This monograph explains that small incremental improvements within drug classes provide important health benefits, especially for elderly patients. The monograph illustrates therapeutic advantages of these newer drugs in a class including: fewer side effects, improved safety and greater effectiveness; easier use, which facilitates compliance with prescribed regimens; and better tailoring to fit individual patient needs.
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The Value ofIncremental
PharmaceuticalInnovation
for OlderAmericans
by
Albert Wertheimer, PhD, MBADirector, Center for Pharmaceutical
Health Services Research, Temple University School of Pharmacy
Thomas W. O’Connor, Jr., PharmD, MBADirector, Continuing Professional Education,
Temple University School of Pharmacy
Richard Levy, PhDVice President, Scientific Affairs, National Pharmaceutical Council
Center for Pharmaceutical Health Services ResearchPhiladelphia, PA 19140
( 2 1 5 ) 707 – 7 787www.temple.edu/tuhs
■
Temple’s School of Pharmacy is located on the Temple University Health Sciences Campus and is recog-
nized for its high standards in research innovation and education. It is becoming known for the Center for
Pharmaceutical Health Services Research, which conducts externally-funded and academic research in the
areas of pharmacoeconomics, outcomes research, and health policy analysis. One year old, the Center has
already attracted research support from a number of multi-national pharmaceutical companies, trade asso-
ciations, professional societies, marketing research and advertising agencies
■
Since 1953 the National Pharmaceutical Council (NPC) has sponsored and conducted scientific, evidence-
based analyses of the appropriate use of pharmaceuticals and the clinical and economic value of pharma-
ceutical innovation. NPC provides educational resources to a variety of health care stakeholders, including
patients, clinicians, payers and policy makers. More than 20 research-based pharmaceutical companies are
members of the NPC.
■
The Value of Incremental Pharmaceutical Innovation for Older Americans 1
Incremental advances, rather than “breakthrough” discov-eries, constitute the basic mechanism of all technologicalinnovation. Newer drugs in a therapeutic class often have
fewer side effects, improved drug safety and effectiveness,and greater ease of use which facilitates compliance with prescribed therapeutic regimens. Product alternatives permittreatments to be better tailored to individual patient needs.In addition, new uses for existing agents are continually discovered and bring significant benefits to patients. Theseimprovements and discoveries are especially important foroptimal treatment of elderly patients, because their diverseresponse to medications requires individualized care. Abroad range of medicines provides physicians with a “toolchest” to treat each patient with precision and providesoptions when particular agents are ineffective or poorly toler-ated. New, incremental innovations are often less expensivethan existing agents in a therapeutic category, and some havebeen shown to save overall healthcare costs. Policies that fos-ter the development of agents representing incrementaladvances serve to stimulate research and broaden access toimportant therapies, while enhancing market competition.
Abstract
..
Understanding PharmaceuticalInnovationThe current policy debate over drug benefit reform
and improved access to needed medicines for seniors
has generated considerable confusion and mispercep-
tions regarding the nature and value of incremental
pharmaceutical innovation. For example, some critics
have suggested that since a majority of the new drug
applications approved by the FDA do not represent
“breakthrough” innovations, the value of these “incre-
mental” drugs is questionable, if not negligible.
In fact, incremental pharmaceutical improvements
provide important benefits to patients:
■ Fewer side effects
■ Improved drug safety and effectiveness
■ Greater ease of use, facilitating compliance
with prescribed therapeutic regimens
■ Product alternatives that permit treat-
ments to be better tailored to individual
patient needs
Incremental Advances andPharmaceutical InnovationThe process of continuous incremental improvement
is the predominant mechanism of technological inno-
vation and product development in most manufac-
turing and high technology industries. Incremental
innovation has been an especially important source of
progress in the pharmaceutical industry. The vast
majority of clinically important drugs developed over
the last 50 years have resulted from an evolutionary
process, involving multiple, small, successive
improvements within a pharmacological class.
Incrementally innovative medicines have a molecular
structure or method of action similar to that the first
drug to be approved in a given therapeutic class.
Another type of incremental innovation occurs when
the FDA approves a previously introduced com-
pound for a new clinical use. The benefits of these
medicines are striking because a broad class of drugs
enables physicians to treat with greater precision the
individual needs of diverse patients. In addition,
patients who fail to respond to one drug will often
respond to another agent of that class.
Incremental innovations in a therapeutic category are
often priced at a discount, since they must compete
with their predecessors for market share. The result is
less expensive alternatives long before generic copies
enter the market when the patent on the first-in-class
drug expires. In addition, incremental improvements
have been shown to save overall healthcare costs.
Incremental Improvements EnableIndividualized Treatment of theElderlyThe availability of multiple, similar agents in a drug
class is of particular value to the elderly. Variation in
response to medications is common among the elder-
ly, resulting in part from wide differences in numbers
and patterns of coexisting conditions, organ function,
frailty, cognitive ability, and capacity to perform
activities of daily living. Compared with younger
patients, the elderly are more likely to experience
atypical, enhanced, or adverse drug effects.
Individual physical and medical differences increase
as people age. As a result, multiple drug options are
necessary for safe, effective, and individualized thera-
py, especially for our fastest growing elderly popula-
tion—the oldest-old, age 86+ years. Therapeutic
options within classes of medications offer the elderly
needed choices among similar agents with somewhat
different pharmacological properties and side effect
profiles. Even choices of dosage form (tablets, cap-
sules, liquids) can benefit certain elderly patients,
such as those with stroke or Parkinson’s disease, who
may have difficulty chewing, swallowing, and meas-
uring or pouring liquids.
Controlled-release formulations, which have a long
duration of action and are taken only once or twice
Executive Summary
The Value of Incremental Pharmaceutical Innovation for Older Americans 3
4 The Value of Incremental Pharmaceutical Innovation for Older Americans
daily, offer many benefits for older patients. The
steady-state drug levels achieved by these formula-
tions reduce side effects while maintaining efficacy,
and the simplified regimen improves general compli-
ance. These advanced technology dosage forms can
allow greater independence for elderly residents in
long-term care facilities, who are often extremely frail
and predisposed to adverse drug effects.
Matching Patients’ Needs: MultipleAgents Provide PharmacologicalVariability and ChoiceOver the past decade, growing numbers of older
Americans have benefited enormously from incre-
mental improvements in medicines used to treat a
variety of chronic diseases. The advantages of these
agents, and of “pharmacodiversity” within therapeutic
categories, are illustrated by examples from the fol-
lowing important diseases and conditions.
Cardiovascular ConditionsThe many beta-blockers used to treat hypertension
and a variety of other cardiovascular conditions illus-
trate the advantages of a fully developed class of
drugs. These agents differ in potency, effects on the
nervous system, appropriateness for patients with
impaired kidney or liver function, potential for drug
interactions, efficacy in specific ethnic groups, com-
plexity of dosing, adverse effect profiles, and other
features. This array of differences enables customized
prescribing according to the patient’s specific needs.
Calcium channel blockers have rapidly gained impor-
tance in the treatment of hypertension, angina, cardiac
Parkinson’s disease, and others.2 The innovative track
record of U.S. research-based pharmaceutical and
biotechnology companies has made the industry a
world leader. Many observers attribute this success in
no small way to public policies that (1) support basic
research; (2) promote market incentives and rewards
for the huge, high-risk private sector investment
needed to research and develop innovative products;
and (3) ensure intellectual property protection for the
results of that investment.3
However, the current policy debate over drug benefit
reform and improved access to needed medicines for
seniors has generated considerable confusion.
Misleading claims have been made about the nature
and value of incremental pharmaceutical innovation.
Some critics, for example, have suggested that since a
majority of the new drug applications approved by the
FDA do not represent “breakthrough” innovations, the
value of these drugs is questionable or minimal at
best.4
Incrementally innovative medicines have a molecular
structure or method of action similar to that of the
first drug approved in a therapeutic class. Another
type of incremental innovation occurs when the FDA
approves a previously introduced compound for a
new use. Common misperceptions about pharmaceu-
tical innovation are well illustrated by the following
viewpoint quoted in the Financial Times of London:
The debate about pharmaceutical pric-
ing and innovation should focus on
how many companies provide real
breakthrough benefit for consumers.
The answer is: depressingly few. The
vast majority of drugs are simply bet-
ter or worse me-too copies of products
that went before them.5
In fact, as will be illustrated in subsequent sections of
this paper, incremental pharmaceutical improve-
ments provide important benefits:
■ Fewer side effects
■ Improved drug safety and effectiveness
■ Greater ease of use, which facilitates com-
pliance with prescribed therapeutic regi-
mens
■ Product alternatives that permit treat-
ments to be better tailored to individual
patient needs
Understanding the nature of technological innovation
in general and the value of incremental pharmaceuti-
cal improvements in particular (especially for the eld-
erly), is not an academic question. Public policies
can have a critical influence in either encouraging or
discouraging pharmaceutical innovation. For that
reason, it is essential that policy makers and the pub-
lic appreciate the importance of both incremental
pharmaceutical improvements and breakthrough
innovations for individual and public health.
The Value of Incremental Pharmaceutical Innovation for Older Americans 7
8 The Value of Incremental Pharmaceutical Innovation for Older Americans
Incremental Improvement is theBasic Mechanism of TechnologicalInnovationThe process of continuous incremental improvement
is the predominant mechanism of technological inno-
vation and product development in most manufac-
turing and high-technology industries.6 Small incre-
mental steps rather than sudden large jumps in tech-
nology through breakthrough discoveries usually
underlie progress. Over time, a succession of small
wins adds up to a big advance. According to experts
on the innovation process:
The cumulative effect of numerous
minor incremental innovations can
sometimes be more transforming and
have more economic impact than a
few radical innovations or ‘technologi-
cal breakthroughs.7
In the last 20 years the number of bits
on a [computer] chip has gone from
one to one million. Incremental
improvement has also given us better
resolution screens and quieter, better
quality printers, . . . jet engines with
double the thrust per unit weight of
two decades ago, plastics that can be
used at temperatures twice as high as
a decade ago, and incandescent light
bulbs that are 15 times as efficient as
Edison’s; in short, an array of prod-
ucts across the entire spectrum of
modern industry that are much better,
and often less costly, than those of an
earlier era.8
Most competition within an industry is
between variants of the same product
type, for example, automobile vs.
automobile, not automobile vs. truck,
and “where the United States has not
been competitive, we have lost, usually
not to radical new technology, but to
better refinements. . . . 9
It is by no means certain that the
increase in productivity over a longer
period of time is chiefly due to the
great inventors and their inventions. It
may well be true that the sum total of
all minor improvements, each too
small to be called an invention, has
contributed to the increase in produc-
tivity more than the great inventions
have.10
The value of incremental innovation in medical tech-
nology is illustrated by the case of computerized
tomography (CT) scanning technology. A detailed
economic analysis of the diffusion and use of succes-
sively improved CT scanners in U.S. medical facilities
estimated a social rate of return of about 270%.11
These gains accruing to consumers from successive
innovations in scanning technology greatly exceed
the amount paid for services.
Though the spotlight typically focuses on break-
through drugs, incremental innovation also has been
an important source of progress in the pharmaceuti-
cal industry. The vast majority of clinically important
drugs developed over the last 50 years have resulted
from an evolutionary process, involving multiple,
small, successive improvements within a pharmaco-
logical class.
Incremental Advances andPharmaceutical InnovationGreat strides in pharmacology and therapeutics have
resulted from small variations in the chemistry of
active molecules and the discovery of new indications
for previously introduced compounds.12 In fact, the
history of pharmacology is characterized by incre-
mental improvements in the safety, efficacy, selectivi-
ty, and utility of drugs within a given therapeutic
class. As a result, many pharmacological classes now
contain numerous agents. Although these agents are
molecularly similar, their therapeutic properties are
often substantially different. The benefits are striking
because a broad class of drugs enables physicians to
The Value of Incremental Pharmaceutical Innovation for Older Americans 9
treat with greater precision the individual needs of
diverse patients. The importance of gradual improve-
ments is often underestimated.
Incremental advances* have generally resulted either
from molecular modification of existing products or
from independent attempts by drug companies to
develop agents with a given pharmacological action.
Incremental innovations are often the unintentional
result of simultaneous research by several companies
on breakthrough products based on a new mecha-
nism of action; only one can be first to market and
the others become follow-on products.
Casual dismissal of new agents in a class as merely
me-too drugs assumes that these agents are essentially
identical. This is a misconception. The process of
incremental innovation is evolutionary, not duplica-
tive. The new agents resulting from this process can
offer advantages in terms of improved efficacy, better
patient satisfaction and compliance, and in some cases
greater cost-effectiveness.
To best treat individual patients, a wide range of
choices is required that includes both new and older
agents. One important reason for having multiple
drugs within the same pharmacologic class is that
patients who fail to respond to one drug will often
respond to another agent of that class.13
Since incremental innovations in a therapeutic class
must compete with their predecessors for market
share, they often are priced at a discount. The result
is less expensive alternatives long before generic
copies enter the market when the patent on the first-
in-class drug expires. For example, when follow-on
SSRI antidepressant medications and cholesterol-low-
ering statins were introduced in the mid-1990s, they
cost only about half as much as the pioneer products
in these classes did when they were first introduced
in the late 1980s.
A study by the Tufts Center for the Study of Drug
Development has shown that new drugs in a class are
often priced lower than existing agents within that
class14 (Figure 1). This study examined the pricing of
new entrants to drug classes and subclasses in eight
therapeutic categories, five of which represent com-
mon ailments of the elderly. The majority of new
drugs were launched at discounts relative to both the
class price leader and the average price in the class.
Six of the 20 drugs examined were priced at dis-
counts of 30% or more, and 13 were discounted by
at least 5%. Five of the drugs were introduced essen-
tially at parity with existing prices. Only two drugs
entered the market at a premium, but they were still
discounted relative to the price leader.15
Evolution of Drug TherapiesThe development of drug product classes is analo-
gous to the evolution of biological species.
Breakthrough therapies are analogous to new species,
and these are eventually replaced by improved relat-
ed compounds that have “evolved” to become more
effective, more selective and better tolerated. Most of
the top 10 prescription drugs sold in the United
States in 1999 represent incremental improvements.16
The advantages of diversity within groups of pharma-
ceutical products are similar to the advantages of bio-
diversity. “Pharmacodiversity” ensures the stability
and viability of the drug group. Competition exists
for survival in a changing environment, and lack of
diversity could doom a species or lineage to extinc-
tion. Within a drug class, products with varying fea-
tures compete for patients. Over time, the emergence
of new disease targets and refined patient subgroups
* Major innovations are generally defined here as the first agents with a particular clinical action (e.g., antihypertensives) orpharmacological action (e.g., beta-blockers) or the first with the same clinical effect as existing agents but with a differentmechanism of pharmacological action (e.g., diuretics vs. beta-blockers). Incremental innovations are subsequent (follow-on)modifications in molecular structure or dosage formulation having a similar, but not identical, pharmacological action (e.g.,beta-1 selective beta-blockers vs. nonselective beta-blockers) or a different absorption, metabolism, or excretion profile (e.g.,sustained action), as well as new clinical uses or indications for existing agents.
10 The Value of Incremental Pharmaceutical Innovation for Older Americans
expands the role of some agents, while other agents
are disadvantaged by newly discovered adverse
effects. Thus, those products that are best fit for their
environment dominate the marketplace; others may
become extinct; and still others maintain positions in
niche markets.
In addition, new uses for medicines can be discovered
as a result of extensive clinical experience, often many
years after introduction of the drug into medical prac-
tice. For example, the beta-blockers, which were ini-
tially used mainly to treat hypertension and other car-
diovascular conditions, now also play a valuable role
in treating glaucoma and promoting survival after
heart attacks. These new uses became apparent from
clinical observations made after the introduction of
the initial three beta-blockers, as well as from the
development of newer beta-blockers.17
In the period from 1996 to 1999, the FDA approved
an average of more than 100 new indications annual-
ly for existing drugs.18 Table 1 provides examples of
these important new applications, many of which
involve diseases of the elderly.
Incremental Improvements andIndividualized Treatment of theElderlyThe availability of multiple, similar agents in a drug
class is of particular value to the elderly. Elderly indi-
viduals are a diverse population requiring pharma-
ceutical care that is individually tailored to each
patient. Variation in response to medications is com-
mon among the elderly, resulting in part from wide
differences in numbers and patterns of coexisting
conditions, organ function, frailty, cognitive ability,
and capacity to perform activities of daily living.
Compared with younger patients, the elderly are
more likely to experience atypical, enhanced, or
adverse drug effects.19
Figure 1. New Drugs in Existing Classes Tend to be Priced at a Discount
important for elderly patients with cardiovascular,
thyroid, and other conditions that are aggravated by
beta-agonist actions.95
Policy ImplicationsThe examples above underscore the importance of
pharmaceutical innovation, as well as ensuring
patient access and choice among alternative drug
treatments. The adequacy of drug benefit programs
for the elderly and other chronic care patients
depends on the extent to which they cover the range
of drug therapies necessary for appropriate care.
Policies that foster the availability of unique, incre-
mental pharmaceutical innovations along with break-
through drug discoveries can have important implica-
tions for treatment outcomes and patients’ quality of
life, as well as ongoing research investment in new,
more effective medicines.
Such policies increase diversity and variability within
drug classes and thereby enable differentiated, indi-
vidualized therapy. The availability of a wide range of
choices is especially important for elderly patients,
who have the greatest need for individualized care
and are at greatest risk for compromised outcomes if
choices are overly circumscribed.
Incremental innovation within existing drug classes is
a major source of differentiated therapy. This source
will soon be complemented by important selective
therapies based on our rapidly growing understand-
ing of the molecular and genetic basis of disease.
Dozens of biotechnology firms are now conducting
R&D focused primarily on applying new scientific
knowledge and technology to diagnosing and treating
major diseases of the elderly, and their products will
further broaden the range of therapeutic options.96
The convergence of these two sources of individual-
ized treatment may result in unanticipated synergies
and major advances in preventing, treating, and per-
haps even curing many of the costly, life-threatening,
disabling chronic diseases and conditions that afflict
older Americans.
Policy makers need to grapple with the short-term
risks and benefits associated with current drug bene-
fit reform proposals, intellectual property protection,
and related issues. These policy decisions can have
long-term consequences for the availability of both
breakthrough and incremental pharmaceutical inno-
vations. This paper has focused on a major risk that
is generally not considered — the potential inhibition
of a substantial, underappreciated, but ultimately
vital component of advances in pharmaceutical tech-
nology — incremental innovation.
The Value of Incremental Pharmaceutical Innovation for Older Americans 21
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