Health and Medicine
Open-Source Pharmaceuticals?
Jackie Hunter
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LONDON – Much attention has been focused in recent years on the pharmaceutical industry’s slowness to develop new drugs and lack of productivity. But this crisis of innovation is also affecting the biotechnology firms upon which the large pharmaceutical companies now rely as the pipeline for developing new drugs.
This has prompted an examination of all aspects of the biomedical research and development process, as companies try to cut costs and improve efficiency and productivity. The result has been corporate mergers, reorganizations, and tens of thousands of job losses in the industry. None of this change, however, seems to have led to the radical shift required for companies to survive and thrive.
What might such a shift look like? Some propose abandoning the current system of patented drugs altogether and funding pharmaceutical R&D through taxation or prize-based systems.
Another approach to solving problems of innovation – adopted by the computer software industry, for example – is pre-competitive openness and collaboration.
Many large pharmaceutical companies are now espousing the virtue of these strategies, but will they work if adopted inconsistently by the industry and not at all by academia and funders?
Both approaches need strong senior management support, because they can succeed only in a culture very different from the more controlling, hierarchical R&D environment that remains prevalent today. They also require much more active management of, and communication about, a company’s unused intellectual property (IP).
Few companies, however, have demonstrated that they are prepared to commit the time, effort, and resources to embrace a radically different way of operating. Yet the tangible and intangible benefits of adopting new forms of collaboration – reducing the cost of failure, leveraging unused IP and external funding mechanisms, increasing access to networks of talent, and establishing greater trust among patients and other stakeholders – could be extensive. Moreover, these benefits would be realized not only by pharmaceutical companies, but also by academics and other collaborators.
One way to experiment with these new approaches is to try them out internally first. The challenge for large organizations is to harness their employees’ knowledge by breaking down barriers and bringing people together to share insights and information. The advent of computing platforms such as Microsoft’s SharePoint have facilitated data-sharing and exchange, and pharmaceutical companies would do well to emulate companies from other sectors, such as Arup, which has developed excellent systems for accessing knowledge across its entire organization.
Some pharmaceutical companies like Lilly and Pfizer have demonstrated the power of this approach by implementing internal systems to seek solutions to problems organization-wide. But it is clear that many of the challenges of the drug-development process are too large and complex for a single company or institution to solve internally.
This has led to an increase in pre-competitive and other forms of collaboration to access external innovation and tackle the bottlenecks in drug discovery and development. But pharmaceutical companies continue to hold assumptions about the boundaries of pre-competitive collaboration that need to be challenged.
At first sight, it seems counterintuitive that companies would want to share data and potentially give away competitive advantages. But this presupposes that the possession of such data does indeed imply a competitive advantage, and that a closed operating model is financially sustainable.
Drugs that make it to market have to fund the cost of failure of those that did not make it to the market. As a recent Morgan Stanley report pointed out, the pharmaceutical industry’s current success rates are not sufficient to sustain large internal R&D organizations, making the industry’s current operating model financially non-viable. Thus, companies must either improve success rates or decrease the cost of failure.
The two major causes of drug failure are lack of efficacy in humans and unexpected toxicity. So it is not surprising that the main areas of collaboration have been in the development of tools and technologies for target validation and the discovery and validation of biomarkers for efficacy and toxicity. Many large public-private consortia have been formed, including the Innovative Medicines Initiative and the Serious Adverse Events Consortium, but these efforts need to be coordinated and integrated in order to obtain the greatest possible benefit.
In the future, the most effective pharmaceutical companies will be hubs at the center of a network of collaborators and suppliers, focusing internally on their core competencies, which might include medicinal chemistry, execution of clinical trials, or sales and marketing. They will facilitate interactions across their network to stimulate the development of innovation ecosystems.
The resulting opportunities to expand beyond traditional products and markets will enable pharmaceutical companies to evolve into companies that offer a range of health-care solutions. These will include not only prescription medicines, but also diagnostics, branded generics, and technologies that support personalized medicine, as well as so-called “neutraceuticals” and other “wellness options.”
Although the size of many R&D organizations is bound to be reduced by such reforms, the complexities of managing and maximizing the impact of this external web of relationships will demand new skills and capabilities over and above those of excellent science. Developing and rewarding employees who possess such skills will be an additional, but welcome, challenge. By doing this the pharmaceutical industry might not become open source, but will become more open for innovation.
Jackie Hunter, CEO of Pharmivation, was previously Head of Science Environment Development at GlaxoSmithkline.
Copyright: Project Syndicate, 2010.
www.project-syndicate.org
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Pharmdoc 02:47 14 Dec 10
I agree that the traditional branded pharmaceutical companies are not likely to embrace open source principles except in the most limited situations. However, that does not mean open source will not happen. Actually, open source principles are an important force to drive innovation of the traditional pharma business. Governments all over the world have set up systems to provide for "open source" type products to compete with branded pharmaceuticals once their patents have expired. In the US for example, the USP, a nonprofit government chartered organization sets up public, non-proprietary standards for specifications and testing of new generic drugs through their monographs. These monographs can be used by anyone who wants to make a similar product. Although this system leads to intense competition among generic drug manufacturers, the generics business is thriving, without patent protection or much in the way of exclusivity (only 6 months for the first to file). Similarly, FDA has published monographs for older products. Again, these are open to any manufacturer and as a practical matter are used by many manufacturers. Given the low number of approvals of patented new molecular entity drugs, it is likely that the generics will become a larger and larger part of the market, effectively making the entire pharmaceutical business more "open source". The pressure from this generics side of the business is an important force driving branded companies to obtain approvals for new drugs that have patent protection and exclusivity.
Given the low new drug approval rates, it is quite possible that this trend towards relative growth of the importance of generics will continue, not voluntarily by big pharma, but through even greater government pressure to hold down costs of already approved products. Patient pressure for new, innovative products could also result in a more open source pharma business since less patent protection and exclusivity could put further pressure on innovator companies to become more productive. Perhaps, discussions like this can help shape that potential future. Significant new molecular entities are often so incredibly profitable that they would still be quite economically viable even with reduced exclusivity and patent protection. The only thing standing in the way is the low number of such approvals which raises the average cost of each one. However, the low productivity of pharma R&D is a relatively recent phenomenon and therefore it may reversible. Particularly as governments and investors apply more pressure. Innovators argue that longer patent protection is needed to justify the high cost of each NCE. However, the real solution may be the reverse, to adopt more "open source" avenues thereby putting greater pressure on innovators to become more productive lest they lose out to generic competitors.
MiddleTier 10:13 19 Oct 10
When I read Jackie's piece I have mixed feelings. On the one hand, I feel sad that Jackie is no longer at GSK to drive this paradigm but happy also that her ideas live on and that the seeds she has sown have now germinated and that the results are bearing fruit. In essence, these ideas have moved from the conceptual to the operational phase and are now becoming integral to how GSK conducts its business. Jackie is a visionary and in this, as in many other ways, well ahead of the curve. She was an early advocate of building strategic partnerships with external for-profit and not-for-profit organizations to exploit pre-competitive niches. This ground-breaking initiative continues to gather pace with such programs as the Pistoia Alliance (http://www.pistoiaalliance.org/) in which GSK is heavily involved, see also the excellent Barnes et al article NDDR (http://www.nature.com/nrd/journal/v8/n9/abs/nrd2944.html) to get a flavor of this. The scope for symbiotic relationships is ever-expanding as is the need for such relationships as data volumes grow exponentially driven by a raft of next generation technologies. No one company can fully capitalize on all these data and the latest IT advances. We need to build a new ecosystem characterized by competition as well as cooperation just as we see in real-world ecosystems. Pushing this metaphor just a little further, we can envisage a system where participants specialize, differentiate, evolve and (hopefully :-) thrive. Next generation sequencing and cloud computing are just two examples of where the case for "coopetition" is clear. The scale of the data in the first instance and the inherently de-centralized and distributed modality of the second instance call for this type of approach to fully leverage the potentialities. The challenges are great but the opportunities are even greater and, with people like Jackie on side, I feel it does not extend to hyperbole to predict that we are now entering a new phase of drug discovery and development, drug discovery and development 2.0.