A Ropes & Gray (RopesTalk) podcast series, focused on current trends in FDA regulatory law, as well as other important developments affecting the life sciences industry.
Kellie Combs: Hello, and welcome to Non-binding Guidance, our 2024 U.S. life sciences regulatory outlook podcast series. I’m Kellie Combs. I’m a partner in the life sciences regulatory and compliance practice group at Ropes & Gray based in D.C. I’m joined today by my colleague Sarah Blankstein, also in our life sciences regulatory and compliance group based in Boston, and Margaux Hall, a partner in our health care practice based with me in Washington.
Today, we’ll focus on anticipated developments and trends related to product development, approval, and pricing. We’ll be discussing highlights in this area from 2023 as well as our expectations as we look ahead in 2024. Many of our life sciences company and investor clients are focused on efforts in the rare disease space, so let’s start there. Sarah, can you discuss some of the key developments and trends for 2024 related to rare disease on the FDA front?
Sarah Blankstein: Sure, Kellie—I’m happy to talk about that. 2023 was a busy year for FDA in the rare disease space, and I think we can expect that this trend is going to continue in 2024.
On the metric of approvals, orphan drugs continued to make up a huge proportion of novel drug and biologic approvals in 2023. Twelve of the 17 biologics approved by the Center for Biologics Evaluation and Research (“CBER”) were orphan drugs, and 51% or 28 of the Center for Drug Evaluation and Research’s (“CDER”) 55 novel approvals—which included both drugs and biologics—were orphan drugs.
FDA also issued several draft and final guidances last year that are relevant for rare disease product development, including a final guidance in December on Considerations for the Development of Drugs and Biological Products for rare diseases, as well as general guidances that would be particularly relevant for rare disease products—those included draft guidance on Demonstrating Substantial Evidence of Effectiveness Based on One Adequate and Well-Controlled Clinical Investigation and Confirmatory Evidence, draft guidance on Decentralized Clinical Trials, draft guidance on Considerations for the Design and Conduct of Externally Controlled Trials, draft guidance on Master Protocols, as well as draft and final guidance documents on real-world evidence (“RWE”) topics.
Now, I won’t delve into each of these guidance documents for purposes of this discussion, but I think that the sheer breadth of guidance we saw coming from CDER last year addressing rare disease issues and innovations in clinical trials and drug development more generally, underscores a willingness and a real effort by FDA to understand and provide a regulatory framework to advance these efforts. It’s a work in progress, though, and I think we’re going to continue to see a lot of focus on rare disease and non-traditional approaches to drug development from FDA in 2024. This includes guidance development, of course, but also a variety of pilot programs and other opportunities for stakeholder engagement.
In terms of guidance, CDER hasn’t published its 2024 guidance agenda yet, though there are some guidances that are particularly relevant for rare disease on the 2023 agenda that were not published by year end. Of course, FDA does not always publish the guidances on its agenda, but I expect we may see at least some of those in 2024, such as final guidance on biomarker qualification and a couple of draft guidances on real-world evidence topics. FDA has also said that it plans to publish a number of cell and gene therapy guidance documents, and I think we can expect to see continued action from FDA to advance gene therapy product development and clarify its regulatory framework.
Kellie, can you talk about some of the rare disease-focused programs and pilots you’ll be watching in 2024?
Kellie Combs: Sure thing, Sarah, but before we do, let me put in a quick plug for the second annual Ropes & Gray Rare Disease Forum, which we’ll be hosting this spring. At that event, we’ll discuss a variety of rare disease topics, including these, in more detail, but we’ll also focus on orphan product developments, deal considerations, and compliance issues, so please be on the lookout for an invite for that.
To answer your question, though, Sarah, FDA has created a number of rare disease-focused programs and initiatives, which will continue into 2024, and we may even start to see some data and important learnings from these programs. These programs include the Support for Clinical Trials Advancing Rare disease Therapeutic (“START”) pilot program, the Accelerating Rare Cures (“ARC”) program, and the Rare Disease Endpoint Advancement (“RDEA”) pilot program. Center for Biologics Evaluation and Research (“CBER”) director Peter Marks also just very recently announced a new gene therapy pilot program—the Collaboration on Gene Therapies Global (“CoGenTGlobal”) pilot—which will be of interest to companies developing gene therapy treatments for rare diseases. So, let’s walk through some of these, at least, at a high level.
The START program, which was announced last September and began accepting applications this month, is intended to provide rare disease products something like Operation Warp Speed for COVID-19 vaccines, at least in terms of the intensive agency interactions. The defining feature of the program here is the participants can meet with FDA staff more frequently and informally to address product-specific development issues. Both CDER and CBER are participating. Eligible CBER-regulated products must be a gene or a cell therapy product intended to address an unmet need for a rare disease or serious condition, and eligible CDER products must be intended to treat rare neurodegenerative conditions. FDA plans to select up to three applicants per center for the pilot, and after an evaluation of the initial pilot’s success, potentially, it would provide proof of concept to support expansion of the product into other areas.
The RDEA pilot program is another joint CDER/CBER initiative that accepts one application per quarter, beginning in the fourth quarter of 2023. This program is intended to support efficacy endpoint development for rare disease drugs through increased collaboration and engagement with FDA. Importantly, the Agency intends to share learnings from the pilot on novel endpoint development through presentations, guidance documents, public workshops, its website, and other avenues. So, as the first participants in the pilot work with FDA, I think we can expect to see some more information on this coming out of the Agency.
The last pilot I want to talk about just briefly is the Collaboration on Gene Therapies Global pilot that CBER announced just earlier this month. Now, this one’s not specific to rare disease, but given that it’s for gene therapies, I expect it to be largely involving products for rare disease indications. This program builds on the very successful Oncology Center of Excellence’s Project Orbis initiative, which was established in 2019 and provides for concurrent submission and review of oncology products by global regulatory authorities. It would allow for partner regulators—like the Standing Regulatory Members within the International Conference on Harmonization (“ICH”)—to collaborate on review of a sponsor’s gene therapy products, and partners could share their regulatory reviews with one another and could participate in each other’s informal and sponsor meetings. The goal is to increase efficiency and potentially even see some harmonization amongst global regulatory authorities. Now, this one is an interesting and ambitious pilot that will require a lot of global coordination, and it’s still in the very early planning stages—unclear what we’ll see on this in 2024, but it’s certainly something to watch.
One other thing I know I’ll be watching closely and was recently announced is the two-day public workshop in March with the Duke-Margolis Center for Health Policy. This workshop aims to identify key challenges and opportunities in clinical trial modernization efforts, including regulatory and compliance considerations, patient centricity and recruitment innovation, and clinical trial infrastructure.
Sarah Blankstein: Thanks, Kellie. Definitely some interesting developments for rare disease sponsors. One other area I’d like to hear your take on is FDA’s accelerated approval program. There were some pretty notable developments last year, and I’m interested in what you think we may see in 2024.
Kellie Combs: As you know, there’s been a fair amount of controversy in the accelerated approval program in recent years, including criticism regarding the approval of Aduhelm for Alzheimer’s disease as well as an Office of Inspector General (“OIG”) study indicating that a large proportion of drugs approved through the accelerated approval pathway had incomplete confirmatory trials. Now, fueled in part by all of this controversy, the Food and Drug Omnibus Reform Act (“FDORA”), which was signed into law at the end of 2022, included a number of changes to the accelerated approval provisions. Among other things, FDORA enabled FDA to require a post-approval study to be underway prior to granting accelerated approval. It also expanded FDA’s expedited withdrawal procedures—FDA can now use expedited withdrawal if, for instance, a post-approval confirmatory study fails to verify clinical benefit.
Following FDORA’s passage, in 2023 we saw, for the first time, FDA using those new expedited withdrawal procedures. The drug is Oncopeptides’ multiple myeloma drug called Pepaxto, which received accelerated approval in February 2021. Shortly after that, the company presented top-line results from a phase 3 confirmatory trial, and this led to FDA’s publishing a safety alert a few months later. Then, in September 2022, a majority of FDA’s Oncologic Drugs Advisory Committee found that Pepaxto, in its confirmatory study, did not confirm a favorable risk-benefit profile for the drug. If we fast forward to last July, the Agency notified the company that it was proposing expedited withdrawal, and the company then appealed the decision. FDA, of course, had to provide an opportunity for comments on its proposal to withdraw the drug, and now the Agency and the company are corresponding—and as of October 2023, Oncopeptides sent FDA plans for a new study. So, certainly more to come on this in 2024.
Last year, we also saw the Agency issue draft guidance addressing clinical trial considerations for accelerated approval of oncology products—this is something that we had discussed in detail both in a client alert last March and a corresponding podcast. There’s plenty that’s interesting in that draft guidance, but one point, I think, that was noteworthy is FDA’s discussion of single-arm trials to support accelerated approval. Specifically, the Agency says in the draft guidance that its preference is certainly randomized controlled trials as opposed to single-arm studies to support accelerated approval, but that the Agency may accept a single-arm trial where there are significant concerns regarding feasibility. One potential efficiency advantage, FDA points out, with conducting an RCT is that sponsors could design a single trial to support accelerated approval that is also powered for the longer-term clinical endpoint, with follow-up in the same trial to verify clinical benefit.
Now, if we think about the rest of this year, I expect that we’ll see FDA continue to flex these new FDORA authorities—in particular, its ability to require confirmatory trials to be ongoing prior to granting accelerated approval. Just a couple of months ago, in November, the director of FDA’s Oncology Center of Excellence said at the Friends of Cancer Research annual meeting that without an ongoing confirmatory trial, an oncology product will not receive accelerated approval. He also noted that the Agency is drafting guidance on what it means for a trial to be “ongoing”—and it’s going to mean something more than having one patient in the trial. So, that’s certainly something we’ll be looking out for. We’ll also keep an eye out for draft guidance on Civil Monetary Penalties for Failure to Meet Accelerated [Approval] Post Marketing Requirements. This is a guidance that was included on CDER’s 2023 guidance agenda but has yet to be finalized.
Yet another area of product development where we expect to see some action this year relates to clinical trial diversity, which was also addressed in FDORA. Sarah, can you speak to that?
Sarah Blankstein: Sure, Kellie. In recent years, FDA and Congress have been increasingly focused on improving clinical trial diversity to address persistent underrepresentation of certain patient populations, in particular, based on race, ethnicity, sex, and age. FDA has issued a number of guidance documents aimed at increasing diversity in the last several years, including a 2022 draft guidance on submission of diversity plans to improve enrollment of participants from underrepresented racial and ethnic populations in clinical trials. FDORA then gave FDA the authority to actually require diversity action plans. Specifically, FDORA requires sponsors of phase 3 or other pivotal drug studies and most device studies to submit diversity action plans to FDA unless otherwise waived or excepted. Those plans need to include the sponsor’s goals for enrollment in the study, disaggregated by age, sex, race and ethnicity, the rationale for the goals, and an explanation of how the sponsor will meet such goals. The requirements would apply to clinical trials that commence enrollment within 180 days after FDA finalizes guidance on diversity action plans—that, of course, hasn’t happened yet.
FDORA directed FDA to issue new or revised draft guidance on diversity action plans by the end of 2023, and then to finalize the guidance within nine months of comments closing. Despite that statutory deadline, though, FDA has yet to issue that draft guidance. I certainly expect that’s something we’ll see published in 2024, and it’s something that both drug and device sponsors will be following closely. I’m particularly interested to see how it will deal with the question of what the consequences are when enrollment doesn’t meet diversity action plan goals, and that’s something that FDA has said that it plans to address in the draft guidance. The Agency is going to be trying to strike a balance, I think—while too much flexibility could undermine efforts to increase diversity in clinical trials, a less flexible approach to missed enrollment targets could, of course, significantly slow product development.
Apart from diversity action plans, we have also seen FDA focused, in particular, on clinical trial diversity in the accelerated approval context. Notably, some FDA review divisions are emphasizing the need for diversity in confirmatory studies as a condition of accelerated approval. Some recent oncology accelerated approvals, for example, emphasize in the post marketing requirements a need to ensure appropriate representation of racial and ethnic minorities in the confirmatory study population relative to disease prevalence. In this vein, FDA issued draft guidance in August of last year discussing post marketing approaches to obtain clinical trial data on underrepresented populations, which says that confirmatory trials of drugs granted accelerated approval should represent the diversity of patients expected to use the drug in the U.S.
So, a lot of focus on clinical trial diversity at FDA and lots to watch for in 2024. Another area I’ve been watching closely—which I expect will continue to be a focus in 2024—is real-world evidence in drug and device development. Kellie, is that something you could share some thoughts on?
Kellie Combs: Certainly. Thanks, Sarah. Real-world evidence continues to be a hot topic—it’s one that you and I have discussed now many times in podcasts over the last few years, and we keep seeing new developments in this space (see our podcasts discussing RWE developments in 2019, 2020, and 2022). Both CDRH and CDER took important steps in 2023 to advance the use of real-world evidence to support regulatory decision-making, and I’ll talk about those just at a high level.
On the drug side, FDA’s Advancing Real-World Evidence pilot program got underway, and that fulfills one of the Agency’s Prescription Drug User Fee Act (“PDUFA”) commitments. The program provides sponsors with opportunities to meet with Agency staff well before protocol development or study initiation to discuss the use of real-world evidence in medical product development. It appears that FDA selected two sponsors for the program in March of last year, and the next round of sponsor applications was due in September. There hasn’t been, yet, any public information posted about the pilot’s progress or learnings, but one of the program requirements is to enter into an agreement with FDA to allow some information sharing, and I expect we’ll get some good information coming out of the pilot in 2024.
I’m also expecting that we’ll see the Agency begin to report aggregate data on CDER and CBER submissions containing real-world evidence this year, which is a big development and something that FDA also committed to doing as part of PDUFA. As described in the PDUFA commitment letter, these annual reports will describe application type, data sources used, study design employed, and the regulatory issues—so, whether it was a new indication, patient population, dosing information, or so on. This reporting would also include information about the protocols coming out of the Advancing RWE Program.
Now, depending on how much detail is ultimately included in the report, the data could be really interesting to see and potentially pretty helpful for sponsors thinking about incorporating real-world evidence into their development programs. That said, a huge caveat is that, as many of us know, individual strategies are ultimately going to depend on what the regulatory question is, what the sponsor is seeking, what the study looks like, and so on. So, we’re still talking about case-by-case determinations.
I also expect that there will be additional guidance documents published in 2024 on RWE. Although CDER hasn’t yet published its 2024 guidance agenda, there are a couple of outstanding new draft guidances from the 2023 agenda. One is on considerations regarding non-interventional studies and the other is on use of clinical practice data in randomized controlled trials. FDA also has a draft guidance on EHR and claims data, which it publicized around the same time as those that the Agency finalized in 2023. So, perhaps, we’ll see that guidance finalized this year as well.
Sarah Blankstein: Thanks, Kellie. 2023 was also a busy year of real-world evidence development on the device side, and I expect we will see more on this from CDRH in 2024. At the end of 2023, CDRH issued a new draft version of its final 2017 guidance on use of real-world evidence to support regulatory decision-making for medical devices. The new draft guidance fulfills a requirement under FDORA and also a Medical Device User Fee Amendments (“MDUFA”) commitment to expand on the prior guidance. The new draft reflects the Agency’s learnings and continued thinking on real-world evidence, and it is a fairly substantial rewrite of the 2017 final guidance. In particular, it provides more clear and detailed insight into how FDA approaches the question of whether real-world data (“RWD”) are “fit-for-purpose” to support regulatory decision-making.
Some of the key changes in the new draft guidance include expanded discussion of considerations for assessing the relevance and reliability of real-world data, discussion of data from emergency use authorization, and new and detailed discussion of documentation that sponsors should maintain and submit to FDA to support their real-world evidence analyses. For now, the 2017 final guidance is still on FDA’s website and—at least ostensibly—reflects FDA’s expectations for real-world evidence until the new draft is finalized.
Apart from the new draft guidance, FDA made a number of commitments related to real-world evidence as part of the latest medical device user fee reauthorization. Those commitments include FDA continuing CDRH’s real-world evidence/real-world data training program for review teams, and providing updates to stakeholders on real-world evidence program activities throughout the course of MDUFA V. So, we’ll certainly be on the lookout for any updates.
Now, I’d like to turn to Margaux to talk about some of what we can expect to see on drug pricing. Margaux, what’s on the horizon for drug pricing in 2024?
Margaux Hall: Thanks, Sarah. The short answer is “a tremendous amount.” I expect that 2024 will be a pivotal year when it comes to drug pricing and market access more broadly. In order to offer my crystal ball for some of the key highlights of 2024, I want to start with a brief retrospective of where we’ve come over the past two years.
Stretching back to 2022, that year was momentous because we had legislative action around drug pricing. There was the requisite level of bipartisan support to enact sweeping, unprecedented drug pricing legislation through the Inflation Reduction Act. As everyone knows at this point, the Inflation Reduction Act had several drug pricing provisions. It included inflation-based rebates on Medicare utilization of drugs; a complete overhaul of the Medicare Part D benefit; and, perhaps the most discussed provision, the Medicare Price Negotiation Program. So, 2022 was the year of legislative action. Many individuals, myself included, questioned whether there would be sweeping congressional action around drug pricing. In 2022, we received the answer: yes.
2023 was momentous in that it featured litigation, prominently, as well as administrative action. Taking those in reverse order, the Centers for Medicare & Medicaid Services (“CMS”) was working in a frenzy last year to hire new personnel, legal and otherwise, in order to implement the Inflation Reduction Act drug pricing provisions. There was concerted agency focus on standing up the Medicare Price Negotiation Program. During 2023, the Agency released controversial initial guidance pertaining to the first year of the Medicare Price Negotiation Program, or 2026. Then, last summer, the Agency released final guidance pertaining to that first year of the Medicare Negotiation Program.
At the same time, the Agency has been preparing in earnest for the Part D redesign, which goes into effect, in part, this year, in 2024. At the same time that the Agency was working in earnest in a truly unprecedented manner through sub-regulatory guidance to begin to implement a momentous Medicare Negotiation Program, we witnessed a spate of litigation across the country challenging the constitutionality of the Medicare Price Negotiation Program as well as the lawfulness of agency action in implementing the program in the manner in which the Centers for Medicare & Medicaid Services has implemented that program.
Looking ahead to this year, I think we will see some interesting trends that build upon what we have seen in the two years to date.
Kellie Combs: Great. Thanks, Margaux. Let’s talk in more detail about the Inflation Reduction Act (“IRA”). In particular, I’m curious whether IRA negotiations will proceed in the midst of the litigation that’s going on around the country.
Margaux Hall: All signs point to yes. CMS is working in earnest on the first year of the negotiation program. That first year of the applicability of the negotiated prices is 2026. However, 2024 is the year in which CMS is undertaking negotiations with manufacturers of the first 10 drug products that have been identified for negotiation—that is underway right now. By this September 1, the Agency should publish the so-called “negotiated price” that results from those ongoing negotiations, but we are seeing no signs that the Agency is slowing in those efforts. My best guess is that we are going to see two fast tracks in a parallel manner. On the one hand, the Agency is working in earnest in preparing for the first year of the negotiation program with a backlog of later years that are rapidly rolling forward. 2027 will come immediately on the heels of 2026 when it comes to the negotiation program, and I expect agency action anticipating 2027, as well, including the publication of the lists of the next round of drugs later this year. At the same time, on a fast and parallel track, litigation is ongoing across the country, raising multiple of these constitutional and, in some cases, Administrative Procedure Act (“APA”), challenges to the Inflation Reduction Act itself.
I predict that the litigation will be protracted. While it could be successful in court, there is the distinct possibility that there could be different lower court decisions that could decide favorably but perhaps on different legal grounds—if that is the case, that could set the stage for appeals. I expect that litigation could continue for years, and the message to many biopharmaceutical manufacturers, from my perspective, is that you need to prepare for both worlds: the negotiations proceeding in earnest, and the potential applicability of negotiated prices and everything that comes with that for the negotiated products and for other products that might have indirect consequences; and, at the same time, litigation that’s challenging the lawfulness of that very negotiation program. It’s a really interesting moment in time to have both of these consequential activities taking place concurrently. Let’s not forget that the other IRA provisions are going to fundamentally re-shift the market access environment when it comes to the Medicare program with, very likely, spillover effects to the commercial market, as well.
Kellie Combs: Aside from those, Margaux, are there other developments we need to be watching in the commercial market?
Margaux Hall: Absolutely. Each year, we’re seeing the market access environment evolve in real time. We are in a world with extensive vertical consolidation and a rapidly evolving market access environment for pharmacy benefit managers (“PBMs”), so-called “group purchasing organizations” (“GPOs”), and their other corporate siblings and counterparts.
I am, in particular, seeing continued change around specialty drugs and commercial health plan efforts to potentially reduce costs through alternative funding programs, which are programs that, in short, leverage patient assistance programs offered by pharmaceutical manufacturers and charitable foundations in order to lower the expenditures of health plans themselves. There are a few different flavors of these alternative funding programs: You have accumulators, maximizers, and also alternative funding programs that work to avail themselves of manufacturer free drug programs. Each of those versions presents its own set of legal and business considerations, but it’s important to note that those, too, have been subject to legal challenge, in some cases challenging agency positions with regard to those programs and, in other instances, commercial litigation that’s challenging the vendors that are operating some of these programs themselves for alleged unfair trade practices, or tortious interference of contract, or otherwise. So, for commercial health plans in that market segment, when it comes to specialty drugs, these programs have become a really crucial factor when it comes to the access environment for patients with rare, often complicated, challenging health care conditions.
Kellie Combs: Margaux, what about other drug market segments or therapeutic areas to watch in 2024?
Margaux Hall: From a Department of Health and Human Services (“HHS”) perspective and broader coverage and access perspective, I think there are some of the same watch areas that we’ve discussed in the FDA context, too. I think rare disease remains particularly important. I think there are many concerns about the consequences of the Inflation Reduction Act on rare disease products or products that might have indications for rare disease and potentially broader-scale indications, as well, and what will be the consequences of that legislation, as it’s implemented by the Agency, on the research and development pipeline.
I think specialty drugs generally are an important area to watch in this environment of payor vertical consolidation, in which many payors have their own affiliated specialty pharmacies and mail order pharmacies. Increasingly, we are seeing new conditions on access to specialty medication that are important to watch and think through, potentially, in a constructive manner as well, as much as that is possible. So, increasingly, we have the prospect of physician-administered drugs that could be covered under either the medical benefit and/or the pharmacy benefit. There are really interesting consequences and several issues that, from a drug pricing and market access perspective, our team continues to unpack for our clients.
Kellie Combs: Great. Thanks so much, Margaux. And thanks to Sarah, as well. There’s certainly a lot happening in drug and device development and pricing—it seems like 2024 is likely to be another eventful year. Of course, we here at Ropes & Gray will continue to monitor these developments. Thanks very much to everyone for tuning in today for our 2024 outlook series brought to you by our attorneys in the life sciences and health care practice at Ropes & Gray. For more information about our practice or other topics of interest to life sciences companies, please visit our FDA regulatory and life sciences practice pages as well as our health care practice page at www.ropesgray.com. You can also subscribe to Non-binding Guidance, our podcast focused on FDA regulatory developments, as well as other RopesTalk podcasts at Ropes & Gray’s podcast newsroom, or on our website, or by searching for “Ropes & Gray podcast” on Apple or Spotify. Thanks again for listening.