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Cancer's Cruel Economics


Billions of dollars are spent developing cancer drugs, but precious few get approved. Is the FDA part of the problem?

Editor's note: For a CBS Evening News report on the challenges confronting new cancer drug approvals, which was made in collaboration with BusinessWeek, click here.

Dr. Oleg Loran treats kidney cancer, but he doesn't have much to offer his patients. They have a 60% chance of surviving five years if the disease is caught early, but more than a third are diagnosed after the cancer is well advanced, when their chances of reaching the five-year mark drop as low as 11%. So Loran was relieved in April when a radically new treatment for kidney cancer was approved. Oncophage, developed by Manhattan-based startup Antigenics (AGEN), is a vaccine that recruits the patient's immune system to fight off cancer cells. It may keep the cancer from recurring for up to two years. "This is undoubtedly a major victory," says Loran.

Perhaps, but not for Americans. Dr. Loran practices in Moscow, and Russia is the only country that has approved Oncophage. The data was not conclusive enough to convince the U.S. Food & Drug Administration; Antigenics will have to mount another clinical trial before the agency will consider approving it for stateside applications. Such a trial would likely take 8 to 10 years and cost at least $500 million, well beyond the means of Antigenics, which has no other products and a stock trading at just over $2 a share. And that, in a nutshell, illustrates the quandary of cancer drug development.

Death and Disappointment

The U.S. government has doled out more than $75 billion for oncology research since President Nixon declared his War on Cancer in 1971. Outlays by the pharmaceutical industry have been far greater. Yet the death rate from cancer has dropped only about 7% in the past three decades, with most of the progress in the last few years. The disease continues to strike 1 in 3 Americans, and it kills 1 in 4. That averages out to 1,500 deaths every day, at an annual cost to the nation of $210 billion and climbing. Cancer is expected to become the nation's biggest killer within a decade, surpassing heart disease.

There are many plausible reasons for so much disappointment, not least the complexity of the disease. But more and more researchers, companies, and patients lay part of the blame on the FDA. They complain that the agency is using outmoded and overly rigorous methods for evaluating a new generation of cancer treatments, rather than doing everything possible to get better drugs to sick patients.

The Vioxx Effect

Since 2005 the FDA has approved 18 new cancer drugs, many of them breakthrough products. But the pipeline contains hundreds more that will never get to market because corporate developers aren't able, or willing, to come up with the money, time, and patients necessary to establish acceptable data. A Tufts University review found that only 8% of experimental cancer drugs end up receiving FDA approval, compared with 20% of medicines for all other diseases.

The FDA knows there's a problem. In 2004 it announced with much fanfare an effort, dubbed the Critical Path Initiative, to make clinical trials more productive. But the initiative never got much funding and little has been heard since. Outside the agency, academic and industry researchers who come up with creative ideas for evaluating drugs routinely complain that the FDA is too conservative to embrace new methods.

The agency's caution may be prudent. But its critics say regulators are too wary of congressional scrutiny in the wake of the debacle involving Merck's (MRK) painkiller Vioxx. Ever since that drug was pulled off the market in 2004 amid safety concerns, the FDA has come under withering attacks in Washington, and overall drug approvals have plummeted. "It's always far easier to say no to a drug than yes,"says Dr. David Kessler, director of the FDA from 1990-97 and now a professor at University of California at San Francisco. "But there are times when the public interest requires that the agency step out of its role solely as a policeman and put into practice those things that might advance the public health."

Kessler believes the agency should overhaul its methods for reviewing cancer drugs much as it did in the late 1980s and 1990s for AIDS drugs. Protease inhibitors and other breakthrough treatments were rushed through the approval process under a new expedited review process put in place to improve patients' access to potentially life-saving medicine. We ended up with a class of drugs that changed the face of the disease," says Kessler. "Even I was struck by how fast it happened, and I was living it."

Kessler and others want a similar push for new cancer drugs, one that would include major changes in human testing. The clinical trial process now is a three-part, years-long effort that effectively kills off all but a handful of once-promising drugs. Medical journals and conferences regularly report on alternative approaches, such as altering a trial's criteria once the first results are in, using mathematical models to predict safety and efficacy, and setting targets that take months to reach instead of years. Pharmaceutical companies would especially like to be able to break down drug-trial results into subsets of participants, so they can establish which groups responded best.

The ultimate authority on whether these methods will pass muster is the FDA's Office of Oncology Drug Products, headed by Dr. Richard Pazdur, one of the most powerful men in medicine. An oncologist who formerly practiced at M.D. Anderson Cancer Center in Houston, Pazdur is demanding and decisive. His division typically gives no quarter when clinical trials produce equivocal results. Pazdur says this is only fair to patients, the constituency he serves: "Efficacy, efficacy, efficacy. That's what we're looking for."

Only the Sickest Patients

Not all patients agree that Pazdur has their best interests at heart. Some advocacy groups, angry at the lack of new cancer drugs, went all the way to the U.S. Supreme Court last year in an attempt to force the FDA to let people buy almost any experimental cancer drug being tested in humans. The Court refused to hear their appeal, but the groups haven't relented. On May 30, the FDA will face a nationwide protest led by CareToLive, a nonprofit advocacy group angered by the agency's rejection last year of Provenge, a controversial prostate cancer vaccine made by Dendreon (DNDN). It would have been the first new drug for prostate cancer in 20 years, and an outside panel of cancer experts chosen by the FDA recommended approval, but the agency asked for another clinical trial.

Pazdur rejects the attacks, pointing out that the FDA already allows patients access to any experimental cancer drug on a "compassionate use" basis if standard treatment options have been exhausted. The agency, he says, is routinely made a scapegoat by both patients and company executives who refuse to abandon a drug despite an obvious lack of efficacy. "Believe me, if there were a clear survival effect, the drug would be approved," says Pazdur.

Establishing such a clear effect is exceedingly difficult. The FDA wants proof that a cancer drug keeps patients alive longer, although it will consider other markers for efficacy, such as a delay in tumor growth. But clinical trials usually enroll only the sickest patients, few of whom live more than a few months even when a drug works. If healthier patients were tested, it could take five years or more of follow-up to show that a drug helped them live longer.

Those difficulties haven't kept the pharmaceutical industry from trying. There are currently some 750 cancer drugs in human trials, far more medications than in other disease categories. Successfully ushering any one of these drugs through the necessary development stages will take up to 15 years and typically cost more than $1 billion—about $200 million more than is spent winning approval for a noncancer drug.

The clinical trial sinkhole most threatens small biotechs that develop the bulk of new cancer drugs, and it is these firms that complain the loudest about the FDA. Pazdur responds that, while a large pharmaceutical company may be willing to cut its losses if a clinical trial isn't panning out, startups with no other products in their pipelines too often keep a drug in development long after failure is apparent. "If they have one drug, it's their baby," he says. "They can't let go of the drug because that's the end of the company."

Antigenics CEO Garo Armen vigorously defends his own persistence. His crusade for the drug Oncophage is personal: His mother suffered from breast cancer for years. When he was 17, Armen emigrated with her from Turkey to New York and searched for a cure, but she died four months later.

Armen, now 55, eventually landed on Wall Street as a pharmaceutical analyst, and started his own health-care investment fund in 1989. Four years later he was contacted by Pramod Srivastava, then a biochemist at Mount Sinai School of Medicine, about a cancer vaccine he had developed. The treatment involved removing a few of the patient's tumor cells, isolating and fortifying the cellular proteins that normally alert the immune system to disease, and reinjecting the proteins into the patient.

"I Feel Very, Very Fortunate"

Armen embraced the idea and in 1994 started Antigenics with $250,000 of his own money, plus the backing of a few friends. He was initially stirred by the results from animal testing; the vaccine cured 80% of mice in the early stages of cancer with virtually no side effects. It did not work as well on large tumors, an ominous sign of troubles to come. Still, early human tests were sufficiently promising that Armen was able to take Antigenics public in February, 2000, at $18 a share, raising $72.5 million. A few months later the FDA agreed to review the vaccine on an accelerated schedule when the company filed for approval, and Antigenics began recruiting 728 patients with kidney cancer for the phase III trial.

Enlisting patients was no easy task. Fewer than 5% of U.S. cancer patients participate in clinical trials, and only 39,000 Americans are diagnosed with kidney cancer each year. Antigenics had to scour the world for patients.

Ultimately, 118 cancer centers participated in the trial, 63 of them outside the U.S. The largest group of patients, 172, was treated in Russia. In the U.S., Dr. Christopher Wood of M.D. Anderson Cancer Center in Houston was lead investigator of the Oncophage trial, and he became a keen advocate. "There is clear evidence that it works," he says, pointing to the case of Steven Creel of Austin, Tex.

Creel, a software salesman, was diagnosed with kidney cancer in January, 2003—a few weeks after he turned 40 and a few weeks before he learned that his wife was pregnant with their first child. Creel's tumor was the size of a fist, and he was at high risk of the cancer recurring after surgery. He joined the trial in June and got biweekly Oncophage injections for a year. "There were literally no side effects. I would have the treatment and then play tennis," says Creel. He now has two children, aged 4 and 1, and has been cancer-free for five years. "I feel very, very fortunate," he says.

It took five years for Antigenics to complete the study; then came the bad news. In March, 2006, the company had to eliminate 124 patients from the trial because they didn't meet the criteria, a common occurrence in phase III trials and one that can render the final results less definitive. In the remaining participants, the vaccine worked only slightly better than standard therapy, a success rate well short of the FDA's requirements. Antigenics' stock plunged on the news.

But Antigenics' researchers dug into the data and came up with reason to hope. They determined that a subset of patients, whose cancer had not spread before receiving Oncophage, went 1.8 years longer without a recurrence than similar patients in the control group.

The FDA rejects this kind of after-the-fact data dissection, known as subset analysis, as do many cancer specialists. "It's like shooting an arrow and then painting the bull's-eye around it," says Pazdur. "You cannot use subset analysis to salvage a failed trial."

Armen insists his analysis is justified because, during the course of the trial, better diagnostic technology had prompted a medical standards group to change the definitions for kidney cancer. The change led to the insight that Oncophage worked best in patients with earlier-stage cancer. Armed with the restructured data, an Antigenics team met with FDA staffers in May, 2006. The team was asked to run another trial using only intermediate-stage patients. But that could take 10 years, and Antigenics was almost out of money.

Instead, Armen looked for a more receptive country for his subset analysis. Russia was a natural choice, given that a quarter of the trial subjects resided there. Russian authorities approved Oncophage 9 months after the application was filed. Antigenics has since met with drug regulators from the European Union and plans to file an application there by yearend. Armen insists he will then use Oncophage revenues to finance a further trial that would satisfy the FDA. M.D. Anderson's Wood, who oversaw the earlier trial, isn't so optimistic: "Realistically, I don't see how they can afford another trial. Their belief is almost blind."

Another trial may fail as well, of course. Several cancer vaccines have entered clinical trials and so far none has succeeded. As it happens, though, scientists and statisticians in the U.S. are beginning to warm to the idea of subset analysis. There is tremendous variation in the genetic makeup of tumors, even those in the same location, such as the breast or the lungs. As a result, cancer is not considered a single disease but 200 or more different ones, and a drug that is effective in one patient may achieve nothing in another.

This heterogeneity mires the pharmaceutical industry in something of a catch-22: It's nearly impossible to pinpoint the right patients for a drug without staging a large-scale clinical trial that includes a lot of wrong patients. But the wrong patients cause the trial to fall short of its goal, and the drug isn't approved. "We are learning more and more every day about how patients respond to a treatment," says Dr. Andrew Parsa of the University of California at San Francisco, who is testing Oncophage on brain tumors. "We can have new information retrospectively that would allow us to come up with a much better result, but the FDA won't let you use it." Pazdur says he might be inclined to consider a subset analysis, but only if the patient subgroup is defined before the trial starts, not after. "Otherwise you have the possibility of a toxic placebo."

That's just one concern. Some economists worry the health-care system could go bankrupt if subset analysis released a flood of expensive medicines, each tailored to just a few patients. Drugmakers counter that only those patients most likely to respond would be treated, and ideally the medicines would allow them to live long and productive lives.

Going with What Works

Drug developers are considering a variety of ways to improve clinical trials. AstraZeneca (AZN) has formed a partnership with M.D. Anderson and other centers to test drugs against the large banks of tumor tissue each institution has collected. That way, the company can figure out which types of tumors a drug might block before it embarks on human testing.

Another potential solution to the drug logjam is to run adaptive clinical trials, where the criteria for success would be adjusted as results come in. Based on early responses, doctors might recruit different types of patients midway through a trial. Better use of statistical analysis could also help. Dr. Larry Norton at Memorial Sloan-Kettering Cancer Center in New York has come up with a mathematical model to predict the optimal dose of a drug before it becomes toxic. "I've looked at ancient drugs with this model and found that they were given in the least effective ways," says Norton. He believes a number of drugs that failed in clinical trials could be revived if his model were applied.

The field of cancer research is changing quickly. "We're on the edge of what's known,"says Dan Denney Jr., CEO of a biotech startup, Genitope, whose cancer drug failed a trial and was shelved in March. "The hope is, people will use their judgment and say, 'This seems to be helping people. Let's find a way to get this on the market.'"


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