The Antidote: Inside the World of New Pharma
The Coming Business of Genotypes and Your Future Health
Not surprisingly, Barry Werth’s sequel to “The Billion Dollar Molecule” is no airy, summer beach read. Part biology, part organizational theory, and part financing strategy, “The Antidote” follows the tortuous, 20-year journey of one of those hard to pronounce drugs from company founding to ultimately your local pharmacy. Digging deeply into the story of Vertex (NASDAQ:VRTX), a pharmaceutical company, the author provides the background for today’s “It Girl” in precision medicine, genomic diagnostics to improve drug design and customized treatments.
For those unfamiliar, we are in an age of increasing scientific knowledge of how humans are assembled, all the way down to the genetic level. More is known about abnormalities and other biologic “mistakes.” The medical community can increasingly, with enough effort, discover and fix some of life’s most difficult and hard to reach problems. The future of selective health repair feels bright. However, as “The Antidote” underscores, it won’t come cheap.
First, the good news — “the future is to know someone’s genotype — modifying genes or mutations that cause disease — and then make drugs tailored to those.”
To appreciate the reach of this statement, Werth describes the history of drug development and how miracle compounds have historically been “discovered.” For the first fifty years of its existence, the pharmaceutical industry essentially employed a brute force testing method, by “screening large libraries of compounds against ‘targets’ [in a] search for appropriate shape, electrical charge and a fondness for, or revulsion towards, water.”
Of course, as the author goes on to describe, it isn’t sufficient to simply design a drug to cause certain reactions in the errant cell. The drug must be delivered in the right doses, to the right location, often passing through the stomach and intestines, by necessity a very “hostile” environment. And, in case anyone may have previously missed the point, the author writes, “as specific as a drug might be, it is no match ultimately for the devilish intricacies of whole-animal biochemistry.”
In what feels like a bit of Star Trek science fiction, these super teams are designing drugs atom by atom, seemingly peering into the mechanics of life itself at the cellular level. It is hard to walk away unimpressed by how far science has come in establishing dominion over the maintenance of life. [In its own way, each morsel of food you consume is a biological experiment, building upon the previous test. See the human microbiome. The constituent elements may be different than the branded pills, but your body does not discriminate.]
However, as fascinating and wondrous as this is, it comes at a cost. Werth lays the odds of developing a drug at 30:1, sometimes longer, and may take 15 years or more to bring to market. This, he writes, is a “sobering reality, a career-long string of failures where…job satisfaction [is] something other than success.”
As dismal as that may sound, the pharmaceutical industry does have a motivational trick up its sleeve. From the scientists in the lab to the sales force in the field, and everyone in between, there is a sense of working on something that matters, an activity that will benefit individuals and slivers of consumers who otherwise would face meaningful hardship. For its part, Vertex was successful in developing drugs for Hepatitis C and Cystic Fibrosis.
Unfortunately for CFO’s and Wall Street investors, it doesn’t cost any less to develop a drug for 5 people as it does for 100,000 people. Further, drug payers are “third parties: government, giant managed care companies and insurers.” Establishing value in advance and pre-wiring payment approval is not nearly as straightforward as in other industries, where bringing new products to a direct buyer market feels, in comparison, to be a more exact science. As the author notes, it is well known in pharmaceutical circles that your “consumers can’t get it…until your payers are willing to pay for it.” From the outside it is easy to conclude this process adds another layer of complexity (read: cost) to the equation, as people on both sides of the payment approval process must be employed to negotiate acceptance and transaction value.
One hazard in this approach, as many others have noted, is the relative absence of a strong, consumer market signal, often much further downstream. One wonders whether a crowd-sourced development effort may ultimately yield a more efficient process.
This idea may not be as far-fetched as it sounds. As Werth points out, “for the investment community five years is a millennium. And in the drug business that probably is a third of the time you need to develop a drug.” Instead what develops, for startups anyway, feels like a constant “pre-sale” on the latest reactions, chemical breakthroughs and clinical expectations. Think Ringling Brothers. But if volatility demands a premium, perhaps this justifies the basis for the pharmaceutical industry’s leading return on equity.
As the story of Vertex’s rise begins its conclusion in 2011, one executive notes his company as driving a “new world of personalized medicine: you find those individuals, by drilling deeper into their genetic makeup, who are likely to benefit most from your drug.” This executive’s point was underscored the following year, 2012, a year in which “nearly half of the thirty nine new drugs approved by the FDA treated rare diseases, signaling the coming of age of the new post-genomic paradigm in pharmaceuticals: the prevalence of eye-wateringly high priced medicines that transform the lives of a handful of patients.”
With the pendulum swinging into a new, integrated health treatment of “repair, replace, restore and regenerate,” it should come as no surprise that there are many stories of patients whose year’s supply of specialty meds “cost more than your house.” In its most simple form, this is the bill society will balance in an age where more is possible. Good news, if not necessarily free.
