A recent report published in the Journal of the American Medical Association found that the FDA’s Pediatric Exclusivity Provision (PEP) does not necessarily yield lucrative returns for innovator drug companies.
The PEP authorizes the FDA to grant innovator drug companies a six-month extension of marketing exclusivity (beyond patent expiration) in exchange for conducting studies of the drug’s effect in children. The program sought to improve product labeling for pediatric uses. The provision, passed as part of the Food and Drug Administration Modernization Act of 1997, is set to expire later this year.
Critics have alleged that the PEP generates a lucrative windfall for innovator drug companies, while providing consumers with few additional benefits. The JAMA report examined the degree to which Big Pharma has financially benefited from the program.
The authors studied nine different drugs in a variety of therapeutic classes. The six-month net economic return for the participating drug company varied from -$8.9 million to $507.9 million. The return-to-cost ratios varied from -0.68 to 73.63.
The authors found that the PEP did not consistently generate large financial returns for innovator drug companies. In some instances, complying with the program generated a net loss. Yet the authors found that the program has created incentives for innovators to carry out much-needed clinical drug trials in children.
Robert S. Dailey is a third-year law student at the University of North Carolina at Chapel Hill. He holds a Ph.D. in physical chemistry. Rob was a member of the 2006 class of summer associates at McDonnell Boehnen Hulbert & Berghoff.
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