2011 U.S. Intellectual Propert y 

Enforcement Coordinator

An nual Report on 

Intellectual Propert y 

Enforcement

cover title here

2011 U.S. Intellectual Propert y 

Enforcement Coordinator

An nual Report on 

Intellectual Propert y 

Enforcement

REPORT TO THE PRESIDENT ON

PROPELLING INNOVATION IN

DRUG DISCOVERY, DEVELOPMENT, 

ANd EVALUATION

Executive Office of the President

President’s Council of Advisors on 

Science and Technology

SEP TEM BER 2012

2011 U.S. Intellectual Propert y 

Enforcement Coordinator

An nual Report on 

Intellectual Propert y 

Enforcement

REPORT TO THE PRESIDENT ON

PROPELLING INNOVATION IN

DRUG DISCOVERY, DEVELOPMENT, 

ANd EVALUATION

Executive Office of the President

President’s Council of Advisors on 

Science and Technology

SEP TEM BER 2012
About the President’s Council of Advisors on 

Science and Technology

The President’s Council of Advisors on Science and Technology (PCAST) is an advisory group of the 

nation’s leading scientists and engineers, appointed by the President to augment the science and technology advice available to him from inside the White House and from cabinet departments and other 

Federal agencies. PCAST is consulted about and often makes policy recommendations concerning the 

full range of issues where understandings from the domains of science, technology, and innovation 

bear potentially on the policy choices before the President.

For more information about PCAST, see www.whitehouse.gov/ostp /pcast.
★ i ★

The President’s Council of Advisors on 

Science and Technology

Co-Chairs

John P. Holdren

Assistant to the President for 

Science and Technology

Director, Office of Science and Technology 

Policy

Eric Lander

President

Broad Institute of Harvard and MIT

Vice Chairs 

William Press

Raymer Professor, Computer Science and 

Integrative Biology

University of Texas at Austin

Maxine Savitz

Vice President

National Academy of Engineering

Members

Rosina Bierbaum

Professor, Natural Resources and 

Environmental Policy

School of Natural Resources and Environment 

and School of Public Health

University of Michigan

Christine Cassel

President and CEO

American Board of Internal Medicine

Christopher Chyba

Professor, Astrophysical Sciences and 

International Affairs

Director, Program on Science and Global 

Security

Princeton University

S. James Gates, Jr.

John S. Toll Professor of Physics

Director, Center for String and Particle Theory

University of Maryland, College Park

Mark Gorenberg 

Managing Director

Hummer Winblad Venture Partners

Shirley Ann Jackson

President

Rensselaer Polytechnic Institute

Richard C. Levin

President

Yale University
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Chad Mirkin

Rathmann Professor, Chemistry, Materials 

Science and Engineering, Chemical and 

Biological Engineering and Medicine

Director, International Institute for 

Nanotechnology

Northwestern University

Mario Molina

Professor, Chemistry and Biochemistry

University of California, San Diego

Professor, Center for Atmospheric Sciences 

at the Scripps Institution of Oceanography

Director, Mario Molina Center for Energy and 

Environment, Mexico City

Ernest J. Moniz

Cecil and Ida Green Professor of Physics and 

Engineering Systems

Director, MIT’s Energy Initiative

Massachusetts Institute of Technology

Craig Mundie

Chief Research and Strategy Officer

Microsoft Corporation

Ed Penhoet

Director, Alta Partners

Professor Emeritus, Biochemistry and Public 

Health

University of California, Berkeley

Barbara Schaal

Mary-Dell Chilton Distinguished Professor of 

Biology

Washington University, St. Louis

Vice President, National Academy of Sciences

Eric Schmidt

Executive Chairman

Google, Inc.

Daniel Schrag

Sturgis Hooper Professor of Geology

Professor, Environmental Science and Engineering

Director, Harvard University Center for 

Environment

Harvard University

David E. Shaw

Chief Scientist, D.E. Shaw Research

Senior Research Fellow, Center for Computational 

Biology and Bioinformatics

Columbia University

Ahmed Zewail

Linus Pauling Professor of Chemistry and Physics

Director, Physical Biology Center

California Institute of Technology

Staff

Deborah Stine

Executive Director

Amber Hartman Scholz

Assistant Executive Director

Danielle Evers

AAAS Science and Technology Policy Fellow
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EXECUTIVE OFFICE OF THE PRESIDENT

PRESIDENT’S COUNCIL OF ADVISORS ON SCIENCE AND TECHNOLOGY

WASHINGTON, D.C. 20502

President Barack Obama

The White House

Washington, DC 20502

Dear Mr. President,

We are pleased to send you this Report To The President On Propelling Innovation In Drug Discovery, 

Development, and Evaluation, prepared by the President’s Council of Advisors on Science and 

Technology (PCAST). This report responds to your request for recommendations on this topic.

The past quarter-century has seen tremendous progress in biomedical research, leading to an increasing understanding of cancer, heart disease, diabetes, and other devastating diseases. The Nation has led 

the world in such progress, due in significant part to wise investments by the Federal Government in 

basic biomedical research. These breakthroughs are beginning to pay off in terms of new therapies for 

American patients.

Still, the pace of new therapeutic development has not kept up with the explosion in scientific knowledge. 

The number of novel drugs has remained constant for several decades, even as R&D budgets have substantially increased. As you know, this situation poses an increasing challenge for ensuring the creation of 

innovative therapies for patients. It is also causing serious stresses throughout the biomedical ecosystem. 

To identify and develop constructive solutions to this challenge, PCAST engaged a wide range of stakeholders in discussions over the past twelve months—including senior leaders from the biopharmaceutical 

industry, patient advocacy groups, physician societies, and healthcare payors, as well as the senior leadership of the Food and Drug Administration and the National Institutes of Health. 

There was broad recognition among these stakeholders that there are a wide range of issues that must be 

solved, only a minority of which are at the FDA. The stakeholders converged around a set of actions that 

the Federal Government and non-Federal parties can take to address this challenge. Informed by these 

discussions, PCAST has identified opportunities and made recommendations that are outlined in the 

attached executive summary and full PCAST report.

Together, the efforts that PCAST recommends are aimed at doubling over the next decade the rate of 

invention of innovative new medicines for patients, while increasing drug safety. PCAST believes the 

recommended actions will advance the health of Americans, as well as economic growth for the Nation.

EXECUTIVE OFFICE OF THE PRESIDENT

PRESIDENT’S COUNCIL OF ADVISORS ON SCIENCE AND TECHNOLOGY

WASHINGTON, D.C. 20502

March 25, 2010

President Barack Obama

The White House

Washington, DC 20502

Dear Mr. President,

We are pleased to send you this “Report to the President and Congress on the Third Assessment of the 

National Nanotechnology Initiative,” prepared by the President’s Council of Advisors on Science and 

Technology (PCAST). This report reflects a PCAST decision to advise you on this topic and fulfills PCAST’s 

responsibilities under the 21st Century Nanotechnology Research and Development Act (Public Law 108-153) 

and Executive Order 13349 to provide periodic updates to Congress.

To provide a solid scientific basis for our recommendations, the Council assembled a PCAST Working Group 

of three PCAST members and 12 non-governmental members with broad expertise in nanotechnology. The 

Working Group addressed the requirements of Public Law 108-153, with additional efforts aimed in four 

areas: NNI program management; the outputs of nanotechnology; environment, health, and safety research; 

and the vision for NNI for the next ten years. The Working Group’s deliberations were informed by 

discussions with 37 government officials, industry leaders, and technical experts from a wide range of fields 

involving nanotechnology. 

The report finds that the NNI—which has provided $12 billion in investments by 25 Federal agencies over the 

past decade—has had a “catalytic and substantial impact” on the growth of the U.S. nanotechnology industry 

and should be continued. Further, the report finds that in large part as a result of the NNI the United States is 

today, by a wide range of measures, the global leader in this exciting and economically promising field of 

research and technological development. 

But the report also finds that U.S. leadership in nanotechnology is threatened by several aggressively investing 

competitors such as China, South Korea, and the European Union. In response to this threat, the report 

recommends a number of changes in Federal programs and policies, with the goal of assuring continued U.S. 

dominance in the decade ahead.

The full PCAST discussed and approved this report, pending modest revisions that have now been completed, 

at its most recent public meeting on March 12, 2010. We appreciate your interest in this important field of 

work and sincerely hope that you find this report useful.

John P. Holdren

Co-Chair

Harold Varmus

Co-Chair

Eric Lander

Co-Chair

EXECUTIVE OFFICE OF THE PRESIDENT

PRESIDENT’S COUNCIL OF ADVISORS ON SCIENCE AND TECHNOLOGY

WASHINGTON, D.C. 20502

March 25, 2010

President Barack Obama

The White House

Washington, DC 20502

Dear Mr. President,

We are pleased to send you this “Report to the President and Congress on the Third Assessment of the 

National Nanotechnology Initiative,” prepared by the President’s Council of Advisors on Science and 

Technology (PCAST). This report reflects a PCAST decision to advise you on this topic and fulfills PCAST’s 

responsibilities under the 21st Century Nanotechnology Research and Development Act (Public Law 108-153) 

and Executive Order 13349 to provide periodic updates to Congress.

To provide a solid scientific basis for our recommendations, the Council assembled a PCAST Working Group 

of three PCAST members and 12 non-governmental members with broad expertise in nanotechnology. The 

Working Group addressed the requirements of Public Law 108-153, with additional efforts aimed in four 

areas: NNI program management; the outputs of nanotechnology; environment, health, and safety research; 

and the vision for NNI for the next ten years. The Working Group’s deliberations were informed by 

discussions with 37 government officials, industry leaders, and technical experts from a wide range of fields 

involving nanotechnology. 

The report finds that the NNI—which has provided $12 billion in investments by 25 Federal agencies over the 

past decade—has had a “catalytic and substantial impact” on the growth of the U.S. nanotechnology industry 

and should be continued. Further, the report finds that in large part as a result of the NNI the United States is 

today, by a wide range of measures, the global leader in this exciting and economically promising field of 

research and technological development. 

But the report also finds that U.S. leadership in nanotechnology is threatened by several aggressively investing 

competitors such as China, South Korea, and the European Union. In response to this threat, the report 

recommends a number of changes in Federal programs and policies, with the goal of assuring continued U.S. 

dominance in the decade ahead.

The full PCAST discussed and approved this report, pending modest revisions that have now been completed, 

at its most recent public meeting on March 12, 2010. We appreciate your interest in this important field of 

work and sincerely hope that you find this report useful.

John P. Holdren

Co-Chair

Harold Varmus

Co-Chair

Eric Lander

Co-Chair

EXECUTIVE OFFICE OF THE PRESIDENT

PRESIDENT’S COUNCIL OF ADVISORS ON SCIENCE AND TECHNOLOGY

WASHINGTON, D.C. 20502

March 25, 2010

resident Barack Obama

The White House

Washington, DC 20502

Dear Mr. President,

We are pleased to send you this “Report to the President and Congress on the Third Assessment of the 

National Nanotechnology Initiative,” prepared by the President’s Council of Advisors on Science and 

Technology (PCAST). This report reflects a PCAST decision to advise you on this topic and fulfills PCAST’s 

esponsibilities under the 21st Century Nanotechnology Research and Development Act (Public Law 108-153) 

nd Executive Order 13349 to provide periodic updates to Congress.

To provide a solid scientific basis for our recommendations, the Council assembled a PCAST Working Group 

f three PCAST members and 12 non-governmental members with broad expertise in nanotechnology. The 

Working Group addressed the requirements of Public Law 108-153, with additional efforts aimed in four 

reas: NNI program management; the outputs of nanotechnology; environment, health, and safety research; 

nd the vision for NNI for the next ten years. The Working Group’s deliberations were informed by 

iscussions with 37 government officials, industry leaders, and technical experts from a wide range of fields 

nvolving nanotechnology. 

The report finds that the NNI—which has provided $12 billion in investments by 25 Federal agencies over the 

ast decade—has had a “catalytic and substantial impact” on the growth of the U.S. nanotechnology industry 

nd should be continued. Further, the report finds that in large part as a result of the NNI the United States is 

oday, by a wide range of measures, the global leader in this exciting and economically promising field of 

esearch and technological development. 

But the report also finds that U.S. leadership in nanotechnology is threatened by several aggressively investing 

ompetitors such as China, South Korea, and the European Union. In response to this threat, the report 

ecommends a number of changes in Federal programs and policies, with the goal of assuring continued U.S. 

ominance in the decade ahead.

The full PCAST discussed and approved this report, pending modest revisions that have now been completed, 

t its most recent public meeting on March 12, 2010. We appreciate your interest in this important field of 

work and sincerely hope that you find this report useful.

ohn P. Holdren

Co-Chair

Harold Varmus

Co-Chair

Eric Lander

Co-Chair

★ v ★

The President’s Council of Advisors on 

Science and Technology

Executive Summary

Report to the President on Propelling Innovation in 

Drug Discovery, Development, and Evaluation

Innovative Medicines Have Made Tremendous Contributions to Public 

Health 

Biomedical innovations—including advances in medicines, medical procedures, and public health—have 

provided extraordinary benefits to the U.S. public. We live longer and we live healthier than our forebears. 

Life expectancy at birth has risen from around 47 years at the turn of the 20th century to 78 years today. 

Many diseases that were once fatal or debilitating can now be prevented, delayed, or ameliorated. 

While nutrition, sanitation, other public health measures, and expanded access to care have been major 

sources of increasing human health, innovative medicines have also played a profound role in this 

progress. Infections that were the leading cause of mortality in the early 20th century are now largely 

eliminated. Vaccines have led to the eradication or control of many devastating infectious diseases, 

including polio, small pox, diphtheria, and measles. Pneumonia, the leading cause of death in the early 

20th century, is now effectively treated with antibiotics. First recognized in 1981, HIV is now treated 

with over 20 Food and Drug Administration (FDA)-approved drugs, although more progress is still 

needed. Multi-drug regimens effectively control HIV infection, preventing the development of AIDS. 

Pharmaceutical therapies have led to cures for multiple malignancies that were once universally fatal; 

for example, childhood leukemia is now cured in 80 percent of cases, testicular cancer in over 90 percent 

of cases, and Hodgkin’s lymphoma in over 90 percent of cases. Along with a reduction in smoking and 

better medical care, cholesterol-lowering therapy, blood-pressure-lowering drugs, anti-platelet agents, 

and diabetes treatment have contributed to a substantial decrease in death from heart attacks (70 

percent decline over the past 60 years). 

Innovation in Medicine Has Depended Upon a Thriving Ecosystem and 

Partnership Comprised of Researchers, Industry, and Regulators

These innovations have been brought forth by a remarkable ecosystem consisting of three major components: (1) academic researchers who have unlocked secrets of basic biology and revealed mechanisms 

that underlie disease, as well as the Federal and other funders who support their research; (2) a robust 

bio-pharmaceutical industry, which has developed molecules to treat disease and conducted clinical 
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trials to demonstrate their efficacy; and (3) government regulators, who have balanced the benefits 

and risks that are inherent in any medical innovation. The United States has consistently led the world 

in all these areas. Importantly, patients themselves have played a critical role in propelling advances by 

focusing attention on the urgency of developing therapies and spurring creative approaches, and by 

participating in clinical trials. Others including physicians, health care payers, pharmacists, and consumer 

groups have also played crucial roles. Medical progress depends on a successful partnership among 

these sectors.

We Stand at a Moment of Historic Progress in Biomedical Research with 

Extraordinary Promise for New Drug Development

The past quarter-century has seen stunning progress in basic biomedical research, propelled by powerful 

research technologies and revealing fundamental information about the biologic basis of disease. The 

opportunities for biomedical advances have never been brighter. 

The tools for biomedical research have become dramatically more powerful. From 1990-2003, the 

Human Genome Project revealed the human genetic code and also propelled advances that have 

decreased the cost of sequencing a human genome by roughly one million-fold. A variety of technologies have made it possible to characterize, monitor, and understand far more of the underlying basis of 

physiology and disease. With these technologies, researchers are systematically discovering the genes 

and proteins that contribute to human diseases—including thousands of genes related to single-gene 

disorders (such as cystic fibrosis or Huntington’s disease), common polygenic diseases (such as diabetes 

and heart disease), and many cancers. These studies will lead to increasingly complete catalogs of disease 

causing entities over the next decade, providing a foundation for understanding disease. 

By combining these powerful tools and information resources with basic biological and clinical studies, 

researchers have made remarkable progress in understanding the fundamental mechanisms underlying 

such fields as immunology, neurobiology, development, and cancer. Some of these discoveries have 

already been successfully translated into first-in-class drugs that are benefitting patients. An estimated 

3,000 treatments are also in various stages of development, including more than 850 for cancer alone. 

Despite These Advances, Pressing Needs Remain for Innovative Medicines 

and Cause for Concern About the Pace of Innovative Drug Development

Despite major breakthroughs for some diseases, many of the most common human diseases are not 

effectively treated by existing therapies. Many common malignancies, including lung cancer, colon 

cancer, breast cancer, and prostate cancer are incurable once they have metastasized. Ninety-six percent 

of orphan diseases, including rare cancers, lack effective therapies.1

 Despite current therapies, heart 

disease and stroke remain leading causes of mortality. Infectious diseases remain an important challenge with the emergence of antibiotic-resistant bacteria and multi-drug resistant tuberculosis, and the 

possibility of new viral pandemics that could cause widespread mortality. Psychiatric diseases remain a 

1. Only 350 therapeutics are approved for 7000 rare diseases that cumulatively affect 30 million Americans. 

Accessed on May 14th, 2012. 

www.fda.gov/ForIndustry/DevelopingProductsforRareDiseasesConditions/ucm239698.htm. 
Executive Summary

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tremendous burden on society, and existing treatments have limited efficacy. Alzheimer’s disease, which 

already afflicts more than 5 million people in the United States, at a direct cost of an estimated $200 

billion in 2012, including $140 billion in Medicare/Medicaid payments, is increasing in prevalence as the 

population ages; some observers project that in the absence of new effective therapies the economic 

burden of Alzheimer’s may ultimately exceed $1 trillion per year. 

The development of innovative medicines therefore remains essential for progress in the prevention 

and treatment of human disease. While biomedical research has experienced a golden age of progress 

over the past 25 years, there has been growing concern about the pace of translating scientific insight 

into public health impact. The many remarkable advances in basic biomedical research over the past 

quarter-century have not yet led to significant increase in the flow of new medicines to the American 

public. 

The Innovation Ecosystem for Public Health is Under Significant Stress and 

R&D Productivity is Declining

Innovation in creating effective treatments for diseases that affect public health depends upon a complex ecosystem that involves basic biomedical research in universities and research institutes, clinical 

research in hospitals, and drug discovery and development in the biopharmaceutical industry. Each of 

the components of this ecosystem is under challenge.

Starting in 2003, Federal support for basic biomedical research failed to keep up with inflation (with 

the important exception of the major multi-year boost provided by the American Recovery and 

Reinvestment Act, which provided a significant increase in funds that has now ended). The prospects 

ahead are even more worrying, given the pressures on the Federal budget.

Similarly, clinical research has come under increasing pressure as the costs of clinical investigation and 

clinical trials increase and sources of financial support decline. NIH has recognized the importance of 

translating basic findings from “bench to bedside” through its Clinical and Translational Science Awards 

(CTSA) program, but this supports only a small portion of the Nation’s clinical research and clinical trials 

infrastructure. 

In addition, there is evidence that industry R&D investment, a major component of this innovation 

ecosystem, is under significant stress:

• The pharmaceutical industry is facing the largest “patent cliff” in its history: drugs with annual 

sales exceeding $200 billion will come off patent in the period 2010-2014, resulting in a loss of 

more than $100 billion in sales to generic substitutions; only a small fraction is expected to be 

replaced by new product revenues. 

• Venture capital to start new biotechnology firms and fund innovative drug development activities appears to be declining, due not only to general economic conditions but to what are cited 

as concerns about unfavorable returns in the drug-innovation sector. 

• Many companies are exiting important fields of critical public health need. For example, 

despite the growing health care and economic burden of neurodegenerative diseases, such 
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as Alzheimer’s disease and psychiatric diseases, many major pharmaceutical companies are 

closing down or severely curtailing drug discovery programs. 

Despite dramatic advances in biological knowledge, the rate of new drugs applications and new drug 

approvals has remained relatively constant for several decades. While the output of new drugs has 

remained constant, total R&D investment by industry in drug discovery and development have grown 

exponentially, in inflation-adjusted terms (see figure below). As a result, the amortized R&D cost per 

newly approved drug has continued to grow. 

FIGURE 1. Annual New Molecular Entity and New Biologic Entity Approvals vs. 

R&D Expenditures in 2009 Dollars.2

Key Challenges Affecting the Ecosystem for Innovative Medicines 

There are two critical areas related to drug discovery and development that must be addressed to 

advance innovation:

(1) Scientific knowledge gaps between basic research and commercial projects. A fundamental problem is that advances in basic biomedical knowledge have not yet been matched by 

similar increases in the science and technologies needed for drug development. Accelerating 

the translation of biological insights into new medicines requires developing powerful new 

scientific knowledge, methodology, and tools. Academic scientists tend not to pursue such 

work, because it is seen as ‘too applied’ and because it often requires multi-disciplinary teams 

rather than individual academic labs. Companies tend to under-invest in such work because 

it is at least partially a ‘public good’—that is, a single company financing the development 

2. Important caveats in the interpretation of this graph, and citation for the data are in the full report in Figure 1. (a).
Executive Summary

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of new foundational approaches to drug discovery cannot fully appropriate the fruits of the 

work, because much of it is disseminated to benefit all participants. Two key areas where such 

rate-limiting scientific knowledge gaps exist are: (1) predicting the efficacy and toxicity of candidate drugs to save time and investment that will ultimately not result in viable drugs, and (2) 

validating proteins in the human body as “druggable” targets to accelerate the development 

of candidate medicines.

(2) Inefficiency in clinical trials. Clinical trials constitute the largest single component of the R&D 

budget of the biopharmaceutical industry, at approximately $31.3 billion, representing nearly 

40 percent of the R&D budget of major companies. Unfortunately, there is broad agreement 

that our current clinical trials system is inefficient. 

Currently, each clinical trial to test a new drug candidate is typically organized de novo, requiring substantial effort, cost, and time. Drug companies must identify clinical investigators and 

assemble multi-investigator teams. Protocols3

 must be written and submitted to each of many 

institutions, and approval of these protocols can take several months without necessarily 

improving the ethics of the research or the protections afforded human subjects. Banking of 

biological specimens, which can be expensive and complex, is typically tailored to the shortterm needs of an individual trial, rather than aimed at the long-term utility of large sample banks. 

Information technology is not standardized among trials. Navigating all of these requirements is 

challenging even for large pharmaceutical companies, and can be daunting for small biotechnology firms. Even in the best cases, the complexities add considerable time to trials—subtracting 

time from a successful drug’s eventual time on the market without competition. 

Ultimately, the industry, the Federal Government, academic researchers, and the medical community would need to work collectively to fill such knowledge gaps and create efficient clinical 

trial networks and trial designs. The long-run return on these investments could be considerable 

to all contributors. The Nation would benefit from a coherent, high-level partnership that brings 

together high-level leadership from key stakeholders on a sustained basis to develop and help 

launch initiatives for shared scientific objectives, such as filling scientific knowledge gaps and 

building efficient clinical trial networks. 

In addition to these two challenges facing the innovation ecosystem, economic incentives 

for certain areas of drug development important to public health may be insufficient to elicit 

adequate investment in innovation. Examples include antibiotics, where the public health 

need for innovation is high but potential market share and duration low, and Alzheimer’s 

disease, where the public health burden of the disease will vastly increase but the lack of basic 

understanding of the disease and the time and complexity of drug development discourages 

companies from investing. In these and other important areas where incentives are not aligned 

to encourage investment, it may be important to consider tools, such as vouchers for priority 

regulatory review, exclusivity periods, and targeted tax credits.

3. These are protocols developed by researchers who are using human subjects, and reviewed by respective 

Institutional Review Boards (IRBs) at academic centers and hospitals charged with overseeing compliance of research 

projects with regulations. 
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Key Challenges Related to Drug Evaluation 

In addition to the issues facing drug discovery and development, critical challenges related to drug 

evaluation must be addressed to advance innovation to serve public health needs.

In principle, the FDA should ensure that the American people gain access as rapidly as possible to new 

drugs that are safe and effective, while ensuring that they are protected as completely as possible from 

drugs that are not. In practice, it is very difficult to strike this balance because our knowledge about 

safety and efficacy is often initially very limited and evolves over time. Approving drugs with too little 

information runs the risk of exposing the public to dangerous side effects or ineffective treatments. 

Requiring overly large and lengthy studies before approval runs the risk of delaying the availability of 

efficacious and potentially life-saving treatments. There are thus two ways in which the FDA can fail: 

by allowing unsafe medical products on the market, or by preventing patients from gaining timely 

access to innovative and potentially life-saving therapies. FDA must strike a balance between these 

two competing responsibilities.

PCAST found multiple issues and opportunities that related to the evaluation of new drugs for approval:

(1) There are opportunities to accelerate the approval of a broader range of truly innovative 

drugs for patients who need them. Such acceleration should be supported by stronger 

tools for and enforcement of post-approval study. Through the Accelerated Approval 

pathway developed in the early 1990s in response to the HIV/AIDS crisis, the FDA has authority to approve drugs for serious or life-threatening diseases on the basis of evidence that the 

drugs improve a surrogate endpoint reasonably likely to predict long-term clinical benefit to 

patients. The FDA could use its authority for a wider range of drugs and diseases than it does 

currently, by approving drugs on the basis of intermediate clinical endpoints (measures of how 

patients feel or function that are short of overall survival or irreversible morbidity). To support 

accelerated approval, it is important to strengthen the enforcement of requirements that drug 

sponsors investigate drugs’ risks and benefits in the post-approval phase, and to ensure that 

FDA responds effectively to this knowledge. By law, the FDA now has authority to withdraw a 

drug’s approval for a specific indication or for all indications. Yet once a drug is in wide use, it 

can be difficult in practice to remove it from the market.

(2) The FDA requires methods to rapidly approve drugs for narrow populations for which 

there is a favorable benefit-risk balance, while protecting the broader population from 

drugs that have an unknown or unfavorable benefit-risk balance. For many innovative 

drugs, it may be possible to demonstrate a favorable benefit-risk balance in certain groups of 

patients with serious manifestations of a disease or especially high risk of developing a disease 

long before it is possible to establish the benefit-risk balance for larger patient populations. Yet, 

once a drug is approved for one indication, physicians are permitted to prescribe off-label, for 

indications for which the drug has never been tested or in ways not recommended by the FDA. 

Off-label use has contributed to discoveries of useful applications of drugs to non-approved 

uses, but it can also pose serious risks to patients. To secure FDA approval for drugs that would 

benefit a narrow population, it is typically necessary to undertake extensive studies to determine 

the overall benefit-risk ratio to the broader population of patients who may use a drug. It would 
Executive Summary

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be possible for the FDA to approve drugs for narrow indications based on limited development 

programs without broader studies, provided that the risk of widespread off-label use could be 

adequately mitigated. For such a pathway to be effective in constraining the use of certain drugs 

to certain patients, it would require a special designation that would strongly discourage prescribers from using these drugs off-label and discourage payors from reimbursing off-label use.

(3) Stronger post-marketing surveillance and communication tools are needed to generate 

evidence on the benefits and risks of drugs and to communicate those benefits and risks 

to the public. The information available about a drug at the time of FDA approval is necessarily 

incomplete, because the patient population who receives the drug during clinical trials can differ 

in important ways from (and is substantially smaller than) the full patient population that can 

be prescribed a drug after it reaches the marketplace. These inherent uncertainties underscore 

the need to generate knowledge about a drug’s risks and benefits over time as it is used more 

widely, in what is known as the “post-marketing phase.” A drug might have benefits for diseases 

beyond the indication for which it was approved by the FDA, or it might have serious risks that 

outweigh its benefits. The FDA and public health agencies currently lack a robust and systematic 

way to track and monitor safety and effectiveness for most medical products in the marketplace. 

The Sentinel System for post-marketing surveillance currently under development by FDA 

holds the potential of becoming such a system, but has lacked adequate and sustained funding 

required to scale up and incorporate more data from electronic health records. In addition, while 

much of the public believes that FDA approved drugs are guaranteed to be safe and effective, 

there is no single moment at which a drug’s full risks and benefits are known. The public would 

benefit from a greater understanding of the known risks and benefits and the uncertainty about 

drugs, and to know how this knowledge changes as a drug is in wider use in the population. The 

current tools for communicating the risks, benefits, and uncertainty about drugs are limited in 

their scope and effectiveness.

(4) Innovators require greater clarity about general regulatory pathways for innovative 

products and approaches. For innovative drug developers to take on new approaches and 

new types of product areas, they need adequate clarity about the pathways and standards of 

evidence that the FDA will require in evaluating those products. In important emerging areas 

of science and innovation, the FDA will sometimes lack the resources and expertise to produce 

clear policies and standards in a timely enough manner to guide innovators in the development of such products. The development of rapid, clear, and thorough guidance documents 

that reflect the consensus of the scientific community on new and emerging areas of scientific 

innovation could help address this need. To develop such guidances in a timely manner while 

reflecting high-level expertise, the FDA may need to more heavily rely upon the biomedical community to collaboratively suggest standards and pathways that the agency can then consider 

in developing guidance documents to clarify its policies and practices. 

(5) Innovators require greater consistency, efficiency, and communication with respect to 

their individual drug applications. The interaction between individual drug sponsors and the 

FDA during the process of drug development and review is critical to efficient drug evaluation. 

Currently, this communication is constrained by formal requirements imposed by legislation. 
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There is a need for strong project leaders at FDA with authority and accountability for resolving 

conflicts and who provide consistent and clear responses to sponsors throughout the drug 

development process (from the investigational stage through final consideration for approval). 

In addition, the FDA faces important management challenges, including antiquated IT systems 

and insufficient ability to assess management needs, pilot reforms, and ensure consistent 

implementation of programs and policies. This situation requires new mechanisms at the FDA 

for evaluating management needs, implementing new reforms, and ensuring accountability 

and consistency across the agency’s centers and divisions.

High-Level Goal and Summary of Recommendations

PCAST recommends setting the following ambitious goal for the Nation:

Goal: Double the output of innovative, new medicines for patients with important unmet 

medical needs, while increasing drug efficacy and safety, through industry, academia, and 

government working together to decrease clinical failure, clinical trial costs, time to market, 

and regulatory uncertainty.

PCAST believes that achieving this goal is possible over the next 10-15 years, and that it will require 

active involvement and collaboration among stakeholders across multiple sectors. Various intermediate 

milestones toward the overall goal can be achieved more rapidly. Achieving the overall goal will require 

advances in: the science of drug development; the execution of clinical trials; the development pathways 

used for innovative medicines; the mechanisms for drug approval; surveillance and communication of 

risk; and management at the FDA.

PCAST makes eight important recommendations to unleash extraordinary innovation and investment 

in the service of public health. The full recommendations, contained in the attached full PCAST report, 

are extensive in their provisions. Here we briefly summarize some features of those recommendations.
Executive Summary

★ xiii ★

Summary of Recommendations:

Improving Drug Discovery and Development

Recommendation 1: Support Federal Initiatives to Accelerate Therapeutics. The Federal Government 

should strongly support funding for basic biomedical research, and vigorously support the National Center 

for Advancing Translational Sciences (NCATS) at NIH and the Reagan-Udall Foundation (RUF).

Recommendation 2: Catalyze the Creation of a Broad-Based Partnership to Accelerate Therapeutics.

This high-level partnership should engage a range of stakeholders to promote innovation and improvement in the discovery, development, and evaluation of new medicines for important public health needs. It 

should focus on identifying needs in three areas: (1) Filling key knowledge gaps in science, technology, and 

methodologies underlying drug discovery and development; (2) Improving clinical trials capabilities; and 

(3) Clarifying the development pathway for innovative medicines by convening the community to provide 

input to FDA on guidance documents.

Improving Drug Evaluation

Recommendation 3: Expand the Use in Practice of FDA’s Existing Authorities for Accelerated Approval 

and for Confirmatory Evidence. The FDA should make full use of accelerated approval for all drugs meeting the statutory standard of addressing an unmet need for a serious or life-threatening disease, and demonstrating an impact on a clinical endpoint other than survival or irreversible morbidity, or on a surrogate 

endpoint, likely to predict clinical benefit. The FDA should also fully enforce its requirement for post-approval 

confirmatory studies demonstrating that the drug indeed results in desired long-term clinical benefit.

Recommendation 4: Create a New Pathway for Initial Approval of Drugs Shown to be Safe and 

Effective in a Specific Subgroup of Patients. This would be an optional pathway under which sponsors 

could propose early in the development process to study a drug for a narrow population. Such drugs would 

be approved under a designation of Special Medical Use, signaling strongly to payors and prescribers the 

limited population that should be prescribed a drug.

Recommendation 5: Explore Approaches for Adaptive Approval via Pilot Projects Under Existing 

Pathways but do not Create New Adaptive Approval Pathways through Legislation. The FDA should 

run pilot projects to explore adaptive approval mechanisms to generate evidence across the life-cycle of a 

drug from the pre-market through the post-market phase. Legislation to create a formal adaptive pathway 

or model for such approval, however, would be premature at this time, and PCAST advises against it.

Monitoring and Communication About Benefits and Risks

Recommendation 6: Improve FDA’s Tools for Monitoring and Communication of Clinical Benefits and 

Risks. FDA should strengthen capabilities for post-marketing surveillance, and the Congress should authorize line-item appropriations of $40M per year to expand the Sentinel System accordingly. The FDA should 

work with stakeholders to develop new tools to effectively communicate risks and benefits to patients and 

the broader public. 
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Improving FDA Management

Recommendation 7: Reform Management Practices at FDA. The FDA should implement a range of 

reforms, including the use of pre-market review leaders to oversee each drug candidate application from its 

investigational stage through final marketing decision. Other reforms should include establishing a regulatory innovation program, overhauling the IT systems, and establishing a Commissioner’s Advisory Board for 

Medical Products to improve management and ensure consistent implementation of reforms.

Economic Incentives

Recommendation 8: Study Current and Potential Economic Incentives to Promote Innovation in Drug 

Development. The Secretary of HHS should commission a study of economic incentives to assess the utility 

of various types of incentives, determine whether current incentives are aligned to promote innovation 

generally and in specific areas of public health priority, and examine whether targeted changes to economic 

incentives would serve National needs.
★ xv ★

The President’s Council of Advisors on

Science and Technology

Report to the President on 

Propelling Innovation in Drug Discovery, 

Development, and Evaluation
★ xvi ★

PCAST Drug Innovation Invited Experts

PCAST Members

Eric Lander

President

Broad Institute of Harvard and MIT

Christine Cassel

President and Chief Executive Officer

American Board of Internal Medicine

Invited Experts

Jeff Allen

Executive Director

Friends of Cancer Research

Jerry Avorn

Professor of Medicine

Brigham and Women’s Hospital, Harvard Medical 

School 

David Beier

Senior Vice President of Global Government 

Affairs, Communications, & Philanthropy

Amgen Inc. 

Rob Califf

Director

Duke Translational Medicine Institute

Professor of Medicine

Vice Chancellor for Clinical Research

Duke University Medical Center 

Mikael Dolsten

President

Worldwide Research and Development

Pfizer, Inc. 

Richard C. Levin

President

Yale University

Ed Penhoet

Director, Alta Partners

Professor Emeritus, Biochemistry and Public 

Health, University of California, Berkeley

Laura Esserman

Director

Carol Franc Buck Breast Care Center

Professor of Surgery and Radiology

University of California, San Francisco 

Ruth R. Faden

Wagley Professor of Biomedical Ethics

Director, Berman Institute of Bioethics

Johns Hopkins University 

Mark Fishman

President

Novartis Institutes for BioMedical Research

Alan Garber

Provost

Harvard University

Garret A. FitzGerald

Professor of Medicine and Chair of 

Pharmacology, Director, Institute for 

Translational Medicine and Therapeutics

University of Pennsylvania 

Kathy Giusti

Founder and CEO

Multiple Myeloma Research Foundation 
PCAST Drug Innovation Invited Experts

★ xvii ★

Gigi Hirsch

Executive Director

Center for Biomedical Innovation and Program 

Director, NEWDIGS

Charles Homcy

Venture Partner

Third Rock Ventures 

Peter Barton Hutt

Senior Counsel

Covington & Burling LLP 

Steven Jacobsen

Director of Research

Kaiser Permanente-Southern California

John C. Lechleiter

Chairman and Chief Executive Officer

Eli Lilly and Company 

Freda C. Lewis-Hall

Chief Medical Officer and Executive Vice 

President

Pfizer Inc. 

Clive Meanwell

Chairman and Chief Executive Officer

The Medicines Company 

Kenneth Oye

Associate Professor of Political Science and 

Engineering Systems

Massachusetts Institute of Technology

Ed Pezalla

National Medical Director

Aetna

Frank J. Sasinowski

Director

Hyman, Phelps & McNamara Law Firm 

Vicki Sato

Professor of Management Practice

Professor, Department of Molecular and Cell 

Biology

Harvard University 

Richard L. Schilsky

Professor of Medicine

Chief, Section of Hematology-Oncology

Department of Medicine, Biological Sciences 

Division, University of Chicago 

Stephen A. Sherwin

Chairman of the Board and Co-Founder

Ceregene, Inc.

Chairman Emeritus 

Biotechnology Industry Organization 

David Singer

Limited Partner

Maverick Capital Ltd. 

Moncef Slaoui

Chairman, Research & Development

GlaxoSmithKline

Henry A. Solomon

Senior Medical Advisor and Chair of the 

Professional and Corporate Consortium

American College of Cardiology

Sean Tunis

President and CEO

Center for Medical Technology Policy

Doug Williams

Executive Vice President, R&D

Biogen Idec

Elias Zerhouni

President, Global Research & Development

Sanofi
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Federal Liaisons

Sandra L. Kweder

Deputy Director, Office of New Drugs, 

Center for Drug Evaluation and Research

Food and Drug Administration

Amy P. Patterson

Associate Director for Science Policy

National Institutes of Health

Staff

Amber Hartman Scholz

Assistant Executive Director, PCAST, OSTP

Michael Stebbins

Assistant Director for Biotechnology, OSTP

Advisor

Bina Venkataraman

Director of Global Policy Initiatives

Broad Institute of Harvard & MIT

Vicki L. Seyfert-Margolis

Senior Advisor and Director for Science 

Innovation and Policy

Office of the Commissioner

Food and Drug Administration

Janet Woodcock

Director

Center for Drug Evaluation and Research 

Food and Drug Administration
★ xix ★

Table of Contents

I. Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1

Innovative Medicines Have Made Tremendous Contributions to Public Health . . . . . . . 1

Innovation in Medicine has Depended on a Partnership Among Researchers, Industry, 

and Regulators . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

Despite Advances, There Remain Pressing Needs for Innovative Medicine . . . . . . . . . 4

We Stand at a Moment of Historic Progress in Biomedical Research, with Extraordinary 

Promise for New Drug Development . . . . . . . . . . . . . . . . . . . . . . . .5

Yet There Are Reasons for Concern About the Pace of Innovative Drug Development . . . . .7

Origin of this Study . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7

Scope of this Study . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .8

II. Innovation Under Stress 9

New Drugs: Output Flat, Productivity Declining 10

Challenges in Drug Development . . . . . . . . . . . . . . . . . . . . . . . . 12

III. Improving Drug Discovery and Development . . . . . . . . . . . . . . . . . . 17

Gap Between Basic Research and Commercial Projects . . . . . . . . . . . . . . . . 17

Inefficiency in Clinical Trials 20

Economic Incentives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24

IV. Improving Drug Evaluation . . . . . . . . . . . . . . . . . . . . . . . . . . 27

Improving Tools for Balancing Risk and Benefit . . . . . . . . . . . . . . . . . . . 28

Enhancing Regulatory Certainty for the BioPharmaceutical Industry as a Whole . . . . . . 41

Enhancing Regulatory Certainty for Individual Drug Development Plans 44

Management Issues at FDA 48

V: A Path Forward: Recommendations for Propelling Innovation in Drug Discovery, 

Development, and Evaluation . . . . . . . . . . . . . . . . . . . . . . . . . . 51
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A. Improving Drug Discovery and Development . . . . . . . . . . . . . . . . . . 51

Recommendation 1: Support Federal Initiatives to Accelerate Therapeutics . . . . . . 53

Recommendation 2: Catalyze the Creation of a Broad-Based Partnership to Accelerate 

Therapeutics 56

B. Improving Drug Evaluation 58

Recommendation 3: Expand the Use in Practice of FDA’s Existing Authorities for 

Accelerated Approval and Confirmatory Evidence . . . . . . . . . . . . . . . . 61

Recommendation 4: Create a New Pathway for Initial Approval of Drugs Shown to be 

Safe and Effective in a Specific Subgroup of Patients . . . . . . . . . . . . . . . 64

Recommendation 5: Explore Approaches for Adaptive Approval Via Pilot Projects 

Under Existing Pathways, but Do Not Create New Adaptive Approval Pathways 

Through Legislation. 67

Recommendation 6: Improve FDA’s Tools for Monitoring and Communication of 

Clinical Benefits and Risks 70

C. Improving FDA Management . . . . . . . . . . . . . . . . . . . . . . . . . 70

Recommendation 7: Reform Management Practices at FDA . . . . . . . . . . . . 71

D. Economic Incentives . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73

Recommendation 8: Study Current and Potential Economic Incentives to 

Promote Innovation in Drug Development . . . . . . . . . . . . . . . . . . . 74

E. Central Role for Patients and Physicians . . . . . . . . . . . . . . . . . . . . . 74

F. Timeframe for Action . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74

G. Towards a National Innovation Strategy 75

Appendix A. Additional Experts Providing Input 77

Appendix B. Acknowledgments 81

Appendix C. Acroynms Used . . . . . . . . . . . . . . . . . . . . . . . . . . . 83
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I. Introduction

Innovative Medicines Have Made Tremendous Contributions to 

Public Health

Biomedical innovations—including advances in medicines, medical procedures, and public health—

have provided extraordinary benefits to the U.S. public. We live longer and we live healthier than our 

forebears. Life expectancy at birth has risen from around 47 years at the turn of the 20th century to 

78 years today.4

 Many diseases that were once fatal or debilitating can now be prevented, delayed, or 

ameliorated. 

While nutrition, sanitation, other public health measures, and expanded access to care have been major 

sources of increasing human health, innovative medicines have also played a profound role in this 

progress. Infections that were the leading cause of mortality in the early 20th century are now largely 

eliminated. Pneumonia, the leading cause of death in the early 20th century, is now effectively treated 

with antibiotics. Vaccines have led to the eradication or control of many devastating infectious diseases, 

including polio, small pox, diphtheria, and measles. First recognized in 1981, HIV is now treated with 

over 20 FDA-approved drugs, although more progress is still needed. Multi-drug regimens effectively 

control HIV infection, preventing the development of AIDS. Pharmaceutical therapies have led to cures 

for multiple malignancies that were once universally fatal; for example, childhood leukemia is now cured 

in 80 percent of cases, testicular cancer in over 90 percent of cases, and Hodgkin’s lymphoma in over 90 

percent of cases. Recombinant proteins, replacing specific proteins that are not effectively produced by 

individuals carrying certain genetic mutations, have transformed the therapies for multiple debilitating 

disorders including type I diabetes and hemophilia. Immunosuppressive drugs have offered effective 

therapies for autoimmune disorders, such as multiple sclerosis, and have enabled organ transplantation. Along with a reduction in smoking and better medical care, cholesterol-lowering therapy, bloodpressure-lowering drugs, anti-platelet agents, and diabetes treatment have contributed to a substantial 

decrease in death from heart attacks (70 percent decline5over the past 60 years). 

Innovation in Medicine has Depended on a Partnership Among 

Researchers, Industry, and Regulators

These innovations have been brought forth by a remarkable ecosystem consisting of three major components: (1) academic researchers who have unlocked secrets of basic biology and revealed mechanisms 

that underlie disease, as well as the Federal and other funders who support their research; (2) a robust 

bio-pharmaceutical industry, which has developed molecules to treat disease and conducted clinical 

4. Arias E. United States life tables, 2007. National vital statistics reports; vol 59 no 9. Hyattsville, MD: National 

Center for Health Statistics. 2011. Accessed May 14th, 2012. www.cdc.gov/nchs/data/nvsr/nvsr59/nvsr59_09.pdf.

5. Age-adjusted decrease from 589 age-adjusted deaths per 100,000 people in 1950 to 178.5 in 2010. 2010 data 

can be found in the most recent National Vital Statistics Report. Accessed May 14th, 2012. 

www.cdc.gov/nchs/data/nvsr/nvsr60/nvsr60_04.pdf. 1950 data can be found in the CDC’s historical unpublished tables. 

Accessed May 14th, 2012. www.cdc.gov/nchs/nvss/mortality/hist293.htm#unpublished.
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trials to demonstrate their safety and efficacy; and (3) government regulators, who have balanced the 

benefits and risks that are inherent in any medical innovation. Patients themselves have played a critical 

role in propelling advances by focusing attention on the urgency of developing therapies and spurring 

creative approaches, and by participating in clinical trials. Medical progress depends on a successful 

partnership among these sectors. Others, including physicians, health care payors, pharmacists, and 

consumer groups, also play crucial roles.

The United States has consistently led the world in all these areas: 

(i) Academic research. By any measure, the Nation has been the world leader in groundbreaking biomedical research. This success is owed in large part to the strength of its extraordinary 

universities and research institutions. Federal investments in the biomedical research enterprise, 

led by the National Institutes of Health (NIH) and augmented by other agencies, have for the 

last 60 years propelled research advances by supporting a robust academic community that 

generates biomedical knowledge, patentable inventions, and trained scientists, including 

135 NIH-funded Nobel Laureates.6In 2010, Federal funding for health research totaled about 

$46 billion (about $35 billion from NIH, of which $5 billion was provided under the Recovery 

Act7), while private and public health research funding combined reached $140 billion.8

(ii) Biopharmaceutical industry. The United States has also been an indisputable leader in the 

global biopharmaceutical industry. This leadership has resulted from a combination of factors, 

including: a strong patent system, access to capital, strong support for research and development (R&D) by both public and private funders, a high-quality science-based regulatory system 

at the Food and Drug Administration (FDA), and a market that recognizes and pays for innovative 

new medicines. 

As of 2005, 8 of the world’s top 15 pharmaceutical companies (by sales) were headquartered 

in the United States.9Since the 1960s, the United States has been the headquarters for a larger 

share of firms that invent and introduce to market new chemical entities (NCEs) than any other 

country, and from 2001-2010, U.S.-based firms invented 57 percent of the NCEs produced 

globally.10More than half of all clinical trials underway are being conducted in whole or in part 

in the United States.11

In the last three decades of the 20th century, a revolution in molecular biology and associated 

technologies, including recombinant DNA, gave birth to a new industry, biotech. The biotech 

industry arose and has flourished in the United States, with strong early clusters in the high-tech 

6. The NIH website lists winners of Nobel Prizes earned over the past 60 years. Accessed May 14th, 2012. 

www.nih.gov/about/almanac/nobel/.

7. Data from fiscal year 2010 can be found on the NIH databook. Accessed May 15th, 2012. 

report.nih.gov/nihdatabook/ Data on American Reinvestment and Recovery Act grants to NIH can be found on the NIH 

website. Accessed May 15th, 2012. grants.nih.gov/recovery/.

8. Overall health research spending includes the $45.9 billion from federal sources, $76.5 billion from industry, and 

$18.1 billion from other sources. Accessed May 14th, 2012. www.researchamerica.org/uploads/healthdollar10.pdf.

9. This has stayed relatively constant since the 1970s, though U.S. firms had moved from the bottom to the top of 

the top-15 list by 2005, representing the top firms by 2005. http://www.hbs.edu/research/pdf/09-118.pdf.

10. The Milken Institute study uses NCEs as an indicator of biomedical innovation. Accessed May 14th, 2012. 

www.milkeninstitute.org/pdf/CASMIFullReport.pdf.

11. Ibid. 
I. Introduction

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and highly-educated areas near San Francisco and Boston, and subsequent expansion to other 

locations including Seattle, San Diego, North Carolina, Maryland, and Virginia. A unique combination of access to academic research institutions, scientists, and venture capitalists created 

the ripe conditions for the industry to take hold and grow from the 1980s to today, aided by 

supportive legislation, such as the Bayh-Dole Act, that encouraged universities and businesses 

to commercialize scientific discoveries in biotechnology. The United States accounts for more 

than 40 percent of the world’s patents in biotechnology—far more than the E.U. at 25 percent 

and Japan at 17 percent.12

The Nation’s leadership in biomedical innovation has been supported by a robust industry, and, 

in turn, investments in biomedical research and corresponding medical advances have allowed 

industry and the economy to thrive. Biomedical innovation has supported U.S. economic 

growth, and high-value, high-skilled jobs for Americans. The medical innovation sector as a 

whole (including the public and private enterprises) employs nearly one million people13 and 

industry-contracted studies show that exports in 2010 from the biopharmaceutical industry 

reached nearly $47 billion, with a subset of the industry, biotechnology products yielding a 

net positive trade balance.14This is a source of significant export strength relative to major 

industries, such as automobiles ($38.4 billion in 2010 exports); plastics and rubber products 

($25.9 billion in 2010 exports); communications equipment ($27 billion); and computers ($12.5 

billion). Pharmaceutical sales have increased steadily over the past decade,15reaching a record 

high of $856 billion in 2010. The biopharmaceutical industry estimates that it pays an average 

salary of $96,563 to the 650,000 people it employs, and that it has indirectly contributed more 

than $300 billion to U.S. GDP.16 Moreover, public health gains as a result of biomedical innovation 

bolster the U.S. economy; the growth in life expectancy between 1970 and 1990, for example, 

had added approximately $2.4 trillion to the U.S. GDP by the year 2000.17

(iii) Food and Drug Administration. The Federal Government has also been at the forefront of 

protecting public safety, while promoting innovation. It has done so by maintaining a predictable, efficient, and transparent regulatory review process that affords patients timely access to 

safe and effective medicines. In 1906, when Congress enacted the first national Food and Drug 

Act and created the Bureau of Chemistry (the predecessor of the FDA) in 1906, medicines were 

developed and marketed in a “wild west” environment. Opium, heroin, and cocaine were sold 

without restrictions; circus performers sold medicinal products to their audiences; and medicines could be labeled as cure-alls, despite having undergone no tests and listing none of their 

ingredients. Over the past century, the FDA has become increasingly scientific and professional 

in its efforts to protect the health of U.S. citizens from unsafe and ineffective medical products.

12. 2008 OECD compendium of patent statistics. Accessed May 15th, 2012. 

www.oecd.org/dataoecd/5/19/37569377.pdf.

13. Paying them wages totaling $84B in 2008 according to Ehrlich, E. “An Economic Engine—NIH Research, 

Employment, and the Future of the Medical Innovation Sector.” 2011. Report sponsored by United for Medical Research.

14. U.S. Census Bureau. U.S. International Trade Statistics by NAICS codes. 2011.

15. CMR International, 2011. CMR International Pharmaceutical R&D Factbook. Thomson Reuters.

16. Archstone Consulting & R.L. Burns. Fact sheet cited in PhRMA profile. 2011.

17. Murphy, K. and Topel, R. “Diminishing returns? The costs and benefits of improving health.” Perspect. Biol. Med.

2003; 46: Suppl S108-S128.
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On the whole, Americans express confidence in the performance of the FDA.18 Standards set by 

the Agency, such as the requirement for well-controlled19 trials to demonstrate efficacy of new 

therapies, have helped improve the quality and public health benefits of drugs on the market.

A famous example of FDA’s important role in protecting the public was its decision not to 

approve thalidomide20 for marketing in the United States; the drug was given to pregnant 

mothers in Europe to prevent morning sickness and was later found to cause birth defects in 

thousands of newborns. In the 1960s and 1970s, on the heels of the thalidomide crisis, Congress 

changed the law to require a demonstration that drugs are effective in addition to being safe. 

In response, the FDA undertook a complete re-evaluation of the pharmacopeia to uphold the 

standard that products must demonstrate safety and efficacy. In important cases, the FDA has 

also responded to urgent medical needs by adopting innovative approaches to regulation. 

The best example was in the late 1980s and early 1990s, when the FDA created the Accelerated 

Approval pathway in response to the HIV/AIDS crisis, under which it rapidly approved drugs 

for serious or life-threatening diseases, based on their ability to affect “surrogate endpoints” 

(such as the amount of virus in the blood) rather than waiting for much-longer studies measuring clinical endpoints such as death. In the area of orphan and rare diseases, the Agency has 

demonstrated notable regulatory flexibility and innovation in order to get drugs to very small 

patient populations who suffer rare conditions.21 Between 1970 and 2011, the FDA approved 

1046 new therapeutics—new molecular entities and new biologic entities (NMEs and NBEs)—for 

marketing in the United States.22

Despite Advances, There Remain Pressing Needs for Innovative Medicine

Despite major breakthroughs for some diseases, many of the most common human diseases are not 

effectively treated by existing therapies. Many common malignancies, including lung cancer, colon 

cancer, breast cancer, and prostate cancer, are incurable once they have metastasized. Ninety-six percent 

of orphan diseases, including rare cancers, lack effective therapies.23 Despite current therapies, heart 

disease and stroke remain leading causes of mortality. Infectious diseases remain an important challenge with the emergence of antibiotic-resistant bacteria and multi-drug resistant tuberculosis, and the 

possibility of new viral pandemics that could cause widespread mortality. Psychiatric diseases remain a 

tremendous burden on society, and existing treatments have limited efficacy. Alzheimer’s disease, which 

already afflicts more than 5 million people in the United States at a direct cost of an estimated $200 

18. According to a recent survey conducted by Research America, 72 percent of Americans say they are very 

confident or confident in the FDA’s safety review system. Accessed May 14th, 2012. 

www.policymed.com/2010/05/research-america-study-americans-confident-in-fda-and-biomedical-research.html.

19. The standard applied to many new drugs is evidence from two randomized controlled trials, though there are 

important exceptions.

20. Avorn, J. “Learning about the safety of drugs—a half century of evolution.” N. Engl. J. Med. 2011; 365: 2151.

21. A recent analysis of 135 non-cancer orphan drug approvals between 1993 and 2012 indicated that 90 of 

these approvals demonstrated “regulatory flexibility” either in terms of administrative discretion or “case by case” 

flexibility. Sasinowski, F. “Quantum of effectiveness in FDA’s approval of orphan drugs.” Drug Inf. J. 2012; 46: 238. DOI: 

10.1177/0092861511435906.

22. FDA data from the Center for Drug Evaluation and Research to PCAST in response to request.

23. Only 350 therapeutics are approved for 7000 rare diseases that cumulatively affect 30 million Americans. 

www.fda.gov/ForIndustry/DevelopingProductsforRareDiseasesConditions/ucm239698.htm.
I. Introduction

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billion in 2012, including $140 billion in Medicare/Medicaid payments, is increasing in prevalence as the 

population ages; some observers project that in the absence of new effective therapies the economic 

burden of Alzheimer’s may ultimately exceed $1 trillion per year.24

 While there are many opportunities to improve public health by better deploying existing approaches 

(including wider use of existing drugs, prevention strategies, behavioral modifications, and other public 

health measures), even perfect use of existing solutions would not prevent cancer or heart disease 

from being leading causes of mortality, and would not eliminate the burden of a host of diseases. The 

development of innovative medicines therefore remains essential for progress in the prevention and 

treatment of human disease.

It is sometimes argued that medical innovation is part of the fundamental problem with the U.S. healthcare system, because innovation drives up costs. We disagree with this reasoning. In the long run, medical 

innovation is one of the best ways both to save lives and to decrease dramatically the economic costs 

of disease: antibiotics now cost pennies a dose, the polio vaccine is much cheaper than iron lungs, and 

prophylactic anti-retroviral therapy used to treat HIV is less expensive than treating patients for AIDS. 

Effective therapies for cancers, Alzheimer’s disease, and schizophrenia could have similar cost savings 

in the long run. Where innovation does increase costs in the long run, it is because it creates true health 

benefits that society values. Given market competition and reimbursement policies tied to value, innovation is thus a key driver of long-term improvement. 

The short-term cost implications are more complicated. It is true that new treatments for a disease often 

command high prices during the exclusivity period before generic manufacturers are allowed to compete.25 These prices reflect a combination of factors—including innovators’ need to offset the expense 

and risk of drug development, their monopoly in selling the drug, and healthcare reimbursement 

practices that do not always match price to value. This situation would be mitigated to some degree by 

the availability of multiple competing products, with similar efficacy and safety.

Overall, we believe that the right solution is not less innovation, but more innovation—to increase 

competition in the short term and expand generic solutions in the long run. 

We Stand at a Moment of Historic Progress in Biomedical Research, with 

Extraordinary Promise for New Drug Development

The past quarter-century has seen stunning progress in basic biomedical research, propelled by powerful research technologies and revealing fundamental information about the basis of disease. The 

opportunities for biomedical advances have never been brighter. 

The tools for biomedical research have become dramatically more powerful. From 1990-2003, the 

Human Genome Project revealed the human genetic code and also propelled advances that have 

decreased the cost of sequencing a human genome by roughly one million-fold (from a few billion 

to a few thousand dollars today). Microarray technologies have made it possible to characterize the 

24. Alzheimer’s Association. “2012 Alzheimer’s Disease Facts and Figures.” Alzheimer’s & Dementia. 2012. Volume 8, 

Issue 2; www.alz.org/downloads/Facts_Figures_2012.pdf.

25. See Box on exclusivity periods in Chapter 3.
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responses of cells to perturbations by simultaneously studying the expression levels of all 20,000 human 

genes. With advances in mass-spectrometers, it is now possible to monitor proteins and metabolites 

with much greater sensitivity, speed, and completeness than a decade ago. With genetic engineering 

tools such as germline manipulation and RNA interference, it is now possible to study genes in mice 

or in human cells by deleting the gene or disrupting its function. With tools to produce pluripotent 

cells able to differentiate into any cell type in the body, biologists are rapidly learning to reprogram the 

identities of cells and to compare the effects of different mutations. And, increasingly, researchers are 

combining tools to measure cellular responses with powerful computational methods to develop ways 

to reconstruct the “circuits” that drive cellular behavior.

With these technologies, scientists are systematically discovering the genes and proteins that contribute 

to human diseases. The genes responsible for more than 3,000 single-gene disorders (such as cystic 

fibrosis or Huntington’s disease) have been identified, and more than 1,500 genes contributing to 

inherited risk for common polygenic (caused by multiple genes) diseases (such as diabetes and heart 

disease) have been identified so far. Studies of tumors have also identified more than 300 genes in which 

acquired mutations contribute to the progress of cancer. These studies will lead to increasingly complete 

catalogs over the next decade, providing a foundation for understanding the origin and cause of disease. 

By combining these powerful tools and information resources with basic biological and clinical studies, 

researchers have made remarkable progress in understanding the fundamental mechanisms underlying 

such fields as immunology, neurobiology, development, and cancer.

Some of these discoveries about the genetic and biologic basis of disease have been successfully 

translated into first-in-class drugs against novel therapeutic targets that are now approved by the FDA 

and benefiting patients. The identification of specific mutations in cancer has led to therapies targeted 

against the abnormal proteins. These cases include the drugs imatinib and vemurafenib, targeting 

genetic abnormalities found in chronic myelogenous leukemia and melanoma, respectively. The discovery that HIV requires the CCR5 protein to infect cells led to the development of an antagonist to this 

protein, maraviroc, which is now approved for treatment of HIV. And, the discovery of the genetic basis 

of cystic fibrosis (CF) in 1989 has finally led to the development of a recently approved therapeutic agent 

ivacaftor (Kalydeco) effective against a specific mutation in the gene carried by 4 percent of patients.26

An estimated 3,000 treatments are in various stages of development, including more than 850 for cancer 

alone.27

26. Kalydeco was approved on January 31st, 2012. Accessed May 14th, 2012. 

www.fda.gov/NewsEvents/Newsroom/PressAnnouncements/ucm289633.htm.

27. Munos, B. “Bringing Breakthrough Innovation Back to Drug R&D” White paper for President’s Cancer Panel/NIH 

from October 2010.
I. Introduction

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Yet There Are Reasons for Concern About the Pace of Innovative 

Drug Development

Although biomedical research has experienced a golden age of progress over the past 25 years, there 

has been growing concern28, 

29 about the pace of translating scientific insight into public health impact. 

As described above, we still lack effective treatments for most diseases, including the vast majority of 

cancers and psychiatric diseases. Many high priority public health needs, including the growing burden 

of neurodegenerative diseases and the emergence of drug-resistant bacterial infections, are not being 

met with adequate investment and innovation.

As discussed in the next chapter, the remarkable advances in basic biomedical research over the past 

quarter-century have not yet led to significant increase in the flow of new medicines to the American 

public. Of course, one should be realistic that the understanding of diseases will not usually translate 

immediately into powerful treatments: finding molecules with high efficacy and low toxicity is extremely 

difficult; much progress comes through incremental improvements that ultimately combine to yield 

large impacts.30

Still, it is concerning that, despite significant increases (in inflation-adjusted terms) in R&D investments by 

industry, the rate of new drugs entering the market has remained roughly constant for decades. As the 

time and amortized cost of developing new drugs continues to rise, the large pharmaceutical companies 

are coming under financial stress and new biotechnology companies are finding that venture capital is 

becoming scarcer. As a result, innovators seeking to pursue unprecedented approaches to important 

public health needs face an increasingly challenging environment. 

Origin of this Study

In light of these concerns, President Obama asked his President’s Council of Advisors on Science and 

Technology (PCAST) in March 2011 to identify ways to accelerate innovation in the discovery, development, and evaluation of biopharmaceuticals. In response, PCAST engaged in discussions with a wide 

range of stakeholders—including senior leaders from the biopharmaceutical industry, patient advocacy 

groups, physician societies, and healthcare payors, and the senior leadership of the FDA and NIH. The 

process began with informational interviews from April to June 2011, followed by two one-day PCAST 

subcommittee meetings in summer 2011. From these diverse constituencies, PCAST assembled a group 

of about 30 invited experts. Informed by extensive discussions with these experts and other knowledgeable parties over six months, PCAST analyzed the situation and developed specific recommendations 

to the President. This report describes the key issues and recommendations. 

28. Pammolli, F., Magazzini, L., and Riccaboni, M. “The productivity crisis in pharmaceutical R&D.” Nat. Rev. Drug 

Discov. 2011; 10, 428–438.

29. FitzGerald, GA. “Drugs, industry and academia.” Science. 2008; 320: 1563.

30. Examples include breast cancer and HIV/AIDS, where physicians took drugs with initially modest effects and 

ultimately combined them to obtain large therapeutic effects.
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Scope of the Report 

The scope of this report is limited to PCAST’s assigned task of recommending actions that can be taken 

to propel scientific innovation in drug discovery, development and evaluation. The report does not 

address many other important policy issues that affect whether therapeutics that are developed will 

optimally serve the needs of American people. Such issues include drug pricing, reimbursement policy, 

comparative effectiveness studies, intellectual property, direct-to-consumer advertising, medical education and physician prescribing authority, international trade and competition, and global harmonization 

of regulation. At the end of the report, we note the need and opportunity for a broader national strategy 

concerning the therapeutics ecosystem.
★ 9 ★

II. Innovation Under Stress

The Nation needs continuing innovation in the creation of effective treatments for the wide range of 

inadequately-treated diseases that affect the public. This innovation depends on a complex ecosystem 

that involves basic biomedical research in universities and research institutes, clinical research in hospitals, and drug discovery and development in the biopharmaceutical industry. Each of the components 

of this ecosystem is under challenge. 

The budget for the National Institutes of Health increased substantially from 1998 to 2003, doubling in 

nominal terms.31 From 2003-2008, however, the budget failed to keep up with inflation.32 Importantly, 

the Obama Administration’s stimulus package provided a supplemental boost of $10.4 billion to the 

NIH budget, spread across several years. But, the prospects ahead are worrying, given the pressures on 

the Federal budget.

Similarly, clinical research has come under increasing pressure as costs of clinical investigation and 

clinical trials increase and sources of financial support decline. NIH has recognized the importance of 

translating basic findings from “bench to bedside”’ through its CTSA program, but this supports only a 

small portion of the Nation’s clinical research and clinical trials infrastructure. 

These challenges need to be addressed by a renewed Federal commitment to the funding of basic and 

translational research. We make recommendations in Chapter 5. 

At the same time, there have been increasing pressures affecting the biopharmaceutical industry. These 

pressures are important because industrial R&D investment is a critical component of the innovation 

ecosystem:

• The pharmaceutical industry is facing the largest “patent cliff” in its history: Drugs with annual 

sales exceeding $200 billion will come off patent in the period 2010-2014, resulting in a loss of 

more than $100 billion in sales to generic substitutions; only a small fraction is expected to be 

replaced by new product revenues. Decreased prices through generic substitution will benefit 

the Nation, but will likely also result in decreased resources invested in new areas of R&D.33

According to some observers, many companies are adopting more conservative approaches 

to R&D. 

• Venture capital to start new biotechnology firms and fund innovative drug development activities appears to be declining, due not only to general economic conditions but to what are cited 

as concerns about unfavorable returns in the drug-innovation sector. While venture capital 

funding in all sectors has decreased since 2008, the decrease in number of first-time deals from 

2007 to 2009 was significant in the biotechnology (-29.4 percent) and medical/healthcare (-40.0 

31. From $13.7 billion in 1998 to $27.1 billion in 2003. NIH Budget Office. 2012.

32. Figure from NIH Director’s Office in response to request. 

33. Paul, S.M., et al. “How to improve R&D productivity: The pharmaceutical industry’s grand challenge.” Nature Rev. 

Drug Discov. 2010; 9 (3):203-214.
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percent) industries.34 Venture capital firms report that they expect to decrease further their 

investments in the biomedical industry,35 although there is some countervailing data.36 Declining 

availability of funds for innovative new companies would put increasing pressure on innovation. 

• Many companies are exiting important fields of critical public health need. For example, 

despite the growing healthcare and economic burden of neurodegenerative diseases, such as 

Alzheimer’s Disease and psychiatric diseases, many major pharmaceutical companies are closing 

down or severely curtailing drug discovery programs in part because of the rate of candidate 

failure and the time and cost required to complete clinical trials.37

• The biopharmaceutical industry has not historically been characterized by a large degree of 

industry-wide collaboration or public-private partnership. However, these pressures have created an environment in which companies appear much more willing than previously to make 

common cause—to work together and with other sectors—to improve processes for drug 

discovery, development, and evaluation. 

New Drugs: Output Flat, Productivity Declining

Despite dramatic advances in biological knowledge, the rate of new drugs applications and new drug 

approvals has remained relatively constant for several decades (Figure 1a). (The notable spike of approvals in 1996-97 is widely attributed to the clearing of backlogs, made possible by funds from the newly 

enacted Prescription Drug User Fee Act (PDUFA) that provided new financial resources to the Agency 

to support expedited drug review.)

While the output of new drugs has remained constant, total R&D investment by industry in drug discovery and development have grown exponentially, in inflation-adjusted terms (Figure 1a-b). As a result, 

the amortized R&D cost per newly approved drug has continued to grow. A recent paper estimated 

that the cost of drug development increased by a factor of two roughly every nine years, and coined 

this as “Eroom’s law” (in contrast to—and with a backwards spelling of—the well-known Moore’s law 

concerning the time over which semiconductor costs decrease by a factor of two). We note that precise 

inferences about the costs of drug development are problematic for many reasons, including that new 

drugs approved in a given year reflect R&D investments over many prior years; that drugs approved in 

different time periods may be more or less innovative; and that data about R&D costs may be incomplete 

or inconsistent. Nevertheless, the broad trends seem clear.

34. Block, J., et al. “Venture capital and the financial crisis: an empirical study across industries and countries.” 2010.

35. A survey of 156 companies conducted by the National Venture Capital Association reported that many firms 

plan to decrease their investment in the biomedical industry further over the coming 3 years. “Vital Signs: The Crisis 

in Investment in U.S. Medical Innovation and the Imperative of FDA Reform.” Survey Findings. October 2011. National 

Venture Capital Association and MedIC.

36. One analysis showed that venture capital financing for biopharmaceutical firms grew in 2011 by 16 percent 

over 2010, to nearly $3.5 billion; it is unclear whether this change reflects a reversal of a trend, a shift in investment focus 

within the biotechnology sector or one-time temporal factors. OnBioVC: 4Q11 & 2011 Trend Analysis. 15 February 2012. 

Report Code: IDOB 1010. freepdfhosting.com/ef718d6d76.pdf.

37. Abbott, A. “Novartis to shut brain research facility.” Nature. 2011. 
II. Innovation Under Stress

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FIGURE 1. (a) Annual NME/NBE Approvals versus R&D Expenditures in 2009 Dollars. 

(b) Estimates of Cost to Companies per New Molecular Entity in 2009 Dollars.

Figure 1. (a) STPI analysis upon PCAST request based on NME and NBE approval data are from the FDA (2012). PhRMA data 

are from Pharmaceutical Research and Manufacturers of America, PhRMA Annual Member Survey, 2011. Entire biopharmaceutical sector data are from Burrill & Co., analysis for PhRMA, 2006–2011. Both sources are publicly available in the PhRMA 

2011 Pharmaceutical Industry Profile. Note: In interpreting the figure, it is important to note that NME/NBE (new molecular 

entity and new biological entity, respectively) approvals in a given year should not be directly compared with R&D expenditures in that same year because there is a lag of several years between the time of investment and output that can be 
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expected in terms of approved drugs. The estimated time from target discovery to drug approval is 17 years. Nonetheless, 

falling productivity is evident because costs are increasing a steady rate higher than inflation but yielding a constant rate 

of NME/NBEs. The spike in NME/NBE approvals in 1996 is generally attributed to FDA clearing a backlog in submissions due 

increased funding from the Prescription Drug User Fee Act, which provided additional resources and imposed time limits 

on the review of new drug applications. NME/NBE approvals represent the number of NMEs and NBEs approved per year 

for marketing by the FDA. NME approvals represent small molecule drugs, whereas NBE approvals cover biologics. R&D 

expenditures include reported expenditures from PhRMA member companies, which are mostly large prescription drug 

firms with substantial U.S. sales as well as expenditures from the entire biopharmaceutical sector (as reported by PhRMA). 

Total PhRMA expenditures include both domestic and foreign reported R&D spending, while domestic PhRMA expenditures 

include spending within the United States by PhRMA member companies. Entire biopharmaceutical sector data include 

R&D expenditures from PhRMA members, research associates, and non-member companies in the biopharmaceutical 

sector. R&D expenditures include salaries, materials, supplies, overhead, and the cost of developing quality control as well 

as R&D funds contracted to outside parties. R&D expenditures exclude capital expenses and routine quality control as well 

as R&D expenditures for projects conducted through grants or contracts from outside organizations. The White House GDP 

deflator was used to adjust all cost data to constant 2009 dollars.

(b) STPI analysis upon PCAST request based on Hansen, R.W. “The pharmaceutical development process: estimates of current development costs and times and the effects of regulatory changes.” 1979. In: Chien, R.I. (Ed.). “Issues in Pharmaceutical 

Economics.” Lexington Books, Lexington, MA, pp. 151–187. DiMasi, J. A., et al. “Cost of Innovation in the Pharmaceutical 

Industry.” J Health Econ 1991; no. 10 (2):107-142. doi: 10.1016/0167-6296(91)90001-4. Adams, C. P., and Brantner, V. V. 

“Estimating the cost of new drug development: is it really 802 million dollars?” Health Aff. (Millwood) 2006; no. 25 (2):420-8. 

doi: 25/2/420 [pii]10.1377/hlthaff.25.2.420. DiMasi, J. A., et al. “The price of innovation: new estimates of drug development 

costs.” J. Health Econ. 2003; no. 22 (2):151-85. doi: S0167-6296(02)00126-1 [pii]10.1016/S0167-6296(02)00126-1. Paul, Steven 

M., et al. “How to improve R&D productivity: the pharmaceutical industry’s grand challenge.” Nat. Rev. Drug Discov.2010; no. 9 

(3):203-214.

Challenges in Drug Development 

Drug development is challenging for a variety of reasons. 

• High probability of failure. Whether a drug discovery and development project succeeds 

depends on the answer to key scientific questions, such as: Will a drug that inhibits a target 

protein be effective against the targeted disease? Will a specific chemical entity be safe? With 

the current state of knowledge, it is difficult to make accurate predictions and uncertainty is 

often resolved only late in the development process after the expenditure of considerable time 

and money. Because the success rate is very low (currently around 9 percent), the true cost of 

making successful drugs must include amortization of the many failures. 

Evidence suggests that the failure rate38 for new drugs in clinical trials is increasing. Between 

1993 and 2003, clinical trial failure rates increased from 82 percent to 91 percent.39 At every 

stage of drug development, attrition rates have been increasing. Success rates in the final stage 

(Phase 3) of clinical testing—at which point significant investment has already been made in a 

drug candidate—decreased from 80 percent to 50 percent between 1995 and 2005,40 and are 

now estimated at 45 percent.41 One analysis showed that half of these Phase 3 drug candidates 

38. Failure rate refers to the proportion of drug candidates that enter clinical trials (Phases 1-3) for which sponsors 

choose not to seek FDA approval.

39. GAO. “Science, Business, Regulatory, and Intellectual Property Issues Cited as Hampering Drug Development 

Efforts.” 2006.

40. Woosley, R. L. and Rice, G. “A new system for moving drugs to market.” Issues in Science and Technology. 2005; no. 

21 (2):63-68.

41. Kota, I. and Landis, J. “Can the pharmaceutical industry reduce attrition rates?” Nat. Rev. Drug Discov. 2004; Vol 3: 

711-715.
II. Innovation Under Stress

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failed for lack of efficacy,42 (even though efficacy should be established in Phase 2) often because 

the underlying clinical hypothesis about how to treat the disease was incorrect. Another third 

failed because of safety issues that had not been predicted earlier in development. Increasing 

failure rates may reflect a greater proportion of drugs with novel mechanisms of action entering clinical trials without adequate proof-of-concept studies in humans.43 (According to some 

analyses,44 drugs with novel mechanisms of action were more than twice as likely to fail as 

drugs with already-established mechanisms, underscoring the challenges of true innovation.) 

In addition, some failures are due to insufficient efforts in Phase 2 of clinical trials devoted to 

optimizing patient selection and dosing.45

• High expenses. The drug discovery and development process is extremely expensive, with the most expensive factor being the cost of clinical trials. The top 20 companies in the pharmaceutical industry spend about 37 percent of their total R&D budget 

on clinical trials, approximately $31 billion dollars annually.46 These trials include those 

that are investigational, before a therapy is licensed for use and the large clinical trials that are often required to investigate the safety of products in the post-marketing setting. (The next largest component is the discovery phase at about 22 percent of costs.) 

Clinical trials are expensive for at least two reasons: (1) the current clinical trials system is inefficient and (2) current clinical trials often require large numbers of patients and long durations 

to provide adequate evidence of safety and efficacy to meet the standards for regulatory 

approval, especially for drugs with clinical impacts which are not dramatic or which occur over 

a long period of time. Decreasing the cost of clinical trials would directly decrease the cost of 

drug innovation. There are opportunities to streamline the clinical trials system in the United 

States in ways that would decrease costs while increasing quality. There are also opportunities to 

obtain better information about effectiveness from smaller or shorter clinical trials (for example, 

by using biomarkers to focus on patients most likely to benefit and by using new kinds of trial 

designs). 

• Long time to market. The time to market for a drug is a critical factor for innovators, because it 

affects the amount of time in which a patented product can be marketed before it faces generic 

competition. Because drugs are very expensive to develop but typically much less expensive 

to manufacture, an economically rational company will not invest in developing a drug unless 

there is an ‘exclusivity period’, during which others are excluded from marketing the same product. (See box on Exclusivity Periods in Chapter 3.) Shorter time to market typically translates to 

longer exclusivity and greater return. The time to market depends on many factors, including 

the time taken by the company to develop a drug and the time taken by the FDA to review an 

application for approval. 

42. Gordian, M.A., et al. “Why drugs fall short in late-stage trials.” The McKinsey Quarterly. 2006.

43. Scannell, J.W., et al. “Diagnosing the decline in pharmaceutical R&D efficiency.” Nat. Rev. Drug Discov. 2012. 

191-200.

44. Ibid.

45. Skarke, C. and FitzGerald, G.A. “Training translators for smart drug discovery.” Sci. Transl. Med. 2010. 2: 26 cm12.

46. Accenture research performed on behalf of the Hever industry collaboration, a group of R&D heads of 

pharmaceutical companies. Data provided via personal communication with Garry Neil of Johnson and Johnson.
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Evidence indicates that the time and cost for conducting clinical trials of new drug candidates is 

rising. Over the past 50 years, the time from drug discovery to drug approval has nearly doubled 

from 8 years in the 1960s47 to roughly 14 or more years now. More recently, some experts conclude that the time required for drug development (from patent filing to commercialization) 

has increased from an average of 9.7 years for drugs launched during the 1990s to an average of 

13.9 years for drugs launched since 2000.48 Factors include the increasing complexity of clinical 

trial protocols, including the procedures to be applied, the growing difficulty of recruiting and 

retaining patients that meet the criteria for clinical trials, the administrative burdens of setting 

up clinical trials, and increasing regulatory requirements for clinical trials in particular areas.

• Regulatory uncertainty. Drug discovery and development projects also face many uncertainties. Some are unavoidable, as unanticipated issues arise during drug development. Some, 

however, reflect regulatory uncertainties that might be minimized through clearer and more 

consistent communications by the FDA. These uncertainties often surround the type and quality 

of evidence that will be necessary to demonstrate safety and efficacy (for example, for a new 

drug class, a new indication, or new drug combination). Regulatory risks affect the costs of drug 

development because investors demand risk premiums to compensate for uncertainty. In this 

report, we discuss ways to increase regulatory certainty. 

While the factors above are important to all innovators, they may be especially important to small 

biotechnology companies. When the FDA determines that the available evidence is inadequate to support approval and that additional studies are required, a large pharmaceutical firm with many products 

in its pipeline can accommodate the delay more readily than a small biotech firm. Small firms often 

have only a single drug under development. Because such companies have no commercial sources of 

revenue to support their high “burn rate,” a two-year delay in drug approval can be a death knell. The 

situation illustrates the importance of clear communications with companies, so that they are aware of 

the requirements they will have to meet to obtain drug approval.49

In addition to the economic factors above, some have argued that part of the explanation for declining 

productivity of the pharmaceutical industry lies in organizational issues and poor execution. Some 

observers, including former pharmaceutical company CEOs, have asserted that declining productivity 

is partly due to the size, structure, and management of R&D organizations; too much focus on “blockbuster” and “me-too” drugs; too much attention to sales and marketing;50, 

51 and failure to fully realize 

the potential of personalized medicine.52

47. DiMasi, J. A., et al. “Cost of Innovation in the Pharmaceutical Industry.” J. Health Econ. 1991; no. 10 (2):107-142. doi: 

10.1016/0167-6296(91)90001-4.

48. Pammolli, F., Magazzini, L., and Riccaboni, M. “The productivity crisis in pharmaceutical R&D.” Nat. Rev. Drug Discov.

2011. no. 10 (6):428-38. doi: nrd3405 [pii]10.1038/nrd3405.

49. In recent years, FDA has made considerable efforts to increase outreach, education, and communication to 

the small business community. The small business assistance portal provides a wealth of resources, FAQs, and real-time 

updates (www.fda.gov/Drugs/DevelopmentApprovalProcess/SmallBusinessAssistance/default.htm). In addition, each of 

FDA’s Regional Offices has a small business liaison and the CDER Communications office is available for small business 

phone or email inquiries.

50. Garnier, J.P. “Rebuilding the R&D Engine in Big Pharma.” Harv. Bus. Rev. 2008.

51. Letter from the Editors. “Lessons from Lipitor and the broken blockbuster drug model” The Lancet. 2011. Volume 

378, Issue 9808, p. 1976.doi:10.1016/S0140-6736(11)61858-8.

52. Aspinall, M.G. and Hamermesh, R.G. “Realizing the promise of personalized medicine.” Harv Bus Rev. 2007; 

85(10):108-17, 165.
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Overall, accelerating the flow of innovative medicines will require coordinated action across sectors 

to address a range of issues, including decreasing the probability of failure, the expense, the time, and 

the regulatory risk associated with drug development, while maintaining the effectiveness and safety 

of new medicines. 

PCAST believes that there are many opportunities to do so. We propose the following ambitious goal 

for the Nation:

PCAST believes that such a goal is attainable over the next 10-15 years. We also discuss below various 

intermediate milestones that can be achieved along the way. Achieving this goal will require concerted 

efforts by stakeholders across multiple sectors—including biopharmaceutical companies, the Federal 

Government, the research community, and patient advocacy groups of various types. The analysis and 

recommendations that follow are intended to lay a foundation for such improvements. 

Goal: Double the current annual output of innovative new medicines for patients with 

important unmet medical needs, while increasing drug efficacy and safety, through industry, 

academia, and government working together to double the efficiency of drug development 

by decreasing clinical failure, clinical trial costs, time to market, and regulatory uncertainty.

★ 17 ★

III. Improving Drug 

Discovery and Development

In this chapter, we describe issues related to propelling innovation in drug discovery and development—specifically, knowledge gaps, inefficiencies in clinical trials, and economic incentives. 

Gap Between Basic Research and Commercial Projects

The explosion in basic biological knowledge over the past 25 years has not yet given rise to a measurable increase in the rate of new drug development. Some have even gone so far as to argue that the 

advances in basic research have actually impeded pharmaceutical productivity53 because the availability 

of thousands of novel drug targets has tempted companies to pursue poorly understood targets. We 

disagree that this is source of the problem.

The fundamental problem is that advances in basic biomedical knowledge have not yet been matched 

by similar increases in the science and technologies needed for drug development. Accelerating the 

translation of biological insights into new medicines requires developing powerful new scientific knowledge, methodology, and tools. Academic scientists tend not to pursue such work, because it is seen as 

“too applied” and because it often requires multi-disciplinary teams rather than individual academic 

labs. Companies tend to under-invest in such work because it is at least partially a “public good”—that 

is, a single company financing the development of new foundational approaches to drug discovery 

cannot fully appropriate the fruits of the work, because much of it leaks out to benefit all participants. 

Two examples illustrate the challenges in drug discovery and development:

(i) Predicting efficacy and toxicity. Developing medicines involves creating molecules to modulate a protein target in the hope of treating a disease. Yet, we currently have only a very limited 

ability to predict whether (1) modulating a particular target will actually ameliorate a disease 

in humans or (2) a particular molecule will have toxic side effects. To a large extent, we rely on 

trial and error. Boeing’s engineers can accurately predict the performance of a new airplane 

design through computer simulation, because they know the equations that describe air flow. 

Pharmaceutical scientists, lacking adequate predictive tools, must instead do the equivalent of 

building the plane to see if it will fly or crash.

A case in point is the recent effort to develop drugs to prevent cardiovascular disease by increasing high-density lipoprotein (HDL). HDL is the so-called “good cholesterol”: in population studies, 

high levels of HDL are correlated with a decreased risk of cardiovascular disease. Pfizer scientists 

created an inhibitor (torcetrapib) of a particular enzyme (called CETP) involved in cholesterol 

metabolism and found that it increased HDL levels and inhibited atherosclerosis in a rabbit 

model. In Phase 2 clinical trials, the drug increased HDL levels in humans, but also elevated blood 

pressure.54 In a large Phase 3 clinical trial of 15,000 patients, the inhibitor showed significantly 

53. Pammolli, F., Magazzini, L., and Riccaboni, M. “The productivity crisis in pharmaceutical R&D.” Nature Rev. Drug 

Discov. 2011. no. 10 (6):428-38. doi: nrd3405[pii]10.1038/nrd3405.

54. Tall, A.R., et al. “The Failure of Torcetrapib.” Arterioscler. Thromb. Vasc. Biol. 2007; 27: 257-260.
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increased morbidity and mortality—resulting in a failure that likely cost hundreds of millions of 

dollars. It is unclear whether the problem was with the fundamental notion of inhibiting CETP 

(a so-called ‘on-target’ effect) or was a vagary of the specific molecule (a so-called ‘off-target’ 

effect, in which the molecule inadvertently affects a different cellular pathway). Lacking clear 

knowledge about the validity of the target, three companies proceeded with clinical trials of 

alternative CETP inhibitors. Just before this report went to press, one of these companies (Roche) 

announced that it had terminated its trial for lack of efficacy. In addition, a study showed that 

individuals who carry genetic variants that exclusively increase HDL levels show no decreased 

risk of heart attack, which suggests that HDL levels may be correlated with but not play a causal 

role in protection against heart disease.55

Before developing a pharmaceutical, a drug developer would ideally want to: (1) know whether 

modulating the intended target would have beneficial effect on the disease (“target validation”), (2) know which subsets of patients have a form of the disease that is likely to respond to 

modulation of the target (patient selection), and (3) have easily-monitored molecular, cellular, 

or clinical responses that indicate that a candidate drug is actually acting on its target in a 

patient (biomarkers of response or disease progression). In addition, a drug developer would 

ideally like to have preclinical tests that would identify candidate drugs that are likely to cause 

unacceptable side effects (“predictive toxicology”). 

Improved knowledge, methods, and tools in these areas would benefit the entire field, by 

decreasing the risk of expensive late-stage failures. Because the proportion of successful drug 

development projects is currently around 9 percent, even modest increases in success rates 

such as back to the historical 14 percent success rate56 or higher, would have a significant impact 

on the amortized cost of drug development. Yet, such foundational work will not be done in 

the ordinary course of business by commercial teams engaged in specific drug development 

projects. 

As an example, the NIH’s National Center for Advancing Translational Sciences (NCATS), in 

collaboration with the Defense Advanced Research Projects Agency (DARPA) and the FDA, is 

exploring an approach for predictive toxicology involving developing a chip carrying various 

human cell types that can monitor readouts related to drug responses. 

The greatest need is for improved methods for target validation. The primary focus should be 

on early proof-of-concept in humans: drugs based on clear proof-of-concept in humans have 

much higher success rates than drugs based only on cell or animal models. Human proof-ofconcept demonstrations can sometimes be obtained from genetic studies, where naturally 

occurring genetic variants provide a clear demonstration of the effect of modulating a target. 

Indeed large-scale genomic studies may greatly expand such information in the coming years. 

Additionally, clinical investigational studies with small numbers of patients but extensive data 

gathering can also be extremely valuable in obtaining proof-of-concept. 

55. Voight, B.F., Peloso, G.M., et al. “Plasma HDL cholesterol and risk of myocardial infarction: A Mendelian 

randomisation study.” 2012, Lancet, in press.

56. FDA. “Innovation or Stagnation: Challenge and Opportunity on the Critical Path to New Medical Products.” 

2004.
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(ii) Drugging the “undruggable.” The vast majority of currently approved drugs act against only 

a few classes of proteins (such as proteases and kinases). Many of the proteins that have been 

implicated in human diseases belong to classes that are currently said to be “undruggable.” The 

term suggests that it is impossible to make drugs against such targets, but actually it means only 

that no one has succeeded to date. Indeed, twenty years ago, kinases were broadly considered 

to be undruggable. Today, transcription factors and many protein-protein interactions are 

generally regarded as undruggable. 

The ability to create drugs against currently undruggable target classes could dramatically 

expand the range of possible medicines. Yet, it is not economically feasible to expect companies 

to take on large research projects to tackle such targets, because success would largely serve 

to blaze trails for others. On the other hand, it is not practical for most academic laboratories to 

take on such projects because they lack sufficient expertise, scale, or tools. Moreover, such work 

runs counter to the usual focus in academic science on testing specific hypotheses.

Recently, the NIH has begun to address the gap between basic research and commercial 

projects, by focusing on the need for Federal support for research in translational science. 

In 2011, the NIH proposed the creation of an important new entity, NCATS, to serve as NIH’s 

catalytic hub for translational innovation. According to NIH Director Francis Collins,57 the new 

center is intended to “catalyze the generation of innovative methods and technologies that 

will enhance the development, testing, and implementation of diagnostics, therapeutics, 

and devices across a wide range of human diseases and conditions.” Importantly, the goal 

is not to create specific drugs—a task that is better performed in the private sector than in 

government—but to improve the foundation for drug development. NCATS was established 

in December 2011. NCATS includes pre-existing programs such as the CTSAs, the Therapeutics 

for Rare and Neglected Diseases Program (TRND), and components of the Molecular Libraries 

Program. A new program launched with NCATS includes a collaboration with DARPA to create 

tissue chips to improve preclinical toxicology testing. Congress also created, within NCATS, the 

Cures Acceleration Network (CAN) to catalyze the development of high-need cures. CAN has 

two novel authorities for supporting innovative research: matching grants and flexible research 

authority. While authorized for up to $500 million, the CAN appropriation in FY2012 was only 

$10M. NCATS is an important development, although it is important to recognize that it will 

likely be able to address only a fraction of the critical needs. 

In addition to NCATS, several specific collaborations and consortia have been formed in the 

United States, including the Biomarkers Consortium, the Observational Medical Outcomes 

Partnership, and the Critical Path Institute. The United States-based efforts are valuable, but 

most tend to be focused on specific topics and projects rather than providing critical mass 

and leadership. (In Europe, the Innovative Medicines Initiative has a somewhat broader focus.)

The Nation would benefit from a coherent, high-level partnership that brings together high-level 

leadership from key stakeholders on a sustained basis to develop and help launch initiatives for 

shared objectives. We discuss this topic in the recommendations in Chapter 5. 

57. Collins, F.S. “Reengineering translational science: the time is right.” Sci. Transl. Med. 6 July 2011. Vol. 3, Issue 90, p. 

90cm17. DOI: 10.1126/scitranslmed.3002747.
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Inefficiency in Clinical Trials

Clinical trials constitute the largest single component of the R&D budget of the biopharmaceutical 

industry, at approximately $31.3 billion, representing nearly 40 percent of the R&D budget of major 

companies.58 Unfortunately, there is broad agreement that our current clinical trials system is inefficient. 

One R&D leader of a major pharmaceutical company consulted by PCAST estimated that a more efficient 

clinical trials system could cut these clinical trials costs by one-third to one-half across the industry. 

Currently, each clinical trial to test a new drug candidate is typically organized de novo, requiring 

substantial effort, cost, and time. Drug companies must identify clinical investigators and assemble 

multi-investigator teams. IRB protocols59 must be written and separately submitted to each of many 

institutions, and approval of these protocols can take several months without necessarily improving 

the ethics of the research or the protections afforded human subjects. Banking of biological specimens, 

which can be expensive and complex, is typically tailored to the short-term needs of an individual 

trial, rather than aimed at the long-term utility of large sample banks with detailed clinical annotation. 

Information technology is not standardized among trials, impairing the ability to analyze and integrate 

data. And, trial details, such as the definition of phenotypes, are variable across trials, further complicating the integrated interpretation of multiple studies. Navigating all of these requirements is challenging 

even for large pharmaceutical companies, and can be daunting for small biotechnology firms. Even in 

the best cases, the complexities add considerable time to trials—subtracting time from a successful 

drug’s eventual time on the market without competition. 

In response to concerns about costs and delays in public-sector-funded clinical research, the NIH formed 

the Clinical and Translational Science Awards (CTSAs), which are now a major component of the new 

National Center for Advancing Translational Sciences. The CTSAs are part of a network of 60 academic 

medical centers whose mission includes improvement in all processes related to the development, 

approval, activation, and completion of clinical trials. Some of the innovations being tested have the 

potential to improve the implementation of clinical trials in all sectors. For example, the CTSAs have 

developed models for both centralized and reciprocal IRB review, with the aim of shrinking the time 

from protocol development to patient enrollment. Increasingly, disease-specific networks are being 

established by NIH institutes, built upon the infrastructure established by the CTSAs. 

In some instances, institutions have successfully cooperated to execute a series of clinical trials in an 

ongoing manner, by creating an enduring infrastructure that facilitates rapid initiation of successive 

clinical trials with modest additional effort. For example, the TIMI Study Group has led over 50 clinical 

trials, contributing enormously to the standard of care for patients with coronary artery disease. 

Cooperative groups in oncology have led many of the most important clinical trials of new agents, 

combinations, and treatment regimens. The Multiple Myeloma Research Consortium is a network of 

58. Accenture research performed on behalf of the Hever industry collaboration, a group of R&D heads of 

pharmaceutical companies. Data provided via personal communication with Garry Neil of Johnson and Johnson.

59. Institutional Review Boards (IRBs) are boards at individual institutions, such as academic centers and hospitals, 

charged with overseeing the compliance of research projects with Federal regulations and the institution’s own policies 

with respect to research that includes human subjects. IRB protocols are developed by researchers who are using human 

subjects, and reviewed by the respective boards at each institution. Each IRB will have varying requirements for such 

protocols and require an independent review process. There are also independent, commercial, and central IRBS that are 

not unique to each institution.
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approximately 16 leading centers in North America that has opened 37 trials to date, enrolled more than 

1100 patients, banked more than 3500 tissue samples, and developed metrics to evaluate its speed—all 

by leveraging philanthropic resources. Some public-private efforts have also been launched to improve 

efficiency of clinical trials.60

The biopharmaceutical industry would benefit from having enduring clinical trials networks able to 

perform studies suitable for registration of a new drug, with efficiency and high quality. A series of networks, specific to disease areas, could provide lasting infrastructure for the execution of clinical trials of 

high quality, with rigorous ethical standards, high-quality data collection, and low per-patient cost. The 

networks could be operated either as for-profit or non-profit entities. Accredited research sites could 

be maintained, with feedback and accountability, and able to enroll patients rapidly on new trials. The 

quality, ethics, and efficiency of clinical trials would be further enhanced through standardization of 

trial design, IRB review, project management, data collection and processing, and sample banking.61

Ultimately, the industry, the FDA, and the medical community would need to work collectively to create 

such trials networks—with initial funding to organize and baseline funding to maintain these networks 

coming through private sources. But, the long-run return on these investments could be considerable 

to all contributors.

Beyond organizational inefficiency, clinical trials are also expensive because they often must be extremely 

large or long to provide sufficient evidence about efficacy. But in fact, it is increasingly possible to obtain 

clear answers with many fewer patients and with less time. One approach is to focus studies on specific 

subsets of patients most likely to benefit, identified based on validated biomarkers. In some cases, 

using appropriate biomarkers can make it possible to dramatically decrease the sample size required 

to achieve statistical significance—for example, from 1500 to 50 patients.62

Another approach is to use innovative new approaches for trial design that can provide more information more quickly. Bayesian statistical designs potentially allow for smaller trials with patients receiving, 

on average, better treatments.63 These and other modern statistical designs can improve on current 

60. One example is the Clinical Trials Transformation Initiative (CTTI), which is a public-private partnership founded 

by the FDA and Duke University to identify practices that will increase the quality and efficiency of clinical trials. CTTI 

now involves more than 60 organizations from across the clinical trial enterprise. CTTI was formed because of the 

challenges facing the clinical trial system: increasing start-up times, decreasing patient recruitment and enrollment, 

increasing trial costs, and the shift of many trials from the United States to offshore locations. CTTI has sought to identify 

both incremental changes (such as standardizing and improving Severe Adverse Event reporting), and transformational 

changes (such as meta-analysis of the overall system using the Results Database built on www.ClinicalTrials.gov).

61. Since 2009, the Institute of Medicine’s Forum on Drug Discovery, Development, and Translation has been 

engaged in efforts to address challenges facing the U.S. clinical trials enterprise, including through (1) harmonizing 

regulation and improving infrastructure of clinical trials in the United States, and (2) public engagement in the 

clinical trials enterprise, including promotion of public understanding of and support for clinical trials and the drug 

development enterprise. The approaches considered include clinical trial networks that engage and support community 

practitioners in research. Citation: IOM (Institute of Medicine). “Envisioning a Transformed Clinical Trials Enterprise in the 

United States: Establishing an Agenda for 2020: Workshop Summary.” 2012. Washington, DC: The National Academies 

Press.

62. The drug imtainib (Gleevec) was approved based on a clinical trial of only 54 patients, because nearly all 

patients showed marked benefit [http://www.cancer.gov/newscenter/qa/2001/gleevecqa]. The drug gefitinib (Iressa) 

required a clinical trial of approximately 1500 patients because it showed benefit in only a minority of patients. It later 

became clear that testing the drug in the specific subset of patients carrying mutations in a specific gene (EGFR) would 

have made it possible to demonstrate efficacy in only about a hundred patients. 

63. Berry, D.A. “Bayesian clinical trials.” Nat. Rev. Drug Discov. 2006; Vol. 5: 27-36. 
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protocols, which have only a very limited ability to explore multiple factors simultaneously. Such factors importantly include individual patient responses to a drug, the effects of simultaneous multiple 

treatment interventions, and the diversity of biomarkers and disease sub-types.

Most trials also imperfectly represent and capture the realities of the clinical care setting in which health 

care is delivered and do not include the full diversity of patients with a disease or the full diversity of 

treatment results. Integrating clinical trial research into clinical care through innovative trial designs may 

provide important information about how specific drugs work in specific patients. 

Some exciting innovative models for clinical trials have been launched in recent years. (For one example 

of such efforts, see Box on I-SPY Trials.) However, the barrier to initiating innovative trials remains high, 

and there is limited ability to scale and disseminate processes and tools needed for such trials. There is a 

need for improved mechanisms to align parties including drug sponsors, insurers, and the FDA. 64 65 66 67

In summary, improving the efficiency of clinical trials is an area that is ripe for improvement, but that 

will require industry and/or public-private consortia to pursue.

64. I-SPY TRIAL: Investigation of Serial Studies to Predict Your Therapeutic Response with Imaging And Molecular 

Analysis.

65. In December 2010, the investigators extended the protocol and enrolled 119 additional patients, per 

www.ispy2.org/about/background-i-spy-1-trial.

66. Esserman, L., et. al. “Pathologic Complete Response Predicts Recurrence-Free Survival More Effectively by 

Cancer Subset: Results from the I-SPY 1 TRIAL (CALGB 150007/150012; ACRIN 6657)” J. Clin. Oncol.2012; in press.

67. Hylton, et al. “MRI Prediction of Response to Neoadjuvant Chemotherapy for Women with Locally-advanced 

Breast Cancer: Results from the ACRIN 6657/ISPY TRIAL.” Radiology. 2012; in press.

I-SPY TRIALS 

The I-SPY 1 and I-SPY 2 TRIALS64 are examples of pioneering approaches to clinical trials, deployed to create 

efficiencies in the development of breast cancer therapies by engaging multiple cancer centers across the 

country, drawing on thorough clinical data, and using innovative trial design. I-SPY 1 involved a collaboration 

among 10 cancer centers and the National Cancer Institute (NCI SPORE program and the NCI Cooperative 

groups) to identify the indicators of response to chemotherapy that would best predict the survival of 

women with high-risk breast cancer. Over the course of four years65 (2002-2006), the study monitored 237 

breast cancer patients as they underwent chemotherapy in advance of surgery, known as neoadjuvant 

therapy. The patients’ tumors were monitored serially using MRI and tissue samples taken iteratively to 

determine the biology of responders and non-responders to standard chemotherapy given in a neoadjuvant 

setting, or pre-surgical setting, across different patients. Evaluating the impact of chemotherapy on the 

tumor tissue directly was much more rapid than studying outcomes in thousands of patients over long time 

periods, and helped to standardize the imaging and tumor sampling processes, as well as miniaturization of 

assays. 

Among the key findings of the trial was that tumor response evaluated in this manner was a good predictor of the patients’ overall survival, and that tumor shrinkage during the treatment was a good predictor of 

long-term outcome and response to treatment.66 Importantly, the vast majority of tumors were palpable 

and determined to be high risk by a molecular signature and therefore at risk for recurrence within 5 years. 

However, there was heterogeneity even within this group of high-risk women and measuring response 

within tumor subtypes was more informative than measuring response in the group as a whole.67 Within 
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genetic signatures, complete pathological response to treatment appears to be a reasonable predictor of 

good outcome. Additionally, the shared database from I-SPY 1 has furthered the understanding of drug 

response and generated new targets and agents for subsequent testing.68

The findings of I-SPY 1 set the stage for the I-SPY 2 TRIAL, an ongoing adaptive clinical trial of multiple Phase 

2 treatment regimens (in combination with standard chemotherapy) in patients with tumors with varying 

genetic signatures. I-SPY 2 is a collaboration of 19 academic cancer centers, two community centers, the 

FDA, the NCI, pharmaceutical and biotech companies, patient advocates, and philanthropic partners. The 

trial is sponsored by the Biomarker Consortium of the Foundation for the NIH (FNIH), and is co-managed by 

the FNIH and QuantumLeap Healthcare Collaborative. I-SPY 2 was designed to address the growing recognition that different combinations of cancer therapies will likely have varying degrees of success for different 

subsets of patients, and that conventional clinical trials that evaluate tumor response after surgery require 

long periods of time and large numbers of patients just to weed out ineffective drug candidates. The goal is 

to accelerate the pace at which we learn, early in the course of drug development, which drugs will be most 

effective for which disease subsets.

With traditional clinical trial designs, separate trials would be required to test many different hypotheses. 

Instead, I-SPY 2 is organized as a standing, ongoing clinical trial process. It can efficiently evaluate different 

therapy regimes by relying on the predictors developed in I-SPY 1 that help quickly determine whether 

certain patients with a particular genetic signature in their tumor will respond to a given treatment regime. 

The trial is adaptive in that the investigators learn as they go, and do not continue to pursue treatments that 

appear to be ineffective. All patients are screened and subdivided based on tissue and imaging markers 

collected early and iteratively throughout the trial, so the insights learned about patients from early stages of 

a trial can inform treatments selected for patients enrolled later.

Treatments that show positive effects on response predictors for a given subset of patients can be ushered 

to confirmatory clinical trials, while those that are demonstrated to be largely ineffective based on a predictor of patient response can be rapidly sidelined. Importantly, confirmatory trials can serve as a pathway for 

Accelerated Approval.69

I-SPY 2 also creates efficiencies and cost-savings because it can evaluate multiple drug candidates developed 

by multiple companies, escalating or eliminating drugs based on their promise and ushering in new candidates when drugs are eliminated. By using a single standard arm for comparison for all candidates in the trial, 

it provides a significant cost-savings over what would be required to evaluate these candidates in individual 

Phase 3 trials.70 All of the data generated are deposited into a database to be shared across the industry.

68 69 70

68. Horiuchi, D., et al, “MYC pathway activation in triple-negative breast cancer is synthetic lethal with CDK 

inhibition.” J. Exp. Med. 2012; 209(4):679-96.

69. Esserman, L.J., et al. “Chemotherapy response and recurrence-free survival in neoadjuvant breast cancer depends 

on biomarker profiles: results from the I-SPY 1 TRIAL (CALGB 150007/150012; ACRIN 6657.” Breast Cancer Res. and Treat. 

2011. Esserman, L.J. and Woodcock, J. “Accelerating identification and regulatory approval of investigational cancer drugs.” 

J. Am. Med. Ass. 2011. 306(23): 2608-9.

70. More information on I-SPY 2 trials is available on the I-SPY 2 website. Accessed May 14th, 2012. 

ispy2.org/about/i-spy-2-trial.
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Economic Incentives

Because drug development is an expensive and risky process, the potential for economic return is an 

important factor in attracting innovators and investors. As the cost and time of drug development 

increases, then (all other things being equal) the potential economic return decreases. For certain areas 

of drug development important to public health, the economic incentives may become insufficient to 

elicit adequate investment in innovation.

• One example is the development of new antibiotics to combat the emergence of antibioticresistant strains of deadly and debilitating bacterial infections, which is an impending public 

health crisis. Despite its importance to public health, investment in new antibiotic development 

is drying up: Just 5 new antibiotics were approved by the FDA from 2003-2007, down from 16 

from 1983-1987, and only two new classes of antibiotics have been discovered and developed 

in the last 40 years compared to twelve classes in the 40 years between 1930-1970.71 Few major 

pharmaceutical companies are investing in discovering new antibiotics.72 The incentives to 

invest in new antibiotics against drug resistant bacteria are low for several reasons: (1) antibiotics 

are often targeted against a subset of bacterial strains so market usage may be limited, trials 

difficult, and regulatory pathways uncertain; (2) they are often used for short course therapy 

of one to two weeks (relative to drugs that can be taken for a lifetime like those for chronic 

diseases); (3) the large number of generics keeps prices low even for innovative drugs; and (4) 

new antibiotics are often used as a “last resort” which keeps market size small.

• Another example is the development of drugs to prevent Alzheimer’s disease. Alzheimer’s 

is expected to have a massive toll on our aging population, with some experts predicting 

that 1 in 85 people globally will be affected with the disease. Because the disease progresses 

slowly, adequate clinical trials to demonstrate protection in healthy individuals (as opposed 

to mitigation of symptoms in affected individuals) might require 10-15 years of study in tens 

of thousands of individuals. Despite the importance to public health, companies would be 

unlikely to undertake such long studies because they would be unlikely to be able to recover 

the high development costs in the limited market exclusivity period that would remain. The 

high failure rate of drug candidates for treating Alzheimer’s in the late stages of clinical testing 

also contributes to under-investment in this area, because research costs are high and probability of success is low. There is a need for robust predictive markers to enable shorter and more 

informative trials. Notably, many leading pharmaceutical companies have closed or significantly 

scaled back their research investments in neurodegenerative diseases (and psychopharmacology, generally) in recent years.73

• Yet another example concerns clinical trials to show the efficacy of marketed drugs for new 

indications. While there may be strong incentives for sponsors to fund such trials to expand the 

71. Singh, M.P. and Greenstein, M. “Antibacterial leads from microbial natural products discovery.” Curr. Opin. Drug 

Discov. Devel. 2000. 3(2):167-76.

72. However, the number of antibiotics in clinical trials has increased significantly over the past three years; the 

factors involved in this are complex and it is not clear whether this represents a trend or an anomaly. 

73. Nutt, D. and Goodwin, G.E. “Summit on the future of CNS drug research in Europe 2011: report prepared for 

ECNP.” Neuropsychopharmacol. 2011; 21, 495-499.
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use of newly-approved drugs in large indications, the incentives are likely to be lower for drugs 

where the end of the exclusivity period is in sight (for example, within six years) or for smaller 

indications. In such cases, a sponsor may have insufficient incentive to initiate clinical trials to 

generate compelling evidence of clinical benefit in additional indications, especially given that 

physicians are permitted to prescribe the drug off-label based on other evidence. Yet, public 

health would benefit from the availability of clear evidence from well-controlled trials.

One powerful incentive for drug developers appears to be the length of the exclusivity period, during 

which the drug is protected from generic competition. Congress has passed various laws aimed at 

encouraging drug innovation by providing additional exclusivity (or data protection) periods to certain 

biomedical products, most recently, for new biologics. (See Box on Exclusivity Periods.) Additional 

exclusivity periods have recently been added for targeted purposes. For example, Title VIII of the Food 

and Drug Administration Safety and Innovation Act (FDASIA) of 2012, Generating Antibiotic Incentives 

Now,74 will provide a number of incentives for antibiotic development including five years of market 

exclusivity for certain new antibiotics. The exclusivity would be in addition to any other statutory 

exclusivity that may apply (e.g., new chemical entity, orphan drug), but would run concurrently with 

any patents for the product.

In addition to exclusivity periods, there is a range of other tools that have been used or proposed to 

encourage investment, such as advanced market commitments (that guarantee a drug developer 

access to a particular market), vouchers for priority FDA review of drugs (that can be put toward other 

drug applications to expedite market access), R&D tax credits targeted at clinical research expenses and 

orphan drug development,75 and insurance guarantees.

The success of the economic tools listed above has been variable and their effectiveness is poorly 

understood. For example, priority review vouchers have not proven to be very successful incentives 

for drug sponsors. Economic incentives also affect costs, but the distribution and fairness (across the 

population and across generations) is not well understood. As we discuss in Chapter 5, the Federal 

Government should study whether and when extensions of exclusivity periods and other economic 

incentives would serve the public health.

74. Public Law No. 112-144, 126 Stat. 993 (2012).

75. The Orphan Drug Credit provides a credit of 50 percent of clinical drug testing costs for drugs being tested 

under section 505(i) of the Federal Food, Drug and Cosmetic Act.
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76 77 78 79 80 81 82

76. In general, statutory exclusivity is actually not protection from all competing products, but rather a period of 

protection from competitors’ use of innovators’ data packages as the basis for an FDA approval. An important exception, 

discussed below, is orphan drug exclusivity.

77. For the first four years of this 5-year period, the FDA will not accept applications for generic or other competitor 

products that rely on the innovators’ data package. In the 5th year the FDA may accept applications accompanied by a 

certificate of patent invalidity or noninfringement.

78. For new uses or formulations that required clinical trials for approval (but were not NCEs), the period is 3 years. 

79. Defined as those with less than 200,000 patients in the United States.

80. Same active moiety.

81. This is the case unless a “parallel pioneer,” a drug sponsor that was developing a nearly identical product for an 

orphan designation, demonstrates the clinical superiority of its product. (Unlike the exclusivity granted for conventional new 

chemical entity approvals, the exclusivity provided by FDA for orphan drug approvals extends to slightly different molecules 

(e.g., an antibody with 2 or 3 different amino acids or an enantiomer). The first drug sponsor to apply for and secure an Orphan 

Approval receives the 7-year exclusivity that protects its market from all such similar molecules, unless the “parallel pioneer” 

demonstrates clinical superiority.

82. The FDA will also not accept any applications for a biosimilar or interchangeable biologic during the first 4 years of 

this 12-year period.

Exclusivity Periods 

Federal law provides two main types of exclusivity periods—patent protection and statutory exclusivity,76 the latter of 

which is applied differently in different contexts. 

In particular, the Drug Price Competition and Patent Term Restoration Act of 1984 (often cited as the Hatch-Waxman 

Amendments or Public Law 98-417) provides two types of intellectual property protection to drug developers—partial ‘patent restoration’ and statutory exclusivity (in this case, data protection), which often run in parallel. The HatchWaxman Amendments extend the term of certain patents to compensate for a portion of the time the drug spends in 

clinical development and evaluation. Specifically, the patent life is extended by 50 percent of the development time 

following the filing of an Investigational New Drug application (IND) plus 100 percent of the time the drug is under 

review at FDA, up to a maximum of 5 years restored and 14 total years of remaining patent life following FDA approval. 

The Hatch-Waxman Amendments also provides statutory exclusivity—a limited period of protection from competition following an FDA approval—for certain drugs. This is a period of time following a new drug approval during 

which the FDA will not approve certain generic and follow-on applications that rely on the innovators’ data package,77

but will accept applications for competing products that do not use the innovators’ data package. For new chemical 

entities (NCE), this period lasts for five years.78 (In principle, generic competitors may conduct their own clinical trials 

and generate their own data package, but this is rarely done because the high cost is not justified by the benefit of a 

somewhat earlier entry into the market.)

Special statutory exclusivity provisions exist for orphan drugs and biologics. The Orphan Drug Act protects new drugs 

intended to treat rare diseases or conditions,79 from competition by barring the FDA from approving any molecularlysimilar80 drug for the same use for seven years.81

The Biologics Price Competition and Innovation Act (BPCI Act) bars the FDA from approving an application for any 

highly similar biologic that relies on the data package of the innovator biologic during the 12-year period that runs 

from the date that the product was first licensed.82

All types of statutory exclusivities, as well as certain patent terms for drug products, can be extended by 6 months if 

a drug developer fulfills a request from the FDA to conduct clinical trials demonstrating the safety and efficacy of the 

drug in pediatric populations. 

Patent life typically exceeds the statutory exclusivity (or data protection) period, but the validity of patents can be challenged in court by potential competitors. By contrast, statutory exclusivity or data protection periods are not affected 

by patent challenges. 

A key policy issue with all exclusivity periods is balancing the incentive to innovators to produce new medicines or 

data with potential increased costs to society through delaying the introduction of market competition.
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IV. Improving Drug Evaluation

Accelerating innovation in the creation of safe and effective medicines will require improvements not 

only in drug discovery and development, but also in the Nation’s regulatory processes for drug evaluation. In this section, we describe the inherent challenges in drug evaluation and the opportunities for 

improving the system.

We first address a commonly made criticism about the FDA—namely, that the FDA itself constitutes the 

major barrier to increased innovation in drug discovery and development, because it is inefficient and 

stodgy compared to its European counterpart, the European Medicines Agency (EMA). In fact, we find 

that the data for drug approvals do not support this claim. Since the early 1990s, the FDA’s review times 

for new drug applications have declined significantly with the full implementation of the PDUFA. The 

proportion of applications for new molecular entities that eventually receive FDA approval has remained 

fairly steady since the 1990s, at about 80 percent.83 When a drug is clearly efficacious, the FDA typically 

approves it rapidly. The issues that typically attract attention concern cases where the favorability of the 

balance between benefit and risk is unclear (for example, moderate potential benefit to some patients 

and large potential risk to other patients). 

Importantly, recent studies have shown that the FDA approves drugs faster than the EMA. For 75 percent of new drugs approved by both the EMA and FDA between 2006 and 2010, the FDA was the first 

to grant approval.84,

85 Similarly, a recent study found that the FDA approved more new cancer drugs 

and approved them more quickly than the EMA (on average in 6 months) between 2003-2010, and 

that patients in the United States consistently had access to those cancer therapies before patients in 

Europe.86 (Because this PCAST study focuses on drugs, we have not evaluated the situation with respect 

to medical devices.87) In short, the FDA remains a respected world leader in drug regulation, setting 

standards emulated around the globe. 

Although this specific criticism above is mistaken, we do believe that there are issues at the FDA that 

require attention and that there are important opportunities to improve the process of drug evaluation. 

These opportunities include improving the Agency’s tools for balancing risk and benefit; increasing the 

degree of regulatory clarity in guidance and communications; increasing the scientific and medical 

expertise available to the Agency in emerging areas, such as pharmacogenomics, biomarker development, or rare disease research; and improving internal management of drug applications.

83. Approval rate is relative to submissions received by FDA. GAO. “New Drug Development: Science, Business, 

Regulatory and Intellectual Property Issues Cited as Hampering Drug Development.” November 2006, pg. 12.

84. See the FDA transparency initiative website: 

www.fda.gov/downloads/AboutFDA/Transparency/Basics/UCM247470.pdf.

85. An important difference between the EMA and FDA approvals is that products in the United States can be 

marketed upon receiving FDA approval. In the EU, a committee of the EMA issues a positive opinion to the European 

Commission, which must adopt the opinion of the EMA before marketing authorization. Some studies, including that 

cited below, take into account this difference in the review processes when comparing review times, by comparing the 

dates of effective marketing authorization.

86. Roberts, S.A., et al. “Despite Criticism Of The FDA Review Process, New Cancer Drugs Reach Patients Sooner In 

The United States Than In Europe.” Health Aff. (Millwood). 2011; No:doi: 10.1377/hlthaff.2011.0231.

87. For a discussion of these issues, see: Kramer, D.B., S. Xu and A.S. Kesselheim. “Regulation of Medical Devices in 

the United States and European Union.” N. Engl. J. Med. 2012; 366:848-855.
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Improving Tools for Balancing Risk and Benefit

In principle, the FDA should ensure that the American people gain access as rapidly as possible to new 

drugs that are safe and effective, while ensuring that they are protected as completely as possible from 

drugs that are not. In practice, it is very difficult to strike this balance because our knowledge about 

safety and efficacy is often initially very limited and evolves over time. Approving drugs with too little 

information runs the risk of exposing the public to dangerous side effects or ineffective treatments. 

Requiring overly large and lengthy studies before approval runs the risk of delaying the availability of 

efficacious and potentially life-saving treatments. There are thus two ways in which the FDA can fail: 

by allowing unsafe medical products on the market, or by preventing patients from gaining timely 

access to innovative and potentially life-saving therapies. FDA must strike a balance between these 

two competing responsibilities.

The Challenge of Addressing Uncertainty, Risk, and Benefit

The FDA’s mission would be challenging under the best of circumstances. But, it is exacerbated by the 

nature of the typical framework for regulatory approval. Under this framework, the FDA makes a binary 

decision to approve or reject an application to market a new drug for a specific indication (disease), 

based on the information available at a specific moment in time. The problems with this framework 

include the following:

• The information available about a drug at the time of approval is necessarily incomplete. 

The FDA requires substantial evidence demonstrating the safety and effectiveness of a drug for 

its intended use. However, even when a product is tested in clinical trials enrolling thousands of 

people and taking several years, the evidence is still limited. When medical products enter the 

marketplace, they are often used by millions of patients in populations that differ in important 

ways from the human subjects who participated in clinical testing. Even if we focus only on 

patients using the drug for the approved indication, these patients will typically be more diverse 

along a variety of characteristics including age, genetics, diagnosis, stage of disease, and state of 

health. Moreover, these patients will use the product in a real-world setting for longer periods 

of time, where they also take other medications and may have a range of other lifestyle and 

medical factors that affect the way they respond to a given drug. Clinical trials cannot feasibly 

predict the full range of rare but serious side effects that might be experienced once a drug is 

released to a wider population or the variation in effectiveness that might be observed in realworld use. Adverse drug reactions that resulted in drugs being removed from the market have 

occurred in less than 1 out of 10,000 patients—meaning that to detect them in the clinical trial 

stage would require enrolling prohibitively large numbers of patients.88 This disparity between 

clinical trials and real-world use of medical products presents a conundrum: knowledge about 

88. A randomized controlled trial that includes 7,000 patients in 2 treatment groups (a large phase 3 trial) would 

have less than 50 percent statistical power to detect an increase of 1 in 500 incidence of an adverse drug reaction that 

background incidence of 1 in 1000 patients. If that drug reaction were lethal, a drug-induced rate of even 1 in 5,000 

might tip the scale against approval. (In 1 million people, it would cost 200 lives.) The trial with 7,000 people could not 

detect that increase; to detect it with 90 percent confidence would require a trial of 1 million patients. Citation: H.G. 

Eichler et al. “Balancing Early Market Access to New Drugs with the Need for Benefit-Risk Data: A Mounting Dilemma.” 

Nat. Rev. Drug Disc. October 2008, Volume 7: 818-826.
IV. Improving Drug Evaluation

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a drug’s safety and effectiveness is inherently limited at the time of FDA approval, and therefore 

it is impossible to fully predict its impact on the entire patient population that will use it. 

• Once a drug is approved for one indication, physicians are permitted to prescribe off-label, 

for indications for which the drug has never been tested or in ways not recommended by 

the FDA. Approved drugs can be prescribed off-label by physicians for indications other than 

what they were tested and approved to treat; by some estimates about 20 percent of prescriptions are off-label.89 This medical practice has allowed doctors and researchers to discover new 

uses of therapies, and to evaluate whether there is scientific evidence to validate such uses. 

Off-label use has allowed physicians, for example, to learn that beta blockers, originally approved 

for treating hypertension, are also helpful in treating heart disease.90 Off-label prescribing is 

a widespread practice today by oncologists in cancer treatment, because there is a growing 

recognition that drugs that block particular cellular pathways may be effective in cancer types 

beyond those tested in the clinical trial used for approval.

At the same time, off-label use can pose serious risks. When drugs are prescribed by physicians 

to patients with illnesses that were not evaluated in clinical testing, there may be no evidence 

about the safety and effectiveness of those drugs in these settings. One study indicated that 

73 percent of drugs used off-label lack evidence of clinical efficacy for those uses.91 There are 

several drugs, such as gabapentin, that have been found to be prescribed by physicians primarily 

for off-label uses despite the dearth of scientific support for such uses.92, 93 In addition to being 

prescribed for non-approved indications, drugs are frequently prescribed to patients for use 

beyond the time frame recommended by the FDA or in tandem with other drugs that may 

cause dangerous interactions—despite labels warning against such use. 

While physicians are permitted to prescribe drugs off-label, biopharmaceutical companies are 

not permitted to promote the use of the drugs for non-approved indications. Yet, there have 

been a number of instances where companies have been found to have violated this prohibition. 

Once a drug is on the market, the economic incentives for sponsors to conduct further clinical trials to obtain formal approval for some additional indications may be low. It may also be 

challenging to enroll patients in such trials (for example, when a treatment is already in wide 

use off-label and believed to be effective, patients may not wish to enroll in a trial). Under such 

circumstances, critical information about the performance of a drug in new indications (or 

specific patient populations) may never be gathered. 

89. Gillick, M.R. Annals of Internal Medicine. March 3, 2009 vol 150, no 5, 344-347.

90. Bennett W.M. “Off-label use of approved drugs: therapeutic opportunity and challenge.” J. Am. Soc. Nephrol. 

2004;15:830-1.

91. Radley D.C., S.N. Finkelstein, and R.S. Stafford. “Off-label prescribing among office- based physicians.” Arch. 

Intern. Med. 2006; 166:1021-1026.

92. Kesslheim, A.S. et al. “False Claims Act Prosecution Did Not Deter Off-Label Drug Use In The Case of Neurontin.” 

Health Aff. (Millwood). December 2011 vol. 30 no. 12 2318-2327.

93. Steinman M.A., et al. “Narrative review: the promotion of gabapentin: an analysis of internal industry 

documents.” Ann. Intern. Med. 2006;145(4):284–93.
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• Although the FDA approves drugs for specific indications, it has a statutory responsibility 

to weigh the overall benefit-risk balance that will result from its use in the population, 

including likely off-label use. Under the Federal Food, Drug, and Cosmetic Act, the FDA has 

the responsibility, when determining whether to approve a drug, to consider whether the 

benefits outweigh the risks. The FDA interprets its statutory responsibility to mean that it may 

deny approval to a drug with a favorable benefit-risk balance in a narrow population if the drug 

will pose serious risks to a broad population. Drugs have also been removed from the market 

because they were being used off-label in a way that raised serious concerns. (Examples include 

Seldane, an antihistamine that caused fatal heart rhythm abnormalities in patients because it 

was often prescribed—contrary to label warnings—in combination with other drugs with which 

it interacts, and Bromfenac, an anti-inflammatory that was prescribed for periods beyond the 

ten-day time frame on its label, resulting in liver failure and death. The FDA requested that both 

drugs be removed from the market by the companies that sponsored them.)

• The tools and incentives to monitor the safety and effectiveness of drugs following 

approval are inadequate. The inherent uncertainties outlined above underscore the need to 

generate knowledge about a drug’s risks and benefits over time as it is used more widely, in 

what is known as the “post-marketing phase.” A drug might have benefits for diseases beyond 

the indication for which it was approved by the FDA, for example, or it might have serious risks 

that outweigh the benefits. The FDA and public health agencies currently lack a robust and 

systematic way to track and monitor safety and effectiveness for most medical products in the 

marketplace. According to regulators, this lack has limited their willingness to accept uncertainty 

about drugs upon approval or rejection. In general, drug use and safety are not actively tracked 

in the United States, nor is such information routinely and systematically paired with clinical 

data on patient outcomes and reactions. 

The FDA relies in part on a passive surveillance system, known as the Adverse Events Reporting 

System (AERS). Under this system, patients and health care providers voluntarily report suspected safety issues from a medical product. This requires health care professionals to make a 

judgment call on whether a particular adverse event is worth reporting as a possible adverse 

drug effect. It then requires health agencies to separate actual drug-related safety issues from 

background “noise”—the cacophony of reported issues, many of which are unrelated to the 

drug. The agencies must then investigate and evaluate safety issues that seem to be significant 

and related to an approved product in order to justify taking action. In our view, this system 

is inefficient, inconsistent, resource-intensive, and increasingly obsolete. Recently, the FDA 

in cooperation with academic researchers and other stakeholders has been developing the 

Sentinel Initiative, which would allow the FDA to more actively monitor the risks and benefits 

of medical products in the marketplace. (For further discussion of this issue, see later discussion 

on Sentinel).

In some cases, the FDA requires drug sponsors as a condition of approval to perform future 

studies of drugs’ risks and benefits in the post-marketing phase (referred to as Phase 4 studies). 

An Institute of Medicine report in 2007 found that many of these studies have either gone 
IV. Improving Drug Evaluation

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untracked, unfulfilled, or unenforced.94 The 2007 FDA Amendments Act (FDAAA) gave the FDA 

greater authority to compel post-marketing studies under a wider variety of circumstances. 

Since 2007, there is evidence that compliance, tracking, and enforcement of post-marketing 

commitments have improved, but it remains to be seen whether the issues have been resolved. 

The most recent available data from FY 2011 indicate that most post-marketing commitments 

are completed or are progressing on schedule.95

For drugs that have been granted “Accelerated Approval” (explained in more detail later in 

this chapter), there is evidence of significant challenges in ensuring that sponsors complete 

confirmatory studies required to verify and describe the clinical benefit of the treatment. A 

major challenge here is that it can be difficult to recruit a sufficient number of patients to a 

randomized controlled trial once a drug for a serious or life-threatening disease lacking other 

effective therapies becomes available to patients. 

There is a clear need for improved methods to quickly identify and verify safety issues associated 

with drugs, and to strengthen incentives to study drugs’ safety and effectiveness in real-world 

populations. The willingness of the FDA and the public to accept the uncertainty and risks of 

new drugs—and therefore the ability to support innovation in drug evaluation—is inextricably 

tied to the quality of information that can be acquired after a drug is on the market. 

• Once a drug is approved, it can be difficult to remove it from the market, even when serious safety issues arise. By law, the FDA has authority to withdraw a drug’s approval for a specific 

indication or for all indications. While it occasionally uses that authority, the process is lengthy, 

cumbersome, and can be challenged in court. In practice, the FDA often asks companies to 

voluntarily withdraw from the market drugs with serious and known safety issues. Importantly, 

once a drug is in wide use, it can be difficult in practice to remove it from the market.96,

97 As a drug 

becomes prescribed and used by patients, there will inevitably be some patients who believe 

(often correctly) they are benefitting from the drug and who do not experience negative side 

effects. If a serious risk of illness or death from a drug is identified and occurs at a high rate in the 

population, however, the FDA may determine that the risks on balance outweigh the benefits 

to the public as a whole. Patients and physicians who experience a drug’s benefits and little 

of its risks may seek to keep the drug on the market by advocating for its approval to remain 

intact. Moreover, even if the FDA removes approval for one indication for a drug (such as one 

type of cancer), if it remains approved for other indications (such as other types of cancer), the 

drug will still be available on the market and physicians may still prescribe it to their patients. 

The off-label prescriptions of such drugs may be reimbursed by insurers adhering to state laws 

and to general recommendations of physician societies. (Medicare is required by Federal law 

to cover off-label uses of cancer drugs listed in one or more approved compendia—reference 

94. IOM. The Future of Drug Safety: Promoting and Protecting the Health of the Public. Accessed May 15th, 2012. 

www.nap.edu/catalog/11750.html, pg. 155.

95. Report on the Performance of Drug and Biologics Firms in Conducting Postmarketing Requirements and 

Commitments. Accessed May 14th, 2012. www.gpo.gov/fdsys/pkg/FR-2012-03-06/html/2012-5302.htm.

96. Ibid 96, pg. 157.

97. On the other hand, the threat of lawsuits may induce drug companies to take drugs off the market even when 

FDA would not do so.
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REPORT TO THE PRESIDENT AND CONGRESS ON THE fourth A S S E S S M EN T 

OF THE NATIONAL NANOTECHNOLOGY INITIATIVE

books developed by physician, hospital, and pharmacist organizations with information to guide 

prescription drug use.98 In addition, several states require reimbursement of listed cancer drugs 

by private insurers and Medicaid.) 

• Many believe that FDA approved drugs are guaranteed—or should be guaranteed—to 

be safe and effective. Although there is no single moment at which a drug’s full risks and 

benefits are known, there is a public perception on the part of many that FDA approval signals 

near-certainty that a drug is safe and effective. In reality, FDA approval signals that risks and 

benefits have been weighed at a single juncture given a body of evidence that is rigorous but not 

exhaustive—and the weighing necessarily involves uncertainty about how a broad population 

of patients will respond and react to a drug. 

A recent study of nearly 3,000 American adults found that 39 percent believed that the FDA 

approves only “extremely effective” drugs, while 25 percent believed that the FDA only approves 

“drugs without serious side effects.”99 Both of these beliefs are mistaken. They also imply that 

significant portions of the U.S. population likely do not understand that knowledge about 

a drug’s benefits and risks can substantially evolve—and diverge from what was previously 

known—after it enters the marketplace and is used more widely. 

When severe safety issues do arise with an approved drug, the public and the Congress often 

blame the FDA for failing to protect the public—whether or not the problem could or should 

have been foreseen (and such judgments are sometimes hard to make in retrospect). The FDA 

has been scrutinized and criticized by Congress in high-profile cases over the past decade, 

including Rezulin, Vioxx, and Avandia. Anticipating such reactions, it is natural to expect that 

a regulatory agency may choose to proceed cautiously—adopting a precautionary culture, 

imposing greater requirements for clinical trials, and requiring greater evaluation of drug 

interactions, liver toxicity, and cardiac toxicity. It is very challenging for the FDA to achieve the 

optimal balance between maximizing innovation and minimizing risk.

Tools to Address Uncertainty and to Balance Risk and Benefit

In a perfect world, the FDA would have the scientific ability to eliminate risk from medical products, ensuring 

their complete safety before they reach the marketplace. The reality is that it is not possible to eliminate risk 

completely, nor to have complete certainty about all the risks and benefits of a drug to a large population. 

Nevertheless, it is critical that we strive to expand the evidence base of the FDA and other stakeholders 

to decrease medical risk, and to improve the degree of knowledge and certainty we have about drug 

risks and benefits before they are ushered into the marketplace. At the same time, we must continue 

to balance the time and cost of gaining greater certainty with the urgent needs of many patients for 

access to innovative treatments.

In order to strike this balance and to accelerate innovation while improving safety, the FDA needs a 

range of tools that enable it to manage uncertainty and to learn and weigh the risks and benefits of 

drugs before and after approval.

98. Gillick, M.R. Ann. of Int. Med. March 3, 2009 vol 150, no 5, 344-347.

99. Scwhartz, L.M. and S. Woloshin. “Communicating Uncertainties About Prescription Drugs to the Public.” Arch. 

Int. Med. Vol. 17 (16). September 12, 2011: 1463-1468.
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IV. Improving Drug Evaluation

The tools needed to optimize the approval drugs that have a favorable balance of benefit and risk include:

• Better scientific tools, including predictors of toxicity and benefit to improve regulatory decisionmaking by increasing the level of certainty about drug risks and benefits;

• Adequate statutory authority and clear interpretation of that authority for early approval of 

drugs based on indicators, such as disease-specific surrogate and clinical endpoints that have 

a high likelihood of positive therapeutic response in serious and life-threatening diseases with 

unmet needs, or early approval of preventatives in especially high-risk patients;

• Robust surveillance systems for collecting post-marketing data about the risks and benefits of 

medical products, including high-quality and interoperable electronic health records;

• Adequate mechanisms to ensure responsible prescribing by physicians for relevant cases;

• Excellent communications channels to patients and physicians that make clear the risks, benefits, 

and uncertainty surrounding medical products, as well as the indications and safe methods for use;

• Effective tools to withdraw drugs that have serious safety issues or are not shown to be effective, including reimbursement policies that are responsive to evolving data about safety and 

effectiveness.

The Federal Government, in partnership with academia and industry, has made progress toward developing such tools. However, further progress is still needed. Below we describe some of the tools and 

the framework that the FDA currently has at its disposal, as well as their limitations and opportunities 

for improvement: 

(i) Accelerated approval. Accelerated approval is a distinct pathway for FDA approval of drugs that 

was developed in the early 1990s in response to the HIV/AIDS crisis. Under Accelerated Approval, 

the FDA has authority to grant an expedited approval to a drug “on the basis of adequate and 

well-controlled clinical trials establishing that the drug product has an effect on a surrogate 

endpoint that is reasonably likely, based on epidemiologic, therapeutic, pathophysiologic, or 

other evidence, to predict clinical benefit or on the basis of an effect on a clinical endpoint other 

than survival or irreversible morbidity.” It includes the requirement that the sponsor conduct 

follow-up studies to verify the clinical benefit. 

Through this pathway, the FDA can expedite patient access to innovative drugs for serious diseases with unmet needs. In doing so, it approves drugs based on their effect on likely predictors 

of clinical outcome (rather than on clinical outcome itself), known as surrogate endpoints, or 

on clinical endpoints other than survival or irreversible morbidity. (For a discussion of risks and 

benefits associated with the use of surrogate endpoints, see the box below.) The advent of this 

pathway has allowed for the development of pioneering and life-saving HIV/AIDS and cancer 

drugs over the past two decades.100

100. For example, protease inhibitors and non-nucleoside reverse transcriptase inhibitors approved in 1996 

combined with already approved AZT led to new combination therapies for HIV which greatly decreased AIDS 

mortality to the point that it became a chronic disease rather than a death sentence. Source: McGee, P. Drug Discovery & 

Development magazine. Vol. 9, No. 7, July, 2006, pp. 10-16.
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Surrogate Endpoints and Intermediate Clinical Endpoints 

Under certain circumstances, the FDA will approve a drug based on its demonstrated impact on an endpoint 

that is likely to predict the desired clinical outcome. These endpoints are known as “surrogate endpoints.” 

Surrogate endpoints are used as the basis for an FDA approval in two types of circumstances:

(1) If a surrogate endpoint is considered to be validated101 by the scientific community as having a high likelihood to predict the desired clinical outcome. Examples include reduction in blood pressure, which is viewed 

as a predictor of decreased risk of stroke, and reduction in LDL cholesterol, which is viewed as a predictor of 

decreased risk of heart attack and increased survival. In these cases, the FDA has approved drugs, such as 

blood pressure drugs and statins, on the basis of these surrogate endpoints under its traditional approval 

pathway. The FDA considers very few surrogate endpoints to be validated, and thus few of them are used as 

the basis of approvals.

(2) If a surrogate endpoint is determined to be reasonably likely to predict the desired clinical outcome and the 

drug that demonstrates an impact on the surrogate endpoint is for a serious or life-threatening disease for which 

there is unmet need. Importantly, in this circumstance, the surrogates are considered non-validated, and are 

associated with greater uncertainty. An important historical example was the reduction of HIV viral load as a 

likely predictor of increased survival in AIDS patients. A current example is a significant increase in the period 

before a tumor of a given cancer type continues to grow (progression-free survival) as a likely predictor of 

increased overall survival (see accompanying box). In these cases, the use of a surrogate endpoint is used as 

the basis for an Accelerated Approval because of the serious nature of the disease and lack of good treatments for patients. The FDA requires confirmatory studies after the initial approval to demonstrate that the 

drug not only affects the surrogate but has efficacy on the desired clinical outcome (thus providing evidence 

supporting the use of the surrogate as a predictor of the clinical outcome), in the case of HIV viral load, the 

surrogate endpoint was subsequently supported through clinical trials demonstrating direct impact on 

clinical outcomes. 

Surrogate endpoints provide a way to approve drugs without first having to prove the long-term impact on 

the clinical outcome. In the case of non-validated surrogate endpoints, the use may be justified when the 

disease is serious or life-threatening and patients lack alternatives. Greater use of surrogate endpoints for 

these types of diseases and patients could play an important role in encouraging the development of therapies and getting them to patients quickly via the Accelerated Approval pathway, as it did with HIV/AIDS. 

However, there is a risk that the use of non-validated surrogate endpoints may not accurately predict the 

clinical benefit of a drug or that smaller trials may not adequately characterize a drug’s risks. As with all 

traditionally-designed or Accelerated Approval trials, there is a risk that off-target toxicities may offset the 

benefit of a drug. This can happen for a variety of reasons.102 Examples include the drug torcetrapib, 

101 102

101. For an endpoint to be deemed as validated by FDA, it is typically necessary to show that it predicts the desired 

clinical benefit across multiple drug, and possibly multiple drug classes. Once a surrogate endpoint is validated, the FDA 

will accept it as the basis of traditional/full approval. Unvalidated surrogate endpoints can be used in appropriate cases 

for Accelerated Approval, as described above.

102. Reasons for the failure of a surrogate to adequately predict may include that the surrogate is not in the causal 

pathway of the disease process, that the drug only affects one causal pathway of the disease (related to the surrogate), 

and that the drug acts on the surrogate in a manner independent of the disease process. Source: Fleming, T.R., and 

DeMets, D.L. “Surrogate End Points in Clinical Trials: Are We Being Misled?” Ann. Intern. Med. 1996; 125:605-613.
IV. Improving Drug Evaluation

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a CETP inhibitor intended to increase HDL levels, mentioned earlier in this report, and the drug mibefradil, 

which lowered blood pressure and reduced angina pectoris but was associated with serious, life-threatening 

abnormalities of heart rhythm. Rosiglitazone and muraglitazar, diabetes drugs that acted on the surrogate 

hemoglobin A1C, may cause the serious side effect of heart attacks in their patients. Vytorin, a drug that 

lowered LDL as a surrogate for heart disease, later appeared to not have a significant impact on atherosclerosis. These examples are compelling reasons why surrogate endpoints should be used cautiously for diseases 

that are not life-threatening. It is critical that the scientific community engage in ongoing efforts to validate 

surrogate endpoints proposed for use or currently in use.103

In addition to surrogate endpoints, the FDA may also use intermediate clinical endpoints as a predictor of 

overall clinical benefit. The difference between an intermediate clinical endpoint and a surrogate endpoint is 

that the former is in of itself a measure of how a patient feels, functions, and survives, while the latter is typically a laboratory measure or test (such as a scan or blood test). Examples of intermediate clinical endpoints 

could include using the speed at which a patient can walk for a length of time as a predictor of a heart 

disease patient’s functional improvement or using improvements in minimal cognitive impairment as a likely 

predictor of delayed progression of Alzheimer’s disease. The FDA currently tends not to use intermediate 

clinical endpoints in Accelerated Approvals. However, there are opportunities to expand the use of intermediate clinical endpoints in the case of serious or life-threatening diseases that have unmet needs, as the basis 

for Accelerated Approvals.

It is important to note that, when relying on surrogate endpoints and intermediate clinical endpoints, 

the FDA cannot be certain about a drug’s efficacy on the long-term clinical outcome. As a result, efforts to 

expand the use of such predictors of clinical outcome must be complemented by greater rigor in enforcing and fulfilling confirmatory studies that demonstrate the actual efficacy of drugs on clinical outcome. 

Through such studies and greater monitoring of drugs in the marketplace (including through observational 

data and electronic health records), the FDA might have greater ability to gain certainty about a product’s 

benefits and risks after approval.

103

103. It is also important to understand off-target effects, as they may eventually lead to other uses for a drug or 

other knowledge helpful to the understanding of drug and disease types.
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Example of a Surrogate Endpoint: Progression-Free Survival

Surrogate endpoints are often used in the evaluation of cancer drugs, with progression-free survival (PFS) 

commonly serving as a surrogate for overall survival (OS). PFS and OS refer to lengths of time following 

administration of a drug, with PFS being the time until the tumor resumes its growth and OS the time until 

the patient dies. 

Using PFS as a surrogate endpoint allows both shorter and smaller clinical trials to establish a likelihood of 

efficacy. The trials can be shorter because tumor progression is an earlier event than patient death. The trials 

can be smaller because PFS typically has less variance than OS, which requires a larger sample size to reach 

the same level of statistical significance. 

A simple example illustrates the point. In the absence of treatment, suppose that a particular cancer has 

average PFS of 6 months and average post-PFS survival (that is, OS minus PFS) of 18 months, with both times 

being exponentially distributed. Suppose that a drug increases PFS by 3 months with no further effect on 

post-PFS survival, thus increasing OS by 3 months. A two-armed clinical trial (designed to have 90 percent 

power) would require 400 patients to prove the PFS benefit, but 1800 patients to prove the OS benefit. With 

an enrollment of 30 patients per month, a PFS trial would require 19 months while an OS trial would require 

75 months.104

An important issue for regulators approving drugs on the basis of PFS is to ensure that post-marketing 

clinical studies are performed to confirm the treatment’s effect on PFS, to validate a favorable risk-benefit 

balance for OS and to study side effects in larger populations.

Drugs with PFS benefit will typically also confer OS benefit, except if the drug actually shortens the post-PFS 

survival period. (Such rebound effects have rarely been documented, but OS benefits are sometimes not 

seen due to insufficient sample size.) In general, PFS has generally proven to be a good predictor of OS and 

has guided the continuing clinical development of cancer drugs and treatment regimens.

Accelerated Approval is intended to signal to the public that there is uncertainty about the 

benefit-risk profile associated with a drug, but that, based on predictors of long-term clinical 

benefit, the serious nature of the disease, and the lack of good alternatives for patients justify 

early access for patients coupled to a requirement for ongoing knowledge-generation. (It 

is important to note, however, that the public does not always understand the standard for 

Accelerated Approval and may believe that Accelerated Approvals have greater certainty or 

evidence associated with them.) 104

By statute, the FDA can use Accelerated Approval for any drug that meets an unmet medical 

need for a serious and life threatening illness.105 In principle, many drugs and diseases might 

qualify for the pathway. In practice, however, the use of the Accelerated Approval pathway has 

been largely limited to HIV/AIDS and cancer drugs.106

104. Calculation provided by J. Reimann and J. Helterbrand, Geneetech, personal communication.

105. 21 U.S.C. 314.500 Subpart H; 601.42, Supbart E.

106. GAO. “FDA Needs to Enhance Its Oversight of Drugs Approved on the Basis of Surrogate Endpoints.” GAO09-866, Oct 26, 2009. At the time of the writing of that GAO report, 79 out of 90 Accelerated Approvals were for HIV/

AIDS, cancer, or inhalation anthrax. However, in some cases, Accelerated Approval has been used for non-cancer and 

HIV/AIDS conditions, such as the following examples: Makena for pre-term birth, Letairis and Remodulin for pulmonary 

hypertension, Exjade for chronic iron overload, Xyrem for cataplexy and narcolepsy, Synercid for resistant bacterial 

infections, Thalomid for leprosy, drugs for hereditary angioedema and Factor XIII deficiency, and influenza vaccines.
IV. Improving Drug Evaluation

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The law also allows the FDA to use (as the basis of approval) the standard that a drug “upon a 

determination that the product has an effect on a clinical endpoint or on a surrogate endpoint 

that is reasonably likely to predict clinical benefit.”107 [Emphasis added.] An example of an 

intermediate clinical endpoint is how fast a patient can walk in a given amount of time, as a 

marker functional improvement in a patient with congestive heart disease.108 However, the use 

of intermediate clinical endpoints for Accelerated Approval has been limited (11 approvals in 

20 years). Increasing the use of intermediate clinical endpoints could speed the development 

of drugs for serious diseases. 

A GAO report in 2009 concluded that industry fulfillment and agency enforcement of postmarketing studies required as a condition for Accelerated Approval has been inadequate in 

some cases,109 and that some surrogate endpoints have not been sufficiently confirmed to 

correspond to clinical benefit.110 Strengthening the ability to study drug safety and benefits in 

the marketplace is critical if Accelerated Approval is to be used more broadly.

Without the need for new legislation, the FDA could expand its use of Accelerated Approval 

to address more types of serious diseases with unmet medical need and to use intermediate 

clinical endpoints. The agency would also need to signal to industry that this path for approval 

could be used for more types of drugs, and to specify what kinds of candidates and diseases 

would qualify. The agency would also need to be confident in the fulfillment of post-marketing 

studies and the validation of surrogate and intermediate clinical endpoints.111 This will require 

a robust exercise of FDA’s existing authorities and, possibly, additional authorities. 

(ii) Managing risks associated with marketed products. When the FDA approves a new drug, it 

should ideally have tools to manage risks associated with the product. The issues include known 

and unknown risks associated with the approved indication, as well as with off-label uses.112

Under the FDA Amendments Act (FDAAA 2007), FDA has the authority to require drug companies to develop and implement risk evaluation and mitigation strategies (known as REMS) in 

order to manage a known, serious risk with a given product that could otherwise not be made 

available to patients. REMS aim to monitor and control distribution and labeling of products 

through various mechanisms, such as including detailed medication guides on how products 

should be used, and physician registries requiring providers to track their patients or perform 

107. 21 U.S.C. § 356(a)3.

108. Clinical endpoints are measures of how a patient feels, functions, or survive and are the ideal dependent 

variable affected by a drug or treatment in clinical trials. Surrogate endpoints are laboratory measures that are distant 

but predicted to be related to a clinical endpoint (e.g. tumor size reduction as a surrogate endpoint for patient survival), 

and are sometimes acceptable bases for approval under the Accelerated Approval pathway at FDA. Intermediate clinical 

endpoints are those that are also related to how a patient feels and functions (e.g. less difficulty breathing), but are not 

the ideal endpoint that the drug intends to affect (e.g. asthma).

109. Avorn, J. “Paying for drug approvals—who’s using whom?” N. Eng. J. Med. 2007; 356. 1697-1700.

110. GAO. “New Drug Approval: FDA Needs to Enhance its Oversight of Drugs Approved on the Basis of Surrogate 

Endpoints.” September 2009.

111. FDA has indicated a need to do this in cooperation with physicians’ societies and patient organizations.

112. We note that some off-label prescribing, particularly in oncology, has allowed physicians to help develop 

evidence-based indications for drugs. On the other hand, there are serious risks with off-label prescribing. See earlier 

discussion of this issue.
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certain screening tests before prescribing. REMS proposals by the drug sponsor (either made 

independently or in consultation with the FDA) must be reviewed and approved by the FDA.

Under the REMS framework, the FDA does not directly interact with physicians or patients but 

rather requires a company to take actions. The REMS mechanism is invoked in response to a 

known safety issue concerning a drug about to enter, or already in, the marketplace. The FDA 

believes that REMS is not an effective framework for strongly signaling when a new medicine 

should be limited to certain subgroups of patients.113 Moreover, the FDA’s use of REMS has 

generally been limited to when a specific, known safety issue arises.114 The FDA generally does 

not consider REMS an effective tool to address uncertainty about risks and benefits to the broad 

population.115

This limitation is illustrated by the case of a drug with a favorable benefit-risk balance in patients 

with a severe manifestation of a disease (for example, morbid obesity) but an unfavorable or 

uncertain benefit-risk balance in patients with a mild manifestation (for example, mild obesity). 

Ideally, the FDA would approve the drug for patients with morbid obesity while taking steps 

to minimize the likelihood that the drug is prescribed widely to mildly obese patients, which 

include about 78 million American adults or 35 percent of American adults.116 However, the 

FDA does not believe that REMS are an adequate tool to allow it to approve drugs for use in the 

narrow population by discouraging prescription in the broader population. (Another situation 

would be approval of a drug to prevent a disease for use in a subpopulation at especially high 

risk, e.g., a genetic predisposition to diabetes.)

One approach could be for the FDA to implement a mechanism under which sponsors could 

choose to seek approval of a new drug under a new designation: Special Medical Use (SMU). 

The sponsor would (1) propose a development process to address the benefit-risk balance in a 

specific subpopulation at high risk from the disease, using the same standards for efficacy and 

safety as for the existing approval pathways (traditional or accelerated) and (2) demonstrate 

that clinical trials in the larger population of patients would require much longer to complete 

or would not be feasible. If sponsors decide to complete broader studies, they could broaden 

their market and approved indication by submitting additional evidence to the FDA. The initial 

113. According to the FDA, restricted distribution requires a central pharmacy with special shipment to restrict 

access, or onerous pharmacy-based verification systems. To restrict distribution broadly across the country for a widely 

used drug would be cumbersome, FDA officials say, as even existing REMS have proven to be difficult for the health care 

community.

114. Some industry observers believe that the FDA has used REMS for uncertain and wider risks to broad 

population, but the FDA maintains that this has generally not been the case. Regardless, it is clear that REMS does not 

constitute an adequate tool to strongly signal prescribers and payors how certain drugs ought to be prescribed.

115. According to the FDA and legal experts, the statute neither explicitly prohibits nor explicitly enables the FDA 

to use REMS as a way to limit the use of a drug to a defined population when the risks to the broader population are 

uncertain. FDA officials point to the need for a specific framework for drug approval that would effectively restrict initial 

approvals to specific subpopulations, to be enforced by reimbursement policy of health care payors. 

116. About 6 percent of adults in the United States are severely (or morbidly) obese (with a Body Mass Index of 

40 or higher), while about 35 percent of adults are obese (with a Body Mass Index of 30 or higher), according to the 

most recent available data from the CDC’s National Center for Health Statistics, via the National Health and Nutrition 

Examination Survey (NHANES) 2009-2010. Source: www.cdc.gov/nchs/data/factsheets/factsheet_obesity.htm.
IV. Improving Drug Evaluation

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designation, however, would give them an early foothold in a market for a narrow population 

or indication.

The purpose of a new pathway and designation would be to signal to physicians and insurers 

that, based on current evidence, the FDA considers the drug to be inappropriate for use outside 

the specific subpopulation. While not forbidding off-label use by physicians, the designation 

would, in practice, need to strongly influence decisions by physicians and formularies, reimbursement decisions by health care payors, and malpractice insurers.117 If so, the new designation could decrease (although not eliminate) the likelihood of off-label use and thereby enable 

the FDA to grant approval consistent with ensuring an overall benefit-risk balance. Following 

initial approval under a new designation, sponsors could apply for subsequent approval without 

the special designation by conducting clinical studies that address the risk-benefit balance in 

broader patient populations.

Some observers contend that the FDA has adequate authority to create a new designation 

already. However, some at the FDA believe that its authority is unclear and that the SMU designation would carry greater weight if explicitly authorized through legislation. We discuss this 

topic in the recommendations in Chapter 5. 

(iii) A tool for post-marketing surveillance: Sentinel. The 2007 FDA Amendments Act (FDAA) 

mandated a rigorous, active surveillance system, known as the Sentinel System, to track and 

monitor the safety and effectiveness of drugs in the marketplace. Efforts to launch this system 

for post-marketing surveillance, known as FDA’s Sentinel Initiative, are currently underway. 

(The current system for post-marketing surveillance via adverse event reporting is described 

in previous sections of this chapter.)

A pilot for Sentinel, known as Mini-Sentinel, was launched by FDA in 2009 and is being coordinated by researchers at Harvard Pilgrim Healthcare Institute to develop the methods for using 

multiple databases to identify and analyze post-market medical product safety. Mini-Sentinel 

has the capacity to examine healthcare data, with strict patient privacy and security safeguards, 

with the aim of detecting important signals related to safety and effectiveness of medical products. The pilot is working to develop approaches to identify potential safety signals and methods 

to determine whether safety signals indicate adverse events associated with medical products. 

The Sentinel Initiative currently involves insurance claims data from about 125 million patients, 

as well as electronic health records for about 10 million patients.118 It is increasingly incorporating more electronic health records as they become available. The system can already query 

databases to analyze adverse events that are recorded in insurance claims, such as allergic 

reactions, heart attacks, liver failure, stroke, and hip fractures to try to determine whether they 

are associated with drugs, and investigates further using information from clinical notes and 

lab data. Sentinel has the potential to become more robust as more electronic health records 

117. We note that some past efforts, such as the use of “black box” warnings on high-risk medications, have been 

less effective than hoped for because they are often ignored by physicians and patients. It will be important to learn 

from such experiences. 

118. Platt, R. et al. “The U.S. Food and Drug Administration’s Mini-Sentinel program: status and direction.” 

Pharmacoepidemiol Drug Saf. 2012; Volume 21, Issue Supplement S1, pages 1–8.
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become available and searchable by the system, given that they could provide more detailed 

information on clinical care important for linking (or delinking) risky side effects or benefits 

with drugs taken by patients. In coming years, post-marketing surveillance may also draw on 

real-time sensor devices that are increasingly being used by consumers. The data from such 

devices may provide extremely rich information about safety, adverse events, drug reactions, 

and drug effectiveness and may help identify correlations of events with patient characteristics. 

Sentinel has been funded via the FDA’s internal allocation of resources to date, and lacks a lineitem appropriation to ensure its ongoing viability and the crucial steps of scaling it up to cover 

a broader population and drawing upon robust electronic health record systems.119 Current 

funding is based on available overall appropriations to FDA and has varied over the life of the 

program from about $12 million to $26 million.120 

Expanding Sentinel and creating a sustained funding source could allow it to be a robust system 

for monitoring drug safety, which would support the FDA in weighing risk and benefit at the 

time of approval in support of innovation. In our view, consistent funding of at least $40 million 

per year is needed to support the maintenance and enhancement of a robust medical product 

surveillance system based on current operating costs of the data coordinating center and scaling 

up the incorporation of data from electronic health records.

In addition to Sentinel, the Observational Medical Outcomes Partnership (OMOP) was an effort 

aimed at developing methodologies for a medical product monitoring system. It was led by 

the Foundation for the National Institutes of Health, as a public-private partnership funded by 

the pharmaceutical industry to test and develop the research methods for querying databases 

to understand drug-related adverse events. Through various approaches, including the use of 

simulated data, OMOP has tested the viability of methods for detecting known associations 

between drugs and safety issues and to refine those methods for use by researchers. (As noted 

earlier in this chapter, it is difficult to determine what is signal and what is noise in such data 

without prior hypotheses, and this will be an ongoing challenge as more data are opened up for 

use in Sentinel.) OMOP is expected to become part of the Reagan-Udall Foundation (RUF), and 

to continue development of methodologies for post-market studies of drug risks and benefits 

under the Foundation’s guidance. Development of methodologies for post-market studies may 

also be undertaken by the Patient-Centered Outcomes Research Institute (PCORI).

(iv) Incentives for ongoing study (expanded clinical trials): Pediatric Exclusivity Example. The 

Food and Drug Administration Safety and Innovation Act (FDASIA, Section 501) permanently 

reauthorizes the Best Pharmaceuticals for Children Act and the Pediatric Research Equity Act, 

in which Congress gave the FDA authority to encourage companies to study adult drugs in 

119. The PDUFA feel collections have in the past, and likely will continue to provide funding for the FDA to fulfill 

some aspects of drug safety activities required by the FDA Amendments Act of 2007 (FDAAA). In PDUFA IV/FDAAA, 

additional fee amounts were added to generally support post-market drug safety work. Under PDUFA V/FDASIA, some 

fee funds are specifically directed to an initiative involving Sentinel. In addition, the generic drug user fee (GDUFA) 

and biosimilar biological product user fee (BsUFA) programs, newly authorized under FDASIA, will provide additional 

resources that can augment funding for FDA post-market drug safety.

120. Source: FDA interviews, January-April 2012. In addition to this funding, Sentinel received about $9 million 

in one-time funds dedicated to medical countermeasures. Two centers at FDA, CDER and CBER, have also allocated 

between $1.7 million and $4.7 million per year each to support specific studies of queries or development of capabilities 

specific to the medical products they regulate.
IV. Improving Drug Evaluation

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development or already in the market to see whether they are safe and effective for children. 

This has resulted in a wealth of useful information for administering drugs in children including 

information on dosing, safety, and efficacy. The provision provides six months of additional market exclusivity (attached to the end of a patent term) to an already-approved drug if a company 

conducts expanded clinical trials in pediatric populations in response to a written request from 

the FDA. Before the pediatric exclusivity provision was passed, few drugs were studied for their 

effectiveness and safety in children, despite the fact that children’s physiology is clearly different 

from adults.121 As a result of the new pediatric studies, new formulations, dosing recommendations, and information about risks and benefits for children became available for these drugs.122

Limitation: The pediatric exclusivity provision demonstrates the ability to incent companies 

to generate additional information about marketed drugs in return for an economic benefit. 

However, the provision applies only to studies of already approved drugs for the use in children. 

The FDA lacks a mechanism to incentivize more broadly studies of drugs already on the market. 

Some observers have also noted issues with the pediatric exclusivity provision. Not surprisingly, 

some studies indicate that companies tend to focus on those drugs based on their profitability 

in the adult market rather than the public health importance of studying them in children.123 In 

addition, there is evidence that some of the pediatric studies have been of low quality or lacking 

proper peer review by medical journals.124

Opportunity: Legislative provisions to provide incentives to companies to conduct important 

clinical trials could help ensure the generation of information about risks and benefits of marketed drugs, and thus might help the FDA manage uncertainty upon approval. Provisions that 

add exclusivity to the end of the patent term and that have the potential to expand the market 

for a product appear to have a measure of success in encouraging further study. 

Enhancing Regulatory Certainty for the BioPharmaceutical Industry 

as a Whole

In any regulated industry, innovators benefit enormously from clarity about what new innovations will 

be acceptable to regulators. In particular, innovative drug developers need to understand the regulatory 

pathways for new products and the regulatory standards for clinical evidence that will be acceptable 

to the FDA in approving new drug applications. Uncertainty or lack of understanding of FDA policies 

and practices creates business risk, which can discourage investment and innovation. Ultimately, this 

impacts the public’s ability to benefit from innovative medicines. The FDA should thus have effective 

procedures to determine its standards in new areas and to communicate its policies and practices.

121. Kesselheim, A.S. “Using Market-Exclusivity Incentives to Promote Pharmaceutical Innovation. N. Engl. J. Med.

363;19. November 4, 2010; 1855-1862.

122. Rodriguez W., et al. “Improving pediatric dosing through pediatric initiatives: what we have learned.” Pediatrics

2008; 121:530-9.

123. Kesselheim, A.S. “Using Market-Exclusivity Incentives to Promote Pharmaceutical Innovation. N. Engl. J. Med.

363;19. November 4, 2010; 1855-1862.

124. Benjamin Jr., D.K., et al. “Peer-reviewed publication of clinical trials completed for pediatric exclusivity.” J. Am. 

Med. Ass. 2006; 296:1266-73.
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It is a commonly stated concern that the biomedical industry lacks adequate certainty about FDA policies and standards, and that this affects their ability to invest in innovative therapies.125 We recognize 

that there are challenging issues regarding new and rapidly emerging opportunities and technologies. 

Providing rapid guidance is important, but also clearly challenging. In recent years, there has been 

uncertainty about a variety of important new or emerging issues: 

• Appropriate studies for combination therapies, which are increasingly important in cancer and 

infectious disease such as tuberculosis, where single agents may have modest or no efficacy 

but combinations may be much more effective.

• The regulatory pathway for therapies for which patients are selected based on a companion 

diagnostic. Increasingly, therapies are appropriate and effective only in patients with particular 

molecular markers identified by a diagnostic tool. (The companion diagnostic might or might 

not be approved already adding a layer of regulatory complexity for the sponsor.)

• The endpoints that constitute an adequate basis for approval. A good example is the circumstances under which the FDA will approve a cancer drug based on delaying tumor progression 

(progression-free survival or PFS) or will require demonstrating an increase in overall survival 

(OS). PFS usually—but not always—translates to OS, but proving OS will typically require a much 

longer and larger trial. (See box on PFS earlier in this chapter.)

In addition, companies may wish to incorporate innovative tools into clinical trials, such as specific biomarkers to identify subsets of patients. Before using new tools, companies need assurance that the FDA 

will consider the tools to be reliable and consistent enough to support regulatory review. The industry 

thus seeks clear, up-to-date information about what tools are suitable for use in their development 

programs and about FDA’s standards for demonstrating the validity of tools.

Good guidance and policy to set standards in such areas must be based on strong science. It is important, however, that the policies adapt to emerging knowledge and science by tapping into the broader 

scientific community. 

Guidances

The FDA produces guidance documents that communicate standards to the external community. 

Guidance documents represent the Agency’s current thinking on a topic related to drug development 

or regulatory science.126 The documents are closely monitored by industry as a signal of what is required 

and expected of them in nearly every aspect of drug development from IND to full-scale manufacturing. 

They also encourage predictable, consistent decisions by FDA during the regulatory process. Guidances 

typically arise when a need is identified by senior FDA staff, is pointed out by external groups such as 

patient advocates or industry, or stems from a commitment outlined in the PDUFA. Indication-specific 

guidances seek to delineate a clear development pathway so that drug developers know what steps 

to take to support an efficacy claim for a particular indication. They also provide advice on the human 

125. GAO. “New Drug Development: Science, Business, Regulatory and Intellectual Property Issues Cited as 

Hampering Drug Development.” November 2006; pg 31.

126. FDA guidance can be found on the FDA website. Accessed May 14th, 2012. 

www.fda.gov/RegulatoryInformation/Guidances/default.htm.
IV. Improving Drug Evaluation

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safety studies needed to support the claim. Other clinical guidances may provide general policy or 

methodological advice. (For example on trial design issues or the uses of pharmacogenomics tests.) 

Most guidances are issued first in draft form to solicit feedback, with the intent to ultimately produce 

a final version.

Producing and finalizing guidance documents in a timely fashion is challenging. FDA staff members 

must study a rapidly evolving field at the forefront of science or medical practice, anticipate the potential 

issues, and then chart an acceptable regulatory course. The FDA maintains a list of guidances it is currently working on, to keep stakeholders apprised of its activity.127 The relevant FDA staff members often 

have many competing demands on their time. The documents must then undergo significant review 

by various other staff and offices at the Agency. The most important guidances, from the perspective of 

the external community, often experience the longest delays because of the scientific and regulatory 

complexity they pose. Others face delays in the transition from draft stage to final document, where the 

feedback provided from the broader biomedical community is being taken into account. For example, 

the FDA’s draft guidance on companion diagnostics took about six years to complete, and the adaptive 

trial design draft guidance took about three years.128 Many other important guidance documents are 

still in process or have not been updated for many years. Examples include guidances that have yet 

to be drafted, finalized, or updated for: use of multiple endpoints in clinical trials, use of enriched trial 

designs, Good Review Management Practices, REMS, and non-inferiority trials.129 The flow of innovation 

requires that regulatory pathways for new areas be clarified more rapidly. It is also critical that guidance 

documents be systematically reviewed and updated in light of changing technology or medical practice 

innovations.

Some guidance documents are felt by many to provide insufficient clarity. A commonly cited example 

is the recent draft guidance on adaptive clinical trials. The guidance defines two types of adaptive trial 

designs—“well understood” and “less well-understood.” Observers say that designs that hold the greatest potential for innovation are largely relegated to the “less well-understood” category, and it remains 

unclear whether this designation means unacceptable or acceptable to FDA. In addition, some observers 

believe the FDA should have consulted more with the biomedical community in writing the guidance, 

before issuing its draft. As a result, innovators may be discouraged about pursuing such types of designs.

The FDA could streamline and prioritize its processes for generating guidance documents, although 

limitations on staff numbers and expertise will constrain its ability to produce guidances as rapidly as 

needed. In addition, the FDA could use more informal mechanisms to clarify language in already-issued 

guidance and in describing changes to policies and practices. 

To speed the process, the external community could take a more active role in generating input to the 

FDA on critical topics. If a wide set of stakeholders and experts (including companies, patient groups, 

127. This Guidance Agenda is maintained on the FDA website. Accessed May 14th, 2012. 

www.fda.gov/downloads/Drugs/GuidanceComplianceRegulatoryInformation/Guidances/ucm079647.pdf.

128. FDA interviews. December 2011. Additional discussion of the guidance process was described and reported 

by GenomeWeb. Accessed on May 17, 2012. www.genomeweb.com/dxpgx/companion-dx-guidance-nearing-releasefdas-mansfield-offers-some-provisional-adv.

129. As of January 2012, 178 of 559 total FDA guidances were still in draft form, and 100 were 15 years or older. 

www.fda.gov/downloads/Drugs/GuidanceComplianceRegulatoryInformation/Guidances/ucm079645.pdf.
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physicians, and researchers) can agree on an approach, it is likely to provide a good starting point for 

the FDA in preparing guidance. The FDA can then focus its resources to critically review the input.

Qualification of Drug Development Tools 

The FDA also provides clarity to the industry through Qualification Statements (appended to guidance documents) stating that a particular tool has been validated for use in clinical trials. These tools 

include biomarkers that help identify patients who are likely to benefit from a given treatment. The 

FDA published a guidance document in October 2010 describing the steps that companies should 

pursue to qualify tools. Since then, there have been at least 20 toolsets proposed for qualification by 

the biomedical community. 

The FDA acknowledges that the Agency has been relatively slow in advising on, reviewing, and issuing 

qualifying letters for drug development tools, owing to insufficient staff resources. It may be possible 

to engage the external community to assist in this effort in a transparent and reliable way. For example, 

the community could help develop recommendations for the conceptual framework and scientific 

standards that should be applied to the qualification process. The community might also engage in 

demonstration qualification projects that use the framework and standards. For example, physician 

societies might convene members via a workshop, or conduct literature reviews and physician surveys 

to gather data on possible new endpoints and then attempt to validate these endpoints. In addition, 

there may need to be greater integration of FDA centers in the effort, including officials who determine 

both device and drug policy.

Enhancing Regulatory Certainty for Individual Drug Development Plans

In addition to clarity about general regulatory pathways and acceptable tools, drug sponsors benefit 

from clear and frequent communications with the FDA about their specific projects from the earliest 

stages through final review (See Figure 2). Clear and consistent answers are important because they 

help companies avoid costly mistakes in designing a project. Rapid answers are important because they 

avoid expensive delays; this is particularly important for small companies, which often have a single 

product in development, a high burn rate and limited capital. There are many challenges in optimizing 

the communication between drug sponsors and the FDA.
IV. Improving Drug Evaluation

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Figure 2: Overview of the Drug Development Process and NDA Review Process.

Figure 2. STPI adaptation upon PCAST request. Figure adapted from a similar figure in the California Healthcare Institute’s 

Competitiveness and Regulation: The FDA and the Future of America’s Biomedical Industry, 2011, California Healthcare Institute 

and Boston Consulting Group, p. 22. The process was initially described in the FDA document Guidance for Review Staff 

and Industry: Good Review Management Principles and Practices for PDUFA Products, 2005, FDA. 1

Particularly for applications 

where the drug is the first member in class, if clinical studies involve novel clinical or surrogate endpoints, or if application 

raises significant safety, efficacy, or public health issues. 2

This step does not necessarily temporally follow meeting of the 

Advisory Committee.

Problems in Communications Between FDA and Sponsor

The Prescription Drug User Fee Act (PDUFA), enacted in 1992, is a system by which the biopharmaceutical industry pays fees to the FDA to cover the costs of drug evaluation and the Agency agrees to 

performance goals in reviewing drug approval applications. PDUFA imposes many requirements, and 

deadlines on the FDA. In FY 2011, for example, these requirements directly led to more than 15,000 

PDUFA-related goals, meetings, and reports. These PDUFA requirements are meant to ensure that the 

FDA formally responds within a defined time period to certain formal requests and submissions from 

sponsors.130 While PDUFA is widely applauded for having expedited drug review times, it has raised 

significant issues. Some observers have expressed concern that it creates dependence on the part of 

the Agency on the pharmaceutical industry, in part because the user fees now comprise a large pro130. Examples include pre-investigational new drug application (pre-IND) meetings (21 CFR 312.82), certain 

end-of-phase 1 meetings (21 CFR 312.82), end-of-phase 2 and pre-phase 3 meetings (21 CFR 312.47), pre-new drug 

application/biologics license application meetings (21 CFR 312.47), dispute resolution meetings (21 CFR 10.75, 312.48, 

and 314.103), and meetings for Special Protocol Assessments.
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portion of the FDA budget for drug evaluation. Some observers also report that the communications 

process under PDUFA is often stilted. The FDA’s need to keep up with the formal PDUFA requirements 

has limited its ability to provide the sort of rapid and informal communication that can be very helpful 

to drug sponsors in formulating and adjusting plans. Moreover, the FDA’s perspective on a development 

program may evolve over time; it is essential that sponsors know of such changes. (These issues are 

being addressed to some extent under the 2012 reauthorization of PDUFA through additional resources 

and commitments ).

Sponsors need a clear, consistent, and timely understanding of FDA concerns about their drug development plan, yet they often express frustration that this understanding can be difficult to obtain for 

two reasons. First, FDA staff is stretched thin addressing formal PDUFA milestones due to insufficient 

total funding from Federal appropriations and PDUFA. Second, the review process for each drug lacks 

a single high-level individual tasked with responsibility for providing clear, consistent ongoing advice 

to the sponsor. As a drug progresses from the pre-investigational stage (pre-IND) to final consideration 

for approval (NDA), many staff across divisions and offices are involved in the review. There are also 

significant imbalances in workload across divisions, which have a variable and unpredictable impact 

on clinical review holds, review timelines, and ultimately total time to approval.131,

132 In summary, no 

single individual has authority and accountability for integrating the input, resolving conflicting opinions within the FDA, and communicating informally in a timely ongoing manner. The lack of clarity and 

continuity often leads to a perception by sponsors that “FDA is moving the goal posts.” 

One solution would be for the FDA to designate, for each drug development project, a senior staff 

member to serve as “pre-market review leader.” This individual would be a “quarterback” for the drug 

development project, with responsibility for providing sponsors with substantive, informal, clear, and 

timely advice, and for coordinating and leading FDA responses across diverse areas, including toxicology, 

trial design, manufacturing and clinical use, and for ensuring that timely decisions are made to resolve 

outstanding FDA review issues. Pre-market review leaders would be valuable for all sponsors, and could 

be especially helpful for small companies bringing their first product through a regulatory approval. 

Such a system could greatly improve regulatory certainty, timeliness of FDA decisions, and encourage 

innovators and investment in innovation.133

131. Milne, C-P, and Kaitin, K.I. “FDA Review Divisions: Performance Levels and the Impact on Drug Sponsors.” Nat. 

Clin. Pharmacol. and Therap. March 2012; Vol. 91(3).

132. For example, in a first review of the implementation of Good Review Management Practices (GRMPs) of 

division data from 2005–2007, only one of the offices examined had a compliance rate of more than 50 percent with 

GRMPs. None of the other offices achieved more than 25 percent compliance.

133. The additional review time and emphasis on communication in the recently signed FDASIA may address some 

concerns.
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Legal Barriers to Communicating Information

The FDA often faces another challenge in fully and transparently communicating the basis for its decisions or requests, because it believes it is not legally permitted to share information or concerns with a 

given sponsor that arise from the review of applications and protocols submitted by other sponsors.134

This constraint contributes to a sense that advice, decisions, or standards upheld by FDA are arbitrary, 

rather than informed by confidential data that only the FDA has the benefit of seeing.

Issues with Special Protocol Assessments 

FDA has mechanisms to provide much greater certainty to drug sponsors, such as the Special Protocol 

Assessment (SPA) agreement. Established in 1997 by the Food and Drug Modernization Act (FDAMA) and 

the renewal of the Prescription Drug User Fee Act, SPAs involve a binding, written agreement between a 

sponsor and the FDA that a particular outcome in a defined Phase 3 clinical trial protocol will suffice for 

approval. SPAs provide a high degree of certainty to a sponsor, reducing concerns that the Agency will 

change its judgment about the evidence required for approval after a trial has been begun or completed. 

Sponsors have the right to request a SPA for many Phase 3 trials.135 The use of SPAs grew consistently 

until the past few years, when annual requests for SPAs have dropped.136,

137 Under PDUFA, FDA aims to 

respond to requests for SPAs within 45 days and it meets this target more than 80 percent of the time. 

However, the overall SPA negotiation process may be lengthy, involving many cycles of interactions 

extending over long periods. As a result, many drug sponsors say that they choose not to pursue SPAs. 

In addition, while precise data are lacking, anecdotal evidence suggests that some divisions within the 

FDA tend to discourage SPAs and that the existence and quality of the subsequent review process (type 

A meetings) varies greatly across divisions.138 In addition, SPAs are not generally used with adaptive trial 

134. The FDA and others cite a number of statutes and regulations that restrict the Agency’s ability to disclose a 

sponsor’s confidential commercial information or trade secrets, which include much of the information contained in 

investigational new drug (IND) applications and new drug applications (NDA). During the development process, the 

FDA is prohibited to disclose to the public or other sponsors confidential commercial information or trade secrets, per 

21 CFR 20.61. (FDA regulations on this point implement laws including the Federal Trade Secrets Act (18 U.S.C. 1905), 

which prohibits the publishing or disclosure of trade secrets and the Freedom of Information Act, which protects from 

public disclosure trade secrets. Section 301 (j) of the Federal Food Drug and Cosmetic Act (22 U.S.C 331(j)) also prohibits 

the sharing of commercial information deemed trade secrets.) FDA regulations 21. C.F.R. 312.130 and 314.430 further 

stipulate what information can be disclosed to the public from INDs and approved/unapproved /abbreviated NDAs. 

These include the FDA’s prohibition on discussing or disclosing the specifics of a pending application, and restrictions 

on disclosing the existence of a pending application until after approval (unless the drug sponsor has publicly disclosed 

it.) The FDA also believes that using information from one sponsor’s application to inform another sponsor of potential 

problems could be considered a “regulatory taking,” under the Fifth Amendment, which prohibits taking property for 

public use without adequate compensation. Sponsors have an investment-backed expectation that their data on safety 

and efficacy (and other information) will be held in confidence by the FDA, and thus could have an argument against the 

FDA’s sharing of that data or information given how the courts have interpreted the property rights of drug sponsors.

135. The law limits SPAs to the clinical trials that will constitute the primary demonstration of effectiveness for the 

drug. There are other requirements such as the need for an end of phase 2 meeting, or equivalent before an SPA is filed 

with FDA for review. In addition to Phase 3 trials, SPAs can also be used for carcinogenicity testing and final product 

stability.

136. Carter, L. and Schumaker, C. “Best practices for special protocol assessment.” Drug Inf. J. 2008; no. 42 (1):9-12.

137. PDUFA Annual Performance Reports, FY 1998-2010. Accessed May 15th, 2012. 

www.fda.gov/AboutFDA/ReportsManualsForms/Reports/UserFeeReports/PerformanceReports/PDUFA/default.htm.

138. Osborne, R. “The special treatment.” Nat. Biotechnol. 2008; no. 26 (5):487-489.
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designs.139 (See Chapter 3.) Yet these trials are the most challenging to design and would ideally involve 

a great deal of collaboration and agreement between FDA and the sponsor.140

Management Issues at FDA

In addition to the issues above, general management and infrastructural issues at the FDA pose challenges for the Agency in achieving its mission. These issues affect all aspects of drug evaluation, from 

providing efficient responses to drug sponsors to providing clarity on standards and pathways for 

innovative products to deploying tools to balance benefit and risk such as surveillance systems. These 

issues include:

Inadequate IT Systems to Support Efficient Management and Communication 

Although the FDA is fundamentally an information agency, its information technology systems are woefully inadequate and lacking in key analytical and coordination capabilities. (A report in 2007 by the FDA 

Science Board addressed some of these issues in depth.141) The agency receives an increasing number 

of drug applications in electronic form, but it still receives a significant number on paper. Additionally, 

the data are not standardized, making it difficult and time-consuming to validate and put into a form 

suitable for analysis and to perform complex analyses. The FDA has no ability to integrate, manage, and 

analyze data from those applications across offices and divisions. 

Many of the IT systems across centers and divisions are incompatible and outdated. As a result, each 

new drug submission may involve significant manual data manipulation and use of several kinds of 

IT systems. The system also impedes timely communications with sponsors. The FDA has historically 

had a series of ad hoc efforts aimed at improving the IT systems, but they have not had the planning 

and critical mass to solve the problem. The FDA’s recent hiring of a new Chief Information Officer (CIO) 

with experience from the pharmaceutical industry holds the promise of developing a coherent and 

streamlined system, but financial and personnel resources are severely lacking to modernize, update, 

and integrate systems for efficient delivery, receipt, and analysis of information about new medical 

products. Without modern IT capabilities and systems and fully electronic submission with standardized 

data, the FDA cannot adequately support innovation in the biomedical industry; this crucial function 

underlies all aspects of management, communication, and process.

139. As outlined in the FDA draft guidance on Adaptive Design Clinical Trials for Drugs and Biologics. Accessed May 

15th, 2012. 

www.fda.gov/downloads/Drugs/GuidanceComplianceRegulatoryInformation/Guidances/UCM201790.pdf. The FDA 

guidance states “Special protocol assessments (SPA) entail timelines (45-day responses) and commitments that may not 

be best suited for adaptive design studies” and “FDA cannot realistically commit to accepting aspects of study design 

yet to be determined. Thus, although an adaptive design SPA request that had been preceded by adequate advance 

discussion, enabling a complete protocol review, the FDA response may have certain limitations that an SPA regarding a 

non-adaptive study would not require.

140. FDA indicated in their draft guidance on adaptive trial designs that the 45-day limit on agency’s review 

of SPAs makes the agreements inappropriate for adaptive trial design. However with end-of-Phase 2 meetings and 

sufficient consultation SPAs could indeed by quite helpful in providing certainty and predictability in the high-risk, highunknown design of adaptive trials.

141. FDA. “FDA Science and Mission at Risk: Report of the Subcommittee on Science and Technology.” November 

2007. Accessed May 15th, 2012. www.fda.gov/ohrms/dockets/ac/07/briefing/2007-4329b_02_01_FDA%20Report%20

on%20Science%20and%20Technology.pdf.
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Beyond simply bringing the FDA’s IT infrastructure up to modern standards, the FDA should more broadly 

plan for a world in which electronic data plays a much larger role in health care. This includes both 

wider use of electronic health records by physicians, as well as use by consumers of personal devices 

that continuously monitor aspects of health. In principle, such information can enable more effective 

and more rapid observational studies of the benefits and risks of drugs. Machine learning techniques 

can be used to identify patterns in clinical data and post-marketing surveillance that identify potential 

issues much more quickly and with finer granularity than current approaches. Such information could 

lead identification of specific patient subsets that respond differently to a drug or to algorithms for 

adjusting drug usage. 

To accomplish these goals, the FDA will need to fundamentally rethink its information architecture. 

Many of the key issues were outlined in PCAST’s report “Realizing the Full Potential of Health Information 

Technology [HIT] to Improve Healthcare for Americans: The Path Forward” in December 2010. Briefly, 

PCAST observed that communication among all parties using HIT would be greatly facilitated by 

standardized metadata tags. The FDA should consider how to incorporate this approach into its nextgeneration IT system—emphasizing metadata, provenance, privacy controls, and well-maintained 

indices that span all information repositories.

Access to Scientific Expertise

In order to effectively support biomedical innovation in its decisions about specific products and more 

broadly in its policies, the FDA needs to be guided by the most up-to-date and robust scientific knowledge. Although the FDA has many in-house scientific experts, it suffers from talent recruitment and 

retention problems including high turnover, inflexibility in organizing its workforce, and lack of time and 

resources for it scientists to engage with the external scientific community. According to some observers, 

scientific expertise is inconsistent across review divisions, in particular with respect to review of safety 

data. This leads to greater regulatory uncertainty and disparity with respect to outcomes of drug reviews. 

Moreover, the FDA faces the fundamental challenge that in any given area of expertise, most experts 

work for someone other than the Agency. Although the Agency draws on external experts for making 

decisions about particular products through the use of advisory committees, the use of outside experts 

is constrained by law, by regulatory policy, and by culture and practice. Some of these constraints are 

necessary; for example, it is important to prevent people who have financial gain at stake (i.e. direct 

conflicts-of-interest) from guiding decisions about specific medical products. Yet it is important to balance those concerns with the crucial need for consultation with the scientific community, particularly in 

complex or niche areas.142 Many important FDA advisory committee slots go unfilled in critical areas each 

year due to what are deemed conflicts-of-interest, undermining the opportunity for the Agency to draw 

on leading scientific expertise in those realms,143 and often external experts are not available for certain 

142. For instance, in the area of orphan diseases, there may be only a handful of experts in the world 

knowledgeable about a specific disease and all experts may be involved as investigators in the pivotal clinical trials 

because of the small population size of the orphan disease. A true disease expert is needed to inform the rest of an 

advisory panel and, in principle, it should be possible to protect the integrity of the decision-making process by fully and 

publically disclosing the participation of the rare disease expert.

143. Reports showed that in 2010, between 25-32 percent of advisory committee slots (from 49 committees in total) 

were vacant at the centers for drugs, biologics, and devices at various points during the year. 
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meetings. Waivers permitted by law and FDA policy allow some individuals with conflicts-of-interest 

to serve on advisory committees each year, but the number of waivers FDA provides consistently falls 

below the allowable annual quota. An FDA study of past advisory committee membership indicated that 

members who received waivers to serve despite an established conflict-of-interest were significantly 

more qualified for those committees than the members who had not received such waivers.144 In April 

2010, the FDA Commissioner issued draft guidance to agency staff to promote more consistency in the 

use of such waivers. This was an important first step. Further efforts are needed to ensure consistent 

high-quality expertise within the Agency.

Mechanisms to Assess Management Needs, Pilot Reforms, and Ensure Consistency and 

Accountability

Generally, there is a need for greater understanding of what initiatives and reforms at FDA could improve 

management and communication during the drug review process—and to ensure that those initiatives 

are consistently and optimally applied across the Agency. Currently, FDA leadership lacks mechanisms 

to evaluate management issues and improve the consistency of processes. The agency also requires 

greater flexibility to test new ways of improving the management of the review process, and to identify 

the best approaches and scale up and ensure their consistent implementation. A program for piloting 

management reforms and initiatives and learning from their outcomes could help the FDA address this. 

The FDA also needs structures and mechanisms to evaluate the consistency of management practices 

across the Agency and to ensure accountability. Many observers cite inconsistent scientific expertise 

across review divisions, especially with respect to review of safety data, as a serious issue. This inconsistency leads to greater regulatory uncertainty and disparity with respect to outcomes of drug reviews. 

Including Encouraging Innovation within the FDA’s Mission Statement

To ensure a steady stream of new safe and effective medicines for unmet medical needs, the FDA must 

balance two roles: (1) encouraging innovation in discovery and development to promote public health 

while (2) serving as a gatekeeper to keep unsafe and ineffective medicines from the marketplace. The 

FDA’s mission statement as defined by law recognizes the second role, but currently does not explicitly 

acknowledge the role of encouraging innovation in drug discovery, development, and post-marketing 

evidence-generation. It could be valuable for the Congress to establish that encouraging innovation in 

drug development is a clear component of the FDA mission.

144. Eastern Research Group. “Financial Conflict-of-Interest Disclosure and Voting Patterns at FDA Advisory 

Committee Meetings.” Report to the FDA Office of Policy, Planning, and Preparedness. January 15, 2009. Accessed May 

15th, 2012. www.fda.gov/downloads/AdvisoryCommittees/AboutAdvisoryCommittees/UCM165328.pdf.
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V. A Path Forward

Recommendations for Propelling Innovation in Drug Discovery, 

Development, and Evaluation

We stand at a moment of extraordinary promise for biomedicine, propelled by scientific and technological advances over the past several decades that have resulted from wise public investment. Yet 

there is widespread concern that scientific discoveries are not being translated rapidly enough into 

urgently needed medicines for patients. The output of new therapies relative to investment of the biopharmaceutical industry has been falling steadily for several decades, amidst a perfect storm of factors: 

increasing failure rates, increasing clinical trial costs, increasing time to market, increasing risk aversion, 

and increasing uncertainty concerning regulatory paths for innovative drugs. 

We propose the following ambitious goal: 

Goal: Double the output of innovative new medicines for patients with important unmet 

medical needs, while increasing drug efficacy and safety, through industry, academia, and 

government working together to decrease clinical failure, clinical trial costs, time to market, 

and regulatory uncertainty.

PCAST believes that achieving this goal is possible over the next 10-15 years.145 As described below, 

various intermediate milestones toward the overall goal can be achieved more rapidly. Achieving the 

overall goal will require advances in: the science of drug development; the execution of clinical trials; the 

development pathways used for innovative medicines; the mechanisms for drug approval, surveillance 

and communication of risk; and management at the FDA. These improvements will unleash extraordinary innovation and investment in the service of public health. Achieving this goal will require active 

involvement and collaboration among stakeholders across multiple sectors. 

Below, we make recommendations concerning specific public and private actions to accelerate 

innovation. 

A. Improving Drug Discovery and Development

We see three key opportunities for accelerating progress in drug discovery and development: 

(i) Science and technology of drug discovery and development. There is a pressing need to fill 

key gaps in the science and technology underlying drug discovery and development. Important 

areas include validation of biological targets, development and validation of biomarkers for 

diseases, new types of chemical matter for drug screening, new techniques for drug screening, 

145. To be precise, we mean that the time and cost of projects that begin in the 2020s will be two-fold lower than 

costs and development times for current projects.
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pharmacogenomics, statistical methods and other areas of emerging science critical to efficient 

discovery, development, and FDA review of drugs.

(ii) Execution of clinical trials. There is a pressing need to increase the efficiency of clinical trials 

in the United States. New models could include standing clinical trials networks with efficient 

IRB review and protocol standardization; pre-accredited sites, including the integration of community practitioners; effective patient accrual, management and retention; the use of Bayesian 

and adaptive protocols where feasible; high-quality integrated information systems that enable 

efficient data management, pooling and analysis across sites; standing capabilities to manage 

patient specimens; and accountability mechanisms for execution of timely, high-quality, and 

ethically sound clinical studies suitable for new drug registration.

(iii) Clear development paths for innovative medicines. It is important that innovators have 

clarity about the nature of the clinical evidence that will be necessary to support FDA approval 

of a drug. Because it is difficult for the FDA to anticipate and analyze the full range of development pathways for innovative medicines in a timely fashion, there may be effective models that 

engage the biomedical community in identifying needs, analyzing approaches, and achieving 

consensus. Such efforts could speed the FDA’s ability to make decisions and provide necessary 

guidance. 

Addressing these opportunities will require actions both by the Federal Government and by 

the larger non-Federal community. 

Federal action to support innovation in drug development. In December 2011, the Federal 

Government took two major steps aimed at advancing innovation in drug development.

• The Federal Government created and funded the National Center for Advancing Translational 

Sciences (NCATS) at the NIH. Appropriately, the mission of NCATS is not to develop pharmaceuticals per se. Rather, NCATS will fund research designed to overcome key challenges in translational research, including (1) creating new biological concepts, chemical methods, and general 

technologies for the discovery, development, testing, and implementation of therapeutics and 

diagnostics and (2) demonstrating their feasibility. In addition, NCATS can play an important 

role in training of translational researchers.146 Before the creation of NCATS, the NIH had no 

systematic approach to funding the underlying science and technology of drug development. 

PCAST applauds the creation of NCATS and urges Congress to support the President’s budget 

request for the new entity, including the authorized Cures Acceleration Network.

• The Federal Government also provided its first funding for the Reagan-Udall Foundation (RUF). 

RUF is a Congressionally mandated nonprofit (501(c)(3)) organization whose purpose is to support the mission of the FDA, by helping to equip FDA staff with the highest caliber regulatory 

science and technology in order to enhance the safety and effectiveness of FDA regulated products. RUF was authorized by Congress in 2007, but did not receive Federal funding until FY 2012.

146. Meagher, E.A. and FitzGerald, G.A. “Efficient drug approval and monitoring must rely on sound regulatory 

science.” Nat. Med. 2011; 17, 1535 doi:10.1038/nm1211-1535.
V. A Path Forward

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Investments in basic biomedical research. It is important to remember that the creation of therapies 

rests on advances in basic biomedical research, which have depended on robust Federal funding. The 

Obama Administration provided a substantial boost to the budget via the American Recovery and 

Reinvestment Act, which temporarily offset previous erosion of the NIH budget from 2003-2008. But 

sustained investment in both NIH and other science-based agencies will be needed in the future to take 

advantage of the extraordinary research opportunities that lie before us.

Recommendation 1: Support Federal Initiatives to Accelerate Therapeutics

Public investment is a critical component of the ecosystem that propels innovation in drug discovery, 

development, and evaluation.

(i) The Federal Government should strongly support funding for basic biomedical research 

by increasing the NIH budget to allow for new and further research on the underlying 

basis of disease and therapeutics.

(ii) The Federal Government should vigorously support the newly created National Center 

for Advancing Translational Sciences (NCATS) at the NIH. In particular, Congress should 

support the President’s budget request for NCATS, including fully funding the authorized 

Cures Acceleration Network. 

(iii) The Federal Government should vigorously support the Reagan-Udall Foundation 

(RUF).

Broader partnership. While the Federal Government can play an important role in accelerating innovation in drug discovery and development through NCATS and RUF, these efforts cannot alone suffice. 

Many observers, from academia, government, and the biopharmaceutical industry, have argued for the 

importance of shared, precompetitive efforts aimed at improving the entire drug development process.

We believe that most of the critical needs in drug development cannot be addressed by individual actors 

or sectors, but rather require a strong partnership involving—and driven by—the larger non-Federal 

community, including industry, academic researchers, patient and consumer groups, physicians, and 

insurance companies. Each stakeholder community brings a distinct and important focus. Industry 

brings experience about the practical realities of drug development, as well as unique scientific and 

organizational capabilities for tackling projects. Physicians bring critical perspectives about the use of 

drugs in practice. Academic researchers bring a focus on general approaches with broader applicability than individual commercial projects. Insurers bring a much-needed focus on the value of drugs in 

promoting health outcomes. And, patients bring a unique perspective on therapeutic needs, as well as 

an important sense of urgency. 
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The most critical needs include: 

(i) Filling key knowledge gaps. As described above, major advances are needed in the science, 

technology and methodologies of drug discovery and development. Examples include systematic approaches for validation of biological targets, development, and validation of biomarkers 

for key diseases, new types of chemical matter for drug screening, methods to develop drugs 

for currently ”undruggable” targets, new techniques for drug screening, new approaches to 

predictive toxicology and pharmacogenomics, and improved statistical methods.

Individual companies will not undertake such efforts at the necessary scale, because the fruits 

are partially a public good that cannot be fully appropriated by any one funder. Instead, such 

efforts must be undertaken through shared projects. NIH has a crucial role to play in this work, 

but cannot fund all of the necessary work through its own budget. Consortia involving shared 

work and shared funding are needed. 

(ii) Improving clinical trials capabilities. As described above, our clinical trials network is inefficient and expensive. There is a need for new models, tools, and capabilities to transform and 

streamline the testing of new drugs and associated diagnostic tests for FDA review. We need 

standing clinical trials networks with efficient IRB review; pre-certified sites, including the 

integration of community practitioners; effective patient accrual, management and retention; 

high-quality integrated information systems that enable efficient data management, pooling 

and analysis across sites; ability to manage patient specimens; and rigorous accountability for 

execution of timely, high-quality and ethically sound clinical studies suitable for registration of 

a new drug. 

One effective model may involve for-profit networks for specific diseases, created by consortia of 

companies that provide shared support for the ongoing infrastructure and pay for the running 

costs of their individual trials. Neither the Federal Government nor individual companies can 

create such networks. Only consortia of parties can do so. 

(iii) Clarify the development pathway for innovative medicines. As described above, it is challenging for the FDA to provide, in a timely fashion, guidance documents about development 

pathways in emerging areas and public letters concerning new tools for drug development. 

While the ultimate decisions must rest with the FDA, the Agency’s process could be accelerated 

if diverse experts and stakeholders came together to identify needs, gather relevant scientific 

information, and develop community consensus in an open and transparent process. There is 

a need for timely and high-quality work on a wide range of topics. To be credible, such efforts 

must involve consortia of parties representing a wide range of perspectives and interests. 

PCAST believes that a high-level partnership is vital to filling these gaps. While there are a number 

of organizations and collaborations to work on isolated components of this challenge, there is no overarching framework that allows the most crucial needs to be identified and addressed efficiently. What 

is required is an entity through which key stakeholders can come together on a regular basis, engaging the highest level of leadership from the various sectors to address the challenges to transforming 

drug development. The lack of such an entity makes the activation barrier to addressing the needs of 

this ecosystem very high, and impedes progress toward accelerating innovation in drug discovery and 

development. 
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The best way to address the need would be to create a broad-based Partnership to Accelerate 

Therapeutics involving the bio-pharmaceutical industry; the academic biomedical research and ethics 

community; physician societies and pharmacists; patient-focused research foundations and advocacy 

groups; healthcare providers and insurers; and the Federal Government. 

We envision four main tasks for the Partnership: 

(1) Identifying key needs and opportunities;

(2) Prioritizing these needs and opportunities; 

(3) Developing detailed plans for shared scientific and technological projects; business and 

operational plans for clinical trials networks; proposed guidance documents and supporting materials; and other high-quality work products; and 

(4) Ensuring that projects are launched, by bringing together allies and raising support. 

The Partnership would facilitate the creation of projects, but in general would not itself carry out the 

projects. In some cases, projects would be performed by existing entities. For example, NCATS would 

be a natural home for many activities to fill key knowledge gaps. In other cases, new entities might be 

organized by sets of stakeholders in response to a need. For example, biopharmaceutical companies 

might form a joint venture to create a clinical trials network.

The Partnership would serve as an umbrella organization that would: engage high-level leadership 

across key stakeholder organizations on a sustained basis; have a governance structure that ensures that 

the Partnership is transparent; balances competing interests and benefits the public; coordinate with 

existing efforts and minimize unnecessary duplication of effort; have a sufficient professional staff, with 

appropriate expertise; and operate in a business-like and accountable manner. The Partnership would 

need a sufficient budget to accomplish its goals, provided by the various stakeholders.

We note that there have been a number of successful examples of private and public-private consortia to address major challenges facing an industry. A famous example is the SEMATECH consortium 

formed in the late 1980s and early 1990s, at a time when the U.S. semiconductor industry was under 

great stress from foreign competition. Combining private funding from 14 U.S.-based semiconductor 

manufacturers together with public funding from the Federal Government, SEMATECH supported joint 

precompetitive research on next-generation technology for integrated circuit memory chips in a shared 

facility in Austin, Texas. SEMATECH also supported a test facility for tool and equipment suppliers in the 

semiconductor industry’s supply chain to prototype innovations, creating major efficiencies for the 

companies in the consortia. SEMATECH is generally regarded147 as having played an important role in 

the resurgence of the U.S. semiconductor industry. The SEMATECH analogy is not exact: (1) the issues in 

drug development involve a worldwide decrease in productivity, rather than a threat from more efficient 

foreign competition, and (2) we do not envision the Partnership to Accelerate Therapeutics to operate 

its own laboratories or large projects. And, the solutions may require a set of consortia projects rather 

than a single shared project. Nonetheless, the example demonstrates the power of properly organized 

and managed precompetitive consortia to dramatically advance an important area in times of stress. 

147. Flamm, K. “Economic Impacts of International R&D Coordination: SEMATECH and the International Technology 

Roadmap,” 21st Century Innovation Systems for Japan and the United States: Lessons from a Decade of Change: Report of a 

Symposium, National Academies of Science and Engineering. 2009; Van Atta, R., et al, Semiconductor Dependency, Institute 

for Defense Analyses, 1988.
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Recommendation 2: Catalyze the Creation of a Broad-Based Partnership to 

Accelerate Therapeutics 

The Federal Government should encourage and participate in the creation of a broad-based 

Partnership to Accelerate Therapeutics, engaging a range of stakeholders including: patient-focused 

research foundations and advocacy groups; the bio-pharmaceutical industry; the academic biomedical research and ethics community; physician societies and pharmacists; healthcare providers and 

insurers; and the Federal Government, including the FDA and NIH. The Partnership should be a nonFederal entity that brings together high-level leadership in a public-private partnership. 

Mission. The Partnership’s mission should be to promote innovation and improvement in the discovery, development, and evaluation of new medicines for important public health needs. 

Focus. The Partnership should focus initially on identifying needs in three major areas: (1) Filling 

key knowledge gaps in the science, technology, and methodologies underlying drug discovery and 

development; (2) Improving clinical trials capabilities, including through new kinds of clinical trials 

networks; and (3) Clarifying the development pathway for innovative medicines, including through 

convening the community to provide input on guidance documents. 

Activities. The Partnership should have four main activities: (1) Identifying key needs and opportunities; (2) Prioritizing these needs and opportunities; (3) Formulating specific solutions and developing 

detailed plans, including for shared scientific and technological projects, business and operational 

plans for clinical trials networks, proposed guidance documents and supporting materials, and other 

high-quality work products; and (4) Ensuring that projects are launched, by bringing together allies 

and raising support. 

The Partnership would facilitate the creation of projects, but in general would not itself carry out 

the projects. Instead, projects would be performed by existing entities (such as NCATS or specific 

consortia, such as the Biomarkers Consortium) or by new entities organized by sets of stakeholders 

in response to a need (such as a joint venture to create a clinical trials network). 

Structure. The Partnership should: engage the high-level leadership across key stakeholder organizations on a sustained basis; have a governance structure that ensures that the Partnership is 

transparent, balances competing interests, and benefits the public; coordinate with existing efforts 

and minimize unnecessary duplication of effort; have a sufficient professional staff, with appropriate expertise; and operate in a business-like and accountable manner. The Partnership would need 

a sufficient budget to accomplish its goals, which should be provided by the various stakeholders. 

There is currently no entity that serves these important goals. The mission cannot be appropriately 

performed by Federal entities such as the NIH, the FDA, the Foundation for the NIH, or the RUF (although 

these entities may have a central role in carrying out some of the projects identified and prioritized). This 

is because each of these Federal entities is dedicated to its own agency-specific mission, rather than to 

the needs of the drug discovery, development, and evaluation ecosystem as a whole. 

The closest match, in terms of broad mission, is the Institute of Medicine Drug Discovery, Development and 

Translation (IOM Drug Forum). The IOM Drug Forum is a convening body that brings together leaders from 
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private sector sponsors of biomedical and clinical research; Federal agencies sponsoring and regulating 

biomedical and clinical research; foundations; the academic community; consumers; and Federal and private 

health plans to discuss issues related to the full drug development pipeline — from drug discovery and 

regulatory approval to translation of research into clinical practice. It undertakes the first of the four activities 

envisioned for the Partnership (identifying key needs and opportunities). However, the IOM Drug Forum 

does not currently engage in the more action-oriented activities envisioned for the Partnership (prioritizing, 

developing detailed business plans for projects, and ensuring that projects are launched). Moreover, it lacks 

an adequate staff, budget, and organizational structure to carry out the envisioned activities. 

To be successful, the Partnership would need: 

• Board of directors. The board would consist of senior leaders from stakeholder groups, with 

responsibility for setting direction, making decisions about project priorities, and overseeing 

professional staff. Certain key stakeholder groups could play an ongoing role in the selection 

of the board on an ongoing basis (for example, key industry organizations, patient and consumer organizations, medical philanthropies, the FDA and the NIH). It will be important that 

the Partnership’s board be balanced in representation among stakeholders, and that voices 

representing the broader public interest have an ample role in governance.

• Professional staff. The Partnership should have a president and staff with extensive experience in drug discovery, development, and evaluation. The staff should include administrative 

staff (to support the work of the Partnership), core scientific staff (to work with experts inside 

and outside the Partnership to identify, prioritize, plan, and help launch projects) and project 

management staff (responsible for ensuring that key projects are launched). A staff of at least 

30-40 people would likely be required to fulfill the goals. 

• Funding. An annual budget of at least $10-15 million would likely be required to fulfill the goals. 

Funding would come primarily from key corporate and non-profit organizations. 

There are several ways in which the Partnership could be created. 

One approach would be for the Partnership to be organized and hosted under the auspices of a 

respected non-Federal entity. One possible entity would be the IOM. As the health arm of the independent, non-profit, Federally chartered National Academy of Sciences, the IOM is a well-respected, 

neutral institution with the expertise and the standing to convene parties from all sectors. The IOM’s 

traditional role has been to organize committees and “think tanks” that produce excellent reports. To 

be a successful organizing body for the Partnership, it would need to go beyond this traditional role to 

organize an operational entity that would (1) serve the public interest, on behalf of a diverse range of 

stakeholders, (2) be organized and staffed in a business-like manner, and (3) develop business plans for 

and help launch projects on a sustained basis.

Another possibility would be for the Partnership to be organized and hosted by a major non-profit biomedical foundation. The Partnership could be organized jointly by IOM and a biomedical foundation, or 

by other suitable organizations. The choice of entity to organize or host the Partnership should be made 

by the stakeholders.
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An alternative approach would be for the Partnership to be established as an independent non-profit 

entity with 501(c)(3) status. Under this model, a respected non-Federal entity could shepherd the creation 

of the Partnership by (i) convening key stakeholders to agree on a governance structure for the Partnership 

and (ii) selecting the initial board. The non-Federal entity could potentially play an ongoing oversight role 

to ensure that the Partnership fulfills its mission, and could potentially provide services to the Partnership 

if needed. The National Academy of Sciences (of which the IOM is a part) could play such a role.

Various stakeholders, including Federal agencies, have expressed strong support for and a sense of 

urgency about organizing a Partnership. The time required to organize the Partnership may differ under 

various models and may thus influence the preferred approach.

In addition to the Partnership spanning stakeholders from multiple sectors, we believe it could be useful for biopharmaceutical companies to create a joint entity focused on pre-competitive R&D-related 

efforts. Such an entity could help coordinate industrial engagement in the Partnership and might carry 

out some of the joint projects identified by the Partnership, such as new types of clinical trials networks.

B. Improving Drug Evaluation

The FDA’s mission is to ensure that the American people gain access rapidly to new drugs that are safe 

and effective, while being protected from drugs that are not. The agency can fail in two ways: by being 

overly cautious (e.g., unreasonably delaying the approval of life-saving drugs) or by being insufficiently 

cautious (e.g., approving drugs that are ineffective or cause great harm). The latter failure mode gets the 

most publicity, but the former can be just as serious.

How can the FDA accelerate the flow of innovative drugs? We believe that the best solution is to enable 

the FDA to be more forward-leaning by optimizing the scientific and regulatory tools for minimizing 

and managing risk and for improving drug efficacy. We recommend two major initiatives concerning 

the drug approval process and suggest exploring a third approach.

Expanding the Use of Accelerated Approval 

As described in Chapter 4, the FDA has authority to grant Accelerated Approval for a drug “on the basis 

of adequate and well-controlled clinical trials establishing that the drug product has an effect on a surrogate endpoint that is reasonably likely, based on epidemiologic, therapeutic, pathophysiologic, or 

other evidence, to predict clinical benefit or on the basis of an effect on a clinical endpoint other than 

survival or irreversible morbidity,” with the requirement that the sponsor conduct follow-up studies to 

verify the clinical benefit. Demonstrating a favorable impact on a marker predictive of clinical outcome 

can be much faster and less expensive than demonstrating impact on the clinical outcome itself. Of 

course, this is valuable only if the surrogate is actually a valid predictor of the relevant clinical outcome. 

(For a detailed discussion of this topic, see Box on Surrogate Endpoints and Intermediate Clinical 

Endpoints in Chapter 3.)

Accelerated Approval involves making an educated guess. For a novel endpoint, there is no way to be 

certain that it will be a valid predictor of clinical benefit; errors will occur. However, for a serious disease 

with no good treatments, early access for patients, coupled to a requirement for ongoing knowledgegeneration represents a good compromise. For traditional approvals and for diseases that do not meet 
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the standard of being life-threatening or serious and with an unmet need, surrogate endpoints must 

have much greater validity and certainty associated with them. 

Achieving the full benefits of the Accelerated Approval pathway requires that: surrogate and clinical 

predictors are chosen wisely; uncertainties are communicated to the public; confirmatory studies are 

conducted expeditiously; and post-marketing safety and effectiveness is monitored carefully. We believe 

that the Accelerated Approval pathway can be improved by optimizing these components and fully 

implementing existing statutory authority. 

The FDA should expand the scope of acceptable endpoints used to approve drugs for serious or 

life-threatening diseases with unmet needs. Under current law, the FDA has considerable discretion 

in deciding whether a surrogate or intermediate clinical endpoint is “reasonably likely, based on epidemiologic, therapeutic, pathophysiologic, or other evidence, to predict” clinical benefit. At one extreme, 

the FDA might be highly risk-averse, requiring near-certainty that the surrogate or intermediate endpoint 

will translate to clinical benefit. At the other extreme, the Agency might accept endpoints that are simply 

correlated with disease outcome or plausibly related to disease outcome based on current scientific 

understanding. Neither extreme would serve the public well. The FDA’s interpretation of “reasonably 

likely...to predict” can have a major impact on the pace of medical innovation and on patient safety. 

(See box on surrogate endpoints in Chapter 3 for further discussion.)

Historically, the use of Accelerated Approval has been primarily used in a limited number of therapeutic 

areas—principally, HIV/AIDS, cancer, and inhalation anthrax148 (87 percent of cases). And, Accelerated 

Approval has been granted typically on the basis of surrogate endpoints (laboratory measures or tests), 

with intermediate clinical endpoints149 being used relatively rarely (on average once per year). 

We believe that the Nation would benefit if the FDA were to expand the use in practice of acceptable 

indicators to other serious or life-threatening diseases, especially by encouraging broader use of intermediate clinical endpoints that have a reasonable likelihood of predicting clinical benefit. These are 

distinct from surrogate endpoints (lab measures, radiographic imaging, or quantitative tests), in that 

these are interim measures of how a patient feels, functions, or survives. Intermediate clinical endpoints 

provide some degree of clinical benefit to patients but are short of the desired, long-term meaningful 

clinical outcome from a treatment.

FDA staff have suggested that possible intermediate clinical endpoints suitable for Accelerated Approval 

might include, for example: 

• Using improvement in minimal cognitive impairment in likely early-stage Alzheimer’s patients150

as a predictor of delayed progression of the disease, rather than waiting to assess progression.

148. GAO. “FDA Needs to Enhance Its Oversight of Drugs Approved on the Basis of Surrogate Endpoints”; Oct 26, 

2009. GAO-09-866. 

149. Intermediate clinical endpoints are measures of how a patient functions, feels or survives. To be used for 

Accelerated Approval, there should be a reasonable likelihood that an improvement in an intermediate clinical endpoint 

will predict a meaningful change in a desired outcome of disease. 

150. Such a study might focus on patients with early symptoms and the highest-risk genotype (e.g., homozygous 

carriers of the ApoE4 allele) Source: Farrer, L.A., et al. “Effects of age, sex, and ethnicity on the association between 

apolipoprotein E genotype and Alzheimer disease. A meta-analysis. APOE and Alzheimer Disease Meta Analysis 

Consortium.” J. Am. Med. Ass. 1997; 278(16):1349-56.
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• Using improvement in isolated muscle strength in patients with a muscular dystrophy as a 

predictor of benefit, rather than waiting to assess overall deterioration of the patient.

• Using clearance of drug-resistant organisms as a predictor of likely clinical benefit, rather than 

waiting to measure overall survival rate.

• Using measures of the amount of air that a patient can exhale by force (a measure of lung capacity 

known as forced vital capacity) or functional motor tests as an endpoint for predicting a drug’s likely 

impact on two serious diseases lacking good treatments: spinal muscular atrophy, a genetic neuromuscular disease, and amyotrophic lateral sclerosis (ALS), a progressive neurodegenerative disease.

These examples are simply intended as possible illustrations. Whether they would truly be suitable 

endpoints for Accelerated Approvals would need to be determined by the FDA. PCAST does not specifically advocate the use of these intermediate clinical endpoints, but they have been suggested to us by 

the Agency as possible candidates. 

Intermediate clinical endpoints can be quite powerful, but they can also fail. Broader use of intermediate 

clinical endpoints for serious or life-threatening diseases with unmet needs should be accompanied 

by the requirements that (1) post-market trials are conducted to test whether the drug’s effect on the 

endpoint translates into significant clinical benefit, (2) the approved drugs are demonstrated to be safe 

enough to have a favorable risk-benefit ratio for the patient population, and (3) the FDA has adequate 

tools to withdraw approval for drugs that fail to meet these criteria. 

We recognize that there is some risk in employing predictors, but we believe that the opportunities for 

progress against serious or life-threatening diseases without good treatments justify taking prudent risks. 

The biomedical research community should take a more active role in determining whether 

endpoints are reasonably likely to predict clinical benefit. While the FDA has the authority to decide 

whether an endpoint is suitable for drug approval, we believe that the decision should largely reflect 

the consensus of the scientific community. The scientific community should play a more active role in 

developing and evaluating whether new surrogate endpoints and intermediate clinical endpoints have 

a reasonable likelihood of predicting clinical benefit for serious or life-threatening diseases with unmet 

need. The FDA should engage the community in identifying the needs for and weighing the value of possible predictors. The best decisions will emerge from transparent discussion about these judgment calls.

The FDA should clarify its guidance to drug sponsors concerning Accelerated Approval in general, 

as well as with respect to the acceptability of specific indicators. Drug developers have expressed 

frustration that it is difficult to get clear and timely answers concerning the acceptability of specific 

predictors for Accelerated Approval. Without such clarity, the risk of employing such predictors during 

the lengthy drug-development process is often too great to justify significant investment. While the FDA 

must proceed thoughtfully in approving predictors, the risks will be mitigated provided that confirmatory studies are performed in a timely manner by drug sponsors. 

The FDA should strengthen its enforcement of the requirement for confirmatory studies. If the FDA 

is to expand the range of endpoints for Accelerated Approval, it must also ensure that sponsors perform 

the confirmatory studies to verify the clinical benefit and safety of drugs approved under Accelerated 

Approval and to validate the endpoints for use in future studies. As noted in Chapter 4, there is evidence 
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that historically the industry has not always fulfilled and/or that the FDA has not adequately tracked 

and enforced requirements that companies complete confirmatory studies required for Accelerated 

Approvals to demonstrate efficacy and thereby verify the drug’s clinical benefit.151 The FDA should 

strengthen its enforcement of these requirements, including using its existing authority to withdraw 

approval or impose penalties where confirmatory studies have not been completed in a timely fashion.152

To ensure that post-marketing studies are completed in a timely manner, new mechanisms might be 

considered—for example, if studies are not completed, the approval will be presumed to sunset or expire 

(absent an extension by the Agency) or that the sponsor will have a contractual obligation to pay for a 

third party to carry out the study.153

151. However, some observers have noted that the FDA has often not withdrawn approval when studies go 

uncompleted, in part because it is practically or politically untenable to do so once a drug is on the market and being 

used by a patient population in need. An example is midodrine, approved under Accelerated Approval for symptomatic 

orthostatic hypotension in 1996 with a condition for confirmatory studies that have still not been fulfilled by the 

sponsor.

152. We note that, in some cases, recruiting patients to randomized trials may be difficult due to the nature or 

prevalence of the disease. For such cases, other types of studies or evidence (including those that use historical controls 

or pharmacoepidemiological methods) may need to substitute for randomized controlled trials in the post-market 

phase.

153. Under Section 901 of FDASIA, which amends Section 506(c) of the Federal Food, Drug & Cosmetics Act, FDA 

will issue draft guidance on accelerated approval within 1 year of enactment and final guidance and, as necessary, 

amendment of the regulations governing accelerated approval with 1 year after the draft guidance. We recommend that 

this guidance address the expanded use in Recommendation 3 (i).

Recommendation 3: Expand the Use in Practice of FDA’s Existing Authorities for 

Accelerated Approval and Confirmatory Evidence

The FDA should make fuller use of authorities previously granted by legislation and not yet fully 

utilized. 

(i) The FDA should expand the use in practice of its existing authority for Accelerated 

Approval. FDA should direct its staff, across all divisions, to make full use of the Accelerated 

Approval track for all drugs meeting the statutory standard of addressing an unmet medical 

need for a serious or life threatening illness and demonstrating an effect on a clinical endpoint 

(other than survival or irreversible morbidity) or on a surrogate endpoint that is reasonably 

likely to predict clinical benefit. 

(ii) The FDA should issue clear guidance concerning the types of new drug applications that 

would be eligible for Accelerated Approval. The guidance should clarify the definition of 

unmet medical need, serious illness, and suitable clinical or surrogate endpoints, particularly 

intermediate clinical endpoints.153

(iii) The FDA should actively engage the biomedical community in the development and 

evaluation of specific predictors, and should provide clear, timely, and transparent 

guidance to sponsors about the acceptability of specific surrogate and intermediate 

endpoints. The scientific community should play a central role both in identifying interim 

endpoints and in weighing whether it is reasonable to use them as predictors of clinical 

outcome based on available knowledge and medical need. The FDA should make timely 

decisions based on available evidence, recognizing that the cost of indecision is high and 

the risk of decisions is mitigated by the requirement for confirmatory studies. 
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With respect to ensuring the performance of confirmatory studies for drugs approved under Accelerated 

Approval, we note that insurers may have an important role to play by tying long-term reimbursement 

to studies demonstrating efficacy. 

Approval for Special Medical Use 

For some serious or life-threatening conditions, a relatively small and rapid clinical trial may suffice to 

demonstrate the safety and efficacy of a drug in a specific subgroup of patients who have a serious, 

high-risk manifestation of a common condition or who are at especially high risk for developing a serious 

disease. Yet, before approving the drug, the FDA believes it has the legal responsibility to consider the 

overall benefit-risk balance of the drug—including the potential to cause harm in a larger population 

with milder manifestations or at lower risk. The FDA’s need to address such possibilities could significantly 

delay the availability of the drug to patients in the subpopulation. Yet there is a need to develop further 

knowledge about the drug before it is prescribed widely.

One example is a drug that has a favorable benefit-risk balance for treating patients with morbid obesity. 

Before approving the drug, the FDA weighs the potential harm that could arise from the possibility that 

physicians would widely prescribe the drug off-label to treat mildly obese patients wishing to lose 10 

pounds. Under such circumstances, the Agency tends to require that a sponsor conduct large clinical 

trials to address the more complex benefit-risk issues in such populations.

If there were a pathway under which (1) a sponsor could propose, early in the development process, 

to study a drug initially for a narrow indication and (2) the likelihood that the drug would be used in 

a broader population were substantially reduced, the FDA believes it could responsibly approve the 

drug based on the data concerning the subpopulation with a serious manifestation of the conditions 

or at especially high risk, and serious need. There would be several advantages to such a pathway. Drug 

sponsors could propose faster and smaller clinical trials for initial market approval, which would benefit 

patients in need of therapies or prevention (as well as, potentially, innovators in need of initial financial 

return to support further development). 

Another important example is the development of drugs to treat bacteria resistant to current antibiotics, 

which is an urgent medical need. A small clinical trial might rapidly demonstrate a favorable benefit-risk 

balance in patients with life-threatening infections caused by antibiotic-resistant bacteria. Yet, the FDA 

would be concerned about the drug becoming widely used as a broad-spectrum antibiotic in a broad 

population. First, it would be necessary to establish the benefit-risk balance. This could involve noninferiority studies involving several thousand patients. Second, widespread use would soon select for 

the emergence and spread of bacteria resistant to the new drug, undermining its clinical benefit to the 

(iv) The FDA should fully enforce the requirement for confirmatory studies. When granting 

Accelerated Approval for a drug, FDA should make full use of its existing authorities to enforce 

post-marketing requirements. This includes the ability to withdraw approval of drugs and 

to ensure that appropriate clinical studies (including well-controlled trials) are completed 

in a timely manner following initial approval, toward the goal of expanded or restricted 

indications depending on the results of these studies. If necessary to ensure that confirmatory studies are undertaken, Congress should consider such mechanisms as presumption of 

expiration of approval if confirmatory studies are not performed within a specified period.
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public. Good “antibiotic stewardship” would involve limiting the use of the new drug to drug-resistant 

cases. Currently, there is not a mechanism to encourage that a new drug will only be used against organisms resistant to standard therapies.

As discussed in Chapter 4, the FDA believes its current REMS authority is not well-suited to this task. 

REMS is a cumbersome tool and has to date primarily been used to address known risks related to an 

approved indication, rather than uncertainty about, or knowledge of potential risks to a broader population. In addition, REMS does not provide a good mechanism to deal with future public health risks from 

clinical use not directly resulting from the drug, such as the emergence of drug-resistant bacteria from 

the broad clinical use of antibiotics. 

One solution might be for Congress to give the FDA direct authority to restrict the right of physicians to 

prescribe such drugs off-label. However, for a variety of reasons, we do not believe that this approach 

is workable or desirable. 

A better solution might be for the FDA to implement a mechanism under which sponsors could voluntarily request to develop a new drug for initial approval under a new designation: Special Medical 

Use (SMU). The sponsor would (1) propose a development process to address the benefit-risk balance 

in a high-risk subpopulation, using the same standards for efficacy and safety as for existing approval 

pathways (traditional or accelerated) and (2) demonstrate that clinical trials in the larger population of 

patients would require much longer time periods to complete or would not be feasible.

The SMU designation would signal to physicians and insurers that, based on current evidence, the FDA 

considers the drug to be inappropriate for use outside the specific subpopulation. While not forbidding 

off-label use by physicians, the designation would need to strongly influence clinical decisions of physicians 

and formularies, reimbursement decisions by health care payors and practices of malpractice insurers. 

Provided that it decreases the likelihood of off-label use, the SMU designation could enable FDA to grant 

approval consistent with its obligation to weigh the overall benefit-risk balance. Following initial approval 

under SMU designation, sponsors could apply for subsequent approval without the SMU designation by 

conducting further clinical studies that address the risk-benefit balance in broader patient populations.

PCAST is unclear whether the FDA (1) can create an SMU designation through new regulations under 

its existing statutory authority or (2) would require additional authority to do so. Some experts believe 

that FDA has adequate authority to act under the FDA Amendments Act (FDAAA 2007) and could promulgate regulations to enact this pathway and designation. Others believe that, even if the FDA does 

have sufficient authority, it would be valuable and important if Congress were to explicitly authorize 

this pathway, or at least, endorse its creation.

PCAST endorses the creation of an SMU designation. We emphasize, however, that the SMU designation 

will only succeed if it is implemented in such a way as to strongly influence behavior. Payors may play a 

central role in shaping behavior through their decisions about reimbursement policy, including through 

public payor provisions for “coverage with evidence development” and analogous policies by private 

insurers.154 Accordingly, payors should be actively engaged in discussions about the SMU designation. 

154. Specifically, reimbursement policies can be structured to ensure that drugs approved through the SMU 

designation are generally prescribed in accordance with the FDA approved indications through payer coverage policies 

that limit reimbursement to clinical use according to the approved indications. Reimbursement policy can also support 

the implementation of required post-approval studies through the use of “coverage with evidence development” and 

other policy mechanism that link reimbursement to the enrollment of patients in clinical studies. See: 

www.cmtpnet.org/coverage-with-evidence-development.
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Recommendation 4: Create a New Pathway for Initial Approval of Drugs Shown to be 

Safe and Effective in a Specific Subgroup of Patients

The development of new medicines for the treatment and prevention of serious chronic diseases and 

conditions, such as Alzheimer’s disease, obesity, and drug-resistant bacterial infection is an important 

public health need. For some drugs, clinical trials may be able to demonstrate the safety and efficacy 

of a drug in a specific subgroup of patients who have a serious, high-risk manifestation of a common 

condition (such as morbid obesity, or bacterial infection resistant to standard antibiotics) or who are 

at especially high risk (such as patients with auto-antibodies that point to high-risk for development 

of Type 1 diabetes) long before it is possible to determine the more complex benefit-risk balance for 

broader groups with milder conditions or less risk (such as overweight or ordinary bacterial infection). 

Currently, FDA may not grant approval without extensive clinical trials in the larger population due 

to concerns about safety risks resulting from possible off-label use in broader groups. It would be 

desirable to have a pathway under which such drugs could rapidly reach high-need patients while 

reducing the risks from wider use of the drug. In the case of antibiotics, there would also be clear 

public health benefits to limiting the use of new antibiotics effective against drug-resistant bacteria, 

to stave off the emergence of drug-resistant strains.

(i) The FDA should implement a drug approval pathway under which sponsors could 

propose, early in the development process, to study a new drug for initial approval 

under a designation of Special Medical Use (SMU). Under this pathway, sponsors could 

request and the FDA could approve drugs in which the usual criteria for approval (traditional 

or accelerated) were met in a subgroup of patients with a serious, high-risk manifestation of 

a common condition, but in which it was not feasible to determine in a timely manner the 

benefit-risk balance for broader patient use. This designation and pathway would be sought 

early in the development process to allow the sponsor and the FDA to agree upon a more 

narrow development program than required for traditional approvals. This pathway would 

not be intended as an alternative means to approve a drug that is late in development or in 

the review and approval process. Sponsors could subsequently apply for approval without 

the SMU designation by providing clinical evidence of the benefit-risk balance in the broader 

patient population.

The purpose of the SMU designation would be to send a clear and effective signal to patients, 

physicians, payors, and malpractice insurers that the drug should be reserved for use in 

the specific subgroup of patients. The SMU designation would not forbid off-label use, but 

would be intended to affect the likely usage by shifting responsibility to educated prescribers 

and payors. In doing so, it would shift the overall benefit-risk balance and allow the FDA to 

responsibly approve drugs intended for patients with the serious manifestation.

(ii) If the FDA determines that existing statutory authority is sufficient for the Agency to 

implement the SMU designation, it should do so through new regulations. 

(iii) If the FDA concludes that existing statutory authority is insufficient or that 

Congressional endorsement is desirable, the Congress should pass legislation that 

clearly authorizes and encourages the FDA to create the new pathway. 
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We emphasize several important points about the proposed SMU pathway:

(1) The pathway would not give the FDA authority to regulate the practice of medicine. 

Responsibility for prescribing would rest with informed physicians. 

(2) The pathway would be an option for companies to elect and pursue early in a development 

program, and would not be imposed by the FDA. 

(3) For certain categories of drugs, it might be appropriate for Congress to adjust the exclusivity 

period for drugs with SMU designation to reflect that they are being prescribed to a limited 

population. This could be appropriate in instances where a drug’s use is being limited for public 

health considerations, such as for a drug to treat bacteria resistant to standard antibiotics.

Adaptive Approval 

Various thoughtful commentators have proposed approaches for accelerating the availability of innovative drugs to patients that go beyond the specific approaches embodied in Recommendations 3 and 

4. Broadly termed “adaptive approval,” these approaches would involve a series of approval stages that 

would iteratively expand the market for a drug based on the evidence generated about the drug’s risks 

and benefits. Adaptive approval contrasts with the binary approach to drug approval that predominates 

today, whereby a drug is approved or rejected based on a given data package at a single moment in 

time; the binary approach fails to adequately acknowledge and signal evolving knowledge about risks 

and benefits. Accelerated Approval and SMU can be viewed as specific instances155 of the concept of 

adaptive approval.

Under an adaptive approval approach, an initial approval would be provided based on a body of 

evidence that shows a favorable benefit-risk balance for a defined group of patients. During an initial 

(provisional) approval phase, patient access to drugs would be managed to limit exposure to risks while 

more information on the efficacy and safety of drugs in use is gathered. Emerging evidence would be 

used to modify approval status and would be communicated to patients, prescribers, and health care 

payors. Drugs would be evaluated across their lifecycle, with iterative phases of evidence gathering and 

reassessment. For this reason, adaptive approval would require greater evidence-generation for drugs 

once they are in use than is currently done under existing approaches to approval.156 Research and pilot 

studies concerning adaptive approval are being undertaken by regulators in other nations, including 

Health Canada, the EMA, and the Health Sciences Authority of Singapore. The MIT Center for Biomedical 

Innovation is working with these regulatory agencies to develop pilot projects. 

For adaptive approval to be a viable approach, it would be necessary to have mechanisms to ensure 

that (1) drugs are prescribed largely to patients for which they have been approved at the time; (2) evidence about drugs’ risks and benefits is generated on an ongoing basis, including through randomized 

controlled studies, pharmaco-epidemiological data, and robust monitoring after initial approval; and (3) 

drugs for which follow-up studies and monitoring are not completed or demonstrate an unfavorable 

risk-benefit balance can be readily removed from the market. 

155. Though possibly incomplete in the range of tools applied to learning about the drugs across their life-cycle.

156. Eichler H.G., Oye, K., et al. “Adaptive Licensing: Taking the Next Step in the Evolution of Drug Approval.” Nat. 

Clin. Pharmacol. Ther. 2012; 91:3, p. 426-437.
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These requirements pose challenges in the context of the highly decentralized U.S. healthcare system. To 

be workable, a solution would likely need an appropriate balance of incentives and restrictions, such as:

• Early access to market. Drug developers would gain earlier market access for restricted indications, which would then be expanded as additional evidence was generated demonstrating a 

favorable benefit-risk in additional indications or populations. 

• Labeling, warning, and restrictions. The FDA would have a stronger and clearer labeling 

system, including stating that there is no evidence to justify prescribing the drug outside the 

specific populations for which it has been approved and that it would currently be irresponsible, in general, to do so based on current knowledge, owing to possible serious risks. The FDA 

might also require certain tests, robust monitoring, and reporting associated with prescribing 

the drug. To be effective, these steps would need to be strong enough to influence behavior of 

physicians, payors, and malpractice insurers with respect to the use of drugs in initial phases of 

approval. These restrictions would be lifted as knowledge about the drug’s efficacy and safety 

was expanded. 

• Advertising. The FDA might, for example, require and strictly enforce that advertisements 

disclose current limitations of knowledge about the drug.

• Withdrawal of drugs. The FDA might require more robust tools for removing drugs from the 

market when studies fail to confirm the expected benefit-risk balance or when critical knowledge is not generated via monitoring and other tools.

• Economic incentives. In order not to seriously erode economic returns to drug developers, 

provisions might eventually be needed to adjust exclusivity periods to partially offset the time 

during which drugs are marketed under strong restrictions. 

Many issues would ultimately need to be worked out to create a viable system. PCAST believes that 

it would be useful for the FDA, in consultation with stakeholders including patient groups, academia, 

industry, and payors to explore ways, within existing drug approval pathways, to carry out pilot projects 

to explore approaches for adaptive approval. 

While we favor pilot projects to explore adaptive approvals, we distinguish this from recent proposals 

to implement adaptive or “progressive” approval approaches through legislation. One recent legislative 

proposal, for example, contemplated granting provisional approval to drugs addressing urgent patient 

needs for a serious or life-threatening condition based on less clinical evidence than required under 

current standards for traditional or Accelerated Approval, with a requirement of ongoing knowledge 

generation about the drug. For a variety of reasons, PCAST does not think this approach is currently 

tenable. Serious questions would need to be addressed about appropriate evidentiary standards, protection of patient’s rights and interests, and mechanisms to ensure timely clinical studies and withdrawal 

of drugs to make such a pathway viable.

PCAST, therefore, does not recommend that the Federal Government pass at this time new legislation 

to enact adaptive or progressive approval, nor does it recommend at this time creating a new drug 

approval pathway. Research and multi-stakeholder discussion is required to determine what regulatory 

tools and incentives are required to shift towards a more adaptive drug approval and monitoring system.
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Recommendation 5: Explore Approaches for Adaptive Approval Via Pilot Projects 

Under Existing Pathways, but Do Not Create New Adaptive Approval Pathways 

Through Legislation. 

The FDA, in consultation with patient advocacy groups, the medical community, payors, and drug 

sponsors, should explore adaptive approaches to approval. A study should be undertaken, involving 

all stakeholders, to address issues including: potential evidentiary standards, protection of patient 

safety and rights, and mechanisms to ensure timely post-marketing clinical studies and withdrawal 

of drugs. The study should also outline the regulatory tools and incentives that would be needed 

to ensure adaptive approaches balance safety and innovation. PCAST recommends that the FDA 

undertake pilot projects within existing approval pathways. 

Some parties have proposed that Congress pass new legislation to create a new regulatory pathway 

at FDA for “adaptive” or “progressive” approval of drugs, based on limited initial data coupled to ongoing knowledge generation across the life-cycle of the drug. While there are potential benefits, there 

are many unanswered questions about how such a pathway would work in practice and whether it 

would adequately protect the public from unsafe or ineffective treatments. 

PCAST recommends against passing at this time legislation to create a new framework for 

“adaptive” or “progressive” approval.
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For comparison purposes, the various approval mechanisms discussed above are summarized in the 

table below.157

157. In 1997, Congress created an alternative standard for statutory evidence (FDAMA 115) and granted FDA 

the authority to approve new drugs with a smaller evidence base than typically required for approval. The provision 

allows the FDA to approve drugs based on “one adequate and well-controlled clinical trial with confirmatory evidence”. 

However, this provision has been rarely used and has been largely confined in practice to rare or orphan diseases, where 

there are clear logistical challenges to performing more than a single trial. Although the FDA has the legal authority and 

flexibility to approve other drugs based on a single trial with confirmatory evidence, the challenge for the Agency and 

for the biomedical community is to define the conditions under which such approvals can be granted without eroding 

the protection of patients from unsafe or ineffective medicines.

Table 1: Explanation of Approval Mechanisms Discussed in the Report

Traditional Approval

Applicability: Any medical condition.

Standard for Approval: Substantial evidence157 from adequate and well-controlled trials demonstrating a favorable 

benefit-risk balance. 

Accelerated Approval

Applicability: Serious or life-threatening conditions with unmet medical need.

Standard for Approval: Substantial evidence from adequate and well-controlled trials demonstrating impact on a 

surrogate endpoint or intermediate clinical endpoint reasonably likely to predict clinical benefit. 

Potential benefit to stakeholders: Earlier access to drug for patients and to market for sponsors; generation of 

targeted knowledge about validation of surrogate or intermediate clinical endpoint. 

PCAST Recommendation: Expand the use in practice to more disease areas and to greater use of intermediate 

clinical endpoints. Requires no new legislation.

Special Medical Use

Applicability: Serious or life-threatening conditions with unmet medical need.

Standard for Approval: Substantial evidence from adequate and well-controlled trials demonstrating impact on 

a clinical outcome (traditional) or a surrogate endpoint or intermediate clinical endpoint likely to predict clinical 

benefit (accelerated) in a patient subgroup with a serious manifestation of a condition or at especially high risk of 

developing a serious disease.

Potential benefit to stakeholders: Earlier access to drug for patients in defined group and to market for sponsors; 

generation of knowledge about drug before wider release; greater assurance that off-label prescribing will not pose 

danger to patients.

PCAST Recommendation: Create new approval mechanism via regulation or legislation. (See Recommendation 

text.) 

Adaptive Approaches to Approval

Applicability: A broad set of approaches involving a series of approval stages that would iteratively expand the 

market for a drug based on the evidence generated about the drug’s risks and benefits. Many aspects remain to be 

defined.

Potential benefit to stakeholders: Potential for earlier access to drugs for patients in a defined group and to market 

for sponsors; generation of knowledge about drugs (including real-world performance) before wider release, and 

broader scope of learning about safety and efficacy following each iterative approval; reduced number of patients 

exposed to risk during the greatest period of uncertainty; greater transparency to public about drugs and uncertainty.

PCAST Recommendation: Explore further through collaborative research, pilots, and discussions. Do not pass 

legislation or enact a new approval pathway at this time.
V. A Path Forward

★ 69 ★

C. Monitoring and Communications about Benefits and Risks 

The FDA’s ability to approve drugs would be enhanced if (1) surveillance systems had greater ability to 

detect safety issues in marketed drugs and (2) patients had greater understanding about the uncertainties of risks and benefits of marketed drugs.

The FDA should improve systems to communicate the uncertainty about marketed drugs. Physicians 

and patients should have clear knowledge of the uncertainties surrounding a drug. This is true for all 

drugs, but is especially important for drugs approved under Accelerated Approval (where clinical benefit 

has not been definitively demonstrated) and drugs tested only in limited populations (where the drug 

may have a negative benefit-risk balance for most of the population). Existing labeling approaches fail 

to do an effective job of communicating to physicians and patients. Especially for patients, better labeling and new communications tools that better put in context the benefits and risks of a new medicine 

will be important to allow informed decision-making and acceptance of risk. This includes better tools 

and approaches for effective communication of safety signals (i.e., early indicators of potential safety 

concerns) that may emerge post-approval, so that physicians and patients can make more informed 

treatment decisions.

The FDA should improve systems to monitor drugs’ risks and benefits in the post-marketing phase. 

Because innovative drugs may not perform as anticipated once they reach the marketplace, the FDA 

will be better able to approve innovative products if robust tools are in place that allow regulators and 

others to detect and manage risks of marketed products. In Chapter 4, we identified the limitations of 

post-marketing surveillance efforts, and the critical need to scale up and bolster these efforts.
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Recommendation 6: Improve FDA’s Tools for Monitoring and Communication of Clinical 

Benefits and Risks

Because knowledge about benefits and risks evolves with experience and over time, FDA requires 

improved tools to assess and communicate about uncertainty, benefit, and risk. 

(i) FDA should strengthen capabilities for post-marketing surveillance and risk-benefit 

assessment. To strengthen post-marketing surveillance, Congress should provide an initial 

line-item appropriation of $40 million per year to the FDA to expand post-marketing surveillance capability, such as the Sentinel System, to cover the U.S. population in a rigorous 

active surveillance and evaluation program to identify and evaluate the potential benefits 

and risks of medical products and the populations at highest risk for adverse events. The 

appropriation should increase over time, indexed to the use of electronic medical records in 

the United States. Additionally, there should be an additional appropriation for a period of 

several years to build the capacity to perform rigorous studies evaluating real-world safety 

and effectiveness in clinical care environments. The Federal Government should continue 

to support efforts, including via public-private partnerships, that advance the science and 

tools for continuously generating knowledge about the benefits and risks of drugs in the 

post-marketing phase, for example, through studies using electronic health records. 

(ii) FDA should develop improved systems to communicate risks and benefits of drugs 

to the public. The FDA should work with academic researchers, communications experts, 

patients, prescribers, drug sponsors, payors, and its Risk Communication Advisory Committee 

to develop and evaluate new tools and approaches for effectively communicating risks and 

benefits to patients and the public at large.158 The FDA should also draw on the creativity of 

the Nation, including through external mechanisms that could administer prize competitions 

for such tools and approaches. 

Improving FDA Management158

In Chapter 4, we identified a range of management issues at FDA that currently hinder innovation in 

drug development and evaluation. To address these challenges, we recommend the following reforms:

158. Section 905 of the 2012 FDASIA directs the Secretary of HHS to “implement a structured risk-benefit 

assessment framework in the new drug approval process to facilitate the balanced consideration of benefits and risks, 

a consistent and systematic approach to the discussion and regulatory decision-making, and the communication of the 

benefits and risks of new drugs.”
V. A Path Forward

★ 71 ★

Recommendation 7: Reform Management Practices at FDA

The FDA should make the approval process for drugs more clear, predictable, responsive, and efficient, 

by instituting critical management and communication reforms. The FDA should:

(i) For each drug development project, designate a senior scientist to serve as “pre-market 

review leader.” This individual would have responsibility for ensuring that sponsors receive 

clear and timely communication and advice from the Agency throughout the regulatory 

process, from pre-IND to NDA review and decision. These leaders should have responsibility 

for providing sponsors with substantive, informal, clear, and timely advice, and for coordinating FDA responses across key areas including toxicology, trial design, manufacturing, 

and clinical use, and for ensuring timely resolution of outstanding review issues in a timely 

manner. To accomplish this goal the FDA will need to increase the pool of cross-disciplinary 

team leaders by increasing division review staff by 25 percent. The FDA should ensure that 

these leaders have appropriate training and mentorship, as well as appropriate authority, 

and should create financial and other incentives (perhaps such as special pay authority) to 

attract and retain the best personnel, including high-level scientific experts across all review 

divisions. The agency should make every effort to ensure the continuity of pre-market review 

leaders across the span of the drug application. These efforts should be overseen at a senior 

level within the FDA. The FDA should also mandate the use of a standard review management 

system across cross-disciplinary teams, as outlined in the FDA’s Good Review Management 

Practices guidance.

(ii) Establish a Regulatory Innovation Program. As a science-based agency, FDA must continue to adapt to ever-changing scientific opportunities. To promote innovation within the 

Agency, the FDA should create a Regulatory Innovation Program to develop and test new 

scientific, regulatory and management approaches within selected divisions. The Centers’ 

implementation of such pilots should be overseen at a senior level within the FDA. The FDA 

should publish regular assessments of the pilot projects and scale up successful pilots.

(iii) Widen the use of Special Protocol Assessments. Special Protocol Assessments (SPAs) have 

a good track record of providing regulatory predictability in appropriate circumstances. Yet, 

many observers believe that the receptivity to SPAs varies widely across therapeutic review 

divisions. The FDA should ensure that all divisions encourage and actively support the consistent use and application of SPAs in appropriate circumstances. Finally, FDA should consider 

updating its guidance on adaptive trial designs to clarify the circumstances under which 

adaptive trial designs can be used in SPAs.

(iv) Completely overhaul FDA’s IT systems. The FDA must bring its IT systems up to 21st century 

standards. The overhaul should develop an integrated platform to manage all drug-regulatory 

activities, including workload tracking and management, establishment of data management 

and data aggregation tools, strategies for mobility and connectivity, and appropriate data 

sharing (both with sponsors and international regulators). FDA should develop and propose 
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within six months a clear, feasible, and accountable plan to achieve IT modernization. The 

modernization plan should identify workforce transformation needs, re-balance agency-wide 

capability initiatives against FDA directorate and FDA center-based initiatives, explore external 

cloud computing and other transformational approaches to data management, and identify 

systems architecture needs to greatly reduce the cost and complexity of the technology 

management lifecycle to ensure long term adaptability.

(v) Reorganize the internal process for issuing guidance documents and clear current 

guidance backlog. The FDA should solicit public input on the most important topics requiring guidance, create a list of high-priority topics, and create an accountable internal process 

to ensure that guidance documents are completed in a timely manner. This process should 

include prioritization and timely completion of guidance documents currently under development and currently in draft form. In addition, the FDA should engage third-party organizations 

with appropriate expertise and credibility (such as the proposed Partnership to Accelerate 

Therapeutics) to convene stakeholders and develop recommendations for guidance for consideration by the FDA. While such input can facilitate the FDA’s process for developing guidance 

documents, the authority to decide on guidance must remain squarely with the Agency.

(vi) Improve FDA communication to external community. To supplement the guidance process, 

the FDA should create web-based communication tools and a white-paper process to rapidly 

update sponsors and other stakeholders about policy and technical standards relevant to drug 

development. FDA should implement a program to improve small business-FDA communications, as recently proposed by the FDA Commissioner. 

(vii)Establish a Commissioner’s Advisory Board for Medical Products (CAB). The FDA currently 

has a Science Board charged with providing advice and reviewing specific research agendas, 

programs, and facilities. The FDA Commissioner should establish an external board to provide 

ongoing advice on the broader topic of the planning, management, and execution of all FDA 

activities related medical products, including both scientific and other operations. The CAB 

should include experts and leaders from a range of backgrounds and disciplines, including 

academia, health care, industry, the investment community, patient advocates, and others. 

Importantly, the CAB should also include external organizational management experts and 

should carry out regular reviews of FDA’s management and organizational structure. The CAB 

should be charged with reviewing progress toward implementation of the various reforms 

discussed in this Recommendation 7 and the implementation of policies to expand Accelerated 

Approval in Recommendation 3 and 4. High priority should be given to the appointment and 

performance of pre-market drug review leaders (Recommendation 7(i)) and to improving the 

consistency of scientific expertise across review divisions.
V. A Path Forward

★ 73 ★

We recognize these recommendations will have costs, but they are small relative to the FDA budget for 

drug evaluation and critical to mission of the FDA. The increase could be paid for either by increases in 

appropriations or increases in user fee support, or a combination. PCAST does not offer an opinion as 

to the optimal allocation of this support among the sources, but notes that these resources are vital to 

a robust drug safety and evaluation system.

In addition to the specific reforms recommended above, PCAST notes that the FDA Commissioner has 

made progress toward increasing the Agency’s access to external expertise. We encourage the Agency 

to continue to evaluate its policies and practices to balance conflicts of interest and ensure transparency, while ensuring FDA staff can regularly interact with external experts particularly on non-product 

specific scientific and regulatory topics. 

D. Economic Incentives

The recommendations above focus on promoting innovation through increasing the probability of 

success, decreasing the expense, shortening the time, and enhancing the regulatory certainty of drug 

development. Another potential approach is to increase economic incentives for drug development. 

Altering economic incentives would require new legislation from Congress.

One of the most powerful incentives is exclusivity periods, which allow sponsors to recover costs and 

make profits without generic competition. Congress must be careful in defining the use and length of 

exclusivity periods for several reasons. Exclusion of generic competition results in higher drug prices 

(which may also be unfairly distributed across generations and society). In addition, exclusivity periods 

may discourage innovation if designed in a way that makes it more desirable to extend the use of older 

products rather than develop new, innovative products. Policy decisions about exclusivity periods should 

balance the benefits of eliciting greater innovative activity against the cost of excluding competition. 

The issue is whether and where current economic incentives may be insufficient. There is evidence that 

this may be the case in some specific areas of great importance to public health. These areas include antibiotics to treat drug-resistant bacteria, prevention interventions for chronic diseases such as Alzheimer’s 

and dementia, and neglected diseases affecting the developing world. In addition, economic incentives 

may be required to generate knowledge, such as to encourage study of new potential uses of drugs that 

no longer have patent protection, and to encourage study of some new indications and populations 

that might benefit from existing drugs on the market. Some have proposed greater use of targeted 

exclusivity (as has been done for orphan drugs and pediatric indications) as a way to create incentives 

for these public health needs. Some in the pharmaceutical industry have argued that, more generally, 

current exclusivity periods are too short and that they need to be extended to encourage innovation 

and investment. In addition to exclusivity periods, other economics tools have been used or proposed. 

These include vouchers for priority FDA review, market commitments, and tax credits.

In PCAST’s opinion, there is currently insufficient knowledge on which to base wise policy decisions. We 

need a clearer understanding of the economic impact of current exclusivity periods and the potential 

benefits and costs of altering exclusivity periods for targeted purposes or in general. In addition, the 

utility of other tools needs to be better understood. Developing the required understanding requires 

economic analyses that are beyond the scope of this report and outside PCAST’s core expertise. We 

recommend that the Federal Government commission an appropriate study. The study might best be 

conducted by the National Research Council. 
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Recommendation 8: Study Current and Potential Economic Incentives to Promote 

Innovation in Drug Development

(i) The Secretary of Health and Human Services should commission a study of economic 

incentives for promoting investment and innovation in drug development. The study 

should examine: 

(ii) The utility of various types of incentives (such as exclusivity periods, voucher for 

priority review, market commitments, tax credits), including economic analysis of the 

impact of current and potential incentives on drug developers and on Federal costs;

(iii) Whether current incentives promote adequate investment in general and in specific 

areas of important public health need (such as antibiotics for drug-resistant bacteria, 

prevention for chronic diseases, and underserved diseases affecting the developing 

world); and

(iv) Whether targeted changes to economic incentives would serve National needs.

E. Central Role for Patients and Physicians 

With respect to all of the recommendations in this report, we wish to emphasize the critical role that 

patients, consumers, and practicing clinicians must play in discussions of promoting innovation in 

drug development. Many of the proposals offered in this report will have significant implications for 

these groups. For example, the public will need to understand and support new regulatory approaches 

intended to accelerate access to new products, and to know when they are associated with greater risk 

in early clinical use. Clinicians will increasingly need to ensure that medical products provided expedited 

market access are used for their labeled indications, and that patients they treat with those products 

enroll in post-approval studies. For these reasons, it will be essential that patients, patient advocates, 

consumers, community physicians and other practicing clinicians be meaningfully involved in the 

refinement and implementation of these recommendations, including through their involvement in 

the Partnership to Accelerate Therapeutics and in related forums.

F. Timeframe for Action 

This report sets out an overarching goal, to be achieved over the next 10-15 years, to “double the current 

annual output of innovative new medicines for patients with important unmet medical needs, while 

increasing drug efficacy and safety, through industry, academia and government working together 

to double the efficiency of drug development by decreasing clinical failure, clinical trial costs, time to 

market, and regulatory uncertainty.”

Toward this goal, we urge the prompt implementation of the recommendations above. We propose the 

following timeframe and milestones for implementation:
V. A Path Forward

★ 75 ★

Within the next year: 

Stakeholders launch the Partnership to Accelerate Therapeutics. (Recommendation 2)

FDA takes steps to improve management and communications and to implement new approaches to 

approval, and Federal support is extended for expanded monitoring of medical products and enhanced 

communication to the public and prescribers. Specifically, the FDA should launch the Commissioner’s 

Advisory board within one year. (Recommendations 3, 4, 5, 6, and 7)

Within the next three years:

The Partnership will have built active programs to address filling knowledge gaps and business-like 

clinical trials networks. (Activity stemming from Recommendation 1)

Completion of a study on key economic incentives and levers that should be deployed to support 

biomedical innovation. (Activity stemming from Recommendation 8)

Within next five years:

FDA should have cleared its backlog of guidances. (Recommendation 7)

A robust safety monitoring system should be full funded and active. (Recommendation 6)

G. Towards a National Innovation Strategy 

The scope of this study was limited to actions to advance scientific innovation, reflecting PCAST’s expertise. While this report touches upon some aspects of reimbursement policy and economic policy, it has 

focused primarily on investments in biomedical research, changes in regulatory policy, and bridging of 

gaps in activity between Federal and non-Federal actors. 

We recognize, however, that a national innovation strategy for therapeutics should consider a broader 

framework, including reimbursement policy, intellectual property, drug manufacturing and supply 

issues, access to capital for innovators, international trade, competition from other countries, and global 

harmonization of regulation of medical products. We note that reimbursement policy will have an 

increasing impact on innovation in drug development, and that it will be important to engage payors 

in discussions of policy mechanisms, as well as to consider the short and long-term costs to the health 

care system of such policies. 

We recommend that the Administration consider undertaking a broader study of these issues within 

this larger economic context. Such a study would need to involve White House Councils and Offices 

and the Department of Health and Human Services (including NIH, FDA, and the Centers for Medicare 

and Medicaid). It would need to engage patients, regulators, health care payors, physicians, academics, 

industry leaders, investors, and others. 

The continuing development of improved therapeutics is central to advancing public health and is 

important to our economy. The Federal Government should exercise strong leadership in ensuring that 

the Nation has a strong ecosystem for drug discovery and development.

★ 77 ★

Appendix A. Additional 

Experts Providing Input

Julian Adams

President, Research and Development 

Infinity Pharmaceuticals

Jane Axelrad

Associate Director for Policy

Food and Drug Administration

Joshua Benner

President and CEO

RxAnte, Inc.

Jeffrey Brewer 

President and Chief Executive Officer

Juvenile Diabetes Research Foundation

Kevin Buchi

Chief Executive Officer 

Cephalon

ShaAvhrée Buckman 

Director 

Office of Translational Sciences

Center for Drug Evaluation and Research 

Food and Drug Administration 

Anne Claiborne

Senior Program Officer

Board on Health Sciences Policy

Institute of Medicine of the National Academy of 

Sciences

R. Alta Charo 

Warren P. Knowles Professor, Law and Bioethics

University of Wisconsin at Madison

William Chin 

Executive Dean for Research and Bertarelli 

Professor of Translational Medicine Science

Harvard Medical School

Louis DeGennaro 

Chief Mission Officer

Leukemia & Lymphoma Society

Susan Desmond-Hellman

Chancellor 

University of California, San Francisco

Benjamin Ebert

Assistant Professor, Medicine

Harvard Medical School 

Brigham and Women’s Hospital

Tony Evnin

Partner

Venrock

Margaret A. Hamburg

Commissioner of Food and Drugs

Food and Drug Administration

J. Kevin Judice

Chief Executive Officer &

Chief Scientific Officer

Achaogen

Erin Karnes

Engelberg Center for Health Care Reform

Brookings Institution

Claudia Kawas 

Al and Trish Nichols Chair in Clinical 

Neuroscience Professor, Neurobiology & 

Behavior and Neurology 

University of California, Irvine

David A. Kessler 

Professor, Pediatrics 

Epidemiology and Biostatics

University of California, San Francisco
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Jonathan Leff

Managing Director, Healthcare

Warburg Pincus

Mark Levin 

Co-Founder

Third Rock Ventures

Jack Lewin

CEO

American College of Cardiology

Diane Maloney 

Associate Director, Policy Office of Director

Center for Biologics Evaluation and Research

Food and Drug Administration

Elizabeth Mansfield 

Director, Personalized Medicine Staff

Office of In Vitro Diagnostic Devices

Center for Devices and Radiological Health

Food and Drug Administration

Mark McClellan

Senior Fellow, Director

Engelberg Center for Health Care Reform 

Leonard D. Schaeffer Chair

Health Policy Studies

Brookings Institution

Robert Metcalf 

Vice President

Global Regulatory Affairs

Eli Lilly and Company

Karen Midthun 

Director

Center for Biologics Evaluation and Research

Food and Drug Administration

Molly Muldoon 

Chief of Staff 

Office of the Commissioner

Food and Drug Administration

Garry Neil 

Corporate Vice President

Corporate Office of Science and Technology 

Johnson & Johnson

Steven M. Paul 

Director

The Helen and Robert Appel Alzheimer’s Disease 

Research Institute

Professor, Neuroscience and Psychiatry 

Weill Cornell Medical College

Mary Pendergast

President

Pendergast Consulting

Sara Radcliffe

Executive Vice President of Health Section 

Biotechnology Industry Organization

Jane Reese-Colbourne

Executive Director

Regan-Udall Foundation

Charles Sawyers

Marie-Josée and Henry R. Kravis Chair in Human 

Oncology and Pathogenesis

Memorial Sloan Kettering Hospital

Investigator

Howard Hughes Medical Institute

George A. Scangos

Chief Executive Officer and Member

Board of Directors

Biogen Idec

Lowell E. Schnipper 

Chief of Hematology/Oncology

Beth Israel Deaconess Medical Center

Professor

Harvard Medical School

Barry Sickels 

Vice President of U.S. Regulatory Affairs

AstraZeneca
Appendix A. Additional Experts Providing Input

★ 79 ★

Ellen V. Sigal 

Chairperson and Founder

Friends of Cancer Research

Lana Skirboll

Vice President

The Zerhouni Group

Marc Tessier-Lavigne

President

The Rockefeller University

Douglas Throckmorton 

Deputy Director for Regulatory Programs

Center for Drug and Research

Food and Drug Administration

Steven E. Weinberger

Executive Vice President and Chief Executive 

Officer

American College of Physicians

David E. Wheadon 

Senior Vice President

Scientific and Regulatory Affairs

Pharmaceutical Research and Manufacturers of 

America

Celia M. Witten 

Director

Office of Cellular, Tissue, and Gene Therapy, 

Center for Biologics Evaluation and Research

Food and Drug Administration

Raymond Woosley 

Former President and Chief Executive Officer

Critical Path Institute

Robert A. Yetter 

Associate Director for Review Management

Center for Biologics Evaluation and Research

Food and Drug Administration

★ 81 ★

Appendix B. Acknowledgments

Judith Hautala

IDA Science and Technology Policy Institute

Tom Kalil

Deputy Director for Policy

Office of Science and Technology Policy

Kristen Koopman

IDA Science and Technology Policy Institute

Mary Maxon

Assistant Director for Biological Research

Office of Science and Technology Policy

Sam Thomas

IDA Science and Technology Policy Institute

Gina Walejko

IDA Science and Technology Policy Institute

★ 83 ★

Appendix C. Acronyms

AIDS Acquired Immune Deficiency Syndrome

CAN Cures Acceleration Network

CBER Center for Biologics Evaluation and Research

CDER Center for Drug Evaluation and Research

CTSA Clinical and Translational Science Awards

EMA European Medicines Agency

FDA Food and Drug Administration

FDAAA FDA Amendments Acts

FDAMA Food and Drug Administration Modernization Act

FY Fiscal Year

GAO General Accountability Office

GDP Gross Domestic Product

HIV Human Immunodeficiency Virus

IND Investigational New Drug

IOM Institute of Medicine

IRB Institutional Review Board

IT Information Technology

NBE New Biologic Entity

NCATS National Center for Advancing Translational Sciences

NCI National Cancer Institute

NDA New Drug Application

NIH National Institutes of Health

NME New Molecular Entity

OMOP Observational Medical Outcomes Partnership

OS Overall Survival

PDUFA Prescription Drug User Fee Act

PFS Progression Free Survival

REMS Risk Evaluation and Mitigation Strategies

RUF Regan-Udall Foundation

SPA Special Protocol Assessment

SMU Special Medical Use

TRND Therapeutics for Rare and Neglected Diseases


President’s Council of Advisors 

on Science and Technology

www.whitehouse.gov/ostp/pcast