Major changes are needed in the country's drug approval process to meet the demands of the growing population of AIDS patients, a president's panel concluded last week.

According to retired Admiral James D. Watkins, the chairman of the Presidential Commission on the Human Immunodeficiency Virus Epidemic, there is a pressing need to speed up the drug approval process so that more AIDS patients can be helped. Watkins cited some serious flaws in the current system that are slowing the emergence of new drugs to treat AIDS.

His report, which covered a broad range of issues including drug development, was endorsed by the full panel yesterday and will go to President Reagan later this week.

Among the numerous problems Watkins cited in the 60-page report is the Food and Drug Administration's need for more money, additional personnel and better facilities to handle the increase in experimental drugs that are being developed.

The present FDA facilities "are inadequate to deal with the pharmaceuticals that are coming downstream from the National Institutes of Health," Watkins said. If the FDA uses its present resources to concentrate on AIDS, he said, other diseases will suffer.

So far, the FDA has received some 179 applications for approval to test 120 new AIDS drugs, diagnostics and vaccines, according to Dr. Frank E. Young, FDA Commissioner.

Yet this large number of applications threatens to overwhelm the FDA drug approval process and stymie the development of not just AIDS drugs, but of all pharmaceuticals in the United States, Watkins said.

It takes most drugs an average of seven to 10 years to go from development to final FDA approval. In contrast, the AIDS drug AZT (Azidodeoxythymidine) went from the laboratory bench to physician's office in just two years -- in part, because the FDA "expended eight man years of effort at a cost of $600,000," Young told the commission on Feb. 19.

It took the FDA 2 1/2 months to review the scientific data on AZT and approve the drug for use in AIDS patients.

But since the FDA has neither the money nor the personnel to continue reviewing drugs at that pace, there is concern that the entire drug approval system will bog down.

"We are very concerned that we don't have a system to move these drugs rapidly into clinical trials. There needs to be a significant enhancement of that process," said Watkins.

Without major revisions in the drug-approval process, the FDA "is going to be in very serious trouble very soon," Watkins said at a breakfast meeting last week. "The FDA is kind of an orphan agency in Washington. We're picking up {FDA Administrator} Dr. Young's advocacy."

One of the key recommendations of the Presidential Commission's report is a plan to eliminate placebo-drug trials for AIDS patients.

Placebos are sugar pills. In clinical trials of new drugs, researchers give one group of patients the experimental drug. Another group of patients receives the placebo. Neither the patients nor the researchers know until after the testing is completed (and a code is broken) which individuals received the drug and which received the placebo.

Using a placebo allows researchers to eliminate the "placebo effect." Sometimes when people think that they are taking a drug, they get better -- not because the drug makes them improve but because they believe they will get better.

"We don't need any more placebo-controlled drug testing for AIDS patients," Watkins said, who noted that these patients are so desperately ill that it is unfair to give them sugar pills. Scientific investigation of new drugs can be served instead, he said, by involving people who test positive for exposure to the virus or those who have the pre-AIDS condition known as ARC -- AIDS Related Complex -- in placebo drug trials.

The reaction from the scientific community to eliminating placebo drug trials has been mixed. "I don't see any need for any requirement for a placebo-controlled trial in people with {full-blown} AIDS," said Dr. Samuel Broder, associate director of the clinical oncology program at the National Cancer Institute and one of the researchers who first proposed AZT for use against AIDS. "There are certain limits to what you can do when you are dealing with human beings who have life-threatening illness. Two years ago, the placebo-controlled trial method was absolutely essential. I do not believe that it is now."

But others fear eliminating placebo-controlled trials for AIDS patients might set a difficult precedent for other diseases. Robert Allnutt, vice president of the Pharmaceutical Manufacturers Association, a drug-industry trade association, said that placebo-controlled trials "are something that we have to look at very carefully." Eliminating placebo-controlled trials for AIDS patients "strikes me as being too broad a statement. But we will have to have our experts look at it."

The AIDS commission also called for:

Immediate funding to help design drug studies in underserved populations with AIDS, such as women, children, minorities, intravenous drug users and people who are HIV positive but do not yet have the illness.

Increased access to a greater variety of experimental treatments for people infected with the AIDS virus.

Stepped-up search for a proper animal model for vaccine development against the AIDS-causing HIV virus.

Wider availability to the scientific community of the pieces of the AIDS virus so that drug research can progress more rapidly.

Adoption of an international standard so that the FDA can utilize high quality drug trial results from other countries.

Doubling of the number of reviewers of HIV-related products at the FDA.

The addition of $25 million in the FY 1989 budget for an additional FDA building to house new employees involved in AIDS research.

Early release of new drugs, which can then be closely monitored once they are on the market.

All in all, the reaction of the drug industry to the Presidential Commission's recommendations has been generally favorable. "Admiral Watkins is calling for more resources to speed the approval of AIDS drugs, and coincidentally that would speed the approval process of all drugs," said PMA's Allnutt. . "We certainly agree with that."

Meanwhile, NCI's Broder reported yesterday at an FDA seminar that he and his colleagues have begun testing a new AIDS drug called DDA (for di-deoxyadenosine) in AIDS patients.

DDA "is much less toxic to the bone marrow {than AZT}," Broder said. It may be that as in treating leukemia, he said, doctors will one day treat AIDS with several drugs, perhaps by alternating administration from week to week.

In studies of a combined drug approach, alternating AZT with another drug known as di-deoxycytidine, five of 15 AIDS patients have survived beyond six months. "One patient has gone beyond 36 weeks," Broder reported.

Contrary to the mood of pessimism about finding effective therapies for AIDS that dominated researchers several years ago, Broder said, "we now face a very large menu of drugs that have the activity and attack the AIDS virus at multiple steps in the life cycle.

"Now the question becomes what drug do you investigate and what priority do you give it? There is a real problem of how to prioritize drugs. It is an interesting challenge but not one that most of us predicted we would be facing."

While there is no question that AZT can prolong life for many of those with AIDS, Broder said, "I don't believe that it is a cure . . . This is a first step."

What research is indicating, Broder said, is that "we are going in the right direction." Studies have shown that AIDS "can be treated," he said. "That was uniformly not accepted in 1984."There also seems to be one positive benefit of the deadly AIDS epidemic that has already emerged in the Presidential Commission Chairman's report: The disease is pinpointing some major flaws in the current health care system.

AIDS research is likely to have many "benefits to Americans who suffer from cancer, viral and immune-related diseases, which collectively kill an estimated 650,000 Americans each year," according to the chairman's report.

"AIDS may be the real catalyst for getting our attention {on medical problems} across the board," Watkins said. " . . . We have exposed significant health care problems in the nation."

HOW DRUGS ARE APPROVED

Approval of a new drug for sale in the United States usually takes years.

Once a promising new chemical compound is found biologically active and safe in laboratory and animal tests, the drug company applies to the Food and Drug Administration for permission to begin clinical testing -- tests on humans. The application, called an investigational new drug or IND petition, becomes effective if FDA does not disapprove it within 30 days.

Clinical testing has three phases:

Phase I studies, conducted on a small number of healthy people, determine the drug's pharmacological effect, its safe dose and how it is absorbed, metabolized and excreted by the body. Phase I usually takes less than a year.

Phase II tests are controlled studies in some 200 to 300 volunteer patients to assess the drug's effectiveness. They usually take about two years.

Phase III consists of clinical trials in large numbers of volunteer patients, usually 1,000 to 3,000, who have the condition the drug is intended to treat. The studies confirm the drug's effectiveness and identify adverse reactions. Phase III usually lasts about three years.

After Phase III trials, the drug company sends the FDA a new drug application or NDA, including all the data gathered in laboratory, animal and human studies, as well as production details and proposed labeling. NDA review and approval by FDA takes an average of two to three years.

Once the NDA is approved, the company can begin marketing the drug. It must submit periodic reports to the FDA, including data on adverse reactions, production and quality control. For some drugs, FDA requires additional monitoring and studies to evaluate long-term effects.

Other terms in the chart:

AIDS - acquired immune deficiency syndrome. ARC -- AIDS-related complex, symptoms that often precede AIDS. CMV -- Cytomegalovirus, an opportunistic infection that can cause blindness. Orphan drugs -- Drugs for rare diseases; a new law provides federal subsidies for development of some such drugs. PCP -- Pneumocystis carinii pneumonia, an often fatal opportunistic infection. PGL -- persistent generalized lymphadenopathy, or lymph node enlargement.