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International Clinical Trials

Trading Standards

The global clinical trials industry, which is worth around £30 billion a year, has undergone many changes in the past five years – and is currently going through another period of structural and technological overhaul.

New innovative medicines/molecules are at a premium but – despite the public announcements by major pharma chief executives during recent takeover activity – there has been a significant reduction in the number of trials. Studies approved in the UK, for example, dropped by 14% between 2005 and 2013 (1).

Shareholders are putting pressure on listed Big Pharma companies to increase profitability and return. This has been challenging for the industry and has led to greater merger and acquisition (M&A) activity, the closure of R&D facilities and loss of jobs (19,500 in the US and 143,000 in the UK within the last two years). The increase in M&As in the first half of 2014, showing $700 billion in completed or announced transactions globally (2), is also being driven by an explosion of technology-based treatment innovations and rapidly changing consumer demographics.

While this has been successful in achieving cost savings, the primary goal must continue to be innovation and development of new molecules. Yet the industry is still focused on cost-reduction.

TransCelerate Initiative

A new, non-profi t organisation, TransCelerate BioPharma, was launched in the US in September 2012. Its mission is: "To collaborate across the global biopharmaceutical R&D community to identify, prioritise, design and facilitate implementation of solutions designed to drive the efficient, effective and high-quality delivery of new medicines.” The organisation seeks to advance innovation in R&D, solve common problems and further improve patient safety, with the ultimate goal of providing high-quality treatments.

In 2013, TransCelerate announced a new Clinical Trial Comparator Network initiative to show a mutual commitment to offering secure and rapid supply of comparator drug products. This consortium has decided to focus on 11 important issues:
  • Risk-based monitoring
  • Site qualification and training
  • Clinical data standards
  • Comparator drugs
  • Shared investigator platform
  • Common protocol template
  • Investigator registry
  • Paediatric trial efficiencies
  • Clinical trial diversification
  • Clinical data transparency
  • Quality management system
The initiative entails a master service agreement among participants, and dedicated resources for tracking shipments, anticipating demand and ensuring safe delivery. According to TransCelerate, "improved access to comparator drug stability and regulatory data will enable member companies to reduce waste by allowing for better management of temperature excursions and facilitate global trials. [TransCelerate] member companies will also have the ability to receive detailed demand data, which will facilitate improved supply chain planning".

The aim of this article is to unpick the initiative's focus on comparator drugs and analyse the rationale for attempting to achieve its objectives.

Comparator History

The concept of comparative drug trials led to the comparator supply industry being established about 15 years ago in order to source medicines for these studies for major pharma companies. Many barriers were set up at the time because the parallel trade industry was at its height, and most European manufacturers were paranoid about clinical trial supplies being leaked into the legitimate market within the EU.

Unfortunately, a number of companies behaved unethically and leaked products from trials into this open market, increasing the paranoia within the industry. At the same time, some major pharma firms placed products into the EU market in order to reduce their stock levels near to year end and thereby increase revenue.

In a large number of cases, Big Pharma – rightly concerned about protecting its patents – refused to supply any comparators to competitors. Comparator companies were forced to dip into the EU market, with the attendant risks of supply being compromised.

This market, which is well-regulated by the Medicines and Healthcare Products Regulatory Agency in the UK and other regulatory authorities throughout the EU, then had to face up to the concept of ensuring that counterfeit products did not enter the supply chain, and finally ended with EU legislation on the matter in the form of the Falsified Medicines Directive. This, however, is a smokescreen since there have been few instances of counterfeit products reaching markets within the clinical trials industry.

Unfair Competition

The issue of comparators then changed course, with a number of manufacturers deciding to centralise their clinical trial supplies to one department within an EU member country and directing all requests to that country. Some companies, albeit a minority, set up formal and informal master service agreements with all the major players in the comparator supply industry. Others decided to outsource distribution of certain comparators to one smaller strategic partner, ensuring a monopoly was achieved and making competitiveness unfair between comparator companies.

This period also saw the issue of price being addressed. There were varying prices, ranging between 10% and 80% increases on prices offered to the NHS in the UK. A finance director of one of the major pharma companies explained that they were "not interested in whether this is fair competition or overcharging, we will not be issuing any price lists and these prices will vary on a monthly basis".

These issues have contributed to the frustrations being felt by the pharma and comparator sourcing industries, and led to the TransCelerate initiative on comparator sourcing.

Cost Conundrum

Tufts Center for the Study of Drug Development highlighted most of these concerns in May 2013 in its study carried out for TransCelerate BioPharma (3). However, this research only really focused on what Tufts described as the following: “Concerns about competitive pricing, antitrust and collusion have prevented the precompetitive consortium concept from gaining momentum. Overall, patent expiries and challenges in R&D productivity make some companies reluctant to partner, as there is a perception that it may erode sales of marketed drugs faster.”

Herein lies the major problem facing pharma companies. By definition, they are financed and controlled by their shareholders, expected to increase profit margins, and ultimately create distributable profits to those shareholders. However, this cannot sit with the TransCelerate concept of collaborating together primarily with the objective of saving costs in purchasing comparator drugs – which is only one part of the cost of bringing a drug safely to market and benefiting the general population that suffers from the particular disease area.

Model Shortcomings

Despite its laudable aims, there are arguably a number of weaknesses in the TransCelerate model:
  • Industry organisations may choose not to cooperate and disclose information to each other
  • Companies will develop a strategy of longer lead times to ensure trials take place later and profit timespan can be lengthened
  • Any companies that currently refuse to supply clinical trial comparators could change policy as members of TransCelerate
  • Shareholder pressure for increases in profit margin and returns will raise costs to the NHS, small clinical trial research bodies and healthcare systems – further slowing research into new innovative molecules
  • Being a member of TransCelerate could encourage further anti-competitive preferential pricing between members and non-members
  • With many trials cancelled or curtailed, member companies will suddenly find higher stocks of products and potential for placing into grey markets in the EU and US, which is certainly not in the interest of a company’s profitability
  • The membership fee to join TransCelerate, subject to approval by the board, could well put off smaller biopharma companies which already have limited R&D budgets
  • In the long term, there will be delays in obtaining drugs for trials: the life of a patent starts as soon as a drug is discovered, and a single day’s delay getting it to market costs up to £6 million
  • Further lack of competition for comparator supply will inevitably push up prices and reduce competitiveness
Market Analysis

So how can industry solve this complex conundrum? Let us consider the opportunities to do so. Firstly, a new CRO forum is being opened this year, driven by the Association of Clinical Research Organizations, to provide a formal mechanism for the CRO industry to furnish input into the work of TransCelerate. This is a welcome move and will be an interesting concept, although it will not address the issues of supply.

The pharma industry has concentrated largely on costs and the control of product supply into the EU market. Surprisingly, it does not seem to have realised that the supply issues and prices are of its own making. Competition drives the marketplace, so pharma companies should look at their providers, large or small, and seriously examine the quality and confidentiality aspects of obtaining comparator drug products.

The sourcing of comparator drugs has always been a specialised area of procurement, and major pharma companies do not have that in-house expertise which can often be very expensive to establish and monitor. Comparator supply specialists have a primary mission to source comparator materials and work closely with manufacturers to protect their products and ensure their trials go ahead on time and to budget. Outsourcing in the industry, which allows major pharma to focus on their core competencies, represents only 45% of all companies. This is compared with 80% of all automotive companies – another hi-tech industry – so there is room for growth in outsourcing in this industry, especially with the pressure on costs.

Sensible Strategies

Furthermore, the industry needs to trust the marketplace and work with, rather than against, the intermediaries in the supply chain to ensure confidentiality of their transaction for the supply of comparators. Pharma has suffered from a paranoia about trading products in the EU market since the UK joined the EU, yet is happy to source comparators within this market if the price differentials are worthwhile.

For many drug companies, the issue of price is clearly a sensitive one; but they have to realise it is they who are setting the prices, and they as individual companies need to set strategies which are legal and fair to all parties. A number of sponsors have proceeded on the request for quotation process for finding preferred suppliers, which is somewhat cumbersome. Although quality issues are assessed, price is the deciding factor as it is primarily set up by procurement executives whose sole responsibility is driving prices down.

The pharma and comparator supply industries no doubt look forward to working closely with TransCelerate BioPharma and the new CRO forum to discuss the best way forward in this mission impossible, in order to deliver clinical trials in a more structured and transparent way.

References
1. Testing, testing – The nation is losing its grip on a valuable industry, The Economist, 26 July 2014
2. DTTL Global Life Sciences and Health Care Industry Group analysis of Thomson Reuters data
3. Visit: www.transceleratebiopharmainc.com/wp-content/uploads/2014/02/pharmexec-on-comparators-may-2013.pdf

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David Allen is Chief Executive Officer of comparator drug specialist, ADAllen Pharma. He was educated at the School of Pharmacy, University of London, and has been an active member of the Royal Pharmaceutical Society of Great Britain (RPSGB) for 30 years, serving as Vice President on two occasions and chairing a number of committees. David is a FRPharmS Fellow of the RPSGB. He has presented at numerous conferences and written articles for various industry magazines.
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