It has taken some time for the financial backers of new drug ventures to figure out what the Food & Drug Administration Amendments Act of 2007 might mean to the drug development process, but they are catching up quickly.

The venture capital firms are paying more attention to the need for post-marketing risk management programs from companies seeking funding and demanding that companies that want capital have a plan for how to deal with any Food & Drug Administration requests for post-marketing controls.

That new attention from the VCs will drive awareness of FDA’s new authority deeper into start-up companies as well as big pharma. The pressure form VCs is also likely to push adoption of post-marketing plans earlier in the drug development cycle.

Fifteen months into the new era of Risk Evaluation & Mitigation Strategies (REMS), the financial community is taking the post-marketing controls as a new fact-of-life in the drug development process.

FDA’s risk management planning is “becoming an increasingly important area” to venture capital reviews of drug development products, MPM Capital managing director Gary Patou told the Drug Information Association annual meeting on June 23.The VC firm says it is looking closely at drug development plans for both for projects nearing the end of clinical development and for early stage projects to see how well the sponsors have anticipated potential post-marketing control requirements.

FDA Says REMS Discussions Will Occur Earlier in NDA Process

MPM views risk management planning as crucial to avoiding delay risks during drug development. “This is now a fairly major source of slow-down at FDA,” Patou said. Drug developers must consider “the REMS program proactively for Phase III plans and regulatory review.”

FDA officials also see the need for pushing REMS planning back to an earlier stage in drug development. At a different session at the DIA meeting, top drug safety and NDA review officials said that the agency is aware that many of the first REMS discussions have taken place too late during the drug review process. Office of New Drugs Deputy Director Sandra Kweder said that understanding what has gone smoothly and what has presented unforeseen difficulty during the first REMS discussions will inform future dealings with NDA sponsors and allow future discussions to begin earlier in the development process. "We have told our staff, 'look, there are some situations where you can probably anticipate some of this stuff as early as Phase II,'" Kweder said.

The approval delays for many of the products getting the first REMS stemmed from the fact that the applications for those products were well into the late stages of FDA review before the agency had a chance to decide whether post-marketing programs are necessary. Eventually, agency management predicst, sponsors will be talking to FDA about the need for REMS much earlier in the drug development process.

VCs See Risks from REMS Now; There May Be Benefits in Future

MPM’s Patou spent a career in drug development with SmithKline (Avandia, Paxil, Augmentin) and Oscient (Factive) prior to joining the venture capital firm to vet the financial viability of start-up development plans.

From that long-term perspective in drug development, he sees REMS initially as a potential negative factor for sponsors and financiers to deal with during regulatory review. Asked if there are positive advantages to REMS from an investor’s point of view, he notes that some companies have begun telling the financial community that the REMS requirements can confer added commercial longevity to branded products.

There is more than talk going on in the area of REMS and exclusivity. Despite the specific language in the FDAAA legislation to try to prevent the REMS from becoming a block to future competitors, it is almost a certainty that some of the highly-restrictive versions of the post-marketing programs will develop into barriers to new competitors and complicate the route to market for generic products.

Take the developing prospects for generic competitors to Celgene’s Revlimid. A recent plaintive filing to FDA by potential competitor Dr. Reddy’s says that the generic company is finding it difficult to impossible to get drugs out of the restrictive system for comparative testing necessary for a generic approval. (See “The Wacky World of Generics: REMS Edition,” The IN VIVO Blog.)

The longevity advantage for products with restrictive post-marketing programs is also demonstrated by Roche’s acne product Accutane. The sponsor is finally giving up on the product after 27 years on the market in the U.S. and 22 years under restrictive distribution programs. The company said June 26 that it will stop marketing the acne product.

The increasing presence of generic competitors, the high cost and high hassle of the shared iPledge distribution program, and the continuing liability and political risks associated with Accutane have finally caught up with it.

The decision to drop Accutane, however, should not obscure the real lesson from the product’s history: the length of its commanding position in the severe acne market. It was able to stay on the market well past the exclusivity for other products of its generation. Accutane entered the US market the same year as Pfizer’s Feldene NSAID painkiller. The Roche product, in effect, got 13 more years of exclusivity than Feldene. Generics began sharing the iPledge program in 2005; Feldene lost patent protection in 1992.

Can REMS Planning Lead to Better, More Predictable, NDAs?

There are also the arguments that REMS planning by companies will actually help sponsors to focus more accurately on target patient populations when filing with FDA. “Those well-targeted NDA applications are still probably a way off into the future of the REMS era, but that is the type of development that could give VCs more certainty about the drug development path for projects that come through their offices in search of financial backing.

There is a tendency to think only of the REMS requirements as post-marketing controls. However, as FDA officials are beginning to point out, the post-marketing controls are based on data that drug sponsors are supposed to generate during the premarket drug development phase. Translation: FDA is going to expect more information on appropriate patients and uses of products in NDA packages.

If the VCs also start pushing firms to come up with a tighter assessment of what types of post-marketing controls will be needed earlier in the development process, then both the money lenders (VCs) and the commercial tollgate guards (FDA reviewers) will be asking for a significant restructuring of regulatory applications and looking for sponsors to define patient populations tightly and closely for rapid approvals.

That’s not the case now. For the time being, the VCs are looking primarily at the risk/delay side attached to REMS. Patou clearly defined the REMS situation among the standard factors that MPM expect s to see addressed by savvy and well-prepared funding applicants.

Clear, Comprehensive Development Plans, Comparative Testing

The REMS analysis joins more traditional elements that MPM expects to see in a well-considered drug development program.

“Comprehensive development plan”: MPM wants “to see that a company is really scoped out from where it is today all the way through Phase III to an NDA submission. It is very problematic for us if a company comes in and says we are out in Phase II and you don’t have to worry about what Phase III looks like.” The VC wants “a plan that is accurately costed, in terms of CRO (clinical research organization) cost, trial costs and realistic timelines.”

Early proof of concept: “We like development plans that give us an opportunity to de-risk investments through an understanding or getting some kind of signal of efficacy and safety early in development.”

Competitive target product profile: “Target product profile planning is absolutely critical now in the development process. It has obviously always been important but now it has been recognized by the regulatory agencies who want to see the target product profile in their earliest interactions. So give us a target product profile that we can understand how this fits in the marketplace.”

Health economic arguments: “We like plans that recognize the need to show some kind of health economic advantages. This is particularly true of hospital products where at the end of the day you will have to deal with a hospital formulary” or with managed care. “There needs to be a compelling story about how potentially this intervention is going to lead to some health economic advantage.”

Priority Review Status at FDA: “The metrics of those that get through on first time around are really quite strikingly better now than non-priority review products. We will surely invest in both based on their merits, but priority review is certainly attractive.”

Comparison to Standard Treatment: “We are increasingly seeing in our discussions with big pharma that they want companies to actively test out whether their product has an advantage over an existing product on the market – particularly if we are going to go directly against that product. Showing comparative data; showing some kind of benefit over an existing entrant is becoming increasingly important.”

Add post-marketing control plans to that list and it’s a pretty daunting path to funding and approval.

However, the focus on defining the appropriate patient population that will be driven by concern about REMS may end up driving back towards a more predictable regulatory process.