The DIA Annual Meeting always features many thoughtful presentations about some of the most intractable problems the R&D community faces. But in reviewing presentations from past meetings, it appeared to me that the industry’s best minds keep repeating the same old concerns and offering the same old solutions. This year’s meeting featured a special set of panel discussions built around this column’s title. Ken Getz and Ken Kaitin of Tufts Center for the Study of Drug Development (CSDD) co-sponsored this Executive Program with the DIA. 

I was proud to be a panel member of this interactive session, and will use this column to share some new insights provided throughout the day. The program focused on three aspects of 21st Century Innovation. 

Session One: New models for R&D. There was universal agreement — at least among the 70 or so attendees and presenters — on the futility of the old model that saw a single company discovering a molecule, then moving it through all the steps necessary to receive FDA approval. Everyone acknowledged the success of dozens of development and marketing agreements between large and small companies, as well as many co-marketing agreements between large organizations. If sharing the fruits of one institution’s initial discovery had been so successful, why has the industry resisted many efforts to share the more problematic task of initial discovery and characterization? 

During the past decade, many companies and academic institutions have formed consortia and begun to share certain insights and discoveries. More recently, many drug development firms have entered promising new types of research partnerships with academic institutions. This audience was painfully aware that academic researchers and drug industry professionals are separated by much more than just George Bernard Shaw’s proverbial “common language.” Their institutions have markedly different attitudes towards incentives, time horizons, inter-departmental relations, extramural partnerships, etc. Yet most attendees recognized the untapped potential of true collaborative partnerships among such organizations; they need to use the incredible scientific knowledge gained during the past two decades to unlock some of the most intractable puzzles of human biology and bring much-needed new medications to the world’s population. 

Session Two: The need to make those new medicines affordable to all who need them. The drug industry had done itself a disservice by failing to demonstrate to most payers the value (not just the efficacy) of many products. Panelists and audience members discussed several stimulating questions:

• Is it a good idea to have a fixed budget for our citizens’ drug expenditures?
• Do the patent laws need major revision to give firms better economic incentives to re-purpose older, off-patent drugs?
• Will ObamaCare increase or decrease the cost of drugs?
• What role should insurers and payers play in helping direct the direction of drug development?
• In what circumstances are price controls warranted?

In our capitalistic society the discovery, development and distribution of prescription drugs is in the hands of private enterprise. Taxpayers support a tremendous amount of basic research, and non-profit institutions use charitable donations and government grants to conduct a great deal of applied research. Yet shareholder-owned, profit-making enterprises have almost total ownership and control of the end-to-end process of bringing a drug to the market. This audience seemed keenly aware of the deficiencies of that system and wrestled with some provocative ideas for change.

Session Three: Financing the costs of innovation. There was some overlap with the discussion about new models for drug development discussed in the first session, but it extended the conversation to include new ideas, such as using tax policy to stimulate investment in R&D, and making clinical trials results more transparent and accessible (thereby helping others avoid repeating unproductive studies). Few profit-making enterprises are pursuing treatments of diseases common in the world’s emerging countries and suffered by their poorest citizens. Panel members described the increasing role of charitable organizations, public-private partnerships and patient groups in meeting this global need. The audience again discussed the potential role of other stakeholders, such as payers, contract research providers and government sponsored entities — yes, those infamous GSEs — in helping finance the risky proposition of drug development. 

Tufts CSDD’s Transforming a Broken Pharmaceutical R&D Paradigm featured many participants not normally spotlighted at other meetings, and was as stimulating an exercise on the nature of drug development as I have ever experienced. It reached few tangible conclusions, but I am certain that virtually every participant walked away with at least one new idea worth exploring with colleagues back at his/her home base. Hats off to everyone who takes such efforts seriously!
 

Michael A. Martorelli is a Director at the investment banking firm Fairmount Partners. For additional commentary on the topics covered in this column, please contact him at [email protected], or at Tel: (610) 260-6232; Fax (610) 260-6285.