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Striving for Economical Innovation

Health and Healthcare Trends Transforming our Economy

nadia cervoni
Nov 26, 2019 · 5 min read

Recently, I was lucky enough to attend the Wall Street Journal Health Forum in Washington DC. This was a full-day program that focused on the innovations and trends in health and health care that are transforming our industry and our economy. I was inundated with speaker names of pharma-celebrity stature including those of CEOs of many clients I’ve worked with over time like Novartis and Pfizer, Directors of Research Institutes, Chairpersons of Managed Care Consortiums along with leaders of cool, innovative companies such as Caribou Biosciences (leading CRISPER-based technology) and African Ancestry (pioneering a new way of tracing African lineages using genetics….wow!). Wall Street Journal (WSJ) journalists covered intriguing topics such as drug prices, new business models, drug regulation, new tech, public policy, and others while successfully keeping the exchange captivating and conversational through their on-stage one-on-one interviewing platform with each of the experts.

This was perhaps captured best in interviews with leaders of two of the largest pharma companies today, CEO Vasant Narasimhan, MD, and Executive Chairman Ian Read from Novartis and Pfizer, respectively.

The Search for New Drugs

Dr. Narasimhan spoke first on how pharma can keep up with the costs of developing new drugs. More specifically, he was asked to address how the investment, foresight, and risk-taking required for new drug development, should direct pharmaceutical companies to position themselves to keep finding new medicines into the future and what looks promising today?

Keeping it Real

Dr. Narasimhan first pointed out how much money it costs to simply develop these drugs — Novartis spent over $9B on R&D this year alone. Combining this high cost with the extremely high failure rates of drugs in development− published studies indicate 13.8% of drug development programs make it from phase I to approval, with cancer drugs having the lowest success rate, a mere 3.4% — supported his notion that only big pharma can withstand this high rate of attrition. As a result, there’s a need to focus on breakthrough innovation that accompanies the societal sentiment that payment will only be made for advances in efficacy. In other words, go big or go home.

Value Reinterpreted

Big innovations such as gene therapies and cell therapies are leading the charge but as we all know, at a cost. Interestingly, these costs, such as an estimated 1.5–5M for Zolgensma and $875K for Kymriah were described as cost-effective (huh?), when evaluated as price per life, per year gained, noting their great value for society (oh, that helps I guess). Of course, payors not used to seeing the value brought forward will need to adjust to a market that could potentially hold multiple similar types of therapies in the future.

Digital Push

Something else made clear when it came to innovation was that it was equated not only to higher outcomes but also to improved efficiencies. With R&D returns becoming more challenging and with $9 billion in spending, there’s a big push to improve digital technologies that will revamp antiquated ways of working — tech that streamlines processes that lead to optimized profits.

Taking over where Dr. Narasimhan left off, Mr. Read (Pfizer Executive Chairman) was asked how can we do better? Specifically, how can drug makers reduce the risk of costly failures and still invest in innovation? And where can innovation be applied most effectively?

Doing More with Less

Pfizer has taken some perceivable extreme measures to do just this. With R&D spending dropping overtime from 9.3B to 6.6B today, Pfizer’s answer has been to reduce its focus to only 5 disease states, from 13, with the hope of optimizing productivity. And the goal is to get more drugs to market at a reduced cost. Criteria used to select key areas of focus included assessing the expertise in each modality, or disease state, along with the quality of the science. Existing unmet needs was also a critical determining factor in the final selections.

Exit Neuroscience

Case in point was their decision to ‘get out of neuroscience’ — a therapeutic area deemed tough to succeed in. Interestingly, Mr. Read talked about how the regulatory pathway takes too long. Because the disease itself can be in development for 20 years before it manifests, the potential for an interventional or preventative approach today appears low, pointing to the need for a different regulatory pathway for this model to be cost-effective.

More Skin in the Game

Many suggestions for improving efficiencies were discussed but perhaps the most provocative idea was that of building an ‘ownership culture’. This was described as an environment where scientists think more like business people; where the reward system is not only grounded in merit but largely tied to compensation based on successfully bringing a drug to market. Combining this visual of scientists turned business people with Mr. Read’s assertion that “Pfizer is not a University” led me to all kinds of panic but I then reminded myself that this is simply a vision and not yet a reality.

It will undoubtedly be interesting to watch unique styles emerge to remake, rejuvenate and ultimately, reduce costs associated with the process. And how knows, maybe we will be all better off for it.


Comments and questions can be directed at nadia.cervoni@ddbhealth.com. Nadia has yet to overcome the realization that her childhood science-fiction fantasies have largely become her present science reality, which of course sets the bar for her current-day science-fiction narratives that much higher.

DDBHealth

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