Breaking with Bad Culture: Trading Risk-Aversion for Efficiency

A recent article in Nature Reviews Drug Discovery by Jack Scannell and his colleagues at Sanford Bernstein identifies four primary causes of declining pharma R&D productivity, including the “throw money at it” tendency. Scannell and co-authors list the increasing number and scale of clinical trials as secondary symptoms. David Shaywitz provides an excellent recap, and Bruce Booth enlivens the debate by blaming “the bulk of the last decade’s productivity decline” on a “culture problem” in the drug industry.

Slashing R&D budgets (see Sanofi, Merck and others) may solve the tendency to throw money at problems, but it won’t create new drugs. Eli Lilly CEO John Lechleiter recently articulated a similar sentiment, saying, “I don’t think we can save our way out of the enormous challenge we face…the best course is to maintain our focus on advancing our pipeline.” Like Lechleiter, I believe the answer lies in improving the efficiency of clinical development.

However, I also agree with Booth’s cultural diagnosis because it is consistent with what I see in clinical trials. The number and size of trials are issues, but the biggest problem is the typical inefficiency with which the pharma industry runs each trial. As a micro example, take the burgeoning use of outsourcing. The point of outsourcing clinical trials is to increase efficiency, but pharma often requires CROs to bid based on using inefficient methods dictated in the RFP. Pharma companies seldom ask CROs to achieve a goal, such as ensuring data quality. Instead, they require a certain number and timing of monitoring visits as well as 100% SDV. This raises costs far above what is actually required to ensure high-quality data. It also excludes bids based on more efficient methods. The only explanation I can think of for mandating inefficiency in the depths of a productivity crisis is cultural—an excessively risk-averse outlook based on ingrained fear of regulatory scrutiny of even the smallest decisions.

If we can find a way to advance good drug candidates through clinical development faster and at a lower cost, we will go a long way towards solving the pharma industry’s productivity crisis. In my next post, I’ll talk about a few positive steps we can take in that direction.

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