Notwithstanding the substantial increase in product approvals in 2012, R&D productivity remains a key challenge for the biopharmaceutical industry. My last post asked whether the current model for R&D — linear, slow, inflexible, expensive and siloed — has become an extravagance that the industry can no longer afford in today’s business environment. At a time when companies of all sizes are resource constrained (small companies face challenging capital markets while large firms are dealing with the aftermath of the patent cliff, a more restrictive pricing environment and growing pressure to demonstrate the differential value of their products), the industry needs new approaches to improve the return on R&D investments.
Companies have responded to this challenge in a variety of ways. Large companies have changed how they organize and incentivize their research scientists and have increased collaboration with universities, CROs, emerging biotechnology companies and even peers. Emerging companies and their venture backers are experimenting with new paradigms that build minimal overhead and use “fail-fast” R&D approaches. These are all worthwhile efforts, and companies should continue to look for R&D efficiencies. However, these approaches are tinkering with an existing R&D paradigm rather than looking for something fundamentally different. And, with small companies stuck in the new normal of constrained funding and large companies facing growing pressure as gross margins decline, the industry sorely needs a new approach that significantly reduces the cost and time of developing differentiated new drugs.
While companies can, and should, seek efficiency gains by reconsidering all their current activities along the R&D value chain, a fundamental change to the R&D process would involve different relationships between companies, regulators, payers and governments. It would require firms to rethink which activities are truly proprietary and add significant competitive advantage, and which could be done in collaboration with others. It would take greater transparency and data sharing (e.g., clinical trial data) and new technologies for data analysis. Finally, it could involve completely new funding and risk-sharing partnership models between various players.
In the 2012 edition of our biotechnology industry annual report, Beyond borders, we put forth one radically different model that could make R&D more iterative, adaptive and cost-efficient. We called this model the holistic, open, learning network (HOLNet). These networks would bring together a wide range of participants — drug companies, health care providers, payers, policy makers, patients and non-traditional entrants into the drug R&D space such as IT companies — to conduct R&D around a particular therapeutic area.
The HOLNet approach would blur the boundaries between drug development, product commercialization and health care delivery. Rather than being confined to the traditional siloed and sequential approach to drug development, HOLNet participants would share data and insights across the entire value chain of companies (early research through marketing) and cycle of care of patients (from prevention through diagnosis and treatment). While specific operating protocols would depend on the needs and preferences of the participants, these networks would require members to pool their strengths and relevant assets and share the resulting output and insights (in “pre-competitive” areas, for instance to tackle intransigent health challenges such as neglected diseases in emerging markets or neurodegenerative diseases in mature markets). Above all, HOLNets would be about learning rapidly and connecting dots from across the ecosystem.
HOLNets would play a critical role in pooling data from all players (patients, payers, providers and drug companies). They would also create standards for data collection — after all, sharing means nothing unless the data can be combined and studied holistically for new insights. Finally, HOLNets could play an important role in engaging regulators in a way that no single (presumably self-interested) company could. To change the drug development paradigm, regulators will need to adapt to a world in which insights can be gathered in real time through more flexible approaches and clinical trial strategies adapted accordingly. HOLNets could also help engage patients differently — developing an ongoing relationship with affected patient populations and a deeper understanding of patients’ real world experiences with their conditions and medications. The existing clinical trial patient enrollment process could be turned on its head to one in which patients would have in essence been pre-screened.
Will this HOLNet model become the dominant paradigm for drug R&D? New approaches typically encounter real world challenges that require further iteration and innovation. But forward-looking companies are beginning to explore such approaches and we look forward to continuing the conversation with them.