Mar 20 2012

Senator Hagan’s TREAT for Small Biotech

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Beginning with the Pure Food and Drugs Act of 1906, legislation proposed by Congress has constructed and continues to modify the FDA.  By extension this legislation represents the rulebook that biotech plays by in its pursuit of advancing drugs to market.  Longtime biotech advocate, Senator Kay Hagan (D-NC) has proposed the TREAT Act, an additional piece of legislation that will shape and modify the way the Agency approaches drug development.  The TREAT Act however represents more than an incremental shift in regulation and policy, in fact, it could be a game-changer in the existing dynamic between small biotech and big pharma.

Senate Bill  S.2113 or the Transforming the Regulatory Environment to Accelerate Access to Treatments  (TREAT) Act was announced and read into the Congressional Record of February 15th, 2012.  Senator Hagan stated that the bill was designed encourage the development of innovative treatments for subpopulations and rare diseases in  three ways.  First by updating the FDA’s mission statement and creating a management review board.  Second, creating a chief innovation officer, chief medical policy officers, and expanding advisory committee participation to further integrate experts in the targeted areas.  Finally, the TREAT Act will instill a clinical informatics coordinator, provide information about denials of approval, and enhance and codify the accelerated approval process.  If put into practice this bill would be a boon for small biotech as it could conceivably shave years and billions off of traditional Phase 3 clinical development programs. 

Despite the fervor created by introduction of the TREAT Act, small biotech would be well advised not to count their regulatory chickens before they hatch.  The bill has already met significant resistance from different directions.  In fact, resistance by both the FDA and big pharma has already resulted in revisions limiting the initial scope of the TREAT Act which would have allowed developers to go after provisional approval with Phase 2 data.  Avik Roy in his Forbes column stated that,

“Sen. Hagan’s proposal would have been devastating to the big pharma R&D oligopoly … If small biotech companies could get their drugs tentatively approved after inexpensive phase II studies, they would have far less need to partner those drugs with big pharma. They could keep the upside themselves and attract far more interest from investors. Big pharma, on the other hand, would be without its largest source for innovative new medicines: the small biotech farm team.”

To satisfy the safety and efficacy requirements of Phase 3 studies, the expertise and horsepower of big pharma is often brought in, or more accurately stated, big pharma takes over.  Broadened acceptance of approval after Phase 2 would not only significantly shorten time to market and development costs but it would shorten investment horizons, increasing funding by private equity in smaller biotechs creating a sought after independence from big pharma, and the term sheets they bring to Phase 3 negotiations.  For these reasons and others it comes as no surprise that PhRMA, a powerhouse DC  lobbying group that represents the bigs came out against the TREAT Act, and has worked to significantly dilute the legislation in its latest iteration.

Coming at the legislation from another angle, the Agency made their feelings known about the TREAT Act.  An FDA spokeswoman, Karen Riley, would not comment specifically on the TREAT Act but did signal the agency’s lack of enthusiasm by mentioning that the FDA already has existing programs for expediting review and that the FDA was “happy to work with Congress to see if there are ways to better utilize our tools while retaining our high standards for safety and efficacy.” The point is well taken and there are three programs/processes designed to speed drugs to market, Fast track, accelerated approval, and priority review.  Senator Hagan, and those in her camp, argue that these programs are not functioning at optimal levels and that there is room for improvement.

Coming out in support of this bill, and a similar bill, H.R. 4132, the FAST Act, is the Biotechnology Industry Organization (BIO). An advocacy group that represents a large number of entrepreneurial companies in small biotech gave praise saying that “The TREAT Act will help break the institutional barriers to a faster idea-to-market pathway and speed new cures to patients most desperately in need.”

At present bill S.2113 has been referred to the Committee on Health, Education, Labor, and Pensions and the reality within the beltway is that the final version of the bill and its approval is still very much up in the air.   Judgment about how efficacious the revised TREAT Act (Synopsis of Revision) will be should be reserved until everyone has had their input and a finalized version is put up to a vote.  The only thing to be sure of is that we will all have to stay tuned to see if TREAT will do the trick for biotech.

This is a post by Matt Medlin, Ph.D.  Matt is a Scientist at Cato Research and an Analyst for Cato BioVentures.