Regulatory aspects in biotechnology

¶ … market is based upon the principle of free will. Companies choose what path they wish to follow. Right now, many firms are finding it easier to get 505 (b) (2) approvals and let the marketing departments sort out how to make money from that. While it is true that there is a potential trap in that these types of approvals motivate companies in a certain direction, that does not preclude the development of entirely new drugs. Indeed, in a rational market if companies cannot make money because products are too similar to one another, they will be forced to adopt a strategy of differentiation. Michael Porter wrote that companies must either compete on a cost leadership basis or a differentiated basis, so only those companies with economies of scale can choose the former. Companies will therefore always need to balance new drug applications with 505 (b) (2) applications in order to ensure profitability.

I think that the trend towards 505 (b) (2) applications that we are seeing right now reflects more on the rediscovery of this application stream as a third way. The value of such filings is apparent to companies, and we are seeing a short to medium term rush. Over the long run, however, useful applications will settle to an equilibrium level. I even thing that innovation can be spurred, since firms will work harder to discover, patent and market all the potential applications of their drugs, before other companies do.

2. There are two things worth considering when examining the issue of globalized trials. The cost savings may well be overstated. Particularly if the FDA must approve the trial, the same (American-based) talent will be required to execute the trials, and they will need to be sent overseas to do so. Using foreign researchers can address the cost issue, but for the most part those cost advantages are already dissipating as Eastern European and Asian economies become modernized. Their people are less willing to take money to be a test subject -- thereby eliminating much of the ethical quandary. Eventually, moving into ever cheaper nations will also result in ever less educated people and less experienced researchers. The FDA will need to draw a line in the sand -- the goal of clinical trials isn't to save money, it's to test a drug's effectiveness.

Janet Rehnquist recommended that the FDA "exert leadership" on this issue. The complexities of globalized clinical trials do not lend themselves to half-hearted regulatory efforts. The problem with taking a more active role is that the FDA begins to become the regulator of regulators, which casts a wider net on its responsibilities than was ever intended. There is cause to want the FDA to consider the practical concerns, much less the ethical ones, in scaling back the reliance on non-U.S. clinical trials.

3. We agree that monitoring online marketing of drugs is going to be difficult. But since the Internet is the main source of information for a lot of people -- 91 million Americans a year look for health information online. With a pent-up demand among consumers and the industry stakeholders, it looks like the FDA is going to be pressed into action. Up until now, they have provided very little guidance on the matter.