7 ms·

“Pay for success” contracts – a model to develop new therapies from old drugs

57 points by savvak 5y ago

chris_va 5y ago
I am not sure why this is written as if drug repurposing is an under-explored concept. Repurposing generics has becoming increasingly popular, because the clinical trial risk is much better in phase 2/3 (where most of the money is lost) than for novel compounds. Combine that with FDA fastrack designation for orphan diseases, and it's become quite the popular space for innovation. Even some of the papers "cited" by this article contradict it. > This means that if one company pays for the expensive clinical trials showing that a specific treatment protocol for an off-patent drug works in a new indication, they cannot prevent others from “free riding” on this valuable information, which is a “non-rivalrous non-excludable” public good once it is published online This isn't true. Composition of matter patents are not the only patents. If so, we wouldn't see generic repurposing at all, and obviously that isn't correct.
- 1vuio0pswjnm7 5y ago
  How do we charge royalties on method of use patents. Do we use prescription data from pharmacies. For the purposes of calculating royalties how do we prove whether and how anyone in posession of a drug actually uses it.
  - savvak 5y ago
    That's the point, under the current system you can't enforce a royalty. You could theoretically use e-medical records to detect infringement, but you can't build a business case on suing individual patients and doctors taking an old drug for a new indication. You could outlaw prescribing drugs off-label but that isn't politically feasible. Pharmacies and doctors are encouraged to automatically prescribe low cost generics where available vs a branded drug, by reference to the INN.
- pkaye 5y ago
  Colchicine is a very old drug used to treat gout and other diseases which went into orphan disease patent because some company figured out proper dosage. Now the drug became expensive in the US but everywhere else benefited by knowing the proper dosage and no increase in price. I'd rather American consumers not end up solely paying for all these costs.
- savvak 5y ago
  As noted above, according to research, the chance of a drug getting a new indication falls to almost zero soon after generic entry - see https://pubmed.ncbi.nlm.nih.gov/33397471/ https://pubmed.ncbi.nlm.nih.gov/33397471/. This is because you cannot enforce a monopoly price if there is generic competition: even if you use a method of use patent over the composition of matter, you can't stop patients and doctors prescribing the "old" drug off-label - suing patients and doctors is not commercially realistic. Therefore, there is a well-recognised market failure (see https://www.healthaffairs.org/do/10.1377/hblog20140306.037370/full/ https://www.healthaffairs.org/do/10.1377/hblog20140306.03737...) that needs to be addressed with new market incentives or financial models e.g. pay for success contracts.
  - chris_va 5y ago
    I read that paper the opposite way. 32% being repurposed seems like a pretty high number. I cannot reconcile these articles with the high investment in repurposing I see in pharmaceutical startups.
    - savvak 5y ago
      The analysis in the paper shows that once a drug goes off-patent its chance of being repurposed approaches 0%. There is repurposing of on-patent drugs while a monopoly profit can be enforced. That's not the point. The point is that information about which off-patent drugs work in new indications is the definition of a non-excludable and non-rivalrous public good. There is no way to enforce a monopoly profit if people can take the generic drug off-label or have it compounded in a pharmacy. Therefore, there is a tragedy of the commons preventing private investment to unlock this generic drug repurposing innovation (unless someone can come up with a new patented formulation that will not be subject to off-label competition, which is not always possible). A pay for success contract is a solution to this problem. You can also enforce differential pricing for repurposed generic drugs while preventing off-label competition using e-medical records, but this is also another kind of pay for success mechanism (like an advance market commitment or the agreement to pay a minimum order of the Covid vaccines under Operation Warp Speed). However, it might not be politically and commercially feasible to prevent off-label use, especially for generics which are widely prescribed for other off-patent indications.
jawns 5y ago
My wife and I have been donating to Cures Within Reach https://www.cureswithinreach.org https://www.cureswithinreach.org, which funds repurposing research. This is especially important for rare conditions that are unlikely to ever see robust R&D purely on the basis of the size of the market.
- savvak 5y ago
  Bruce Bloom who was the former CEO of Cures within Reach was one of the first people to propose using pay for success financing (i.e. social impact bonds) to repurpose generic drugs, although their focus was on rare disease (see https://ssir.org/articles/entry/repurposing_social_impact_bonds_for_medicine https://ssir.org/articles/entry/repurposing_social_impact_bo...). More recently in 2016, Findacure in the UK tried to get NHS backing but this was derailed due to Brexit (see http://findacure.org.uk/the-rare-disease-drug-repurposing-social-impact-bond/ http://findacure.org.uk/the-rare-disease-drug-repurposing-so...). The mission of the charity https://crowdfundedcures.org https://crowdfundedcures.org is to raise awareness and get payer backing of a generic drug repurposing pay for success contract in a specific disease class e.g. Covid-19, pancreatic cancer, Alzheimer's, Crohn's disease, MS, longevity, etc
gumby 5y ago
There is a specific regulatory pathway for this purpose written into law: section 505(b)(2) of the FDCA. It lets you use existing safety data from the approved NDA. I have used this pathway myself and the FDA is quite comfortable with it. I don't really understand the fuss. Nor do I understand why the DAO matters. https://www.fda.gov/regulatory-information/search-fda-guidance-documents/applications-covered-section-505b2 https://www.fda.gov/regulatory-information/search-fda-guidan...
- ISL 5y ago
  A normal contract would surely suffice. "The United States Government will give $1B to the first company or person to demonstrate a safe and effective treatment that halts or reverses the effects of Progressive Supranuclear Palsy[1] using treatments with existing FDA approval." [1] My Dad has it. It sucks. 0/10 do not recommend. https://en.wikipedia.org/wiki/Progressive_supranuclear_palsy https://en.wikipedia.org/wiki/Progressive_supranuclear_palsy
  - savvak 5y ago
    Yes, this would be a pay for success contract. And a "prize" or outcome payment of $1b would not be necessary. By using a generic drug, you can enter into phase 3 trials immediately, and it can cost less than $10-15m to obtain regulatory approval (100x cheaper than developing a new patented drug over 10-15 years) - see https://dndi.org/wp-content/uploads/2019/10/DNDi_ModelPaper_2019.pdf https://dndi.org/wp-content/uploads/2019/10/DNDi_ModelPaper_.... See Figure 1 on page 17: Out-of-pocket costs per stage of development for eight projects in DNDi’s portfolio.
    - gumby 5y ago
      You likely don’t need a standard phase three trial. If you are within the phase 1 safety dosages (that’s the data you’re using under 505(b)(2) anyway) you can just do a smaller study. Power it as high as you want/need. Typically any physician can do such a study. Doctors can read your paper on the study and decide whether to use the therapy you studied.
bserge 5y ago
It's amazing how after all that work they leave it to some uncaring, overworked and underpaid people to actually give it to those who need the medication. Resulting in many not getting any.
thayne 5y ago
What if we also removed (or increased limitations on) patent protections? Then the incentive to find a cure would be the same regardless of if it is a new drug, a new therapy using an old drug, or uses an unpatentable chemical/herb/etc.
- savvak 5y ago
  If a pay for success model could provide more QALYs at a lower cost than patented drugs, there would be no need to limit patent protections: the model would simply outcompete the patent system. Payers would instead "buy" successful RCT data for repurposed off-patent drugs via pay for success contracts instead and potentially save trillions of dollars as a result. In my view, there is a role for new patented drugs, but this model will reduce pharma's ability to game the patent system via "evergreening" (e.g. releasing a slightly tweaked formulation of a drug just prior to expiry of the old generic and trying to get doctors to switch to new formulation using excessive marketing). It would give payers another option other than patented drugs to buy successful RCT data.
rscho 5y ago
These guys at UAB [1] are doing amazing things with evidence-based drug discovery and repurposing, using logic programming [2]. Fund them! They're the future! [1] https://www.uab.edu/medicine/pmi/ https://www.uab.edu/medicine/pmi/ [2] https://github.com/webyrd/mediKanren https://github.com/webyrd/mediKanren
tpoacher 5y ago
Nice idea in principle, but the article conveniently sidesteps how "success" is defined, which I could easily see being the bigger problem here. If success is a particular percentage of outcomes after 10 years in a trial, maybe that's not that attractive to an investor.
- deleted 5y ago
  [deleted]
- savvak 5y ago
  Quoting article verbatim in third paragraph under heading "Solution — using pay for success contracts to repurpose off-patent drugs": Outcome payments are disbursed to the fund by payers upon success of a particular clinical trial. Payment amounts are determined based on savings generated for the payer (e.g., a national health service or private health insurer) which ensures the model is scalable, using standard pharmacoeconomic assessment (e.g., $50k per QALY, or Quality-Adjusted-Life-Year or $100k per additional prevented hospitalisation in treatment arm vs usual care) that considers the incremental cost savings due to showing efficacy of this new off-patent treatment in RCTs versus cost for standard usual care My preference is to have a payment for a specific robust outcome like per prevented hospitalisation in the treatment arm of an RCT. For most patented drugs, this would be a very high cost (e.g. if 50 patients treated to course of patented drugs costing $50k each for one prevented hospitalisation, society would be paying $2.5m per successful outcome under patent system). This is also more closely linked to how outcome payments for social impact bonds are determined (e.g. $5k per homeless person given a job and put in a home or per prisoner that is given a job and stays out of prison for one year). Regarding ROI for impact investors, it should be a market rate (5-10% p/a) paid over a period of time (e.g. 5 years) and subject to phase 4 surveillance trials showing the safety and efficacy of the off-patent treatment protocol is maintained over time. The impact investment opportunity can be made more attractive (above market rates of return) if payers such as govts, health insurers or philanthropy also provide matched funding without an expectation of return - effectively acting as follow on investors but relying on the impact investors to lead the round and pick the winners (promising off-patent repurposing RCTs to fund) instead of traditional direct grant funding where payers take on all the risk of RCT failure. I also note that it is over 100x cheaper to repurpose generic drugs, so the cost per QALY should be much more value for money (e.g. $1k per QALY) and would outcompete the patented drugs. Open Source Pharma Foundation are working on a Phase 3 trial of a repurposed off-patent vaccine - https://www.fastcompany.com/90498448/how-open-source-medicine-could-prepare-us-for-the-next-pandemic https://www.fastcompany.com/90498448/how-open-source-medicin.... Old vaccines can provide broad spectrum protection by boosting innate immunity - see https://www.pnas.org/content/118/21/e2101718118 https://www.pnas.org/content/118/21/e2101718118. The lack of private incentives to repurpose off-patent medicines is a massive missed arbitrage opportunity that could generate trillions of dollars in value for society, if only it could get payer backing.
smeej 5y ago
This question is tangential, but why do you think it is that there are so many people in the "new philanthropist" class who do have the money to fund such research privately, but instead partner with the big pharma companies? If the costs for these types of solutions can be SO much lower, it surprises me that there isn't a more robust subculture working on it with money they've made when their last tech startups went public. Almost everybody knows somebody with a rare or expensive-to-treat disease, right? Is it just too early? Are we only just learning how to figure out exactly which mutations cause exactly the wrong protein production errors in the cells, and then can assess the effects of off-patent generics to treat them? Or is there more to it than that? I only learned about Medikanren[0] a couple weeks ago, and since this isn't my field, immediately felt like I was behind on some very important knowledge, and I'm fascinated by the thought of trying to figure out how to address this problem by thinking this far outside the big pharma box. It reminds me of FOSS in that the funding challenges may be similar, but for treating disease. [0] https://github.com/webyrd/mediKanren https://github.com/webyrd/mediKanren
- savvak 5y ago
  Currently, private pharmaceutical drug development is seen through the patent lens because there is no other way create a scalable business model. What is needed is to convince payers (e.g. health insurers, govt, or philanthropy) to back pay for success contracts and agree to purchase valuable off-patent RCT data rather than just RCT data involving a new patented drug which is capable of being monopolised. Without that, there is no market and no way to leverage this arbitrage opportunity. This would allow tools such as Medikanren and other AI and personalised medicine approaches to drug discovery to be properly utilised. Doctors need RCTs to know which drugs are safe and effective and unfortunately, those RCTs are expensive, which creates a market failure if there is no ROI possible with patents. You can't solve a market failure with direct public funding, it's too inefficient. You need to update the social contracts to create a new market. You are correct, it's the same "public goods" problem for FOSS projects, but for medicines, and uses a "bounty" model to solve it, but has not been implemented to date.

57 points by savvak 5y ago

I am not sure why this is written as if drug repurposing is an under-explored concept. Repurposing generics has becoming increasingly popular, because the clinical trial risk is much better in phase 2/3 (where most of the money is lost) than for novel compounds. Combine that with FDA fastrack designation for orphan diseases, and it's become quite the popular space for innovation. Even some of the papers "cited" by this article contradict it. > This means that if one company pays for the expensive clinical trials showing that a specific treatment protocol for an off-patent drug works in a new indication, they cannot prevent others from “free riding” on this valuable information, which is a “non-rivalrous non-excludable” public good once it is published online This isn't true. Composition of matter patents are not the only patents. If so, we wouldn't see generic repurposing at all, and obviously that isn't correct.

1vuio0pswjnm7 5y ago
How do we charge royalties on method of use patents. Do we use prescription data from pharmacies. For the purposes of calculating royalties how do we prove whether and how anyone in posession of a drug actually uses it.
- savvak 5y ago
  That's the point, under the current system you can't enforce a royalty. You could theoretically use e-medical records to detect infringement, but you can't build a business case on suing individual patients and doctors taking an old drug for a new indication. You could outlaw prescribing drugs off-label but that isn't politically feasible. Pharmacies and doctors are encouraged to automatically prescribe low cost generics where available vs a branded drug, by reference to the INN.
pkaye 5y ago
Colchicine is a very old drug used to treat gout and other diseases which went into orphan disease patent because some company figured out proper dosage. Now the drug became expensive in the US but everywhere else benefited by knowing the proper dosage and no increase in price. I'd rather American consumers not end up solely paying for all these costs.
savvak 5y ago
As noted above, according to research, the chance of a drug getting a new indication falls to almost zero soon after generic entry - see https://pubmed.ncbi.nlm.nih.gov/33397471/ https://pubmed.ncbi.nlm.nih.gov/33397471/. This is because you cannot enforce a monopoly price if there is generic competition: even if you use a method of use patent over the composition of matter, you can't stop patients and doctors prescribing the "old" drug off-label - suing patients and doctors is not commercially realistic. Therefore, there is a well-recognised market failure (see https://www.healthaffairs.org/do/10.1377/hblog20140306.037370/full/ https://www.healthaffairs.org/do/10.1377/hblog20140306.03737...) that needs to be addressed with new market incentives or financial models e.g. pay for success contracts.
- chris_va 5y ago
  I read that paper the opposite way. 32% being repurposed seems like a pretty high number. I cannot reconcile these articles with the high investment in repurposing I see in pharmaceutical startups.
  - savvak 5y ago
    The analysis in the paper shows that once a drug goes off-patent its chance of being repurposed approaches 0%. There is repurposing of on-patent drugs while a monopoly profit can be enforced. That's not the point. The point is that information about which off-patent drugs work in new indications is the definition of a non-excludable and non-rivalrous public good. There is no way to enforce a monopoly profit if people can take the generic drug off-label or have it compounded in a pharmacy. Therefore, there is a tragedy of the commons preventing private investment to unlock this generic drug repurposing innovation (unless someone can come up with a new patented formulation that will not be subject to off-label competition, which is not always possible). A pay for success contract is a solution to this problem. You can also enforce differential pricing for repurposed generic drugs while preventing off-label competition using e-medical records, but this is also another kind of pay for success mechanism (like an advance market commitment or the agreement to pay a minimum order of the Covid vaccines under Operation Warp Speed). However, it might not be politically and commercially feasible to prevent off-label use, especially for generics which are widely prescribed for other off-patent indications.

jawns 5y ago

My wife and I have been donating to Cures Within Reach https://www.cureswithinreach.org https://www.cureswithinreach.org, which funds repurposing research. This is especially important for rare conditions that are unlikely to ever see robust R&D purely on the basis of the size of the market.

savvak 5y ago
Bruce Bloom who was the former CEO of Cures within Reach was one of the first people to propose using pay for success financing (i.e. social impact bonds) to repurpose generic drugs, although their focus was on rare disease (see https://ssir.org/articles/entry/repurposing_social_impact_bonds_for_medicine https://ssir.org/articles/entry/repurposing_social_impact_bo...). More recently in 2016, Findacure in the UK tried to get NHS backing but this was derailed due to Brexit (see http://findacure.org.uk/the-rare-disease-drug-repurposing-social-impact-bond/ http://findacure.org.uk/the-rare-disease-drug-repurposing-so...). The mission of the charity https://crowdfundedcures.org https://crowdfundedcures.org is to raise awareness and get payer backing of a generic drug repurposing pay for success contract in a specific disease class e.g. Covid-19, pancreatic cancer, Alzheimer's, Crohn's disease, MS, longevity, etc

gumby 5y ago

There is a specific regulatory pathway for this purpose written into law: section 505(b)(2) of the FDCA. It lets you use existing safety data from the approved NDA. I have used this pathway myself and the FDA is quite comfortable with it. I don't really understand the fuss. Nor do I understand why the DAO matters. https://www.fda.gov/regulatory-information/search-fda-guidance-documents/applications-covered-section-505b2 https://www.fda.gov/regulatory-information/search-fda-guidan...

ISL 5y ago
A normal contract would surely suffice. "The United States Government will give $1B to the first company or person to demonstrate a safe and effective treatment that halts or reverses the effects of Progressive Supranuclear Palsy[1] using treatments with existing FDA approval." [1] My Dad has it. It sucks. 0/10 do not recommend. https://en.wikipedia.org/wiki/Progressive_supranuclear_palsy https://en.wikipedia.org/wiki/Progressive_supranuclear_palsy
- savvak 5y ago
  Yes, this would be a pay for success contract. And a "prize" or outcome payment of $1b would not be necessary. By using a generic drug, you can enter into phase 3 trials immediately, and it can cost less than $10-15m to obtain regulatory approval (100x cheaper than developing a new patented drug over 10-15 years) - see https://dndi.org/wp-content/uploads/2019/10/DNDi_ModelPaper_2019.pdf https://dndi.org/wp-content/uploads/2019/10/DNDi_ModelPaper_.... See Figure 1 on page 17: Out-of-pocket costs per stage of development for eight projects in DNDi’s portfolio.
  - gumby 5y ago
    You likely don’t need a standard phase three trial. If you are within the phase 1 safety dosages (that’s the data you’re using under 505(b)(2) anyway) you can just do a smaller study. Power it as high as you want/need. Typically any physician can do such a study. Doctors can read your paper on the study and decide whether to use the therapy you studied.

bserge 5y ago

It's amazing how after all that work they leave it to some uncaring, overworked and underpaid people to actually give it to those who need the medication. Resulting in many not getting any.

thayne 5y ago

What if we also removed (or increased limitations on) patent protections? Then the incentive to find a cure would be the same regardless of if it is a new drug, a new therapy using an old drug, or uses an unpatentable chemical/herb/etc.

savvak 5y ago
If a pay for success model could provide more QALYs at a lower cost than patented drugs, there would be no need to limit patent protections: the model would simply outcompete the patent system. Payers would instead "buy" successful RCT data for repurposed off-patent drugs via pay for success contracts instead and potentially save trillions of dollars as a result. In my view, there is a role for new patented drugs, but this model will reduce pharma's ability to game the patent system via "evergreening" (e.g. releasing a slightly tweaked formulation of a drug just prior to expiry of the old generic and trying to get doctors to switch to new formulation using excessive marketing). It would give payers another option other than patented drugs to buy successful RCT data.

rscho 5y ago

These guys at UAB [1] are doing amazing things with evidence-based drug discovery and repurposing, using logic programming [2]. Fund them! They're the future! [1] https://www.uab.edu/medicine/pmi/ https://www.uab.edu/medicine/pmi/ [2] https://github.com/webyrd/mediKanren https://github.com/webyrd/mediKanren

tpoacher 5y ago

Nice idea in principle, but the article conveniently sidesteps how "success" is defined, which I could easily see being the bigger problem here. If success is a particular percentage of outcomes after 10 years in a trial, maybe that's not that attractive to an investor.

deleted 5y ago
[deleted]
savvak 5y ago
Quoting article verbatim in third paragraph under heading "Solution — using pay for success contracts to repurpose off-patent drugs": Outcome payments are disbursed to the fund by payers upon success of a particular clinical trial. Payment amounts are determined based on savings generated for the payer (e.g., a national health service or private health insurer) which ensures the model is scalable, using standard pharmacoeconomic assessment (e.g., $50k per QALY, or Quality-Adjusted-Life-Year or $100k per additional prevented hospitalisation in treatment arm vs usual care) that considers the incremental cost savings due to showing efficacy of this new off-patent treatment in RCTs versus cost for standard usual care My preference is to have a payment for a specific robust outcome like per prevented hospitalisation in the treatment arm of an RCT. For most patented drugs, this would be a very high cost (e.g. if 50 patients treated to course of patented drugs costing $50k each for one prevented hospitalisation, society would be paying $2.5m per successful outcome under patent system). This is also more closely linked to how outcome payments for social impact bonds are determined (e.g. $5k per homeless person given a job and put in a home or per prisoner that is given a job and stays out of prison for one year). Regarding ROI for impact investors, it should be a market rate (5-10% p/a) paid over a period of time (e.g. 5 years) and subject to phase 4 surveillance trials showing the safety and efficacy of the off-patent treatment protocol is maintained over time. The impact investment opportunity can be made more attractive (above market rates of return) if payers such as govts, health insurers or philanthropy also provide matched funding without an expectation of return - effectively acting as follow on investors but relying on the impact investors to lead the round and pick the winners (promising off-patent repurposing RCTs to fund) instead of traditional direct grant funding where payers take on all the risk of RCT failure. I also note that it is over 100x cheaper to repurpose generic drugs, so the cost per QALY should be much more value for money (e.g. $1k per QALY) and would outcompete the patented drugs. Open Source Pharma Foundation are working on a Phase 3 trial of a repurposed off-patent vaccine - https://www.fastcompany.com/90498448/how-open-source-medicine-could-prepare-us-for-the-next-pandemic https://www.fastcompany.com/90498448/how-open-source-medicin.... Old vaccines can provide broad spectrum protection by boosting innate immunity - see https://www.pnas.org/content/118/21/e2101718118 https://www.pnas.org/content/118/21/e2101718118. The lack of private incentives to repurpose off-patent medicines is a massive missed arbitrage opportunity that could generate trillions of dollars in value for society, if only it could get payer backing.

smeej 5y ago

This question is tangential, but why do you think it is that there are so many people in the "new philanthropist" class who do have the money to fund such research privately, but instead partner with the big pharma companies? If the costs for these types of solutions can be SO much lower, it surprises me that there isn't a more robust subculture working on it with money they've made when their last tech startups went public. Almost everybody knows somebody with a rare or expensive-to-treat disease, right? Is it just too early? Are we only just learning how to figure out exactly which mutations cause exactly the wrong protein production errors in the cells, and then can assess the effects of off-patent generics to treat them? Or is there more to it than that? I only learned about Medikanren[0] a couple weeks ago, and since this isn't my field, immediately felt like I was behind on some very important knowledge, and I'm fascinated by the thought of trying to figure out how to address this problem by thinking this far outside the big pharma box. It reminds me of FOSS in that the funding challenges may be similar, but for treating disease. [0] https://github.com/webyrd/mediKanren https://github.com/webyrd/mediKanren

savvak 5y ago
Currently, private pharmaceutical drug development is seen through the patent lens because there is no other way create a scalable business model. What is needed is to convince payers (e.g. health insurers, govt, or philanthropy) to back pay for success contracts and agree to purchase valuable off-patent RCT data rather than just RCT data involving a new patented drug which is capable of being monopolised. Without that, there is no market and no way to leverage this arbitrage opportunity. This would allow tools such as Medikanren and other AI and personalised medicine approaches to drug discovery to be properly utilised. Doctors need RCTs to know which drugs are safe and effective and unfortunately, those RCTs are expensive, which creates a market failure if there is no ROI possible with patents. You can't solve a market failure with direct public funding, it's too inefficient. You need to update the social contracts to create a new market. You are correct, it's the same "public goods" problem for FOSS projects, but for medicines, and uses a "bounty" model to solve it, but has not been implemented to date.