Using Interventional Pharmacoeconomic Clinical Trials and Outcomes-Based Contracts to Repurpose Generic Drugs with Cost-Savings

Abstract

The inability to enforce a monopoly price over low-cost therapies, such as repurposed generic drugs by using patents for new medical uses, means that pharmaceutical companies are not interested to develop these potentially lifesaving therapies, even if clinical trials would be significantly cheaper. With the cost of new drugs increasing unsustainably, new financial models are needed that can incentivize the development of such low-cost therapies, by leveraging the cost-savings they generate for payors. For example, by conducting a trial comparing a low-cost generic drug to an expensive patented drug, the cost-savings from patients taking a low-cost therapy rather than an expensive drug during the trial itself can exceed the cost of running the clinical trial, which means it is “self-funding,” while also potentially improving patient outcomes due to better safety, efficacy, convenience, or accessibility. This is referred to as “interventional pharmacoeconomics” or a “revolving research fund” and allows the sponsorship of clinical trials that can be entirely funded by payors. “Prize-like” outcomes-based contracts or advance market commitments can also be combined with such self-funding trials to incentivize obtaining regulatory approval and solve the “last-mile” problem. Self-funding trials can provide significant cost-savings for payors without financial risk. This article illustrates a four-step process for conducting such self-funding trials and other ethical, commercial, political, and legal barriers that need to be overcome in order to scale this novel and practically unlimited source of funding for the development of low-cost therapies.