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

Key Points

Question

What have been the benefits of the US Food and Drug Administration’s pediatric exclusivity program in terms of new safety and efficacy data in pediatric populations, and what have been the costs to all consumers of extending market exclusivity by 6 months?

Findings

In this study of 54 drugs receiving pediatric exclusivity under the Best Pharmaceuticals for Children Act from September 27, 2007, to December 31, 2012, 31 (57%) demonstrated safety and efficacy in children. Pediatric exclusivity provided pharmaceutical manufacturers with a median net return of $176.0 million and a median ratio of net return to cost of investment of 680%.

Meaning

Meaningful knowledge of pediatric uses of pharmaceuticals has come from the pediatric exclusivity program, but at a high cost; other approaches to pediatric research, such as direct funding of such studies, may be more economically efficient.

This study assesses the benefits of the US Food and Drug Administration’s pediatric exclusivity program in terms of new safety and efficacy data in pediatric populations and the costs to all consumers of extending market exclusivity by 6 months.

Abstract

Importance

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

Objective

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

Design

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

Main Outcomes and Measures

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

Results

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

Conclusions and Relevance

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

Introduction

Historically, few prescription drugs approved for adults were tested on children before they were widely used in children. The pediatric exclusivity program was conceived to address this problem by enabling extension of the market monopoly on a brand-name prescription drug for 6 months if the manufacturer undertook trials in children. The process formally begins when the US Food and Drug Administration (FDA) issues a Written Request detailing the qualifying pediatric studies.¹ (In approximately 80% of cases, sponsors propose pediatric studies to the agency prior to receiving Written Requests.²) The manufacturer then earns the extension by completing the prespecified trials, regardless of whether the drug is found to be safe or efficacious in pediatric populations. Some of these drugs have gross sales of more than $1 billion annually in the adult market, so 6-month market exclusivity extensions pose substantial costs to all patients and payers.

The pediatric exclusivity program was enacted as a 5-year pilot as part of the FDA Modernization Act of 1997.^3,4,5 It was then integrated into the Best Pharmaceuticals for Children Act (BPCA) in 2002, renewed in 2007, and made permanent in 2012.^6,7 Separately, the Pediatric Research Equity Act of 2003 (PREA) requires pediatric studies for approved indications of drugs without a market exclusivity extension when the FDA identifies a need to improve pediatric labeling.^8,9 For drugs subject to a PREA mandate, sponsors may propose that 1 or more of its mandated trials form the basis of a formal Written Request for pediatric studies that, if approved, provides pediatric exclusivity extensions under BPCA for completion of PREA-mandated trials.

Early studies of the pediatric exclusivity provision showed that some clinical studies provided useful information about the proper dosing and expected outcomes in children.^10,11 Between 1998 and 2012, 57% of drugs granted exclusivity through Written Requests had new or expanded pediatric indications.^11,12 Through December 2017, Written Requests have been issued for 438 drugs, with trials completed and pediatric exclusivity extensions awarded for 229.^13,14

Prior studies examining the economics of the pediatric exclusivity program found a variable but lucrative net return. One study of the costs and revenues for a sample of drugs granted pediatric exclusivity between 2002 and 2004 found a net return of −$8.9 million to $507.9 million for 9 drugs randomly selected from 9 therapeutic classes.¹⁵ Another study of 9 antihypertensive drugs found a net return of $14.5 million to $316 million.¹⁶ To systematically generate more recent outcomes from the program, we reviewed benefits and costs for drugs being studied in children and receiving pediatric exclusivity from 2007 to 2012.¹⁷

Methods

Sample Derivation

From publicly available FDA websites,^13,18,19 we identified 54 drugs that received pediatric exclusivity extensions between September 27, 2007, and December 31, 2012, the period spanning the renewal of the program under the FDA Amendments Act of 2007, before the program was made permanent in 2012. We chose this period to allow for as many drugs as possible to experience their pediatric exclusivity extension periods; the award date may precede the extension period—which begins when the final patent expires—by several years.

Pediatric Clinical Trials

Using FDA medical review documents, we extracted the phase and number of participants of trials completed for the Written Request for the 54 drugs in our sample (for exceptions, see eAppendix in the Supplement). Neither ethical board approval nor patient written informed consent was required because we used only publicly available data and no patient medical records.

Label Changes

We queried FDA’s New Pediatric Labeling Information Database to identify whether studies were conducted under BPCA alone or under both BPCA and PREA.^19,20 We then extracted labeling changes for the 54 drugs within our cohort, including safety and efficacy outcomes. We also determined whether extended or new indications were awarded.^11,20

Pediatric Exclusivity Period and Generic Entry

We identified the sponsor, the date of new drug approval, and the 6-month window in which pediatric exclusivity occurred using the FDA’s Orange Book,²¹ brand-name manufacturer financial reports, and press releases from generic manufacturers (for exceptions, see eAppendix in the Supplement).

6-Month Revenue and Additional Revenue Due to Pediatric Exclusivity

We determined revenues (earned or estimated) during the 6-month period preceding pediatric exclusivity. Six of the 54 drugs (11%) did not have publicly available revenue data and were excluded (for other revenue exceptions, see eAppendix in the Supplement). Annual revenue data were divided by 2 to approximate 6-month revenue corresponding with pediatric exclusivity periods and converted to 2017 dollars using a Consumer Price Index annual inflation rate (i) of 0.0169 (eTable 1 in the Supplement). For drugs that had not yet completed their pediatric market exclusivity period by December 31, 2017 (9 of 48 [19%]), we used 2016 revenue data as a proxy for revenues expected during the pediatric exclusivity periods, consistent with a similar study.²²

Additional revenue from the pediatric exclusivity extension was calculated using market share erosion, an estimate of lost market share to generic manufacturers 6 months after market exclusivity expires (see Box).²⁶ Market share erosion represents savings to consumers (patients or payers) had generic entry occurred 6 months sooner but may vary depending on the type of drug and its frequency of use. For example, blockbuster drugs (gross revenue >$1 billion annually) may face several generic entrants on loss of market exclusivity, resulting in accelerated market share erosion compared with niche drugs with fewer generic entrants.

Box. Key Equations Used in Calculating Cost of Investment.

Equations

• R₂₀₁₇ = R × (1 + i)^T1

• AR = R₂₀₁₇ × GMS × (1 − GP)

• CT = [No. of patients phase 1 × phase 1 per-patient estimate × (1 − phase 1 deflator)^T2]

• + [No. of patients phase 2 × phase 2 per-patient estimate × (1 − phase 2 deflator)^T2]

• + [No. of patients phase 3 × phase 3 per-patient estimate × (1 − phase 3 deflator)^T2]

• + [No. of patients phase 4 × phase 4 per-patient estimate × (1 − phase 4 deflator)^T2]

• CT₂₀₁₇ = CT × (1 + i)^T3

• CI = CT₂₀₁₇ × (1 + CC)^T4

Abbreviation Expansions

• R₂₀₁₇ = 6-month revenue inflated to 2017 dollars

• AR = additional revenue from the pediatric extension

• GMS = generic market share lost (%) as a result of delayed market exclusivity^a

• GP = generic price as a percentage of brand price^a

• CT₂₀₁₇ = cost of clinical trials, inflated to 2017 dollars

• CI = cost of investment after accounting for cost of capital (CC^b)

• Time Periods^c:

• T1 = time for inflation to 2017 dollars using Consumer Price Index annual inflation rate (i) of 0.0169. For drugs with patents that had not expired as of December 31, 2017, this value equals 0.

• T2 = timeframe (in years) from the start of trials to March 31, 2013 (the mid-point of the industry-based clinical trial cost estimate time window, October 1, 2012, to September 30, 2013)

• T3 = time from start of trials to December 31, 2017

• T4 = interval (in years) between clinical trials and PE end date

Cost of Trials

To estimate the cost of pediatric trials, we used the mean per-patient per-phase trial costs for 8 disease areas that best matched the indication identified in the Written Request, consistent with a previous study.²² Cost data come from a March 2015 report from the pharmaceutical industry (eTable 2 in the Supplement).²⁹ These clinical trial cost estimates cover a broad range of clinical activities, including costs related to investigator and site, patient enrollment, trial procedures, materials, laboratory and imaging studies, and data management. The per-patient per-phase trial costs specific to clinical trials were converted from 2013 dollars to the year in which clinical trials were estimated to begin using a Bureau of Labor Statistics estimate (Phase Deflators) (eTable 3 in the Supplement).³⁰ Because pediatric clinical trials may cost 2 to 5 times more per patient than adult clinical trials,³¹ we multiplied adult per-patient clinical trial cost estimates by 3. In sensitivity analyses, we used multipliers of 1 (industry estimates with no adjustment) and 5. We then inflated all trial costs to 2017 dollars using the Consumer Price Index.

We accounted for the cost of capital, which reflects the manufacturers’ opportunity cost of investing in pediatric trials vs using those resources for other purposes. We set cost of capital at 10%, consistent with industry-wide estimates for large corporations (which made up the majority of our sample), with sensitivity analyses of 5% and 15% (the latter of which more closely approximates cost of capital for smaller biotechnology firms).^15,22,28 See Box for more details.

Net Return (Cost to Consumers)

Net return is defined as the difference between additional revenue and cost of investment for trials and reflects the monetary value of the pediatric exclusivity provision. This can also be considered the cost to consumers—a transfer of income from third-party payers and patients to the sponsor.³² Consumers could have saved this amount had pediatric trials been directly funded by the federal government. Finally, we calculated the ratio of net return to cost of investment.

Results

The 54 drugs in our study cohort are listed in Table 1. Of these 54 Written Requests, 16 (30%) were initiated by the FDA and the remainder were initiated by sponsors. We identified 141 trials enrolling 20 240 pediatric patients: 41 phase 1 trials with 1249 patients, 32 phase 2 trials with 2019 patients, 65 phase 3 trials with 16 591 patients, and 3 phase 4 trials with 381 patients (eTable 4 in the Supplement). The median number of trials per drug was 2 (interquartile range [IQR], 2-3) and the median number of patients studied per drug was 207 (IQR, 127-556). For 27 drugs (50%), fewer than 200 children were enrolled in clinical trials; the fewest patients needed to obtain pediatric exclusivity was 14 (bicalutamide [Casodex]). Five drugs (9%) were studied in more than 1000 children, with the largest number for nitric oxide (INOmax) (1387). The most common clinical subcategory was infectious diseases.

Table 1. Pediatric Exclusivity Extensions Awarded by the US Food and Drug Administration for 54 Drugs, 2007-2012^a.

Drug	Brand Name	Manufacturer	Pediatric Exclusivity Grant Date	Year of Pediatric Exclusivity Extension
Eplerenone	Inspra	Pfizer	10/24/2007	2019-2020b
Anastrozole	Arimidex	AstraZeneca	11/14/2007	2009-2010
Aripiprazole	Abilify	Otsuka (and Bristol-Myers Squibb)	11/14/2007	2014-2015
Divalproex	Depakote ER	Abbott	12/14/2007	2008
Zoledronic acid	Zometa	Novartis	12/21/2007	2012-2013
Technetium Tc99m sestamibi	Cardiolite	Bristol-Myers Squibb	01/11/2008	2008
Ezetimibe	Zetia	MSP Singapore	02/14/2008	2016
Valacyclovir	Valtrex	GlaxoSmithKline	02/28/2008	2009
Lopinavir/ritonavir	Kaletra	Abbott	03/07/2008	2016
Tipranavir	Aptivus	Boehringer Ingelheim	03/07/2008	2019-2020b
Rocuronium	Zemuron	Organon	04/03/2008	2011-2012
Caspofungin	Cancidas	Merck & Co	04/15/2008	2017b
Levetiracetam	Keppra	UCB Inc	06/03/2008	2009
Lansoprazole	Prevacid	Tap Pharmaceutical Products, Inc	07/15/2008	2009
Topiramate	Topamax	Ortho-McNeil-Janssen	07/24/2008	2008-2009
Valganciclovir	Valcyte	Hoffman-La Roche Inc	07/24/2008	2015
Albuterol	Ventolin HFA	GlaxoSmithKline	08/27/2008	2026b
Bicalutamide	Casodex	AstraZeneca	09/19/2008	2008-2009
Almotriptan	Axert	Johnson & Johnson	01/13/2009	2015
Quetiapine	Seroquel	AstraZeneca	01/23/2009	2012-2013
Colesevelam	Welchol	Daiichi Sankyo	02/17/2009	2022b
Pantoprazole	Protonix	Wyeth	02/17/2009	2010-2011
Risedronate	Actonel	Procter & Gamble	04/24/2009	2013-2014
Esomeprazole	Nexium	AstraZeneca	05/01/2009	2015
Gatifloxacin	Zymar	Allergan	05/19/2009	2013
Bivalirudin	Angiomax	The Medicines Company	06/17/2009	2014-2015
Rosuvastatin	Crestor	AstraZeneca	07/07/2009	2016
Candesartan	Atacand	AstraZeneca	07/20/2009	2012
Olopatadine	Patanol	Alcon	08/12/2009	2015
Levocetirizine	Xyzal	UCB Inc	08/25/2009	2010
Tamsulosin	Flomax	Boehringer Ingelheim	09/17/2009	2009-2010
Famciclovir	Famvir	Novartis	09/21/2009	2010-2011
Olmesartan	Benicar	Daiichi Sankyo	10/07/2009	2016
Docetaxel	Taxotere	Sanofi-Aventis	03/17/2010	2010-2011
Alfuzosin	Uroxatral	Sanofi-Aventis	09/07/2010	2011
Saquinavir	Fortovase	Hoffman-La Roche Inc	10/26/2010	2019-2020b
Nitric oxide	INOmax	INO Therapeutics	11/02/2010	2031b
Pemetrexed	Alimta	Eli Lilly	12/03/2010	2016-2017
Loteprednol/tobramycin	Zylet	Bausch & Lomb	12/28/2010	2012
Paliperidone	Invega	Ortho-McNeil-Janssen	01/05/2011	2015
Clopidogrel	Plavix	Sanofi-Aventis	01/20/2011	2011-2012
Fulvestrant	Faslodex	AstraZeneca	02/01/2011	2021b
Ixabepilone	Ixempra	Bristol-Myers Squibb	04/05/2011	2024-2025b
Darunavir	Prezista	Tibotec	06/07/2011	2024b
Tenofovir	Viread	Gilead	09/06/2011	2017-2018b
Rizatriptan	Maxalt	Merck	09/20/2011	2012
Fosamprenavir	Lexiva	ViiV	01/10/2012	2015
Sildenafil	Revatio	Pfizer	02/09/2012	2017b
Temsirolimus	Torisel	Pfizer	02/28/2012	2032b
Bendamustine	Treanda	Cephalon	05/24/2012	2030-2031b
Eszopiclone	Lunesta	Sunovion	06/29/2012	2014
Duloxetine	Cymbalta	Eli Lilly	07/02/2012	2013
Everolimus	Afinitor	Novartis	07/10/2012	2019-2020b
Rabeprazole	Aciphex	Eisai	12/04/2012	2013

^aDrugs arranged by pediatric exclusivity award date. Drugs with multiple years in the Year of Pediatric Exclusivity Extension column reflect a 6-month window that spans 2 calendar years.

^bDenotes drugs for which pediatric exclusivity had not completed by June 30, 2017, based on FDA Orange Book queries in January 2017. These dates may be subject to change due to future patent challenges, litigation, or settlements. For more details see eTable 5 in the Supplement.

Label Changes

Thirty-one drugs (57%) demonstrated safety and efficacy for children in at least 1 study (Table 2 and eTable 5 in the Supplement). Twenty-nine (54%) extended the age range for an existing adult indication and 3 (6%) obtained a new clinical indication. New indications were identified for children with heterozygous familial hypercholesterolemia (for colesevelam [Welchol] and rosuvastatin [Crestor]).^33,34 In addition to an extended pediatric indication for herpes labialis, valacyclovir (Valtrex) received a new indication for children with chicken pox.³⁵

Table 2. Pediatric Labeling Changes for Pediatric Exclusivity Extensions.

Parameter	No. (%)
Pathway and study type
BPCA (pediatric exclusivity)	54 (100)
PREA (pediatric mandate)	31 (57)
First-in-class pediatric study	23 (43)
Efficacy labeling changes
Efficacy in pediatric population	31 (57)
Extended indication	29 (54)
New indication	3 (6)
Safety labeling changes
New safety issuea	16 (30)

Abbreviations: BPCA, Best Pharmaceuticals for Children Act; PREA, Pediatric Research Equity Act.

^aExamples: anastrozole (acne, headache), eszopiclone (altered taste), everolimus (infection), olopatadine (epistaxis), rocuronium (tachycardia), sildenafil (increased mortality), tipranavir (rash).

Thirty-one (57%) drugs that received pediatric exclusivity under BPCA had also been subject to a PREA mandate; of those, 24 (77%) received new or expanded indications. By comparison, 7 of the 23 drugs (30%) receiving pediatric exclusivity under BPCA alone received new or expanded indications.

Some pediatric studies identified important safety signals in children (Table 2). Of the 54 drugs, 16 (30%) had new pediatric safety issues added to the drug label. For example, pediatric studies of sildenafil (Revatio) for patients with pulmonary hypertension identified dose-dependent increases in mortality,³⁶ while valproic acid (Depakote) increased the risk of fatal hepatotoxicity in infants younger than 2 years.³⁷

We also observed clustering of pediatric studies for certain disease indications. Thirty-one of the 54 drugs (57%) were not first-in-class to undergo pediatric studies for exclusivity extensions. For example, 4 drugs were proton pump inhibitors studied to treat gastroesophageal reflux disease; all 4 earned extensions, despite pediatric exclusivity awards for 3 such drugs prior to 2007.¹³

Trial Costs, Additional Revenue, and Net Return

The total estimated cost of investment of pediatric trials for the 54 drugs was $4.9 billion in 2017 dollars, with a median of $36.4 million (IQR, $16.6 million to $100.6 million) (eTable 6 in the Supplement). Pediatric trial costs for 30 (56%) were estimated to be less than $50 million, and 8 (15%) were less than $10 million.

Six-month gross revenues totaled $29.0 billion in 2017 dollars for the 48 drugs with available revenue data, a median of $342.1 million per drug (IQR, $196.3 million to $773.3 million). Twenty (42%) generated gross annual revenue of more than $1 billion when pediatric exclusivity periods occurred.

The median additional revenue from the pediatric extension was $221.7 million per drug (IQR, $127.2 million to $501.1 million). Thirty-eight drugs (79%) had additional revenues greater than $100 million; 12 (25%) surpassed $500 million. Four (8%) surpassed $1 billion in additional revenues: the antiplatelet agent clopidogrel (Plavix; $2.36 billion), the atypical antipsychotic quetiapine (Seroquel; $1.44 billion), the antidepressant duloxetine (Cymbalta; $1.36 billion), and the proton pump inhibitor lansoprazole (Prevacid; $1.22 billion). The smallest additional revenue was for the migraine treatment almotriptan (Axert; $9.8 million). The most valuable pediatric exclusivity extensions were in the hematology, infectious diseases, and diabetes/metabolic/nutrition categories (Table 3).

Table 3. Cost of Investment, Net Return (Cost to Consumers), and Ratio of Net Return (Cost to Consumers) to Cost of Investment by Drug Category.

Characteristic	No. (N = 48)	Cost, Median (IQR), $ Millionsa		Ratio of Net Return (Cost to Consumers) to Cost of Investment, Median (IQR), %b
		Cost of Investment	Net Return (Cost to Consumers)
Therapeutic class
Cardiovascular/circulatory	4	71.2 (56.9 to 99.3)	126.1 (−32.0 to 288.2)	200 (−30 to 560)
Central and peripheral nervous systems	10	141.9 (87.8 to 286.8)	266.1 (57.5 to 694.7)	250 (30 to 590)
Diabetes/metabolic/nutrition	5	23.3 (16.8 to 27.2)	208.8 (155.2 to 496.4)	1120 (730 to 1250)
Hematology	2	83.1 (NA)	1200.1 (NA)	1180 (NA)
Infectious diseases	9	10.0 (6.9 to 13.7)	132.0 (47.7 to 368.9)	1320 (690 to 2770)
Oncology	6	41.2 (20.1 to 53.5)	297.6 (190.5 to 323.7)	750 (440 to 2710)
Respiratory	2	584.4 (NA)	−405.7 (NA)	−30 (NA)
Other	10	32.1 (25.8 to 70.6)	122.4 (46.2 to 490.1)	450 (80 to 1520)
Blockbuster drug
Yes	20	40.5 (26.5 to 82.2)	493.7 (350.7 to 804.7)	1050 (590 to 2910)
No	28	30.2 (16.5 to 112.7)	58.8 (9.8 to 156.2)	190 (20 to 720)

Abbreviations: IQR, interquartile range; NA, not applicable.

^aIn 2017 dollars, rounded to nearest 100 000.

^bRounded to the nearest 10%.

For all drugs, the median net return was $176.0 million (IQR, $47.0 million to $404.1 million). Net return was positive for 42 drugs and negative for 6 drugs. The median ratio of net return to cost of investment for all 48 drugs was 680% (IQR, 80% to 1270%). Fifteen drugs (31%) had a ratio greater than 1000%.

Sensitivity Analyses

In sensitivity analyses (Figure), varying market share erosion had the greatest impact on cost to consumers, while varying clinical trial costs had the greatest impact on the median ratio of net return to cost of investment. When we excluded 9 drugs with exclusivity periods ending after December 31, 2017, the overall median net return increased from $176.0 million to $184.9 million (IQR, $49.1 million to $493.7 million).

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

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

Discussion

The BPCA and PREA have provided important new information about drugs approved for adults through studies in children. Compared with a pre-BPCA era in which more than 80% of drugs approved for adults were inadequately labeled for children,³² these data can advance disease management in useful ways.

It may not be economically efficient to award pediatric exclusivity to multiple drugs from the same therapeutic class, and only 43% of drugs in our cohort were first-in-class drugs. Among the lipid-lowering statin drugs, 5 received the award (lovastatin in 2001; atorvastatin, pravastatin, and simvastatin in 2002; and fluvastatin in 2005) prior to pediatric studies of rosuvastatin in 2009.¹³ Omeprazole, a proton pump inhibitor used for gastroesophageal reflux disease, received pediatric exclusivity in 2001; its S-enantiomer esomeprazole obtained pediatric exclusivity in 2009,¹³ with 3 other proton pump inhibitors (lansoprazole, pantoprazole, rabeprazole) also receiving pediatric exclusivity during our study period. Studies of these later-in-class drugs pose less risk to sponsors because earlier studies have already offered valuable insights into safety and efficacy. Yet statins and proton pump inhibitors are some of the most widely prescribed drugs among adults, underscoring the fact that 6-month pediatric extensions delay generic competition, with cost and access implications for all patients and payers.

Despite potentially lucrative return from 6 months of extended market exclusivity, use of the pediatric exclusivity program appears to be declining.^15,16 From 2000 through 2004, a mean of 19 pediatric exclusivity awards were granted annually; that value decreased to 7 awards per year, on average, between 2010 and 2014 (eFigure 1 in the Supplement). There were also fewer Written Requests issued per year.¹¹ The high number of pediatric exclusivity awards at earlier times in the program may have reflected a backlog of pediatric studies for medications on the market or the cumulative effect of PREA mandates over time.

The characteristics of studies submitted for pediatric exclusivity have also evolved over time. A previous review found that 50% of pediatric studies conducted between 1998 and 2004 evaluated efficacy, while the other half were trials assessing only pharmacokinetic or safety end points.³⁸ A 2014 FDA analysis of drug labeling changes similarly found efficacy demonstrations in 57% of pediatric exclusivity trials from 1998 to 2012.¹¹ We found that 71% (100 of 141) of pediatric clinical trials in our cohort were phase 2 or higher. We also identified more trials being conducted per Written Request (2.6 on average in our study compared with 2.2 in the previous study covering 1998-2004) with a greater median enrollment per drug (207 compared with 103 in the previous study).³⁸

If policymakers determine that the costs to consumers for pediatric exclusivity extensions described in the present study are excessive, an alternative would be to set a fixed or predetermined award amount for each requested study, claimable on successful completion of pediatric studies. Such an approach would not require companies to wait several years to recoup capital invested in pediatric research, and it would be less expensive for the public, particularly for products with substantial revenues, in which the extension of the monopoly creates the largest mismatch between the incentive and the cost. Another approach would be direct funding of pediatric trials through the National Institutes of Health (NIH). This could include increased allocations to the Pediatric Trials Network, which is funded by the NIH’s National Institute of Child Health and Human Development.³⁹ Because government-sponsored prescription drug insurance programs cover more than 100 million patients, taxpayers already bear a substantial proportion of the costs associated with delayed availability of generic drugs. Federal funding could also expand the scope of studies to include pediatric uses of drugs that are already generic but continue to be prescribed to children without the necessary data.⁴⁰ The NIH already publishes a Priority List of Needs in Pediatric Therapeutics for use in this line of research.⁴¹ In addition to prospective trials, increased funding for active postmarket safety surveillance of existing pediatric indications is important,^42,43,44 particularly because pediatric study enrollment is often not powered to identify less common but potentially important safety signals.^6,44

Limitations

Our study has limitations. The date of generic entry was based on January 2017 patent data that may change based on new patent listings, successful patent challenges, or settlements that establish dates for generic entry. For drugs with no current generic competition, 2016 revenue may underestimate actual earnings during the future time window in which pediatric exclusivity will occur. Because revenue data were unavailable for the exact 6-month time window prior to generic entry, we estimated those revenues using corporate revenue data filed on a quarterly and annual basis. Market share erosion over 6 months may also differ among drugs with differing sales volumes, revenues, and number of generic entrants at the end of the market exclusivity period^45,46; the sensitivity analysis shows variation in the median cost to consumers between approximately $115 million and $230 million when market share erosion was varied between 50% and 80% (Figure).

Median net return remained positive in spite of substantial variation in parameters in the sensitivity analyses. The ratio of net return to cost of investment was most sensitive to our assumption about the clinical trial costs (Figure). This result is particularly interesting given that clinical trial costs were conservatively estimated. In addition, because the cost of capital varies by manufacturer and may be lower for research and development than for manufacturing, a 10% rate may represent an overestimate, particularly in the setting of follow-on innovation.⁴⁷ Cost of capital may also represent an overestimate if federal funding is used to conduct trials. There may be other benefits for sponsors apart from pediatric exclusivity for demonstrating safety and efficacy in pediatric patients that were not included in our study. A 2018 analysis of labeling changes between 2009 and 2011 for drugs found to have safety or efficacy in children found an increased market share of 2.8% and a median yearly revenue benefit of $3.8 million (IQR, $0.7 million 25.2 million).⁴⁸ This study examined “manufacturer incentives to conduct pediatric clinical trials in the absence of legislation like the BPCA and PREA.”⁴⁸

We approximated the date of clinical trials as from the last FDA Written Request addendum listed on the FDA website, a conservative estimate that may not have reflected the actual start date of clinical trials (Box and eFigure 2 in the Supplement). Yet the median duration between the last Written Request addendum and pediatric exclusivity award was 1.98 years, suggesting relatively prompt completion of trials. Given that pediatric clinical trial costs were not publicly available, they were estimated using mean per-patient costs in adult trials. Multiplying those values by 3 may still underestimate the complexity of pediatric clinical trial enrollment, conduct, and monitoring, and we did not consider the costs of preclinical studies.¹⁵ Other factors, such as the role of parental involvement in care and informed consent, logistical challenges related to enrollment and multicenter trial coordination, and risk of litigation, are important considerations in deciding whether to begin clinical trials in children. We excluded drugs with pediatric exclusivity awards after 2012 to capture the actual end of market exclusivity for as many drugs as possible (there was a median of 4.25 years between the award and the exclusivity period), although this approach limits the generalizability of our data to the current pediatric exclusivity program. Finally, we did not consider tax incentives associated with research and experimentation or pediatric orphan drug research when calculating the cost to consumers.

Conclusions

The pediatric exclusivity extension was drafted in response to a need for studies of pharmaceutical products in children. It has generated new pediatric indications for several drugs, but it has also led to substantial rewards to pharmaceutical manufacturers. Over the long term, direct federal funding of pediatric research may be less expensive for consumers and have similar—or greater—public health benefit.

Supplement.

eMethods

eFigure 1. Annual Number of Pediatric Exclusivity Awards, 1998 – 2016

eFigure 2. Time periods used when calculating net economic return

eTable 1. Consumer Price Index, All Urban Consumers, 2003-2017 (Source: https://www.bls.gov/cpi/data.htm)

eTable 2. Estimated Locally-Based Per Patient Costs by Selected Disease Areas and Phase

eTable 3. Average annual growth rates of clinical trial costs: alternative models and periods, 1989-2011 (in percent)

eTable 4. Components of Total Trials Conducted for Each Drug in Conjunction with Pediatric Written Request

eTable 5. Pediatric Exclusivity grants, Food and Drug Administration, September 27, 2007 – December 31, 2012

eTable 6. Estimated Cost to Consumers (Net Return) and Ratio of Net Return to Cost of Investment for 48 Pediatric Exclusivity Extensions with Revenue Data (Listed in Order of Pediatric Exclusivity Grant Date)