Summary
India Becoming Favored Destination for Clinical Trials.
Analysis
Today, the pharmaceutical drug manufacturing industry has become
increasingly competitive. Taking a drug from its initial compound ‘find’ to the
market shelf is extremely timely, risky and expensive for drug producers. Add to
this fact that the emergence and establishment of the Generic Drug market has
made it even tougher for drug innovators to compete. Fortunately, the recent
outsourcing of clinical drug trials to India and China during research and
development are providing a tremendous impact on Western Drug innovators. In
the near future, drug manufacturers will have to utilize outsourcing and 24 hour
knowledge factory as means to stay competitive in the pharmaceutical industry.
(1)
The Problem: Emergence and Establishment of Generic Drugs
The emergence of lower cost, lower margin generic drugs has forced nongeneric
drug companies to cut expenses to remain competitive. Generic drugs
took off in 1984 when the Hatch-Waxman Act, also known as the Drug Price
Competition and Patent Term Restoration Act was passed. The Hatch-Waxman
Act was passed by congress in an effort to lower drug costs to patients by
increasing competition. The law expedited the process for generic companies to
‘copy’ an innovator company’s drug. After the law was passed, a generic
company basically only had to prove to the FDA that the drug they were
producing had the same active ingredient(s) and that they were absorbed in the
body within 20% of the rate of the brand drug.(2)
The new law was a godsend for many generic companies. Generic
companies could now use reverse engineering to discover the compounds found
in the brand drug, recreate the compounds to make the drug, and then get the
drug approved by the FDA. Because the brand drug has already proved both
safety and efficacy by a grueling research and development process, obtaining
approval from the FDA is much easier the second time around. Not having to go
through the expensive and timely research and development process meant that
generic drugs could push their product to the market for a fraction of the cost and
time it took its more innovative predecessor.(2)
While patients and generic drug companies greatly benefit from the Hatch-
Waxman Act, innovator drug companies have not embraced the new law as it
seriously threatens profits. The law meant that innovator companies would now
enjoy a shorter period of ‘market exclusivity’. Market exclusivity is the period of
time that a brand company gets to utilize its monopoly power prior to expiration of
its patent. During this time, a brand company achieves maximum profit because
it is free to sell its drug at its desired price with no competition. A shorter period
of market exclusivity, of course means less profits for innovative drug companies.
The growing generic drug market has forced innovative drug companies to look
for new ways to get its product to the market quicker and less expensively to
remain competitive. Outsourcing certain phases in the Research and
Development process may provide the answer. (3)
Untapped Opportunities in Clinical Trial Outsourcing
It is a long, expensive and extremely difficult process to bring a new drug
to market. After discovery, new compounds will first be evaluated in animal
laboratories. Of the 5,000 compounds that are evaluated in the animal
laboratory, only five on average will pass. The fortunate few compounds that
pass move on to be tested by humans in three rigorous phases of clinical trials.
Only one of these five will be approved by the FDA and enter the market. The
cost to develop and approve a new drug from the time it is discovered averages
over 700 million dollars and takes between seven and 12 years. More than half
of these costs occur in the human clinical trials. (4)
The clinical trials period of new drug development present an opportunity
for drug companies to reduce a significant amount of money and time by
outsourcing their clinical studies to undeveloped countries where labor for
physicians and patients are greatly reduced. Today, more than 70% of clinical
drugs miss their deadlines because they simply cannot recruit qualified patients
quickly enough. This is an expensive problem for drug companies. A few
companies are looking to solve this problem by recruiting their clinical patients in
India and China. Some major Pharma drug companies like Pfizer and Eli Lily are
taking advantage of the enormous populations of China and India and recruiting
more patients there. The benefits of recruiting both patients in less developed
countries are significant. By expanding patient recruitment outside of the United
States, companies are able to reduce their cost per patient by 40-60% and to
speed up recruitment by nearly 30%. (5)
Along with cost savings in patient recruitment, conducting clinical trials in
India also offers tremendous cost savings in regards to research personnel which
include doctors, nurses, researchers and technicians. Interestingly, India and
China have hundreds of thousands of these highly credentialed positions. Yet
another benefit is that this personnel often times speaks English, yet are paid
80% less than those positions in the United States. (5)
The savings that companies realize by outsourcing to less developed
countries, allows them to spend more resources on gathering and analyzing
clinical data. Additional money is often times spent on hiring counselors who can
oversee and more closely monitor patients to ensure that the patient is taking the
drug appropriately and complying with the trial. When additional resources are
used on analysis and data gathering, companies enjoy better data and are able
to analyze the data at a finer detail. (6)
Still, most companies in the pharmaceutical industry are hesitant to
outsource clinical trials to a foreign country. Today, less than 3% of clinical trials
are conducted outside of the United States, Japan, or Europe (7). This is partly
due to an FDA regulation that will not approve a clinical trial where 20% of its
subjects are from developing countries(7). University of Arizona Pharmacology
Research professor Dr. Gandolfi points out that drugs affect different ethnicities
Differently (8). In other words, testing an Indian from Bangalore, India would be
of little value when you are trying to get a drug approved in Europe, where most
of the population consists of Anglo-Saxons(8).
Opposition to Clinical Outsourcing
Along with FDA regulations that limit the amount of foreign clinical patients
being tested, there is also strong opposition from many in India. Today, there is
an Indian law in place that does not allow Phase I clinical trials on its people.
Rayhomath Mashelker who chaired a panel to draft amendments to the law,
would not recommend Phase I of foreign drugs, “as this will make our people,
who are mostly illiterate, guinea pigs.” William Rutter adds that, “Clinical
research outsourcing provides a big opportunity, no doubt, but India’s business
model for [IT] which is based on cheap labor may not work here, what U.S
companies look for is quality data, reliability and confidentiality, not just low
price.” (
Clinical Trials in II and III phase more acceptable
There are difficulties to outsourcing clinical research, but companies may
be able to find success in outsourcing particular phases. For example, less
developed countries like India oppose Phase I research, but are open to allowing
Phase II clinical research. Phase I research is conducted on healthy paid
volunteers to determine drug absorption rates, effects on the organs, and side
effects for different dosages. Phase II research is considered safer and involves
patients with health disease or dysfunction. The purpose of Phase II is primarily
to determine the effectiveness that the drug has on a particular disease. Phase
III is the largest part of the clinical phases. This uses the largest study
population, and is the final phase. If clinical trial results are acceptable by the
FDA, the drug can then be sold for consumption. (5)
Significant Benefits in India
India’s massive population and numerous health ailments make it a very
attractive country for Phase II clinical research. Today, India has a population
that has amassed over one billion people. Finding clinical patients in India with
disease and ailment are far easier than in the western world. Thirty million Indian
citizens have heart diseases, twenty five million people have type II diabetes and
over ten million citizens suffer from psychiatric diseases. (5)
The need for expediency in the drug development process cannot be over
stated. The drug company that can get their product to the market quickest will
win the allegiance of the market. This is of course true in any industry, but is
much more apparent in the new drug industry, where getting a drug to the market
six months faster could mean an extra 200- 250 million in profits.(4)
Importance of First to Market
A good example of the spoils that the first company to market will receive
is Pfizers male enhancement drug, Viagra, was approved by the FDA in 1998
and was remarkably successful. Five years later in 2003, Bayer got its male
enhancement drug Levitra approved by the FDA and was available on drug
shelves that same year. The following year, Pfizer was still able to generate
sales of more than eight times its new competitor. Drug companies like Pfizer
are always looking for ways to expedite the process time needed to develop a
new drug. Outsourcing clinical trials and utilizing the 24 hour knowledge factory
should lead to considerable savings in both time and money.(10)
Outsourcing and 24 Hour KF provide the answers?
Along with the outsourcing of clinical trials, 24 hour knowledge factory
utilization could further compound benefits. 24 hour knowledge factory would
mostly benefit the pharmaceutical clinical trial industry with regards to data
collection and analysis. To implement 24 hour knowledge
factory most
successfully, the innovator drug company would discover a compound, conduct
research, then outsource the first clinical trials to the most cost effective locations
(location 1 different time zone). Meanwhile, data from the research and phase I
clinical trial could be used in the primary data collecting site (location 2 different
time zone) and then utilized to recruit patients for phase II in the most cost
effective location (location 3 different time zone). The primary data collection site
would serve as an information hub and liaison between the three phases. The
‘information hub’ would transmit and receive information to and from trial
researchers.
In the aforementioned manner, 24 hour knowledge would not be employed
perfectly by definition, as 24 hour knowledge factory is meant to break up one job
into several tasks across several time zones. However, drug companies can use
many of the principles of 24 hour knowledge in clinical trial data collection and
data analysis to improve the reliability and expediency of data collection and
analysis.
One example where 24 hour knowledge factory utilization could be used is
by the drug developer, GlaxoSmithKline (GSK) pharmaceutical company’s effort
to create a malaria vaccination that is affordable for the people in the region of
Southern Africa (11). Currently, there is an ongoing study, where an affordable
vaccination is being ‘tried’ on two thousand Mozambique adults and children in
Africa, in the third phase of clinical trials. GSK has its vaccinations headquarters
in Belgium (11). Perhaps 24hour knowledge factory fundamentals could have
used 24 HKF and have held its phase II clinical trials in India, where it would
have achieved significant cost savings. Data and research results from phase II
could have been sent to the vaccination headquarters in Belgium (the information
hub), to be used sequentially, and sometimes perhaps simultaneously by both
headquarters and clinical trial researchers in different phases. This, of course
would expedite the clinical trial significantly, allowing the drug manufacturer to
get the drug to the market faster.
The combination of 24 hour knowledge factory and outsourcing gives
Western drug manufacturers a tremendous economic advantage over its
competitors when used appropriately. Competition from generic drug
companies, huge cost savings on patient recruitment, and faster recruitment
times make outsourcing and 24 hour knowledge factory critical to the future
success of Western drug manufacturers. Companies that use 24 hour
knowledge factory knowledge and outsourcing effectively will have a serious
advantage over drug manufacturers that do not.
This author consults with leading institutions through GLG
Analyses are solely the work of the authors and have not been edited or endorsed by GLG.
