Labeling Changes and Costs for Clinical Trials Performed Under the US Food and Drug Administration Pediatric Exclusivity Extension, 2007 to 2012

Abstract

Importance: Pharmaceutical manufacturers can receive 6 additional months of market exclusivity for performing pediatric clinical trials of brand-name drugs widely used in adults. Congress created this incentive in 1997 because these drugs were being used off-label in children without such trials.

Objective: To review updates to drug labeling and the cost to consumers of extending market exclusivity related to the pediatric exclusivity program.

Design: From government records, we identified 54 drugs that earned the pediatric exclusivity incentive between 2007 and 2012. We evaluated labeling changes from the pediatric studies. We then extracted trial details from clinical review documents and used industry estimates of trial costs on a per-patient basis to estimate cost of investment for trials (with a 10% cost of capital). To calculate the net return and cost to consumers during the 6-month exclusivity period, we estimated additional revenue for the 48 drugs with available information.

Main outcomes and measures: For each drug, we evaluated labeling changes and costs associated with pediatric trials under the Best Pharmaceuticals for Children Act and the cost to consumers of 6-month market exclusivity extensions.

Results: The 141 trials in our sample enrolled 20 240 children (interquartile range [IQR], 2-3 trials and 127-556 patients per drug). These trials led to 29 extended indications and 3 new indications, as well as new safety information for 16 drugs. Median cost of investment for trials was $36.4 million (IQR, $16.6 to $100.6 million). Among 48 drugs with available financial information, median net return was $176.0 million (IQR, $47.0 million to $404.1 million), with a median ratio of net return to cost of investment of 680% (IQR, 80% to 1270%).

Conclusions and relevance: Clinical trials conducted under the US Food and Drug Administration's pediatric exclusivity program have provided important information about the effectiveness and safety of drugs used in children. The costs to consumers have been high, exceeding the estimated costs of investment for conducting the trials. As an alternative, policymakers should consider direct funding of such studies.

Figure.. Effect of Varying Market Share Erosion, Cost of Capital, and Cost of Investment on Net Return (Cost to Consumers) and Ratio of Net Return to Cost of Investment

Each bar represents the net return (cost to consumers) and ratio of net return to cost of investment (y axis) achieved by adjusting a single variable in our analysis (x axis). Varying market share erosion between 50% and 80% changed the $176.0 million median net return from $114.5 million to $229.6 million. When cost of capital is varied between 15% and 5%, the median net return ranged from $150.4 million to $192.9 million. Varying clinical trial cost estimates (by using either 5× or 1× multipliers instead of 3×) produced a median net return of between $132.5 million and $209.5 million. When varying market share erosion between 50% and 80%, the 680% median ratio of net return to cost of investment ranged between 500% and 860%, When cost of capital is varied between 15% and 5%, the median ratio of net return to cost of investment ranged from 420% to 900%. Varying clinical trial cost estimates (by using either 5× or 1× multipliers instead of 3×) produced a median ratio of net return to cost of investment of between 370% and 2230%.