The following post is an adapted version of "The Value in Mattering", which I posted on the Phosphagenics forum on June 14. In my opinion, both Phosphagenics and Calzada have demonstrated understanding of the new paradigm of "value-driven drug development" and are consequently well placed to attract the interest of pharma.
Success in drug development has never come easily. It is generally accepted that only one in ten drugs that enters human trials is eventually approved. (1) Of those drugs which are approved, fewer again will achieve significant commercial success. In the estimation of a leading UK Life Sciences consultancy, of the 35 drugs which received FDA approval in 2012, less than one third will achieve peak sales in excess of $200 million.(2)
Pharma is now acting after paying a high price in recent years for continuing to push through drugs that couldn't be proven to be demonstrably superior to existing products with respect to safety, efficacy or patient outcomes. Finally, there appears to be the realisation that clever marketing alone will not guarantee commercial success.
Failure to gain broad market access has been a frequent outcome of pharma’s persistence with “me too” strategies in the face of a rapidly changing healthcare landscape. Countries requiring cost-effectiveness assessments as part of drug-funding decisions now account for some 60 percent of global prescription sales, and that percentage is increasing. (3) Subjected to this increased scrutiny, many of pharma’s offerings have been found wanting. In the decade 1998- 2008, the UK´s National Institute for Health and Clinical Excellence (NICE) granted either restricted or no market access to almost 60 percent of drugs from the world’s top ten pharmas. In Germany, the Institute for Quality and Economic Efficiency in Health Care IQWiG) has classified 70 percent of the drugs it has reviewed since 2004 as "benefit not proven".(4)
A flow on effect has been a continuing decline in drug developers’ rate of return. The average economic return on pharma R&D has dropped from between 13 and 15 percent in the 1990s to between 4 and 9 percent in the past decade. For the worst impacted pharma, the net present value of their pipelines is negative. (3)
Pharma is being forced by poor returns to adapt to the new paradigm of “value-driven drug development”, and a new, sharpened focus is in turn being applied by pharma towards aspiring licensor biotechs. Pharma's current scrutiny is centred on “the value equation”. As explained by Ed Mathers, a partner in NEA, a US venture capital firm with a broad portfolio of biotechs
In addition to chemistry, manufacturing and control data, pharma partners also want to see what communications we have had with regulatory agencies such as the U.S. Food and Drug Administration. And they want to know what primary research we have done around the value of our product, by talking with key opinion leaders, payers and others.(5)
Mathers explains that just five years ago, if his VC firm was investing in an early-stage platform company, the principal question asked would have been “Will the platform work?” and potential applications would have been thought through later. He says that today the additional question is “Will it matter?”
Because if a new product or platform doesn’t matter to payers and pharma companies, then it is unlikely to be paid for and we are unlikely to invest in it. Nowadays, the product must not only work clinically and provide some measurable benefit relative to the standard of care, it must also offer economic advantages in terms of impacting the overall cost of therapy.(7)
During a panel discussion at the Drug Delivery Partnerships 2013 Conference, Christopher Seaton, senior VP, global licensing at Bayer, explained his company’s current response to approaches from drug delivery technology developers.
Fundamentally, it’s a value question. Does this delivery mechanism add value to the product? Does it differentiate us? Does it give us a position that we can use?
Value, he explained, is multi-dimensional, and cannot be measured simply by price. For a product to be considered valuable to Bayer, it must clearly deliver value to the patient, to the physician and to the system.
There is absolutely no value to the company if there isn’t a value to either our customers or the people who are paying for the drug. (6)
Other members of the panel, also representatives of Big Pharma, joined with Seaton in stressing the fundamental importance of “value adding” through differentiation.(6,7)
Calzada is hopeful that a market leading distribution partner for PolyNovo’s Novosorb TNP foam dressing will be found by the end of this year. Interest has already been shown and the company has indicated that it is in discussion with multiple parties. Within the new paradigm of value driven drug development, the following list of questions might be anticipated and evidence in support of responses will be required.
What differentiates this product? What does this do that something else doesn’t do better ?
How is this product’s value protected by IP?
What communications has your company already had with the FDA?
How does this product rate against the current and evolving standard of care?
How is your product more efficacious?
How does your product improve safety?
In what ways can your product reduce the adverse event profile?
How can this product improve patient compliance?
What value will physicians see in this product?
What value does your product provide to the payer?
How does this product impact the total cost of care?
As well as demonstrating the safety and efficacy of NovoSorb TNP foam dressing in its first human trial completed earlier this year, Calzada also successfully demonstrated that NovoSorb offers significant therapeutic and economic benefit over the market leading GranuFoam dressing.
By demonstrating clear understanding that value delivered to both patients and payers means value delivered to commercial partners, Calzada would appear be well placed to realize its stated partnering ambitions.
(1)http://www.forbes.com/sites/matthewherper/2012/02/10/the-truly-staggering-cost-of-inventing-new-drugs/2/
(2) http://www.tcpinnovations.com/drugbaron/?p=306
(3) McKinsey & Co, McKinsey perspectives on drug and device R&D 2012 Escaping the sword of Damocles: Toward a new future for pharmaceutical R&D
(4) McKinsey & Co, Value-driven drug development- unlocking the value of your pipeline
(5) Ernst & Young, Biotechnology Industry Report 2013 If you build it, will it matter?
http://www.ey.com/Publication/vwLUAssets/Beyond_borders/$FILE/Beyond_borders.pdf
(6) https://www.youtube.com/watch?v=dtIncQq7luI
(7) https://www.youtube.com/watch?v=hqSbEAsZoVw
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