Module 1a

The Drug Approval Process

The process for Drug approval is quite similar in different countries, but in the U.S. and Canada the
systems of new drug approvals are perhaps the most rigorous in the world. According to a recent study
(2016) done by the Tufts Center for the Study of Drug Development, it is estimated that the average cost to
develop and gain marketing approval for a new drug is close to $2.558 billion!

When post-approval R&D costs of $312 million are included, the full, product lifecycle cost per approved
drug, on average, rises to $2.870 billion, according to Tufts CSDD. Post-approval studies, required by the
U.S. Food and Drug Administration as a condition of approval, assess new indications, new formulations,
and new dosage strengths and regimens, and monitor safety and long-term side effects in patients.

Only 10 years earlier (2006), the Tufts Center for the Study of Drug Development indicated that it cost a
company $1.2 billion on average to get one new medicine from the laboratory to the pharmacist's shelf.

It still takes 12 years on average for an experimental drug to travel from lab to medicine chest. Only five in
5,000 compounds that enter pre-clinical testing make it to human testing. One of these five tested in people
is approved. New medicines are developed as follows:

The New Drug Development Process:

Steps from Test Tube to New Drug Application Review

New Drug Discovery and approval can take up to 20 years

Synthesis and Extraction - The process of identifying new molecules with the potential to produce a
desired change in a biological system (e.g., to inhibit or stimulate an important enzyme, to alter a metabolic
pathway, or to change cellular structure).

The process may require:

1) Research on the fundamental mechanisms of disease or biological processes;
2) Research on the action of known therapeutic agents; or
3) Random selection and broad biological screening.

New molecules can be produced through artificial synthesis or extracted from natural sources (plant,
mineral, or animal). The number of compounds that can be produced based on the same general chemical
structure runs into the hundreds of millions.
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Biological Screening and Pharmacological Testing - Studies to explore the pharmacological activity and
therapeutic potential of compounds. These tests involve the use of animals, isolated cell cultures and tissues,
enzymes and cloned receptor sites as well as computer models. If the results of the tests suggest potential
beneficial activity, related compounds, each a unique structural modification of the original compound are
tested to see which version of the molecule produces the highest level of pharmacological activity and
demonstrates the most therapeutic promise, with the smallest number of potentially harmful biological
properties.

Pharmaceutical Dosage Formulation and Stability Testing - The process of turning an active compound
into a form and strength suitable for human use. A pharmaceutical product can take any one of a number of
dosage forms (e.g., liquid, tablets, capsules, ointments, sprays, patches) and dosage strengths (e.g., 50. 100,
250, 500 mg.) The final formulation will include substances other than the active ingredient, called
excipients. Excipients are added to improve the taste of an oral product, to allow the active ingredient to be
compounded into stable tablets, to delay the drug's absorption into the body, or to prevent bacterial growth
in liquid or cream preparations. The impact of each on the human body must be tested.

Toxicology and Safety Testing -Tests to determine the potential risk a compound poses to man and the
environment. These studies involve the use of animals, tissue cultures, and other test systems to examine the
relationship between factors such as dose level, frequency of administration, and duration of exposure to
both the short- and long-term survival of living organisms. Tests provide information on the dose-response
pattern of the compound and its toxic effects. Most toxicology and safety testing is conducted on new
molecular entities prior to their human introduction, but companies can choose to delay long-term toxicity
testing until after the therapeutic potential of the product is established.

Regulatory Review: Investigational New Drug (IND) Application - An application filed with the U.S.
Food and Drug Administration (FDA) prior to human testing. The IND application is a compilation of all
known information about the compound. It also includes a description of the clinical research plan for the
product and the specific protocol for phase I study. Unless the FDA says no, the IND is automatically
approved after 30 days and clinical tests can begin.

Phase I Clinical Evaluation - The first testing of a new compound in human subjects, for the purpose of
establishing the tolerance of healthy human subjects at different doses, defining its Pharmacological effects
at anticipated therapeutic levels, and studying its absorption, distribution, metabolism, and excretion patterns
in humans.

Phase II Clinical Evaluation - Controlled clinical trials of a compound's potential usefulness and short
term risks. A relatively small number of patients, usually no more than several hundred subjects, enrolled in
phase II studies.

Phase III Clinical Evaluation - Controlled and uncontrolled clinical trials of a drug's safety and
effectiveness in hospital and outpatient settings. Phase III studies gather precise information on the drug's
effectiveness for specific indications, determine whether the drug produces a broader range of adverse
effects than those exhibited in the small study populations of phase I and II studies, and identify the best
way of administering and using the drug for the purpose intended. If the drug is approved, this information
forms the basis for deciding the content of the product label. Phase III studies can involve several hundred to
several thousand subjects.

Process Development for Manufacturing and Quality Control - Engineering and manufacturing design
activities to establish a company's capacity to produce a product in large volume and development of
procedures to ensure chemical stability, batch-to-batch uniformity, and overall product quality.

Bioavailability Studies - The use of healthy volunteers to document the rate of absorption and excretion
from the body of a compound's active ingredients. Companies conduct bioavailability studies both at the
beginning of human testing and just prior to marketing to show that the formulation used to demonstrate
safety and efficacy in clinical trials is equivalent to the product that will be distributed for sale. Companies
also conduct bioavailability studies on marketed products whenever they change the method used to
administer the drug (e.g., from injection or oral dose form), the composition of the drug, the concentration of
the active ingredient, or the manufacturing process used to produce the drug.

Regulatory Review: New Drug Application (NDA) - An application to the FDA for approval to market a
new drug. All information about the drug gathered during the drug discovery and development process is
assembled in the NDA. During the review period, the FDA may ask the company for additional information
about the product or seek clarification of the data contained in the application.

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Post approval Research - Experimental studies and surveillance activities undertaken after a drug is
approved for marketing. Clinical trials conducted after a drug is marketed (referred to as phase IV studies in
the United States) are an important source of information on as yet undetected adverse outcomes, especially
in populations that may not have been involved the premarketing trials (e.g., children, the elderly, pregnant
women) and the drug's long-term morbidity and mortality profile. Regulatory authorities can require
companies to conduct Phase IV studies as a condition of market approval. Companies often conduct
post-marketing studies in the absence of a regulatory mandate.

Drug Prices - Almost everybody has bought medications in the pharmacy. You certainly have paid attention
to the high prices that all of us have to pay in order to by new drugs. Sometimes you buy 10 tablets for $ 50,
sometimes you pay even more.

Regulatory Review in the United Kingdom, European Union and Australia

The drug approval process is similar in other parts of the world. Approval to research and market potential
new drug compounds is regulated; authorization is required to conduct clinical trials and market a new drug.
Specific details of the approval required for these two parts of the drug approval process in the United
Kingdom, European Union and Australia are as follows:

Approval to Conduct Clinical Trials

United Kingdom (U.K.): (Clinical Trial Authorization)

In the U.K., a Clinical Trial Authorization should be obtained from the Medicines and Healthcare products
Regulatory Agency (MHRA). Research and development approval is also required before a trial can
commence in any clinical site as well as an approval from the Ethics Committee. Unless the MHRA declines
the application, the Clinical Trial Authorization is automatically granted after 30 days and clinical tests can
begin.

European Union (EU): (Clinical Trial Request for Authorization)

In the European Union, the Clinical Trial Authorization request process is very similar to the one in the
U.K.; the main difference is that the sponsor should apply to the specific Member State authority (in which
the clinical trial will be conducted). Unless the Member State authority declines the application, the Clinical
Trial Authorization is automatically granted after 60 days and clinical tests can begin.

Australia: (Clinical Trial Notification / Clinical Trial Exemption)

In Australia, a Clinical Trial Notification (CTN) or a Clinical Trial Exemption (CTX) should be filed with
Australia’s Therapeutic Goods Administration (TGA) and notification sent to the Australia’s Health Ethics
Committee (AHEC) of the National Health and Medical Research Council (NHMRC) to provide assurance
that the trial is operating within its guidelines. The approval process usually takes 30 – 60 days.

Approval to Market New Drugs

United Kingdom:
Before a drug can be marketed in the U.K, it must be evaluated by the MHRA. The licensing authority will
consider a valid application for a manufacturing authorization and grant, or refuse to grant, an authorization
within a period of 90 days prior to the application.

European Union:
Again, the application process for the E.U is similar to one in the U.K. An application for authorization of
marketing of a new drug should be filed with the local Member State authorities. The licensing authority
will consider a valid application for a manufacturing authorization and grant, or refuse to grant, an
authorization within a period of 90 days prior to the application.

Australia:
Before a drug can be marketed in Australia, it must be evaluated by the Therapeutic Goods Administration
(TGA). In addition to evaluating the quality, safety and efficacy of drugs, the TGA must also consider their
timely availability. New chemical entities and applications that require expert advice are referred to the
Australian Drug Evaluation Committee (ADEC).

Why do these tiny pills cost so much? Please, take a moment to reflect on this question.

You may be right, that the drug market is demand / supply regulated as any other market is. But there is
another factor that you have probably mentioned in your statement above: the new drug development and
approval process is an extremely costly and risky venture. It could cost tens and even hundreds of millions
of dollars and could yield absolutely nothing in the end. In the frames of development of one new

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medication, the pharmaceutical company screens up to 10,000 compounds, when only 200-300 of them
enter pre-clinical testing and only 5-6 start clinical testing. In the end you can have only one making it to the
market, and even this would happen only if you are lucky enough. This is not all. Now, you have to succeed
in the marketing of your new drug. And that's not easy with all this competition around. Clinical Research is
an important part of the process that every new therapeutic product should pass in order to receive approval
to be placed on the pharmaceutical market. No clinical trial could be done without you, if you chose to
become CRA (Clinical Research Associate), of course. Now you can see why a pharmaceutical company or
contract research organization would be desperate to hire you and pay you very substantial wages in order to
ensure that this research runs smoothly with no delays. (Every day of delay can cost up to 1 million dollars
in losses). It's all about money, money - it is all about . . .

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