Most 1990s new drugs were modified versions of older drugs (NIHCM study)

Most 1990s new drugs were modified versions of older drugs (NIHCM study)

Two-thirds of the prescription drugs approved by the U.S. Food and Drug Administration (FDA) between 1989 and 2000 were modified versions of existing medicines, or identical to drugs already on the market; about one-third were drugs based on new molecules that treat diseases in novel ways.

And only 15% of drugs approved during the period were both based on a new molecular entity and deemed by the FDA as providing significant improvement over existing medicines.

These findings come from a study by the National Institute for Health Care Management (NIHCM) Foundation, which also found that the bulk of the increase in spending on new prescription drugs between 1995 and 2000 was on medicines the FDA did not designate as priority for review.

The study's findings were cited in an hour-long ABC News Special on prescription drugs issues: "Peter Jennings Reporting -- Bitter Medicine: Pills, Profits and the Public's Health", which aired Wednesday, May 29.

The study found that the FDA approved 1,035 drugs in the period 1989 to 2000; 361 (35%) were new molecular entities -- drugs based on new chemicals acting in new ways to treat a disease. The remaining 674 drugs (65%) contained active ingredients that were already available in previously approved drugs.

The FDA further subdivides the prescription drugs it reviews into "priority" and "standard" categories.  Priority drugs are put on a swifter review track because they are deemed -- based on the available research -- to provide significant clinical improvement over existing medicines. The NIHCM Foundation analysis of FDA data found that of the 361 drugs categorized by the FDA as new chemical entities between 1989 and 2000, 153 (15% of the total 1,035 drugs approved) were designated as "priority" drugs; the remaining 208 were put on a standard review track.

Of the 674 drugs that did not contain a new chemical entity, 583 received a standard rating for review and 91 received a priority rating. Thus, overall, between 1989 and 2000, 24% (244) of the 1,035 drugs the FDA approved were categorized as "priority" drugs with promise of significant improved efficacy and/or safety.  And 76% (791) were categorized as standard drugs.

"Highly innovative drugs are rare," says Nancy Chockley, president of the NIHCM Foundation. "This does not mean that many of the incrementally modified and improved drugs the FDA approves don't benefit patients.  Many are of enormous benefit. But our findings, based on the FDA's own classification systems, puts into perspective the dynamics of pharmaceutical innovation. The plain fact is that many new drugs are altered or slightly changed versions of existing drugs and they may or may not be all that much better that what's available already.  Consumers should be more aware of that."

The study found that as the 1990s progressed, the number of incrementally modified drugs (IMDs) the FDA approved grew at a faster pace than drugs based on new molecular entities (NMEs). In the six-year period 1995-2000, the FDA approved 304 new standard incrementally modified drugs versus 168 in the period 1989-1994, an increase of 81%. By contrast, approvals of priority new molecular entities increased by just 10% from 73 between 1989 and 1994 to 80 between 1995 and 2000.

Of the 219 more IMDs and NMEs approved in the period 1995 to 2000 compared to the period 1989 to 1994, 156 (71%) were incrementally modified drugs and 63 (29%) were new molecular entities.

The study also examined trends in pharmaceutical spending on innovative versus incrementally modified drugs from 1995 to 2000.  In the retail marketplace for drugs, spending on prescription drugs doubled from $64.6 billion in 1995 to $132 billion in 2000. Of this $67.4 billion increase, $44.0 billion can be attributed to increased spending on drugs approved by the FDA between 1995 and 2000. (The remainder was spent on drugs approved before 1995).  Increased spending on standard-rated medicines accounted for 67% ($29.3 billion) of that increase.  Increased spending on priority-rated drugs with new chemical ingredients accounted for 33% ($14.7 billion) of the $44 billion increase in spending.

The study found that new drugs of all types were priced much higher than the older drugs they replaced.  In 2000, the average retail price per prescription for drugs approved before 1995 was $37.20.  In contrast, priority-rated new molecular entities cost an average $91.20 per prescription. New standard-rated incrementally modified drugs cost an average $65.07 per prescription. And priority-rated incrementally modified drugs cost an average $142 per prescription (primarily because of the inclusion in this category of some very expensive HIV/AIDS drugs).

The study, "Changing Patterns of Pharmaceutical Innovation", attributes the trend it identifies to several structural factors in the industry. In particular, modifying an older drug enables a brand drug company to extend intellectual property protection on it. These extensions, in turn, enable a company to delay generic competitors and maintain a high price for an aging product.

The NIHCM Foundation is a non-profit organization whose mission is to promote health care access, management and quality.

Posted: June 2002

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