QUESTION
FDA Approval for COVID-19 vaccinations
Dr. Manganelli
MBAA 815 FINAL EXAM
- A pharmaceutical manufacturer is in the race to create a vaccine for COVID-19. The executives want to have their vaccine candidate approved as soon as possible. However, due to their fiduciary responsibility to the company’s shareholders, their vaccine should also be pursued in a manner that maximizes shareholder value. There are four potential risks they are currently scrutinizing: (1) a delay in clinical trial enrollment of patients; (2) a potential FDA hold on the Phase 3 clinical study due to adverse effects on the trial’s patients; (3) unreported adverse effects caused by the vaccine discovered late in the trial; and, (4) the need to rewrite the FDA submission due to errors in the initial written submission.
A “material consequence” for the executives is the FDA approval of the candidate vaccine. The current assessed probability of a successful completion of Phase III clinical trial is 0.70 and the trial is planned take another five months to complete. Given the successful completion of the Phase III trial, the probability of FDA approval (a.k.a. “Submission to Launch”) is 0.95.
- What is the “Tipping Point Probability of a Material Consequence” for the executives? That is, what is the probability of achieving FDA approval for their vaccine candidate?
The clinical research team believes the “FDA Hold for Adverse Effects Risk” has a probability of 0.30 of occurring and given it occurs, it will reduce the probability of successful completion of the Phase III trial to 0.50.
- What is the “Tipping Point Probability of a Material Consequence” for the executives? That is, what is the revised probability of achieving FDA approval for their vaccine candidate?
A PRO assessment was performed on the four identified risks. For each of the risks the estimated cost of mitigating the risk (investment) was determined; the enterprise net present value (NPV) protected was calculated given the investment was made; and, the investment productivity (a.k.a return on investment) for each investment was calculated. The following table summarizes this information.
- If the top three most productive investments were approved for implementation, what would be the total investment and how much enterprise value would be protected as measured in NPV?
- The US Federal Government is funding COVID-19 vaccine programs in an attempt to accelerate the FDA approval of one or more vaccines as soon as possible. A “material consequence” for the US Federal Government is to have at least one vaccine approved by the FDA by January 31, 2021.
- Assuming that any one funded program has a 40% chance of achieving FDA approval by January 31, 2021, how many vaccine programs should be funded to achieve a 95% chance of having at least one vaccine program FDA approved by January 31, 2021?
Assume that both a COVID-19 vaccine and a COVID-19 cure has been created and that the US Federal Government is deciding which of the two medical breakthroughs would be best to sponsor for residents in an impoverished community outside the United States with a $100million package. The $100million package would sponsor 20 million vaccinations or one million doses of the COVID-19 cure. Both the vaccine and the cure require a single dose per patient. In impoverished communities, the probability of contracting COVID-19 in 2021 is estimated to be 20%. The following table includes some important statistics regarding the vaccine’s and cure’s efficacy.
- If the US Federal Government pursues a vaccine-based program, how many lives is the program expected to save?
- If the US Federal Government pursues a cure-based program, how many lives is the program expected to save?
- Per $100,000 of spending how many lives do the two programs individually save?
- Which program, the COVID-19 Vaccination Program or the COVID-19 Cure Program, do you recommend the US Federal Government to pursue?
Dr. Manganelli
MBAA 815 FINAL EXAM
- A pharmaceutical manufacturer is in the race to create a vaccine for COVID-19. The executives want to have their vaccine candidate approved as soon as possible. However, due to their fiduciary responsibility to the company’s shareholders, their vaccine should also be pursued in a manner that maximizes shareholder value. There are four potential risks they are currently scrutinizing: (1) a delay in clinical trial enrollment of patients; (2) a potential FDA hold on the Phase 3 clinical study due to adverse effects on the trial’s patients; (3) unreported adverse effects caused by the vaccine discovered late in the trial; and, (4) the need to rewrite the FDA submission due to errors in the initial written submission.
A “material consequence” for the executives is the FDA approval of the candidate vaccine. The current assessed probability of a successful completion of Phase III clinical trial is 0.70 and the trial is planned take another five months to complete. Given the successful completion of the Phase III trial, the probability of FDA approval (a.k.a. “Submission to Launch”) is 0.95.
- What is the “Tipping Point Probability of a Material Consequence” for the executives? That is, what is the probability of achieving FDA approval for their vaccine candidate?
The clinical research team believes the “FDA Hold for Adverse Effects Risk” has a probability of 0.30 of occurring and given it occurs, it will reduce the probability of successful completion of the Phase III trial to 0.50.
- What is the “Tipping Point Probability of a Material Consequence” for the executives? That is, what is the revised probability of achieving FDA approval for their vaccine candidate?
A PRO assessment was performed on the four identified risks. For each of the risks the estimated cost of mitigating the risk (investment) was determined; the enterprise net present value (NPV) protected was calculated given the investment was made; and, the investment productivity (a.k.a return on investment) for each investment was calculated. The following table summarizes this information.
- If the top three most productive investments were approved for implementation, what would be the total investment and how much enterprise value would be protected as measured in NPV?
The top 3 investment would total to 15+4+3= 22 and it would cover the NPV 335+550+88 = $973 millions.
- The US Federal Government is funding COVID-19 vaccine programs in an attempt to accelerate the FDA approval of one or more vaccines as soon as possible. A “material consequence” for the US Federal Government is to have at least one vaccine approved by the FDA by January 31, 2021.
- Assuming that any one funded program has a 40% chance of achieving FDA approval by January 31, 2021, how many vaccine programs should be funded to achieve a 95% chance of having at least one vaccine program FDA approved by January 31, 2021?
Assume that both a COVID-19 vaccine and a COVID-19 cure has been created and that the US Federal Government is deciding which of the two medical breakthroughs would be best to sponsor for residents in an impoverished community outside the United States with a $100million package. The $100million package would sponsor 20 million vaccinations or one million doses of the COVID-19 cure. Both the vaccine and the cure require a single dose per patient. In impoverished communities, the probability of contracting COVID-19 in 2021 is estimated to be 20%. The following table includes some important statistics regarding the vaccine’s and cure’s efficacy.
- If the US Federal Government pursues a vaccine-based program, how many lives is the program expected to save?
The $100million package would sponsor 20 million vaccinations, as the probability of people contracting COVID-19 who are vaccinated is 0.5% so the 99.5% population would be saved if they are vaccinated.
- If the US Federal Government pursues a cure-based program, how many lives is the program expected to save?
If the cure based program is implemented then the probability would be higher as the mortality rate is 0.03% so the saved probability would be 99.7% of whole populated who would be cured.
- Per $100,000 of spending how many lives do the two programs individually save?
As the single dose is given to every person and $100 million would give 20 million vaccines so per 100,000 the calculation would be as follows:
20,000,000/100,000,000*100,000 = 20,000
It would save 20,000 lives per $100,000 spending
- Which program, the COVID-19 Vaccination Program or the COVID-19 Cure Program, do you recommend the US Federal Government to pursue?
I would recommend the cure based program as the probability of saving is high in this than the cure based program that 99.7%
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Answer
Dr. Manganelli
MBAA 815 FINAL EXAM
- A pharmaceutical manufacturer is in the race to create a vaccine for COVID-19. The executives want to have their vaccine candidate approved as soon as possible. However, due to their fiduciary responsibility to the company’s shareholders, their vaccine should also be pursued in a manner that maximizes shareholder value. There are four potential risks they are currently scrutinizing: (1) a delay in clinical trial enrollment of patients; (2) a potential FDA hold on the Phase 3 clinical study due to adverse effects on the trial’s patients; (3) unreported adverse effects caused by the vaccine discovered late in the trial; and, (4) the need to rewrite the FDA submission due to errors in the initial written submission.
A “material consequence” for the executives is the FDA approval of the candidate vaccine. The current assessed probability of a successful completion of Phase III clinical trial is 0.70 and the trial is planned take another five months to complete. Given the successful completion of the Phase III trial, the probability of FDA approval (a.k.a. “Submission to Launch”) is 0.95.
- What is the “Tipping Point Probability of a Material Consequence” for the executives? That is, what is the probability of achieving FDA approval for their vaccine candidate?
Answer:
The probability of achieving FDA approval for their vaccine candidate would be the multiplication of assessed probability of a successful completion of Phase III clinical trial which is 0.70, and the probability of FDA approval which is 0.95. Therefore, the resultant probability would be 0.70*0.95 = 0.665.
The clinical research team believes the “FDA Hold for Adverse Effects Risk” has a probability of 0.30 of occurring and given it occurs, it will reduce the probability of successful completion of the Phase III trial to 0.50.
- What is the “Tipping Point Probability of a Material Consequence” for the executives? That is, what is the revised probability of achieving FDA approval for their vaccine candidate?
Answer:
The revised probability of achieving FDA approval for their vaccine candidate would be calculated as:
|
Original probability |
(0.70*0.95) |
0.665 |
|
Less: Hold probability |
(0.50*0.30) |
(0.15) |
|
Revised Probability |
|
0.515 |
A PRO assessment was performed on the four identified risks. For each of the risks the estimated cost of mitigating the risk (investment) was determined; the enterprise net present value (NPV) protected was calculated given the investment was made; and, the investment productivity (a.k.a return on investment) for each investment was calculated. The following table summarizes this information.
- If the top three most productive investments were approved for implementation, what would be the total investment and how much enterprise value would be protected as measured in NPV?
Answer:
The top 3 investment would total to 15+4+3= 22 and it would cover the NPV 335+550+88 = $973 million.
- The US Federal Government is funding COVID-19 vaccine programs in an attempt to accelerate the FDA approval of one or more vaccines as soon as possible. A “material consequence” for the US Federal Government is to have at least one vaccine approved by the FDA by January 31, 2021.
- Assuming that any one funded program has a 40% chance of achieving FDA approval by January 31, 2021, how many vaccine programs should be funded to achieve a 95% chance of having at least one vaccine program FDA approved by January 31, 2021?
Answer:
The probability of approving one funded program is 40%
For 95% success ratio the calculation would be as follows:
95%/40%*100 = 2.3,
so it would be approximately 3 programs required for 95% chance.
Assume that both a COVID-19 vaccine and a COVID-19 cure has been created and that the US Federal Government is deciding which of the two medical breakthroughs would be best to sponsor for residents in an impoverished community outside the United States with a $100million package. The $100million package would sponsor 20 million vaccinations or one million doses of the COVID-19 cure. Both the vaccine and the cure require a single dose per patient. In impoverished communities, the probability of contracting COVID-19 in 2021 is estimated to be 20%. The following table includes some important statistics regarding the vaccine’s and cure’s efficacy.
- If the US Federal Government pursues a vaccine-based program, how many lives is the program expected to save?
Answer
The $100 million package would sponsor 20 million vaccinations, as the probability of people contracting COVID-19 who are vaccinated is 0.5% so the 99.5% population would be saved if they are vaccinated.
- If the US Federal Government pursues a cure-based program, how many lives is the program expected to save?
Answer:
If the cure-based program is implemented, then the probability would be higher as the mortality rate is 0.03%, therefore, the saved probability would be 99.7% of the whole population who would be cured.
- Per $100,000 of spending how many lives do the two programs individually save?
Answer:
As the single dose is given to every person and $100 million would produce 20 million vaccines, as such, for every 100,000 the calculation would be as follows:
20,000,000/100,000,000*100,000 = 20,000
It would save 20,000 lives per $100,000 spending.
- Which program, the COVID-19 Vaccination Program or the COVID-19 Cure Program, do you recommend the US Federal Government to pursue?
Answer:
I would recommend the cure-based program as the probability of saving is high in this than the vaccine-based program, since the former has about 99.7% chance of success.
References