Abuse-Deterrent Opioids: A Business Answer To The Opioid Abuse Crisis

|
Includes: ABC, ACUR, COLL, CVS, DRRX, DSNKY, EGLT, ELTP, ENDP, IPCI, IR, JNJ, KMPH, MCK, MNK, NVS, PFE, PTIE, SRPT, TEVA, WBA, WMT
by: StrategyDoc

Summary

The recent effort at addressing opioid abuse has been focused on limiting the availability of the drugs to abusers by limiting the number of prescriptions written by healthcare providers.

Lawsuits by 41 states and other entities against drug manufacturers, distributors and formularies are seeking to place blame with little or no focus on ways to ameliorate the abuse problem.

The FDA has recently re-committed to impacting the scourge of opioid abuse by working with pharma companies on guidance for the development of novel and generic abuse deterrent opioids.

Given the size and growth of the opioid drug market, abuse deterrent formulations offer an opportunity to impact the abuse epidemic and make needed pain medications available to legitimate patients.

Though still in the early stages, companies are engaged in developing abuse deterrent opioids. But, as with all medications, ADFs need to be priced for value.

Context

The widespread abuse of opioids has been a national tragedy. It has contributed to the deaths of thousands and led to billions of dollars spent in search of comprehensive remedies. To date, no single solution has been completely effective in reducing the consequences of opioid abuse, despite the commitment of federal, state, and local resources, and the best efforts of scientists and clinicians.

One response by the pharmaceutical industry, with the encouragement of the United States Food and Drug Administration (FDA), has been the creation of abuse deterrent formulations (ADFs) for opioids. However, it has been 15 years since the ADF technologies were first developed and only eight ADF opioids have been approved for commercialization by the FDA, this representing just 2% of the opioid pain med market.

If ADFs offer such promise, why have so few been developed and approved? Many suggest the answer is two-fold: 1) Lack of effective FDA guidance and consistency in the process of approval and, 2) Lack of adequate investment by pharmaceutical companies, particularly those with a product or products in the market and little incentive to alter an approach to what has been a financially lucrative business.

However, with the socio-political-legal clamor created by the widespread abuse of opioids, combined with an opioid pain med market projected to be about $42 Billion by 2021, we now see that both the FDA and pharma companies find themselves at the proverbial crossroad.

What now?

Combined with litigation and the threat of financial penalties, many pharma companies realize that their lucrative pain med markets are facing disruption. However, as ADFs reflect the best single technology currently available to reduce the non-medical use of a whole class of drugs, companies increasingly recognize that ADFs may well offer the shelter provided by being viewed as part of the solution to the opioid abuse epidemic. And then there is the potential for greater business success, because the FDA has recently stepped forward and provided new guidance for companies designed to aid in the process of ADF development and approval. When considering the argument by researchers (and implied by the FDA) that, if sufficient numbers of ADFs can be developed and approved, any opioids without the ADF technology would be removed from the market and replaced by those with effective abuse deterrence, many pharma companies recognize that the development of new ADFs offers a significant opportunity to drive revenue growth.

But, let’s be clear. This business solution requires that pharmaceutical companies invest in creating more effective abuse deterrent opioids, no small challenge. Still, the financial incentive is the other 98% of a $42 Billion market!

Clearly, this is a complex matter and that is the basis for this article.

A Changing Environment

Just so the reader is clear, an opioid is an addictive narcotic pain medication we often see used in anesthesia and prescription cough suppressants, as well as to reduce post-surgical pain, pain from injury or trauma, pain arising from disease and cancer pain management, as well as end-stage diseases in which palliative care is required. Opioid pain medications are a necessary component of pain management for a range of conditions. But, they are and have been highly abused drugs.

According to the American Society of Addiction Medicine, drug overdose has become the leading cause of accidental death in the U.S., driven by the opioid epidemic. In 2015, of the 52,404 lethal drug overdoses, 20,101 were related to prescription pain relievers.

However, in an editorial appearing in the American Journal of Public Health, four researchers in the CDC’s Division of Unintentional Injury Prevention say many overdoses involving illicit fentanyl and other synthetic black-market opioids have been erroneously counted as prescription drug deaths.

How inflated were the overdose numbers? Using the agency’s “traditional definition” for prescription opioids, the CDC estimated that 32,445 Americans died from overdoses of pain medication in 2016.

Under a new “conservative definition” – one that excludes the “high proportion of deaths” involving synthetic opioids like fentanyl – the death toll from prescription opioids is cut nearly in half to 17,087 overdoses.

The researchers note that even that estimate is likely wrong for a variety of reasons:

  • The number of deaths involving diverted prescriptions or counterfeit drugs is unknown
  • Toxicology tests cannot distinguish between pharmaceutical fentanyl and illicit fentanyl
  • Drugs are not identified on death certificates in 20% of overdose deaths
  • Multiple drugs are involved in almost half of drug overdose deaths

The reality is that no matter what sanctions are imposed on the manufacturers, distributors, or prescribers, there is nothing the FDA, DEA, law enforcement, the politicians, or the plaintiff’s attorneys can do to cut legitimate opioid prescriptions that provides the sole answer to the abuse problem. To suggest otherwise is nothing more than stylized theater reminiscent of the Prohibition Era. (And, how did that work out?)

The Market Opportunity for Abuse Deterrent Opioids

Companies began to focus on opioid abuse deterrent drugs in the early 2000s, when the FDA began discussing the matter with the pharma industry, and in 2009 the FDA sent a letter to various manufacturers that indicated the need to have a risk mitigation strategy to balance the benefits of opioid pain meds with the risks.

This spurred a flurry of research and development leading to innovation in abuse deterrence that created a market opportunity for firms. This development coincided with the surge in demand, largely generated by aging US and global populations with their attendant physical ailments, and an increase in surgical and dental procedures coinciding with an expansion of the economic middle class.

This increased demand is apparent in market research that shows an increased opportunity for pain medications.

For example, Transparency Market Research has published a report entitled “Pain Management Therapeutics Market - Global Industry Analysis, Size, Share, Growth, Trends, and Forecast 2016 – 2023.

In their research, the global pain management therapeutics market is expected to expand at a 3.7% CAGR over the period between 2016 and 2024. At this pace, the market is expected to rise from a valuation of $60.2 Billion in 2015 to $83.0 Billion by 2024. Within that forecast are Anticonvulsants, Antidepressants, Anesthetics, Non-steroidal Anti-inflammatory Drugs (NSAIDS), Opioids (Oxycodones, Hydrocodones, Tramadol), Antimigraine Agents, Other Non-narcotic Analgesic; Indication - Neuropathic Pain, Fibromyalgia, Chronic Back Pain, Arthritic Pain, Migraine, Post-operative Pain, Cancer Pain.

More narrowly within the pain med market lies the opioids market, which was valued at $33.9 Billion in 2014. Of that, North America was the leading market for opioids, accounting for approximately 65% of the revenue share in 2014, or about $22 Billion. Despite the regulatory efforts to reduce prescriptions between then and now, based on the aforementioned demographic changes, the market is expected to reach $42 Billion by 2021.

While a work in progress since the 1990s, when they were treated as if something out of science fiction, today there is a business opportunity for opioid abuse deterrent formulations (ADFs).

Fast forward to the August 29, 2018 statement by FDA Commissioner Scott Gottlieb, that the agency is working hard to forcefully address the opioid crisis, using all the agencies tools and authorities. Of particular note in the statement was that they developed new regulatory guidance to promote abuse-deterrent formulations of opioid drugs, including a new path for the development of generic versions of drugs with these features.

Then there is the Opioid Crisis Response Act to be voted on by the US Senate in the near term. That legislation includes the Synthetic Trafficking and Overdose Prevention Act that will give the US Postal Service more tools to flag suspicious shipments of illegal fentanyl from overseas.

These announcements suggest the timing is right for a business solution through the development of abuse deterrent opioids, as part of a balanced, multi-faceted approach that, while aggressively addressing the misuse of prescription drugs, also ensures access to pain medications for real pain patients.

Real Pain, Real Concerns

In 2012, in research on pain prevalence and severity in adults, it was estimated that nearly 100 million people suffer from pain in any given year for a variety of reasons, and between 9% and 12% face persistent or chronic pain. (Nahin RL: Estimates of pain prevalence and severity in adults: United States, 2012. J Pain. 2015;16(8):769-780.)

This raises questions whether simply reducing pain medication access is the real answer to abuse deterrence and here is why.

In 2016, researchers at the University of North Carolina reported on 2.2 million residents of the state who were prescribed opioids and found a very low overdose rate of 0.022 percent. More recently, a January 2018 study in BMJ by researchers at Harvard and Johns Hopkins examined 568,000 opioid naïve patients (non-abusers) prescribed opioids for acute and postoperative pain from 2008 to 2016 and found a total “misuse” rate (abuse) of just 0.6 percent.

So the evidence argues that real pain patients are not the abusers and, while doctors may be trying to curb abuse, they are actually making the medication less available for compliant users.

As if on cue, some insurance companies will not cover opioids above the CDC (Centers for Disease Control and Prevention) threshold and health systems are setting hard ceilings with forced tapers to get patients under their limits.

So it seems, deaths and addiction to opioids is a problem not easily solved by merely prescribing fewer pain meds for legitimate pain patients. In fact, it complicates the matter because real pain patients are unable to be prescribed pain meds without going through hoops like providing urine samples for analysis before receiving a prescription. In truth, many legitimate pain patients report feeling they are being treated as street junkies. And, I would be remiss in not mentioning what politicians seem unable to acknowledge – that pain is a legitimate medical concern. On that point…

In his written testimony submitted to the Senate Subcommittee on Crime and Drugs and noted in Gen Rx: Abuse of Prescription and OTC Drugs” hearing; 2008–03–08, Alex DeLuca, M.D., FASAM, MPH stated unequivocally that unrelieved pain can be accurately thought of as the “universal complicator” which worsens all co-existing medical or psychiatric problems through the stress mechanisms and by inducing cognitive and behavioral changes in the sufferer that can interfere with obtaining needed medical care.

But, the most profound comment he offered was that the overall deleterious effect of chronic pain on an individual’s existence and outlook is so overwhelming that the risk of death by suicide has more than doubled in chronic pain patients, relative to national rates.

The Socio-Political-Legal Approach

While not an approach that resolves the problem rather than seeking to place blame, we see socio-political forces and litigation have created a firestorm, as the pharma companies are accused of complicity in the abuse and deaths. This being America, the belief is they should pay for misleading marketing and downplaying the addictive qualities of the opioid pain meds. And, to be honest, it is not as if there is no history on this…

In 2004, the state of West Virginia and Pike County, Kentucky, settled parens patriae cases with Purdue Pharma for $10 million. In 2007, Purdue Pharma settled with 26 states and the District of Columbia for $20 million for unlawfully marketing Oxycontin. The multi-state class action lawsuit was inspired by the West Virginia settlement and alleged that Purdue misbranded Oxycontin as "less addictive, less subject to abuse and diversion, and less likely to cause tolerance and withdrawal than other pain medications." Kentucky refused a $500,000 offer in the case, fought for more money and in 2015 settled with Purdue for $24 million.

Currently, we have the attorneys-general for some 41 states, as well as assorted cities and Native American tribes, suing various drug companies, distributors, and formularies. These include: Johnson & Johnson (JNJ), Endo International (ENDP), Teva Pharma (TEVA), Pfizer (PFE), Mallinckrodt Pharma (MNK), Purdue Pharma (PRIVATE); AmerisourceBergen (ABC), McKesson (MCK), CVS Health (CVS),Walgreens (WBA), and Walmart (WMT).

And, President Trump said the federal government would join the states, cities and Native tribes in suing drug companies and distributors over their role in the opioid epidemic.

Beyond the tragic loss of life, it has been estimated that abuse drains almost $80 Billion a year from the US economy as a result of lower worker productivity, lost tax revenues, increased costs from demands on criminal justice (both enforcement and incarceration), and the rise of attendant medical care, as addicts and abusers inevitably make their way into the healthcare system through emergency room visits or substance abuse treatment.

Should the suits succeed, how much could this end up costing all these companies? Well, plaintiff’s lawyers and government coffers are eyeing a big tobacco comparison and the search for proximate cause lies in the defendant conduct and what they knew or should have known, and whether they covered that up. Just to remind the reader, the tobacco companies ended up paying dearly for their failures, to the tune of $206 billion dollars over the first 25 years of a settlement it made with the attorneys general of 46 states in 1998.

The Culture of Blame Obscures The Value of A Business Response

A culture of blame actually exacerbates the difficulty of finding solutions that will serve all needs and that prioritize considerations relevant to the addicted and the pain population.

The CDC, the DEA, and state law-making and regulatory bodies have sought or implemented limits to opioid prescription quantities, dose, and duration of opioid therapy with the goal of reducing patients’ opioid exposure along with the supply available for diversion and abuse. And, to avoid appearing non-complaint, prescribers are creating their own version of what, when, and how they will and will not prescribe opioids for pain.

Unfortunately, what is happening is the real pain patient and the abuser are conflated, and missing is the acknowledgement that real pain patients want pain relief, while abusers are generally aware of the risks associated with opioid abuse. Therefore, policymakers need to deploy prevention strategies that hold the promise of incremental improvements over current policy that ensures effective pain patient treatment.

Policymakers should access and read postings on the drug abuse Web site, BlueLight.org, that recommend tampering methods for prescription drug abuse. The plain reading suggests that there is a conscious decision to try various opioids by the abuser, with the core question for most abusers—what opioid shall I abuse? The answer is they abuse what their friends are abusing, which in turn relies on which drug (licit or illicit) happens to be most available. Adopting policies or legislation that restricts access to certain products appears functionally naive in the face of the well-organized abuse community.

In fact, in their article "Opioid use in the acute setting: A survey of providers at an academic medical center," Douglas R. Oyler, PharmD, Kristy S. Deep, MD, Phillip K. Chang, MDJournal of Opioid Management 13:6 November/December 2017 Vol 14, No 3 (2018) found data that points to a gradual switching back to heroin because it is now a much cheaper alternative to prescription drugs, and supply lines have made it more widely available.

For those unaware, drug abuse is as price sensitive as any industry; raising the “cost” of abusing prescription drugs (in time, dollars, and amount/type of drug accessible) when including an abuse deterrent technology, is expected to divert abusers to older, more readily abusable drugs. This speaks to abuse deterrent drugs as a valuable element in the fight against prescription opioid abuse; as diversion from abuse-deterrent opioids to existing highly abusable opioids is an expected outcome of successful ADF deployment. This result should allow the FDA to exercise its authority to remove the readily abusable opioids from the market in favor of the ADF version of the same type.

FDA To The Rescue?

The August 2018 FDA statement indicated that they have spent the preceding 17 months addressing the opioid crisis in ways that included: 1) taking new steps to rationalize the prescribing of opioids and amounts dispensed as a way to reduce exposure to the drugs in the medical setting; 2) stepping up enforcement of the marketing and sale of illicit opioids by targeting online sites that enable the illegal sale of these drugs and their shipment through the mail; and 3) undertaking new efforts to support novel product innovation.

Among the ADF product development efforts is the regulatory guidance to promote abuse-deterrent formulations of opioid drugs, including a new path for the development of generic versions of drugs with these features. But to be certain, the FDA is also seeking to ensure that the message is clear that these ADFs are not less addictive.

As is pointed out by the FDA, non-abuse-deterrent opioids represent 98% of all prescriptions in the pain med market. However, we are at the start of an opioid pain med market disruption; one that is seeing efforts by companies - big and small - to create drugs with abuse-deterrent formulations. These drugs seek to perform in one of three ways recommended by the FDA - preferably in all three - Oral, Nasal, and Intravenous. While there are ADFs that have been approved by the FDA, they only comprise (obviously) 2% of the opioid pain med market.

The National Institute for Drug Abuse (NIDA) recognizes opioid medications have a legitimate role in the treatment of acute pain and some chronic pain conditions. Among the recommendations NIDA made to address abuse included the need to develop opioid drugs with abuse-deterrent formulations.

Although the FDA acknowledged that the science of abuse-deterrent technology is still relatively new and evolving, they have embraced the development of abuse-deterrent opioids. So, the business opportunity is notable and made even more so with the inference that, once abuse-deterrent drugs reach critical mass, the FDA would consider outlawing all non-abuse-deterrent opioids from the US drug market.

Again, we are talking about a multi-billion dollar market with redefined barriers to entry and a clear tipping point, courtesy of abuse deterrent opioids that, when effectively designed/engineered, do not interfere with the net analgesic benefit present in non-ADF versions of the same therapeutic product. Rather, ADFs are an effort to make inappropriate tampering more difficult. This does not mean an abuser could not choose to simply swallow a pill or few; although that would require about a 20-minute wait for effect and nothing suggests abusers are tolerant of such delays.

According to the FDA, abuse-deterrent formulations target the known or expected routes of abuse, such as chewing to gain immediate effect, or crushing in order to snort, or dissolving in order to inject. As the science of abuse deterrence is relatively new and the formulation technologies as well as the analytical, clinical, and statistical methods for evaluating those technologies are rapidly evolving, the FDA is working with many drug makers to support advancements in this area and help sponsors navigate the regulatory path to market as quickly as possible. In working with the industry, the FDA said they are taking a flexible, adaptive approach to the evaluation and labeling of potentially abuse-deterrent products.

However, there is the hurdle involving the Advisory Committees.

FDA Advisory Committees

It is the current policy of the FDA to convene expert Advisory Committees to provide input on key regulatory decisions regarding drugs. This effort includes approval and labeling of opioid abuse-deterrent formulations.

From September 2015 through April 2017 there have been seven joint meetings of the Anesthetic and Analgesic Drug Products Advisory Committee (AADPAC), the Adcom responsible for evaluating ADF pain med products. And, the members rely on the FDA Guidance for Industry on the evaluation and labeling of abuse-deterrent opioids to ensure the goal of ADFs is maintained to meaningfully deter abuse, while recognizing that no formulation can fully prevent abuse.

Sound simple? As noted in the article: "Insights and issues from FDA Advisory Committee meetings on abuse-deterrent opioids" by Christopher J. Miller, MS; Richard C. Dart, MD, PhD; Nathaniel P. Katz, MD, MS; Lynn R. Webster, MD, FACPM, FASAM, in the Journal of Opioid Management 13:6, November/December 2017, it assuredly is not.

In the case of Advisory Committees for abuse-deterrent products, the expertise present in committee members is in the areas of clinical pharmacology, public policy, and substance abuse. While experts in their respective fields, most of the Advisory Committee members will not have training or experience in abuse deterrence outside of prior Advisory Committee meetings. Specifically, they usually do not have experience conducting in vitro experiments or HAP studies, or in the identification of abuse-related events in clinical trials. Thus, panel members rely considerably on the briefing information prepared by the sponsor (company) and FDA in advance of the meeting, as well as the presentations at the meeting itself to make their recommendations. Therefore, the sponsor's briefing materials and presentations need to provide the necessary background information to derive a sound scientific evaluation of the data, while avoiding unnecessary technical details.

This places the onus on companies to effectively present evidence in support of their ADF platform. The Adcom will vote on approval or not and, given the three forms of ADFs, may only approve a drug for one or two but not all three forms of abuse deterrence. Needless to say, this creates a commercialization problem for the companies, as most payers would not approve payment for a “half-baked” ADF.

The FDA usually agrees with the Adcom vote but is not required to do so. This was apparent when the Adcom for the Sarepta (SRPT) drug voted to not approve and the FDA decided to do so (under some public pressure).

Even in the face of this reversal, the power of the Adcom is significant and, because the concern for opioid abuse so prevalent in our society, it is notable that the "Pain" Adcom members have expressed concern that approving more opioids, even ADFs and generics, might not be a good thing. On that point, recent Advisory Committees have spent considerable time discussing the ease and speed with which the API can be chemically extracted from the supposedly abuse-deterrent product. Clear evidence they are looking for the easier "NO" button.

This raises the question of whether ADFs actually work.

Do ADFs Actually Work?

This is actually a two-part question. One relates to the abuser and the other to the product mechanism. As to the abuser…

Illicit demand for an opioid drug is comprised primarily of three sources, (1) convincing a prescriber to write a prescription (doctor shopping), (2) simply purchasing the drug through a fraudulent physician-patient relationship (pill mill), or, (3) borrowing or stealing drugs from acquaintances or family members.

An ADF would be expected to decrease at least the first two types of illicit access. Doctor shopping would change because abusers would manipulate the process to have a different drug prescribed. Similarly, a pill mill doctor, many of whom wrote prescriptions for millions of high dosage opioid analgesics, would not prescribe a drug that their “patient” did not desire.

According to data from “Do abuse deterrent opioid formulations work?” Richard C. Dart, MD, PhD; Janetta L. Iwanicki, MD; Nabarun Dasgupta, PhD; Theodore J. Cicero, PhD; Sidney H. Schnoll, MD, PhD, in the Journal of Opioid Management 13:6, November/December 2017, reported that Immediate Release (IR) opioids are 4.6 times more likely to be intentionally abused and 6.1 times more likely to be diverted than Extended Release (ER) formulations. Not surprisingly, cited in the aforementioned work is a real-world study of 300 opioid abusers entering treatment for substance abuse who indicated they prefer abusable IR opioid products because they provide faster onset of the rewarding effects.

A concern expressed by some is that abusers would learn how to circumvent the abuse deterrent features of an ADF. However, studies looking back 5 years after reformulation of OxyContin ER (an ADF) have not found this to be the case. The conclusion the research that Dr. Dart, et al., arrived at, albeit on limited data, is that the strategy of opioid analgesics with abuse deterrent properties does reduce abuse of the product involved.

As to the mechanics of the ADF drug, there are a few different mechanisms to prevent the drug from being abused by chewing, snorting or injecting. The current FDA approved mechanisms for ADFs are physical-chemical and agonist-antagonist. While these two mechanisms are what we know have been FDA approved, this does not preclude the development of other means to prevent tampering and abuse.

ADF Hits & Misses

To meet the FDA’s standards for ADFs, it is essential that every opioid with labeling describing its abuse-deterrent properties be grounded in science and supported by evidence. Any claims regarding abuse-deterrent properties must be truthful and not misleading based on a product’s labeling. They must also be supported by sound science taking into consideration the totality of the data for the particular drug. Absent sufficient science, the FDA will not permit product claims of abuse deterrence.

Since abuse-deterrent products are expected to reduce abuse compared to non-abuse-deterrent products, the FDA is very interested in exploring new methods for analyzing and evaluating abuse-deterrent features; evaluating the nomenclature used to describe abuse-deterrent features; facilitating development of science for generic versions of these drugs; and taking new steps to encourage the conversion of the market to effective ADFs as part of the FDA’s Opioid Policy Work Plan.

To date, one IR ADF, RoxyBond, has been approved as an ADF for intravenous use. But the product is not currently being commercialized, likely because it lacks all three means to deter abuse. However, the FDA has approved eight extended release ADFs with differing ADF mechanisms. The companies and their drugs are as follows:

Purdue (Private) with three ADFs. Oxycontin was approved in 2010 (physical-chemical), Targiniq approved in 2014 (agonist-antagonist), and Hyslinga in 2014 (physical-chemical). Purdue has received a CRL for Avridi, a candidate IR ADF.

Pfizer (PFE) Embeda (agonist-antagonist) was initially approved in 2009 and again in 2014 for additional ADF qualities. They also have Troxyca (agonist-antagonist), approved in 2016 but not commercialized. There are claims Pfizer is withholding Troxyca to prevent comparative trials. This is an issue noted by Dr. Gottlieb, when he spoke of big pharma firms gaming the system and is the focus of the Creates Act (Creating and Restoring Equal Access To Equivalent Samples); which would allow generic drug companies to sue brand name manufacturers to get samples. On that point, in May 2018, the FDA noted there have been 164 reports of generic drug makers requesting assistance from the FDA because of these delay tactics.

Daiichi Sankyo (OTCPK:DSNKY) acquired Inspirion Delivery Sciences and with it has MorphaBond ER (physical-chemical), which was approved by the FDA in 2016 as an ER ADF, as well as the aforementioned IR RoxyBond (physical-chemical).

Collegium (COLL) has an ER ADF opioid – Xtampza (physical-chemical), an extended-release product for which the company received FDA approval in April 2016. According to the information available, while on the Express Scripts formulary, they are having less than stellar sales and have a small pipeline.

Egalet (OTC:EGLT) has an abuse-deterrent extended-release morphine product - Arymo ER (physical-chemical) - that was approved by the FDA in January 2017. However, it only received abuse deterrence approval for the intravenous route, only one of the three routes desired by the FDA. They also have Oxaydo, IR (physical-chemical), an opioid that has IV only ADF qualities. (Egalet has financial issues and is facing a delisting from the Nasdaq.)

Johnson & Johnson (JNJ), through its division Janssen Pharma, sold their non-ADF opioid Nucyenta ER and Nucyenta IR to Depomed (NASDAQ: DEPO) in 2015, and with it any effort at developing abuse-deterrent drugs. Incidentally, Depomed has a partnership with Mallinckrodt (MNK) on Xartemis, which is an FDA approved non-ADF pain med for acute severe pain. Previously, Mallinckrodt ran afoul of the DEA on its oxycodone sales tracking and paid a stiff fine.

Teva (TEVA) received a 2017 FDA approval for Vantrela, supposedly an ER ADF opioid used to treat pain severe enough to require daily, around-the-clock, long-term opioid use. However, the product's abuse-deterrent properties are expected to reduce, but not totally prevent oral, intranasal, and IV abuse of the drug when the tablets are manipulated. The product is not currently commercialized.

Endo (ENDP) announced their compliance with the request to remove the product Opana ER from the market. Shipments of Opana ER ended on September 1, 2017. Opana ER was formulated with abuse-deterrent technology but was never approved by the FDA as an ADF.

Acura (ACUR) has the Aversion technology, a patented mixture of gelling ingredients and nasal irritants designed to discourage typical methods of opioid abuse. Egalet secured global rights to the product from Acura in January 2015. Interestingly, it was this technology that Pfizer acquired licensing to and then returned to Acura in 2014, along with a $2 million one-time royalty payment. (At last check, Acura is in penny-stock territory and facing potential bankruptcy.)

KemPharm (KMPH) is a work in progress. The FDA PDUFA hearing Committee determined by a vote of 16 to 4 that its drug Apadaz should be approved for its proposed management of acute pain that requires an opioid. However, it voted 18 to 2 against the inclusion of abuse-deterrent labeling for the product. With that, it is just another opioid on the market.

Durect (DRRX), in a deal with Novartis (NVS), has a non-opioid post-surgical pain med (Posimir) that was previously rejected in 2014 for safety and failed its ADF Phase-3 trial in October 2017.

Pain Therapeutics (PTIE) has a lead candidate called Remoxy ER, a proprietary oral formulation of oxycodone for which it holds worldwide commercialization rights. However, Remoxy ER recently received its fourth CRL, the point when a company begins to recognize that approval for a drug is unlikely – ever.

IntelliPharmaCeutics (IPCI) has the ADF candidate Rexista (oxycodone hydrochloride ER) that received a CRL from the FDA in September 2017. With little news on how or if it will address the CRL, the company is facing financial concerns and a delisting from the Nasdaq.

Elite Pharma (OTCQB:ELTP), a small generic drug company, filed a New Drug Application based on a patented technology for an immediate release ADF and were given Priority Review status by the FDA. But the drug, SequestOx, an IR ADF candidate, received a CRL in August 2016. Since then, Elite announced it completed a small trial and a patent filing it believes addresses the CRL issues and supports the drug for resubmission. The next steps are pending an FDA decision.

It is important to note that there are no FDA approved generic ADFs. A clear business opportunity for the well positioned firm willing to engage in a strategic investment.

The Cost of ADFs Matter

As Doctor DeLuca said in his testimony, delaying aggressive opioid therapy in favor of trying everything else first is not rational medicine based on a modern, scientific understanding of the pathophysiology of chronic pain, and is neither the standard of care nor remotely resembling comprehensive interdisciplinary care that uses best evidence.

As he noted, the argument that non-pharmacologic alternatives to addressing opioid abuse, such as physical therapy, massage, yoga, acupuncture, and cognitive-behavioral therapy, fail the test of reality; as they are unavailable or unaffordable for many, particularly in view of diminishing interdisciplinary programs in the United States and inadequate or absent insurance coverage.

Legislation in Massachusetts, Maine, Maryland, Florida, and West Virginia make the prescription of abuse-deterrent opioids over non-abuse-deterrent formulations mandatory whenever possible and 20 more states hope to follow suit. What the term "whenever possible" means is unclear, but it is likely part of that answer is cost, because abuse-deterrent opioids cost about twice as much as conventional ones: On average $11.60 per daily dose versus the $5.82 a conventional opioid costs per day, which makes the transition to ADFs a pricing decision and not one easily embraced by payers.

On that point, the Institute for Clinical and Economic Review (ICER), an independent evaluator of value-based drug pricing weighed in and has been clear.

According to Dan Ollendorf, ICER’s chief scientific officer, based on their calculations, abuse-deterrent opioid prices should be lowered to match their potential benefits. In fact, the ICER report found that the cost of the current abuse-deterrent opioid prices needed to be cut by 41% to make them cost neutral (i.e., the additional cost of the drugs and the amount saved in treating misuse would balance out). Yet, it would still enable drug companies to make 18% more than by selling regular opioids. So there is an ADF premium, it is just not as big as pharma has projected.

Companies developing ADFs need to ponder that carefully, because the reticence of healthcare to pay for more costly drugs that offer the same analgesic impact, irrespective of the ADF qualities, is simply not going to happen. Yes, that means payers are not on the abuse deterrence team, but companies need to accept that and adapt their pricing as a means to gain wider acceptance.

In a recent statement on reducing risky use of prescription drugs, Pharmaceutical Research & Manufacturers of America, an advocacy group representing 37 major pharmaceutical companies, calls abuse-deterrent opioids an important treatment option that can help prevent widespread misuse. Beyond those companies with approved ADF products, more firms are joining this effort; with 15 abuse-deterrent opioids currently in late-stage clinical trials.

The question, then, for policy-makers, drug companies, and healthcare providers waging a fight against a national opioid abuse epidemic is simple – Why not bet on abuse-deterrent opioids as an element to combat opioid abuse if the price is right?

Finally - Concluding Thoughts

While numerous abuse-deterrent technologies are currently available or in development, no ADF can prevent all forms of overuse or abuse. Overdose by ingesting too many pills may still occur, though technology is even being developed to address this method of abuse. However, only when ADFs replace the majority of earlier non-ADF formulations can the public-health impact be known, and the economic costs and life-saving fully understood. Although on that, the FDA admits that some non-ADFs should remain available for certain settings, such as hospice care when injectable opioids are indicated.

The FDA was similarly clear it believes that, however imperfect, current ADF technology can provide a benefit to society and, as such, it should be permitted by the payers as a “science driven” solution that is the most “shovel ready” approach to the prevention paradigm for the opioid abuse crisis.

To that end, the FDA has issued guidance to industry containing recommendations for structuring trials to demonstrate abuse deterrence. In addition, the agency has also strengthened regulatory hurdles for new products without abuse-deterrent properties and issued a draft guidance to facilitate the development of generic ADFs.

The FDA looks forward to a future in which most or all opioid medications are available in formulations that are less susceptible to abuse than the formulations that are on the market today. To achieve this goal, FDA is taking steps to incentivize and support the development of opioid medications with progressively better abuse-deterrent properties. These steps include working with individual sponsors (companies) on promising abuse-deterrent technologies; developing appropriate testing methodologies for both innovator and generic products; and publishing guidance on the development and labeling of abuse-deterrent opioids.

While there is value in abuse-deterrent formulations of opioid pain medications, ADFs are not intended to be a stand-alone solution to abuse. Rather, they are one part of a comprehensive approach to addressing the opioid abuse epidemic. In that manner, ADFs are like seatbelts in autos, a necessary part of a comprehensive business investment designed to achieve a safer product.

Disclosure: I am/we are long JNJ, TEVA, ELTP.

I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Editor's Note: This article covers one or more microcap stocks. Please be aware of the risks associated with these stocks.