Demystifying 505(b)(2) Development: Navigating the Scientific, Regulatory, Legal, and Business Complexities
By Ed Allera - Chairman of The 5059B)(2) Platform
The conference was thorough and sobering because it looked at the interaction of the science, law, regulatory issues, and financing. To rework Tolstoy’s adage about families: each §505(b)(2) can make its sponsor happy, but only in its own way. The pathway cannot be viewed as a cheap fast way to get a product to market that payers will obviously adopt and result in a financial bounty.
A vast number of excellent product ideas, concepts, technologies, and patient needs exist that can fit into the (b)(2) category. Almost all require financing, either from the developer, the parent company, a trade partner, or outside investors.
Financing is the foundation for the (b)(2)’s. Investors want solid returns on their investments. Some are looking for as much as 10X. How do they achieve this return? For a start, the product must have solid intellectual property. Robust patent protection of the technology, drug product, and use is the minimal starting position. Delivery systems and combination product patents are important.
For some 3 years of market exclusivity alone is not enough. Orphan exclusivity is a huge plus. Mere bioequivalence studies or emphasis on bioequivalence are a negative. Alone they are not a value driver. The possibility of generic substitution by payers becomes an obstacle that must be overcome to attract investors. Investors are seeking sustainable value addition.
Nothing directly comparable exists abroad. A coalition has been formed in Europe to begin the process of creating something akin to the (b)(2)’s in order to obtain favorable reimbursement.
FDA is not a monolith. Each FDA reviewing division is unique. But in most cases, the reviewers does not view (b)(2)’s as deviations from the norm of product. They view them as novel or unique products for which they expect a comprehensive development plan and approach. Many (b)(2) sponsors fail recognize the importance of the first meeting and to prepare comprehensively for their initial FDA meeting. They operate on the faulty assumption that they are developing glorified generics and that the Office of New Drug Evaluation will cut them breaks to get a cheaper product on the market. Nothing can be further from the truth. A mistake by a reviewing division can have adverse consequences to the Agency. The biggest mistakes companies make involve the failure to understand the potential for safety issues to arise from the new product’s uniqueness- the safety paradox. ONDE is a high stakes poker game, and you are expected to be ready to play in that league when you make your initial approach. Thus extensive preparation is necessary, often in conjunction with a consultant who understands FDA’s language.
Payers are becoming more demanding of data proving that your product adds value and actually saves money. Theories are interesting, but “show me the money” is the mantra. Developing a reimbursement strategy as soon as possible in the product development plan is advisable to attract investors.
The distribution system has a significant number of players. Multiple options exist but properly pricing the product is vital.
There is a significant market for these products. But you must plan ahead. You must have a comprehensive story that sets out the development plan for the drug product, its path through FDA, and the value that it adds to the healthcare system. What clinical benefit is the product providing. The use of data gathered from all reliable sources, including artificial intelligence, can facilitate creative clinical trial designs that can make development and approval more efficient are on the horizon.
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