Rx: Innovation

The uphill climb from discovery to drugstore

Stephan Schmitz

The chances are one in a million.

For the one, that can be good or bad. If you're an inventor trying to patent a brand-new idea, being one in a million is probably good; if you're a health care patient, it's almost certainly bad. For patients with acquired hemophilia A, the odds were not in their favor.

Acquired hemophilia A is extremely rare and potentially fatal. The body's immune system suddenly begins to attack the clotting factor in the blood, inactivating it and causing uncontrolled bleeding into the muscles, skin, and soft tissue. Although the condition is most commonly seen in elderly patients after surgery or trauma, or in postpartum women, doctors can pinpoint a cause in only about half of the cases.

In the early 1990s, Emory hematologist Pete Lollar and his research team were studying coagulation when they happened to discover a new, modified version of the very thing patients with acquired hemophilia A are missing— factor VIII, a blood-clotting protein. Lollar pursued the unexpected finding until it eventually led to a new treatment for the rare disease.

Start Your Engines: Todd Sherer (above, top), who heads Emory's OTT program, knows firsthand how few discoveries make it to market.

Ann Borden

The drug Obizur was approved by the Food and Drug Administration (FDA) in 2014 with "orphan drug designation," a special status established by the FDA to facilitate the development of medications for rare diseases. Still, it reached hemophiliac patients more than twenty years after Lollar—now the Hemophilia of Georgia Professor of Pediatrics in the Aflac Cancer and Blood Disorders Center at the School of Medicine and Children's Healthcare of Atlanta—made the original discovery and filed an invention disclosure.

"The story is one of perseverance on the part of the inventors, the companies, and Emory itself," says Todd Sherer, executive director of Emory's Office of Technology Transfer (OTT) and associate vice president for research. "Its long and twisting road from discovery to market is a prime example of how complex it can be to bring a drug to market, but also how great an impact research can have on patients' lives."

In recent decades, changes in the law and research funding trends have strengthened the ability of university-based researchers like Lollar to pursue discoveries that have the potential to improve—and even save—lives around the world.

Before 1980, federal research funding contracts and grants stipulated that any new discoveries or inventions made using federal funding, regardless of where the inventor worked, were technically owned by the government. The system resulted in patents getting all piled up with no place to go; according to a 1978 report by the US Government Accounting Office, the government had accumulated 28,000 patents, but fewer than 5 percent of those were commercially licensed.

But the 1980 Bayh-Dole Act, or Patent and Trademark Law Amendments Act, changed the game by allowing universities, small businesses, and nonprofit institutions to pursue ownership of intellectual property arising from government-funded research. The law requires that universities share royalties from any new technologies or therapies directly with the inventor—and also that they reinvest the balance of proceeds back into scientific research and the institution's educational mission.

For university-based researchers, already motivated by the heady possibilities of scientific discovery, Bayh-Dole added a new level of incentive and urgency: not only could they and their universities receive profits from their work, the research and development process could be accelerated so that their findings might start helping people sooner. The law also has led to big changes in the pharmaceutical industry, including multiple international mergers and a gradual shift of investment away from internal research enterprises in favor of partnerships with research universities and the growing biotech industry.

The ripple effect of this sea change made federal research funding more critical than ever for universities like Emory, which conduct the early stage, bench science research that big pharma companies hesitate to invest in because it's not likely to be immediately profitable. But even as efficiencies and opportunities have increased along the development pipeline, federal funding has gone the other way.

Pharmaceutical companies have stepped in to help narrow the gap, but attracting private investors who are willing to gamble on early stage biotech research from university labs is highly competitive. Adding to the challenge is the mounting concern over high drug prices once they do reach the pharmacy shelves.

Start Your Engines: George Painter, CEO of DRIVE, says it is critical to fuel the machine of drug discovery, including universities, startups, and private industry.

George Painter 77PhD is chief executive officer of Drug Innovation Ventures at Emory (DRIVE), a nonprofit organization created in partnership with the university to help accelerate the development of novel therapies for viruses that are currently untreatable, and the former executive vice president of research and development at the Emory-launched startup Triangle Pharmaceuticals.

"Despite the anger over pricing, in the past twenty years, there has been unprecedented, unparalleled partnership with universities and innovation in the pharmaceutical industry," Painter says.

Painter estimates that it costs about $802 million over time to bring a new drug to market. Since the 2008 financial crash, research universities have faced a dwindling pool of National Institutes of Health (NIH) funding for basic science, as well as a withdrawal of venture capital from biotech companies. Between 2003 and 2015, budget cuts and sequestration led to a 22 percent decline in NIH research funding. The past two years saw boosts from Congress that reversed that trend, but there's evidence that there could be significant—and much more abrupt—cuts in the next two years.

"As NIH funding has declined and there has been more commercial funding, costs have been going up. There is extraordinary downward pressure on researchers to be more productive for less money, and then innovation shrivels and the whole machine breaks down," he says. "But there is a magic to this formula, and we need the funding to allow it to continue."

Market Research

Established in 1985, Emory's Office of Technology Transfer has helped launch thirty-six pharmaceutical startup companies, and its licensees have developed nineteen drugs approved by the FDA, with more in development and testing. The OTT currently has 577 active technologies in the drug discovery area.

Outside OTT director Sherer's office, a display box holds an assortment of objects with placards describing some of the fifty-one inventions and drugs that have been developed and brought to market thanks to university research. Those successes are only a fraction of the discoveries reported to the office by Emory faculty, researchers, and graduate students each year.

Because Emory owns the rights to intellectual property created using university funding, it's up to the OTT to decide whether the university will pursue a patent on any given innovation. That's a tricky business, given that even the most exciting breakthrough discoveries don't emerge from the lab in the form of a pill ready to be swallowed.

"We make the findings or discover the molecule that is thought to play a role in signaling that is thought to play a role in a certain disease," Sherer explains. "Only about 30 percent of the ideas that come to us get licensed. At the point when the university is trying to market these discoveries, the risk is so incredibly high and the value is so incredibly low that we are lucky if we find one investor who is interested. Every university has far more ideas and findings than there is money for or outside interest in pursuing. Nobody knows the cost of lost innovation."

Supply and Demand: High launch prices set by companies for new drugs are often a tradeoff for innovation in a costly, market-driven system, says David Howard.

Kay Hinton

The pricing problem doesn't help. On the bright side, the US has led innovation in the pharmaceutical industry since the 1970s, generating more novel drugs than any other country—and dramatically so since 1991. But US residents also pay higher prescription drug prices than any other nation, and public outcry over the cost of medications has spurred debate in the media and government over how to control drug costs. That intensified scrutiny of the pharmaceutical business has the potential to stymie investment in the basic research—such as that happening in Emory labs—that can lead to new medications.

"If you add anything further that decreases the potential return on that investment, it drives investors away," Sherer says. "Saying you are going to put a limit on how much something can cost creates uncertainty, and investors don't like uncertainty."

As the interaction between universities and pharma companies has grown more direct, it's not surprising that academic research programs have begun to show increased interest in the whole length of the drug development pipeline—and ultimately, how effectively their discoveries are used to help people.

Last fall, the Emory Center for Ethics hosted "Prescribing Price: The Ethics, Science, and Business of Drug Development and Pricing," a one-day conference that brought together experts in research, technology transfer, public policy, government regulation, health care, and business for a multifaceted examination of the factors that drive drug pricing.Even among the experts, opinions varied widely.

The formula for how prices are set is as complex as the science behind any drug on the market. Myriad forces are at play, including research and development costs, demand, marketing expenses, and discounts that the manufacturers know will be negotiated by government and business entities.

Getting Real: Law Professor Joanna Shepherd says government price control measures could put a damper on investment in research.

Kay Hinton

Federal regulations on pricing negotiation could add to drug costs in the long run, says Professor Joanna Shepherd, who specializes in the legal and economic issues of health policy at Emory Law.

"Economic principles predict that price controls result in drug shortages: at a below-market price, the demand for drugs exceeds the amount of drugs that manufacturers are willing to sell," she says. "In addition, price controls may prevent many companies from earning profits sufficient to offset their research and development costs or the risk of failures. This could slow innovation, negatively impacting long-term health outcomes."

How drugs have historically been priced has more bearing on the cost of a new drug than research and development or any other cost, says David Howard, associate professor of health policy and management at Rollins School of Public Health.

"This was true five to ten years ago, and it is today—manufacturers are pushing up the boundaries of acceptability and tolerance in drug pricing. What is considered a high price is redefined upward each time," Howard says.

And yet, there is little resistance from patients when the pharmaceutical industry wants to set a high price for an FDA-approved medication, because the demand for certain drugs is so urgent.

"The cost of cancer drugs is high, but that reflects the proclivity of patients and physicians to demand treatments despite the very small benefit they see in relationship to cost," Howard says.

Considering that only about 10 percent of drugs that begin clinical trials end up being approved by the FDA, pharmaceutical companies also factor in the costs of all the product failures they have to absorb in pricing decisions for successful drugs, Shepherd adds.

"If only 10 percent of drugs are approved, and only 20 percent of those are able to recoup costs, then only one in fifty drugs developed by brand companies are 'winners' that earn positive profits," she says. "Drug companies will not spend millions and billions of dollars developing drugs if they cannot recoup the costs of that development."

By far, the most successful drug invented at Emory is emtricitabine (trade name Emtriva—with the "Em" for Emory). In July 2005, Gilead and Royalty Pharma bought the university's royalty interest in emtricitabine for $525 million—money that was reinvested in Emory's research programs and facilities.

Developed at the Emory startup Triangle, emtricitabine is among the most commonly used HIV/AIDS drugs in the world, taken in some form by more than 94 percent of US patients on HIV therapy and by thousands more globally.

If that "winner" is Emory's one in a million, more than a million people with HIV are winning, too.

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