Pediatric drug market finds its own pathway

Pharmaceutical CommercePharmaceutical Commerce - November/December 2015

Even with legislative incentives, pharma manufacturers struggle to cost-justify pediatric innovation

From a pharma-industry perspective,

the pediatric drug market (which includes infants to young adults under 18), while large, exists in something of a shadow, for the simple reason that most drugs are developed for adult patients, and most uses of those drugs for children are off-label. This well-recognized situation has been addressed multiple times over the years with national legislation and FDA policies, but overall, the market still runs on a different track than “conventional” medicine.

The global market for pediatric medications was estimated at $83.6 billion in 2014, rising by about 4% annually to 2019 when it will reach $100.7 billion, according to a 2014 analysis by BCC Research (Stamford, CT). Vaccines, inflammatory diseases, respiratory conditions and viral infections are key therapy areas, in addition to central nervous system (CNS) treatments and oncology. Obesity, with its tie-in to diabetes in later life, is a special concern (as well as for Type I diabetes itself, generally a childhood condition).

The growth of specialty drugs under the Orphan Drug Act (see Pharmaceutical Commerce, Sept/Oct, p. 16) has been a boon for pediatric medicine, as many of the orphan diseases being targeted today express themselves in children. In addition, legislative action in this century—notably the Best Practices for Children Act (BPCA) and Pediatric Research Equity Act (PREA)—provide a carrot-and-stick approach to focusing pharma on childhood disease. PREA, in particular, provides a checkpoint for every drug seeking FDA approval.

While there are a small number of pharma companies that target pediatric care exclusively, most of the bigger pharma companies focus on it as a subset of adult care. In the healthcare arena (besides the medical specialties of pediatrics and obstetrics), much industry activity centers around the network of children’s hospitals across the country. The Children’s Hospital Assn. (Washington, DC) has some 220 member institutions; it runs a Pediatric Health Information System to organize clinical data about pediatric care, among other activities. The Institute for Pediatric Innovation (IPI; Cambridge, MA), a consortium of four children’s hospitals, launched the Global Alliance for Pediatric Therapeutics in 2013 with the support of several leading pharma companies; its 2015-6 services document highlights a Clinical Innovation Catalyst Program, and support for developing medical devices specifically for pediatric care.

The off-label conundrum

In the absence of rigorous clinical trials that include pharmacokinetics (PK) study, off-label prescribing is more the rule than the exception when treating pediatric patients—occurring as often as 50—90% of the time (depending on the disease state and age cohort). It’s important to remember that off-label use does not imply improper or illegal use—rather, it just signifies a lack of other suitable therapeutic options. “Optimally, all drugs given to children would have gone through a rigorous clinical development plan, but that hasn’t happened thus far,” says Mark Sorrentino, MD, MS, executive medical director of the Pediatric Practice Area for PPD, a leading contract research organization. As a result, “Safety and efficacy both can be at risk when using a drug off-label in an unstudied population. For instance, without good PK data, optimal dosing probably is unknown.”

Instead, physicians typically rely on the best-available guidance in the literature, interactions with expert medical peers, and their own professional experience or judgment when prescribing off-label. In a September 2015 survey of 144 physicians (pediatricians and primary care physicians who regularly treat pediatric patients), conducted for Pharmaceutical Commerce by Healthcasts (New York), 73% of physicians state that they prescribe medicines that do not have a pediatric indication (box, left).

Many of the physicians responding to the Pharmaceutical Commerce/Healthcasts survey say they would like pharma companies and FDA “to provide data on pediatric use of medications based on years of actual physician experience with those drugs—regardless of whether the drug has a pediatric indication,” says Denis Wyrwoll, senior director at Healthcasts. He notes that one proposed solution would be for FDA to officially recognize that data is being collected by physicians using drugs off-label for pediatric patients.

Meanwhile, heavy reliance on off-label prescribing also creates a personal burden for physicians. “Iatrogenic injury is the responsibility of the manufacturer or license holder when the drug is prescribed on-label,” notes Sorrentino of PPD. “But when it is prescribed off-label, legal liability rests with the prescriber, unless patients (and in this case parents and/or guardians) are appropriately informed and give their permission.” This may be cold comfort for families of the patients. “Drug makers are dealing with an increasingly negative public perception. While simply pointing litigants to the prescriber in the event of an off-label adverse event may be technically correct, that type of response will not be taken well in the medical community or with the public,” he adds.

According to the Healthcasts survey, when prescribing a medicine off-label to a pediatric patient, 20% of physicians don’t inform the parent or guardian that they are doing so, and only 24% of physicians require legal consent; there is an increased risk of malpractice lawsuits without informed consent.

“One of the main issues with pediatric medications versus adult medications is that the absorption, distribution, metabolism and excretion (ADME) pathways in children are completely different than in adults, and dosing cannot simply be extrapolated on a weight basis,” says Robert Wenslow, PhD, VP of business development for the contract research organization, Crystal Pharmatech (New Brunswick, NJ). “In the absence of rigorous pediatric clinical trial data, physicians are forced to act as if children are just ‘small adults’ with a smaller weight, and then interpret the adult data to adjust the dose. But statistically, we know that approach only works in 6% of the cases.”

The challenges of pediatric trial design

Except for therapies created expressly to treat children (such as childhood vaccines or perhaps for Type I diabetes), drug companies have had little incentive to undertake the added effort and risk to carry out pediatric clinical trials. The reasons include limited market potential for any specific pediatric indication of a given drug, the cost and complexity of pediatric clinical trials, and the inherent logistical, clinical and ethical challenges of enrolling children in clinical trials.

Recruitment of study participants remains one of the biggest challenges for drugmakers. “Pediatric patients make up only 20—25% of the world’s population, and only a small number of children typically have any given disease. When you layer on top of that the need to enroll a certain number of children with that disease in each of the different trial-arm age cohorts, you see a very real numbers problems start to emerge,” says Cynthia Jackson, DO, FAAP, VP and head of the Pediatric Center of Excellence for Quintiles (Durham, NC). The problem is compounded when multiple trials are being conducted for the same condition. “In this case, different sponsors literally end up competing for the same sick child,” she says.

“Because of such small population bases for any given condition, sponsors must often recruit from several countries to get enough participants, and this increases the time necessary to negotiate study designs and protocols with regulatory agencies which can add years onto development timelines,” adds Eric Anthony Floyd, PhD, chief science officer at Dohmen Life Science Services (DLSS; Milwaukee). “In addition to the idea that testing in pediatric populations is considered high risk with little return on investment, there is also a perception that vulnerable pediatric patients should be protected from clinical trial experimentation,” he adds.

“Even with the best of intentions, companies are sometimes thwarted by these and other logistical challenges,” says Neal Dunn, partner at Trinity Partners (Waltham, MA). For instance, he cites one company that was trying to get a pediatric indication for an IV drug to treat a particular type of infectious disease. “Because there were already oral treatment options available to treat this condition in children, it was much harder for the company to enroll children (who would need a PIC line) in its IV trial, even though the IV drug was purported to provide some advantages over the oral options.”

Financial incentives help drive compliance

In recent years, a carrot-and-stick approach has been implemented to compel many drug developers to carry out clinical testing on children of different age cohorts.

In the US, the Pediatric Exclusivity Program, first established as part of the Food and Drug Administration Modernization Act of 1997, gives FDA the authority to grant six-month patent-exclusivity extensions to drug developers that voluntarily complete specific pediatric trials in accordance with a “Written Request” (WR) from FDA. (The WR can relate to new or existing drugs, and can be initiated by FDA or requested by the drugmaker itself, if it wants to be eligible for extended market exclusivity).

Importantly for the drugmaker, this extended exclusivity applies not just to the pediatric form of the drug or biologic but to the adult version of it as well (essentially for the entire franchise based on the drug moiety). This creates an opportunity to both recoup the cost burden of the added trials and drive additional earnings for the brand. (Note: Technically, FDA does not have the authority to prolong the life of the existing patents, but it gets this result by delaying the market entry of generic competitors.)

“In an interesting twist, the ability to gain six months of exclusivity is not contingent upon positive outcome of the pediatric studies or an approved FDA label change to approve the drug for children—just completion of the FDA-requested studies,” says Jackson of Quintiles. “Whatever the outcome, additional pediatric trials still benefit prescribers, because the trial results will be put in the label for prescribers to see, whether efficacy in children is proven or not.”

This was the case for Cymbalta (duloxetine). In July 2012, Eli Lilly received the added exclusivity for its blockbuster, postponing patent expiry from June to December 2013. Cymbalta was already widely used in adults for the treatment of nerve pain in diabetics, generalized anxiety disorder, fibromyalgia, chronic lower back and knee pain, and had recorded $1.1 billion in sales in the first quarter of 2012. Cymbalta received extended market protection even though Lilly’s pediatric study results were inconclusive regarding Cymbalta’s efficacy in children (thus Eli Lilly did not seek a pediatric indication on the product label). Supporters say the effort was still helpful to help inform physicians, because Lilly’s pediatric clinical trials specifically revealed that the drug increases suicidal thoughts in children, adolescents and young adults.

The growing list of drugs that were already being used widely off-label in pediatric care but have recently benefitted receiving an expanded pediatric label indication include Oxycontin (oxycodone), Claritin (loratadine) syrup, Duragesic (fentanyl) transdermal patch for chronic pain, Luvox (fluvoxamine) tablets for OCD, Midazolam for sedation, Neurontin (gabapentin) for partial seizures, and Pepcid (famotidine) for acid reflux.

While the BPCA provides market incentives to spur innovation, the Pediatric Research Equity Act (PREA) requires companies that file any new drug applications to have a Pediatric Study Plan (PSP; in the EU this is called a Pediatric Investigation Plan, or PIP) in place (within 60 days of the end of Phase II product testing in the US; at the end of Phase I testing for all products seeking regulatory approval in the EU). Under the PREA, FDA can require companies to carry out pediatric studies of a drug if the agency determines the product is likely to be used in a substantial number of pediatric patients, or if the product would provide a meaningful benefit in the pediatric population over existing treatments.

In 2012 the US Congress codified both BPCA and PREA into permanent laws, wrapping them up as the Food and Drug Administration Safety and Innovation Act of 2012. Similarly, in 2007, the EU ratified the Pediatric Regulations, which all EMA countries follow. “Today, thanks to the fact that both are now permanent laws, it is now a part of all drugmakers’ plans to at least think about pediatrics, and many will go on to do full pediatric trials,” says Jackson of Quintiles.


And this carrot-and-stick approach is delivering results. For instance, from 1998 through 2014, FDA has issued 464 Written Requests (WR) to drug makers, and of these, 224 Pediatric Exclusivity determinations were extended. Of these, 204 products were granted pediatric exclusivity (92% of all products that were reviewed for pediatric exclusivity received it), according to FDA statistics.

Over the same time period, 563 pediatric label changes have been made in response to BPCA and PREA—an average of 37 label changes per year (see Fig).

A 2013 report entitled “Do Incentives Drive Pediatric Research,” by McKinsey’s Center for Government concludes that for drugs with blockbuster revenue (more than $1 billion annually), there is a clear benefit to conducting dedicated pediatric trials to extend market exclusivity. “With trials costing up to $25 million and average industry profit margins of 23%, blockbuster manufacturers have significant incentives—$300 million in value per drug [based on 6 months of extended market exclusivity] against $25 million in trial costs.” However, the report goes on to say “for drugs with annual sales below $100 million, the incentives seem to be less alluring, given the complexities and risks of conducting pediatric trials.”

Opting out of pediatric trials

Today, in the US and EU, companies can request a waiver from FDA, seeking to not study a particular drug in pediatric patients. “One factor often cited by companies seeking a waiver is that the drug may be thought to be unsafe or ineffective in pediatric patients,” says Jackson of Quintiles, although she says this line of reasoning faces a very high bar for drug manufacturers to reach.

Similarly, companies developing drugs that are aimed at adult conditions—which are unlikely to have pediatric patients—may also seek a waiver to avoid conducting pediatric trials (examples may include Alzheimer’s Disease or erectile dysfunction). Others may seek a waiver if the condition is so rare and dispersed that it precludes conduct of a pediatric development program, a condition that has a different etiology in children, or a condition that already is so well-treated in children that bringing a new treatment to registration would exceed the effective patent life, adds Sorrentino of PPD.

Getting FDA to grant a requested waiver is not easy. “Regulators can still look at that drug and ask the drugmaker to investigate whether the drug’s mechanism of action may be effective in a condition in children that differs from the one approved for infants,” says Jackson. “But if FDA were to request such testing, the incentive would be the opportunity to get 6 months of extra market exclusivity, under the BPCA provisions.”

Whenever additional clinical trials are carried out (whether they lead to a pediatric label indication or not), such efforts provide more clinically robust guidance for healthcare professionals, and this helps to better inform prescribing choices, and thus strengthen real-world evidence and outcomes data in the marketplace, notes Floyd of DLSS.

“Many companies also recognize the marketing value of being known and identified as a dedicated pediatric specialist company for certain disease, and this affords a tremendous amount of goodwill,” adds Robert Finkel, principal at a health industry consultancy, FreshBlood (San Francisco).

In addition to addressing unmet medical need in pediatric healthcare, and the potential for growth in the market on a global basis, the pursuit of a pediatric indication “increases the value of the out-licensing deal with both adult products and pediatric line extensions,” adds Anil Kane, PhD, executive director at Patheon, the contract development and manufacturing organization (CDMO). “When a drug developer decides not to pursue a pediatric indication, the decision signifies a potential loss of market opportunity and a loss of an intellectual property opportunity.”

However, Dunn of Trinity Partners points out that the potential information gap is somewhat mitigated by the fact that many children are treated by primary care physicians and family practitioners (rather than just pediatricians), “and those physicians will have fuller access to the clinical and promotional information offered by pharma brand sales representatives for many of the brands they may be using off-label with younger patients.” And, he notes that, even in the absence of a pediatric indication, physicians are still able to seek specific medical and scientific (not promotional) information about the drug from the medical liaison at many drug companies.

Reimbursement challenges

According to the Pharmaceutical Commerce /Healthcasts survey, 42% of physicians report that they have had to overcome the hurdles (mostly related to non-coverage and higher co-pays for the patient) that payers put in place to prevent off-label prescribing. This increases the cost to the parents, and may prevent many children from getting expensive but necessary off-label medications.

“Speed to therapy is especially critical when focusing on care for children,” says Jessica Black, director, Reimbursement Strategy and Tactics at Xcenda. “Medications often require prior authorization (PA) to limit and control access to just those patients who truly need the medication but as always, the process of submitting documentation to demonstrate that PA requirements are met have the potential to delay a patient’s access to the necessary treatment. These types of access dynamics make robust reimbursement support services even more important for specialty pediatric medications to facilitate utilization management processes for physicians and their practices.”

Reformulation: Into the mouths of babes

When it comes to developing approved pediatric medications that are directly aimed at children, the old adage holds true: Necessity is the motherhood of invention. Because adult formulations are not always suitable or transferable to pediatric populations, additional re-engineering and costly developmental effort and manufacturing processes are routinely needed to create and evaluate competing formulation options and administration methods for children of different ages. For instance, certain excipients (such as alcohol, polymers, preservatives and plasticizers) that are used in the adult formulation may not be appropriate for more vulnerable pediatric age subgroups.

Similarly, taste and texture are big issues for children, as is the fact that most cannot swallow a pill. “The old fallback of turning your drug into a liquid and making it really sweet and sticky is not enough, and there has been a tremendous amount of progress in this area,” says Jackson of Quintiles.

“Taste masking is still in its infancy for pediatric formulations, and palatable formulations, if they can be developed, can take years to produce,” adds Floyd of DLSS.

Some pediatric formulations rely on chewable tablets, quick-dissolve granules, microencapsulated products, smaller or flavor-coated tablets, liquid formulations (solutions, suspensions or syrups). Long-acting or controlled-release versions can help to reduce dosing frequency, helping to improve adherence. And while it would be optimal to find one advantageous formulation to cover the entire pediatric age range, this is rarely possible.

To address the limitations of tiny veins and the strong antipathy of children toward needles, many pediatric formulations rely on needle-free injection devices, and other non-invasive alternatives, such as transdermal patches or inhalable formulations.

“Many adult medications rely on a simple, direct-release mechanism, so you take the pill, the active agent gets dissolved and absorbed into the blood stream. But in many cases with pediatrics, you might not need that much drug at that initial stage, so you may need to engineer the formulation for delayed release to improve the pharmacokinetic profile in children of different ages,” explains Wenslow of Crystal Pharmatech.

Recently, oral transmucosal delivery has emerged as an alternative route of administration for some pediatric formulations. Absorption across the oral mucosa (typically by way of a transdermal patch placed on the cheek or under the tongue) allows the drug to bypass hepatic first-pass metabolism and avoid degradation or metabolism of the drug in the gastrointestinal tract (meanwhile, oral formulations may not be suitable for drugs with poor oral bioavailability or when a rapid clinical effect is required). Buccal or sublingual formulations of buprenorphine, fentanyl and midazolam have been successfully developed for the pediatric market.

Orphan drugs: Pediatric Review Vouchers

Pediatric drug development is already challenged under the specter of limited patient populations. When it comes to rare disease—by definition, any condition that affects 200,000 people or less at any given time—that impact children, the challenges become even more acute. To spur innovation in drug development for pediatric rare diseases, the Rare Pediatric Disease Priority Review Voucher (RP-PRV) program is being hailed by many for its success in using market incentives to spur innovation.

The PRV program originated for tropical diseases in 2009 under the FDA Amendments Act; the pediatric component was added in 2012 under the FDA Safety and Innovation Act.

Through the program, any company that gains regulatory approval for a drug aimed at a pediatric rare disease is rewarded with a RP-PRV. The company can reap the value of that reward voucher in one of two ways—it can either use it to expedite the review of one of its own future products (whether an orphan drug or one aimed at a mass market population); or, the company can sell the voucher to the highest bidder. That transaction is said to be a win-win for both parties: The sale of the voucher generates a huge cash influx for the seller, and acquisition of the voucher allows the buyer to speed up the regulatory review of a product in its pipeline (from the usual 10 months to an expedited 6 months). Notably — and often overlooked or misunderstood — the Pediatric Rare Diseases PRV voucher does not need to be exercised for another orphan drug product new drug filing; rather, it can be used to speed up regulatory review for a potential blockbuster product, too.

To date, three of these new RP-PRVs have been awarded to companies that successfully commercialized an orphan drug for a rare pediatric disease, and within no time, they very quickly demonstrated their value in the market:

  • BioMarin Pharmaceutical (San Rafael, CA) was awarded the first RP-PRV in February 2014, and five months later (July 2014), it sold the voucher to Sanofi SA (Paris) and Regeneron Pharmaceutical (Tarrytown, NY) for $67.5 million.
  • United Therapeutics Corp. (Silver Spring, MD) was awarded the second RP-PRV in March 2015, and in August, sold this PRV to AbbVie for $350 million.
  • Asklepion Pharmaceuticals (Baltimore, MD) was awarded the third RP-PRV in March 2015; Retrophin, Inc. (San Diego, CA) had acquired Asklepion just months before for $75 million, taking possession of the voucher as part of the deal. In May 2015, Retrophin sold the voucher to Sanofi SA for $245 million.

Sanofi and Regeneron created a lot of buzz—both positive and negative—when they used the PRV voucher they purchased from BioMarin to expedite approval of their PCSK9 anti-cholesterol treatment, Praluent (alirocumab), which was granted by FDA in late July. By exercising this voucher to receive a priority review from FDA, Praluent was approved just a few months ahead of Amgen’s PCSK9 product, Repatha (evolucumab), gaining first-in-class status in this potential blockbuster indication.

Critics take issue with the way the Pediatric Orphan PRV program is designed, charging that it is inherently unfair that some drug companies can simply outbid others to purchase one of these vouchers and then cut the line in front of their close competitors in competitive races to gain critical “first-to-market advantages” in a given hotly contested indication.

“Amgen’s new PCSK9 inhibitor, Repatha, lost its bid to be the first in its class when Sanofi/Regeneron’s Praluent won approval first—thanks entirely to the voucher the companies’ purchased from BioMarin at tremendous cost,” says Finkel of FreshBlood. “The way the PRV program is designed now, the biopharma company with the biggest checkbook now has the potential to leapfrog right over a major competitor. It’s proven to work,” says Finkel. “Perhaps that’s just an example of capitalism at its best and worst.”

The RP-PRV program is up for renewal in Congress; meetings have been held recently in the Senate, and the House included it as part of the 21st Century Cures Act passed in that house this summer.

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