One Thing the Pandemic Taught Us About New Drug Development

It’s been said by many, many, others that the Covid-19 vaccines were developed and put into use very quickly. Part of that was due to the fact that the US products were put into use without a full biologics approval; initially they were given Emergency Use Authorization, a faster regulatory process requiring less complete information.

Nonetheless, it is clear the clinical trials that will likely support final approval were completed far more expeditiously than average in the past. This provides support for the idea that clinical trials supporting approval of new drugs can be done much more quickly if the conditions are right. That means eliminating the conflicts of interest and management inefficiencies inherent in the development process in many companies.

The purpose of the book is to outline the techniques and processes that facilitate rapid, efficient drug development. Faster development also leads to lower costs for many reasons. In particular, because each day spent in development can bring generic competition one day closer. For a multi-billion dollar product, each of those days can mean millions of dollars of peak sales lost.

I hope the managements and boards of directors take note of how quickly and efficiently the vaccine clinical trials were completed and reported and set higher bars for themselves. The book will give them a good idea how to do this.

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15 Million Vaccine Doses Lost

According to an article on Bloomberg J&J is “taking over” production at one of the vendors making the J&J vaccine after a reported manufacturing error resulted in the loss of a large batch of vaccine component. The article implies that J&J personnel will now have primary responsibility for activities at their vendor. This is consistent with the idea that when an employee makes a serious mistake, he/she is replaced with another employee who is expected to do better. While this concept is applicable to pharma just like other businesses, it is not the full or adequate way to address serious problems in production or drug development. That is because the quality of the final product, whether a drug product or a new drug application, should never be dependent solely on the perfect performance of employees nor on perfect testing/evaluation of the final product.

This kind of quality should be primarily determined by production procedures. Adequate standard operating procedures, safety interlocks built into the production procedures and machinery, and physical isolation of machinery and intermediate materials, should minimize the potential for errors like cross contamination happening in the first place. So, while quality testing/auditing, etc., are important, the “system” must be set up to be as “foolproof” as possible from the beginning.

So, when an error occurs, it is standard practice not to just replace or retrain whomever made the mistake, but also to initiate a “corrective and preventive action plan” or CAPA aimed at, among other things, preventing the error from recurring. Anyone who has worked in drug development for a significant period of time will be familiar with CAPAs.

Given the complexity of drug manufacturing and what I think is the greater complexity of drug development, it is inevitable that mistakes will be made. The key is to employ people who are familiar with the common problems that arise and therefore can set up systems that minimize the chances for common problems. Experienced people can also set up systems for evaluating quality on an ongoing basis. Once this is done, it is important not just to correct mistakes, but also to alter systems so as to minimize the probability of recurrence.

As I tell the teams I lead, mistakes are inevitable and their consequences tend to grow as time goes by. So, it is important to identify mistakes quickly so they can be corrected before their consequences become more dire. Once identified, it is equally important to modify procedures to minimize the chance of recurrence; i.e. “let’s make different mistakes and not keep repeating mistakes of the past”. The actions taken as a result of a CAPA should be fully documented. The objective is to continuously improve quality as time goes by and to document the organization’s commitment to quality work.

It will be interesting to see what happens at another company that has had very public apparent missteps related to their vaccine. Will they blame a single individual or a few people or will they recognize that systems vulnerable to mistakes by singe individuals or small groups are inherently weak and thus require strengthening via comprehensive CAPAs?

Update: According to a report from the New York Times, problems at the vendor were apparent before the latest batch failure. This would be especially unfortunate because it is at least theoretically possible that the recent failure could have been avoided if earlier actions, presumably via CAPAs, had been taken.

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SBIA Online Workshop

FDA organized and excellent webinar entitled “Oncology Therapy Development Workshop 2021”. Although the bulk of the webinar is over at the time I am writing this post, the slides of all the presenters are still available. I would recommend looking at them to anyone who wants to learn about development of oncology drugs or even to those who want to learn about drug development in general. You should be able to get the slides at:

The full webinar is going to be posted on the FDA’s Youtube channel.

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Revised Efficacy Results

After criticism from their DSMB, AZ has issued revised efficacy results from one of their vaccine studies. I’ve read a lot of criticism of them for having to do this. I think one author called it an “unforced error”. Even though the newly issued results don’t differ much from what was initially announced, it’s the kind of revision, based on what I know, that shouldn’t happen; especially in such a high visibility program. But, really it shouldn’t happen ever.

Although this kind of thing rarely happens so publicly and in such a high profile situation, I can tell you that it’s more frequent in drug development than one might imagine. It typically happens when inexperienced people become involved in the development process. These are generally people who are not familiar with the “checks and balances” in the development process and thus do not appreciate the severity of consequences that come from not doing things “by the book” and being sure that everything is carefully checked before conclusions are drawn.

As explained in my book “New Drugs”, these kinds of “mistakes” are typically 50:50; half make the product look better than it really is and, unbelievably, half make it look worse than it really is.

The misrepresentations that make products look worse than they really are, sometimes open an opportunity for a product to be acquired for a price far below its real value. My early career successes were based on just these kind of situation. I had the opportunity to lead the approval of very valuable products because their true value was not recognized until relatively close to the time the projects were completed.

This was also my motivation for recently helping to start the company based on the hypothesis that we could recognize and/or capitalize on value that was not appreciated by others. In just a few years, it has grown from a few people discussing it as an idea, to a company of more than 1000 people and given rise to two FDA new drug approvals and billions of dollars of transactions.

So, while “unforced errors” of the type exemplified above are more common in drug development than a naive person would assume, so are tremendous opportunities for those who follow the principles outlined in my book, “New Drugs”.

As an aside, I’ve found that following embarrassing public mistakes, companies frequently veer in the opposite direction. They become so obsessed with checking and rechecking and avoiding definite statements, that they become paralyzed and have a great deal of difficulty moving projects along. This again opens up opportunities for others who have a balanced, thoughtful and careful approach to the drug development process.

AZ’s latest very pubic apparent error, is just the most recent one. It will be interesting to see what internal changes will result. Will this last correction be sufficient to induce changes in the company that will minimize these kinds of “unforced errors”? Will AZ veer over the edge and become so cautious that they have problems moving forward expeditiously. Or, will they just continue along as before? We shall see.

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Approval of Vaccines to Viruses that Produce Frequent Variants

Given the current pandemic situation, I thought it would be useful to review briefly the method FDA typically uses to approve flu vaccines (a virus with frequent variants) and which they might (and I believe likely will) apply to vaccines for variants of the Corona virus now in circulation. The approval of modified vaccines to virus variants is based less clinical information than is required for a completely novel vaccine (or novel new drug) because there is already a lot of information available from the clinical trials of the original vaccine.

The FDA criteria for approval of a novel flu vaccine requires a phase I/II and phase III studies. The object of phase I/II is to identify a dose regimen that generates an immune response high enough that it would be expected to prevent and/or mitigate the viral illness. The magnitude of immune response targeted is generally equal to or greater than the immune response associated with recovery from natural infection. A second objective is to determine the tolerability of the putatively effective dose regimen in a relatively small number of human subjects.

Once the dose regimen that accomplishes these two objectives is identified, FDA requires a Phase III study of a large number of subjects to show that the vaccine is still found to be well tolerated in a much larger number of subjects and that the vaccine really does prevent or mitigate infection sufficiently to support approval. Approval is based on a judgement that the side effects are more than compensated for by the reduction of infection or the consequences of infection.

Because flu virus variants change every year, it is not feasible to require this same development process every year, because the time delay required for a phase III study would mean the vaccine for the new variant would not be widely available during period when the variant(s) is prevalent.

To overcome this, once a successful Phase III study has been conducted for an specific vaccine, FDA requires only the phase I/II study of the vaccine for the variant, to confirm that the dose regimen induces an immune response to the variant similar to the immune response the original vaccine produced against the original virus. This shortens the development process for vaccines to variants substantially and is the reason that we have a new flu vaccine every year, just in time for the new flu season variant(s).

I think it is likely that FDA will follow this precedent for vaccines to the novel corona virus variants that may become predominant and for which the current vaccines may have lower efficacy. Once a vaccine has had a successful phase III study (and assuming nothing adverse has cropped up in the interim), approval of the same vaccine for a variant will not require a phase III study, just a successful phase I/II to confirm the immune response to the variant and tolerability in a small number of patients.

Given the incredible speed of current vaccine studies, I would guess that the vaccines for the new variants will be available within a couple of months. The current manufacturing procedures can likely be quickly modified to produce large amounts of variant vaccines. Thus, we likely could have EUA for variant vaccines soon if they are needed.

Here are some links to relevant FDA documents.

One other Covid item of interest is the upcoming FDA Advisory Committee Meeting that will review the J&J vaccine for an EUA. Here’s a link to the announcement that includes links to the webcast of the meeting.

The meeting materials and webcast will likely be the most complete summary of the clinical data on the J&J vaccine that is readily available for quite some time. Highly recommended for all those interested in the J&J vaccine.

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JAMA Publication on Refusal to File Letters

One issue I describe in my book is that while companies are free to describe their interactions with the FDA (or not), the FDA is generally barred from disclosing any but the most top-level interactions, e.g., new drug application approvals. This imbalance can lead to a disconnect between the reality of a company’s interaction with FDA and what the public knows.

This potential problem was analyzed in a formal way in a recent publication in JAMA (JAMA Intern Med. doi:10.1001/jamainternmed.2020.8866), which described an analysis of FDA Refusal to File Letters for new drug applications.

A refusal to file letter is issued by FDA in response to a submission that it determines is too deficient to warrant a full review. So, it’s a pretty embarrassing for a company. Thus, it may not be surprising that the publication reported that applicants publicly disclosed the existence of only 15.5% of the Refusal to File Letters and only 5.4% of applicant-disclosed reasons matched the refusal reasons that the FDA had provided in the RTF letters. This suggests that there is a significant problem with company disclosures of these letters.

Here are some of my other takeaways from the JAMA publication:

  • Only a very small proportion of NDA submissions result in a refusal to file
  • The main reasons for issuance of letters are:
    • Safety issues
    • Efficacy issues
    • Failure to heed advice given by FDA prior to the NDA submission

The last sub bullet is especially troubling. As pointed out in the article, the FDA reviewers are typically very knowledgeable about the subjects of NDA submissions, having reviewed prior similar submissions by other sponsors. Thus, their pre-submission advice is typically extremely valuable (and FDA’s advice is provided for free).

As discussed in my book, companies ignore FDA advice more commonly than would be expected. In the case of Refusal to File Letters the authors found that about a quarter of the Refusal to File Letters were due to FDA’s pre-submission advice being ignored. This is roughly consistent with my personal observations. The publication reported that 1.5 year delay of the NDA approval; a significant part of the patent life of a typical NDA products and a delay in the time when patients can benefit from a new product and roughly consistent with my experience as well.

When a refusal to file letter is received from FDA, a sponsor can file “over protest,” essentially ignoring FDA’s Refusal to File Letter. Although this was done in only a handful of cases included in the publication, all the applications filed “over protest,” all were ultimately rejected by FDA, suggesting continued ignoring of FDA’s advice is not generally productive for a company sponsor.

As pointed out in my book, advice from regulators is generally extremely valuable. One can disagree with them. But, disagreements should be resolved prior to action that may result in a refusal to file or other adverse determinations by regulators. Proceeding in the face of contrary advice, increases the risk of the development process which is a very risky business in any event.

Given the relatively low rate of public disclosures of Refusal to File Letters by sponsors, investors and other interested parties should be alert to the potential of undisclosed RTF letters. Some ways to do this are for example: inquiring about apparent delays of expected events following an NDA submission for example failure to announce intermediate steps expected after the announcement of an NDA submission. For example:

  • Acceptance of NDA for filing
  • Submission of 120-day safety update
  • Completion of manufacturing sites inspections

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2020 FDA Novel New Drug Approvals

My objective in writing my book and this blog is to contribute in some small way to the more efficient and productive development and approval of new drugs. When I first started the blog, the number of new FDA novel drug approvals was near an all-time low. During 2014, I stopped writing about how to do more efficient and effective drug development and helped to start an organization that I believed could make drug approvals more efficient. I believed that this organization could, by its example, help drive the industry in a more efficient and productive direction. Whether by coincidence or in part because of the efforts of me and my colleagues, the number of novel drug approvals has increased considerably since the period before 2014 as evidenced by the Figure below.

CDER’s Annual Novel Drug Approvals: 2011 - 2020

A full listing of the approvals during 2020 is given on the FDA’s website at:


Two of the approvals listed are derived from Roivant Sciences, Ltd., the company I helped to start with the hope that it could be a more efficient drug developer. For 2020, about 4% of all novel drug approvals by FDA came from Roivant derived companies.

There were seven companies that had two approvals if you count the two that derived from Roivant as Roivant approvals and no individual company that had more than two. I am not sure if any of the companies listed were started by the same people like those derived from Roivant and therefore could be consolidated as I’ve done for Roivant. Quite possibly, I suppose. On the other hand, if none of them were started by the same people, then Roivant would be among the top 7 out of 53. Remarkable for a company is only 6 years old.

Another thing worth noting. Most of the approvals were obtained by companies that are not pharma majors. I think this is important because obtaining a new drug approval from FDA is a significant accomplishment and demonstrates a minimum level of competency at the main value generator in the pharma industry. I think it would be interesting to compare companies by calculating the average drug development spend over the prior 5 years divided by the number of NDA approvals in the current year. Of course, there are other kinds of drug approvals, new formulations and new indications and some drugs are a lot more important than others. But, I still think this might be a reasonable measure of productivity and a predictor of longer-term success because getting novel new drugs approved is such a core competency.

For reference, I’ve pasted the annotated page from the FDA website below. The numbers floating off to the right are the number of approvals for that company if it had more than one. The first, vibegron and third, relugolix were both derived from Roivant.

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A Comment on the Evaluation of the Risk of Covid Vaccination

Recently, people who know I’m a retired physician and pharma specialist, occasionally call to ask my opinion about the safety of getting vaccinated (immunized) against the SARS Covid-19 virus.  I believe their hesitancy is the result of the media’s emphasis on the vaccine’s potential side effects; both common (usually mild or moderate and transient), rare (that can be more serious but appear to respond well to therapy), and purely theoretical.    

The question presents a false dichotomy, namely that one can actually decide whether or not to be immunized.  Covid is a very infectious virus and is becoming more so as time passes and more contagious variants emerge. This means that the pandemic will not end until a large majority of the population becomes immune; realistically, all of us will become  “immunized” over time in either of the following ways:  

  • By getting vaccinated with a well-characterized substance that is manufactured to a high standard of purity and consistency in a pharmaceutical manufacturing plant and stored in a sterile vial, and which, at least over a period of months, has been found to be remarkably safe, subject to generally modest side effects.
  • By remaining unvaccinated until, almost inevitably, we become infected with the virus (which continues to mutate to cause ever-higher transmissibility and can have fatal consequences). Transmission from another infected person will naturally inoculate us, while introducing into our bodies viral components made from parts of another person’s body, and reproducing in our bodies a multitude of potentially toxic molecules that are known to frequently cause symptoms like fever, myalgia, cough, shortness of breath, loss of taste and smell sensation and for hundreds of thousands of Americans (so far) death, largely by suffocation.

I believe that for all but the luckiest who may somehow avoid infection in spite of remaining unvaccinated, these are the only two options: Getting a substance made by professionals who are trying to protect your health, or getting infected by a malign virus that uses you as food and doesn’t care if it has to sicken and kill you and your loved ones to feed itself; in short a monster.

Although all pharmaceuticals have side effects, one must compare them with the alternatives.

I am beyond grateful for the existing vaccines and to the dedicated people who’ve brought and will continue to bring these life-saving pharmaceuticals to us faster than ever before. They may not be perfect. But, what’s the alternative?

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Please Excuse My Absence

Been busy for a couple of years. During that time, I helped put some of the ideas included in my book into practice as part of starting a new company. Thus far, I am more than gratified by the results; most recently with the approval of two of the company’s new drugs by the FDA. The company has grown from a handful of us having dinner in a Mexican restaurant to over 1000 employees in its various parts. It has strong relationships with major companies and I am hopeful that it will grow even more productive. Although it’s quite small and young compared with the major companies, I judge its pipeline and number of FDA approvals last year to be comparable to those of some of the largest pharma companies in the world.

It wasn’t appropriate nor did I have time write in this blog while involved in such a demanding undertaking. But, now I do have some time so I plan to make some entries from time to time. I hope you find them interesting.

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Pharma Mergers and Acquisitions: No-win or a No-Lose Propositions

This seems to be the season for mergers and acquisitions in Pharma.  What is the motivation for these transactions.  One possibility is that if structured correctly, a merger or acquisition can be a no-lose proposition for accounting purposes and a no-win proposition for stockholders.

How can this happen.  Consider Company A which is slowly losing patent protections for its products and cannot get replacement products approved quickly enough to replace them.  Given the massive profitability of many pharma products and the enormous landscape of potentially successful development projects, Company A must be relatively poorly managed.  However, Company A can find Company B that has income producing products and acquire it.  What is the cost to Company A?  The cost is minimal because the money Company A spends to acquire Company B is counted as an investment.  Company B’s assets are simply a replacement for the money Company A spent.  Over time, Company A will have to depreciate these assets but this depreciation can often be spread over many years.  So, the cost of acquisition is low from an accounting point of view.  Just a lot of lawyer payments.

If the cost is low, what’s the benefit.  Well, that’s easy, the net income of Company B is added to the income of Company A.  So, profits go up automatically.  In fact, profits can go up even more if Company A fires as many people in Company B as possible.  Of course the firing should concentrate on people who don’t add immediately to the current income of Company B.  This maximizes the amount of Company B’s income that is available to add to Company A’s bottom line.  Who will be the first targets for firing?  The R&D group is prime.  R&D doesn’t contribute to current profits.  R&D generates future profits and a good R&D group can be extremely valuable.  But, in the short term, R&D is a cost.  So, getting rid of R&D makes short-term sense.  It makes many mergers and acquisitions a no-lose proposition, at least on paper.

But what about reality?  Firing all the people responsible for generating future profits means there will be no future profits.  All the value locked in the R&D organization is lost.  So, the value of Company B is greatly reduced.  However, this loss is probably not recognized for accounting purposes.  The value of Company B is still carried at close to its cost.

Thus, an acquisition can, for accounting purposes, be a no-lose transaction.  However, over time, the profits from Company B must decline because their future revenues are limited by the loss of R&D.   So, in due course, the slow depreciation of Company B that must be recognized year after year, will overtake the rapidly declining revenues.  This is when reality starts to set in.  Now Company A may have to start recognizing losses from the acquisition.

What to do?  Another acquisition will fill the bill.  Of course, it must be larger because the income from newly acquired Company C will need to cover the losses from depreciation of Company B in addition to the depreciation of Company C.  So, the acquisitions must get bigger and bigger.

That’s just what we are seeing.  Larger and larger acquisitions but sluggish growth or declining profits, except for a few years following the acquisition.

I’m not sure how something like this will end.  But, he size of acquisitions cannot grow to infinity.

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