Could this be a coincidence?

After months of anticipation, the US Food and Drug Administration released final guidelines on Thursday for allowing drug makers to provide experimental treatments to terminally ill patients. And Wall Street wags see the move as a way for the agency to avoid approving a drug for treating Duchenne muscular dystrophy and sidestep intense political pressure, while still making it possible for patients to obtain the drug.

As a result, stock in Sarepta Therapeutics (SRPT), which makes the drug and has regularly battled with the FDA in hopes of winning marketing approval, is down more than 26 percent today.

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At issue is an FDA program called compassionate use. This allows patients with serious diseases to gain access to a medicine being developed, even though they are not enrolled in a clinical trial. To obtain a medicine, requests must be approved by both the FDA and a drug maker. Critics, however, believe the program, which is also known as expanded access, is replete with cumbersome hurdles.

So the agency issued final guidelines that are designed to widen access to medicines by creating additional routes and easier procedures for patients and their doctors to obtain a medicine. Under the program, a drug maker would be able to charge for its direct costs, such as manufacturing. A company may not charge for various administrative costs associated with providing its drug.

Of course, the guidelines would apply to countless drugs. And the agency actually issued draft guidelines containing nearly identical language in 2013. But the timing surrounding the release of the final version is causing intrigue, given the controversy over the Sarepta drug and the growing political pressure on the agency to approve the medicine.

Twice in the past six months, the FDA has rejected drugs for Duchenne muscular dystrophy, a rare and fatal genetic disorder that causes muscles to waste away. About 13,000 children, mostly boys, are afflicted and they typically die before turning 25 years old. But the agency has twice delayed an approval decision for the Sarepta drug, known as eteplirsen; the most recent delay was just last week.

Before and during expert panel meetings held to review the drug, FDA staff questioned whether the drug can produce sufficient levels of a protein called dystrophin, without which muscle fibers degenerate. Agency medical reviewers also doubted the validity of a 12-patient study, which was not run according to usual standards, and the viability of six-minute walking tests that boys underwent.

Nonetheless, families and their supporters — which include medical experts and lawmakers — argue the drug has not demonstrated a safety risk, and, moreover, there is no alternative treatment. In their view, if the FDA rejects the Sarepta drug, it may be years before a treatment is available and boys will die. Earlier this week, BioMarin Pharmaceutical (BMRN), whose drug was recently rejected, ended its research.

For this reason, the Sarepta drug has become an important litmus test for the agency as it balances intensifying demands to approve more drugs more quickly — especially for rare diseases — and the need to maintain scientific standards for endorsing medicines. Some describe the battle as the biggest clash between regulators and patients since the AIDS crisis more than three decades ago.

This explains why some analysts believe the updated FDA guidelines for compassionate use may provide a way forward, albeit something of a compromise for the company and the regulator. How so? The FDA can continue to insist that Sarepta run a randomized, controlled trial, which does not jeopardize its view of approval standards. At the same time, patients could presumably gain access to the treatment.

The guidance “provide(s) a simple roadmap by which the drug could get to patients quickly, thus relieving the significant political pressure being felt by the agency, without FDA having to approve the drug prior to the completion of randomized controlled trials,” RBC Capital Markets Simos Simeonidis wrote in an investor note.

It is worth noting that, during a recent FDA advisory panel meeting, Janet Woodcock, who heads the agency division for evaluating drugs, seemed to suggest the agency is considering more than just the scientific data that was criticized by the FDA’s own neurology division. “Failing to approve a drug that actually works in devastating diseases — these consequences are extreme,” she told the crowd. The panel, however, voted against recommending approval.

Of course, Sarepta is not required to greenlight a compassionate use request for its drug. But arguments that the program would become a financial burden may be limited, at least according to analysts. As they see it, the ability to charge for direct costs would lessen the amount of money the company is burning through, according to RW Baird analyst Brian Skorney.

A Sarepta spokesman declined to comment, although sources familiar with the company say there is no plan to pursue compassionate use programs for its drug.

One industry consultant said the costs for providing drugs in a compassionate use program can be prohibitive. “Recovering only manufacturing costs is not going to sustain a company,” said Ken Moch of Salutramed Group and former chief executive at Chimerix (CMRX), which caused an outcry in 2014 when the company initially denied an experimental drug to a young boy who was dying of cancer.

The guidelines, by the way, do not address reimbursement for health care costs for patients, but one analyst wonders if insurers would risk bad publicity by declining coverage for sick boys.

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  • No drug company in its right mind would continue to manufacture a product simply to satisfy the demands of a compassionate use program without assurance that there would still be enough patients left to enroll in an adequate and well controlled trial. No parent in their right mind would enroll their child in a clinical trial when they can get the active drug under compassionate use, money notwithstanding. Having run a compassionate use program it becomes a three part self fulfilling prophecy:

    1) the company will issue the Duchenne drug under a compassionate use protocol; 2) the company will be unable to recruit sufficient number of patients for a RCT based on #1; and 3) at some point the company will make a decision to cease manufacturing the drug, notify the parties, take the heat and become a footnote to the annals of drug development.

  • An excellent and relatively complete explanation of the potential strategy behind FDA’s release of its new single-patient treatment use form (a form to request FDA approval for treating a single-patient with a single drug), and the new (but actually old) related guidance documents. For complete accuracy, it is necessary to also explain that these programs, including a company’s ability to charge limited costs, have been in place for decades and have been almost entirely non-functional for reasons that FDA has been unwilling to acknowledge or address over those decades. The programs don’t work, and despite the FDA’s carefully crafted PR campaign aimed at trying to blame everyone but itself for the near-complete failure of the programs, FDA knows they don’t work, and they are fine with that. Thus, if FDA points to the form and guidance documents (which explain decades old programs that haven’t worked) as cover for failing to approve a drug they should approve under the current law governing agency decisions, then Congress should take note and act immediately to strengthen its already clear direction to a FDA that a drug like eteplirsen should receive accelerated approval based on exactly the kind of evidence FDA already has. It is also important to note that FDA and its Commissioner Robert Califf report to the Secretary of HHS (Sylvia Burwell) and both report to the President. Both Secretary Burwell and President Obama should be taking note here. The credibility of the FDA with millions of Americans affected by serious and terminal rare diseases is at stake, and FDA will lose that credibility if they pull something as crass as releasing a meaningless form and guidance documents as cover for making a lethal mistake for thousands of kids with DMD.

    • I suppose the reason the compassionate use programs don’t work is money – recovering manufacturing cost is not sufficient for companies to participate. Therefore, I see three possible solutions,
      1) The federal government (HHS) subsidizes compassionate use programs.
      2) FDA allows companies to charge using a cost plus model that provides sufficient incentive for companies to participate.
      3) FDA institute a temporary approval category, whereby companies can charge market prices, but permanent approval will depend upon completion of all clinical trials to allow the accumulation of sufficient data to satisfy FDA’s full approval standards.

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