsor obtains a drug from another entity for use as an active control or in combination with another product in a trial designed to evaluate the effectiveness or safety of the sponsor's investigational drug, "the threshold for charging ... should be lower than the threshold for charging by a sponsor for the sponsor's own investigational drug."

The rule reasons that in those situations, patients generally must receive some type of therapy because using a placebo would be unethical. In addition, subjects would often be treated with that approved drug in the course of medical practice outside of the trial.

Coverage of routine care provided during clinical trials has been a delicate issue for payers. CMS is developing a new policy on reimbursement for costs incurred in studies as a part of its reconsideration of the national coverage decision policy on Medicare coverage of trials (³ (Also see "Medicare Coverage For Non-IND Drug Trials Should Continue – PhRMA & BIO" - Pink Sheet, 28 Aug, 2006.), p. 21).

FDA's proposed rule also specifies criteria for charging for an approved drug "obtained from another entity in a clinical trial designed to evaluate the approved drug (e.g., for another indication)."

"This provision is primarily intended to enable sponsors who are not commercial entities in the business of drug development to study new uses of approved drugs that might not be of commercial interest to the drug's manufacturer or to conduct studies that provide additional information about a drug that might not otherwise be obtained."

Current regulations permit a sponsor to charge for investigational drugs under four conditions: there must be adequate enrollment in the ongoing trial under the IND; charging is not equivalent to commercial marketing of an unapproved new drug; the drug must not be commercially promoted or advertised; and the sponsor must be pursuing FDA approval of the drug.

Under the proposed rule, FDA clarifies it would permit a sponsor to charge for its own drug in a clinical trial under three circumstances.

First, charging should only be allowed to aid development of a "promising new drug or indication that might not otherwise be developed, or to obtain important safety information that might not otherwise be obtained."

Second, the sponsor must prove that trial is essential for the development of the drug or that it would support a "significant" change in labeling for an approved drug. "The types of products that are likely to meet these two criteria are also likely to be eligible for fast track development programs and priority review."

The third circumstance is that charging must be necessary to conduct the trial.

According to FDA, the number of requests to charge for drugs represents a small percentage of all INDs. From 1997 to 2005, the agency received an average of 2,046.6 INDs per year, according to the proposed rule. During the same time period, FDA received, on average, 22.6 requests to charge patients for an investigational drug per year, and only 1.1 requests to charge under a treatment IND.

FDA also received an average of 659 individual patient and emergency INDs annually from 1997 to 2005, roughly 32% of all INDs received each year. In that timeframe the number of requests to charge per year was, on average, 7.1.

"I need to stress that most companies, even though they can charge now, do not charge for access," Woodcock said. Nonetheless, "we anticipate - and we have seen - that the need for cost recovery is a barrier for certain patient populations to access investigational drugs, and that's where it's a very small company, they may not have any approved products that they're selling, and they're just developing a single or a small number of products, or it might be a research institution that is offering the drug."

The proposed rule additionally addresses charging for two new categories of expanded access for treatment use - individual and intermediate-size populations -described in the proposed expanded access regulation.

FDA "specifies that the authorization to charge be limited to the number of patients authorized to receive the drug for treatment use, if there is a limitation."

The rule "proposes to limit the authorization to charge to a period of one year or less to permit the agency to periodically assess whether the criteria for charging continue to be met." The rule notes FDA may specify a shorter duration if there are concerns that charging may impede drug development.

The proposed rule additionally addresses which types of costs are recoverable when a sponsor charges for an investigational drug in a clinical trial or for expanded access. "The purpose of permitting charging for an investigational drug in a clinical trial is to permit a sponsor to recover the costs of a drug when the drug is extraordinarily expensive."

Therefore, recovery in those situations should be limited to "the direct costs of making the investigational drug," and cannot include indirect costs, the proposed rule states.

Examples of direct costs include costs per unit to manufacture the drug, costs to acquire the drug from another entity and costs to ship and handle the drug.

Indirect costs are those "not attributable solely to making the drug available for the investigational use for which charging is requested," such as expenditures related to the equipment and physical plant that will be used to manufacture the drug in large quantities for commercialization post-approval.

Sponsors who are offering the drug for expanded access for treatment in intermediate-size populations and treatment INDs tend to incur additional costs beyond those ordinarily associated with drug development, according to the proposed rule.

FDA would therefore allow a sponsor to recover the costs of administering treatment in those populations, as well as direct costs. The sponsor may also recover the costs of monitoring the expanded access use, complying with IND reporting requirements and other administrative expenses directly related to providing the drug.

However, the rule states, sponsors would not be permitted to recover any additional costs for individual patients "because these costs would be so minor."

While the agency is hoping clarifying what costs are recoverable will encourage more sponsors to make drugs available under investigational use, the American Society of Clinical Oncology and the National Coalition for Cancer Survivorship recommended in a March citizen petition that FDA instead encourage sponsors to provide investigational agents free of charge (⁴ (Also see "FDA Widens Expanded Access, Will Accelerated Approval Gray Area Narrow?" - Pink Sheet, 3 Apr, 2006.), p. 4).

- Brooke McManus