Fighting the Efficiency War on Two Fronts

We welcome the news that FDA drug and biologic approvals soared to 39 in 2012. That’s the best year for approvals of new therapeutic agents since 1996, justifying all the champagne we drank on New Year’s Eve.

Consistent with opinion at the recent Forbes healthcare summit, the increase in FDA approvals suggests the industry is learning to cope with the immense complexity of the genomics revolution and its implications for development of targeted therapies.

It’s great that for the first time in years the industry has won a major victory in the war against poor R&D productivity. However, this victory belongs to the industry’s drug discovery efforts. As the recent Office of Health Economics report showed, the industry is still losing the development battle on another front: the cost of clinical development. Furthermore, it remains to be seen whether successful identification of targeted products for relatively small populations can replace revenue losses as herds of blockbusters stampede off the patent cliff. Can a horde of gerbils replace a herd of bison? It depends on how much the gerbils cost and how much revenue they generate.

Given the staggering cost of clinical development, the industry may not reap the profits it expects from targeted products. The industry has no choice but to charge extraordinarily high prices to recover development costs that are generally as high for products targeting small populations as for drugs that treat common health conditions.  Efficacy opens the door for targeted products to enter formularies, but prohibitive prices can block the way.  Beyond that, front-line physicians can rebel, as we recently saw in the Sloan-Kettering announcement about Sanofi’s Zaltrap.  Market resistance forced Sanofi to slash the price of the new treatment for metastatic colorectal cancer by half.

The Zaltrap story shows that high clinical development costs and resulting price resistance by healthcare payers and providers may render the industry’s victory in drug discovery hollow. By contrast, the more the industry can reduce clinical development costs, the more resounding the victory will be.  New therapeutic agents, especially targeted agents, will stand a better chance of reaching their targeted markets and generating suitable profits.

Really winning the efficiency war in pharma development requires breakthroughs on more fronts.  Gradual adoption of adaptive designs has provided incremental progress to date, not a breakthrough.  But there are signs of breakthroughs in trial operations based on the same fundamental adaptive principles that underlie adaptive designs: making midstudy changes based on information collected during a study.  While adaptive designs allow a limited number of changes based on prespecified criteria and decision rules, adaptive operations deliver striking efficiency gains through countless improvements made continuously based on current information about the status of all study operations. Make enough small improvements every day and you’ll soon see big cuts in the cost of clinical development. If we do our jobs right, these operational cost cuts in the aggregate will be big enough to enable targeted therapeutic agents to replace the profits of fallen blockbusters.

Mastering adaptive monitoring and adaptive enrollment won’t be as glamorous as conquering the genome, but it may be as important to increasing development efficiency and maintaining pharma profits in the post-blockbuster age.


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