As­sis­tant Pro­fes­sor Danielle Li of Har­vard Busi­ness School

Business Sphere - - CONTENTS - By Our Cor­re­spon­dent

In the bud­get Pres­i­dent Trump re­cently sub­mit­ted to Congress, he asked for a re­duc­tion in the 2018 fund­ing of the U.S. Na­tional In­sti­tutes of Health (NIH) of al­most 20 per­cent—or $6 bil­lion. That could have con­se­quences for those suf­fer­ing from a va­ri­ety of ill­nesses and con­di­tions and for bio­med­i­cal in­no­va­tion, based on re­sults from an ar­ti­cle to be pub­lished in Sci­ence on Fri­day, March 31, 2017 and coau­thored by As­sis­tant Pro­fes­sor Danielle Li of Har­vard Busi­ness School, Pro­fes­sor Pierre Azoulay of MIT Sloan School of Man­age­ment and the Na­tional Bureau of Eco­nomic Re­search (NBER), and As­so­ciate Pro­fes­sor Bhaven N. Sam­pat of Columbia Univer­sity’s Mail­man School of Pub­lic Health and NBER. “Our ar­ti­cle, ‘ The Ap­plied Value of Pub­lic In­vest­ments in Bio­med­i­cal Re­search,’ shows that pub­licly-funded re­search cre­ates knowl­edge that links to pri­vate com­pa­nies’ ef­forts to de­velop drugs, med­i­cal de­vices, and other patented bio­med­i­cal prod­ucts,” says Har­vard’s Li. “We find that 30 per­cent of NIH-funded grants pro­duce re­search that is cited by a pri­vate­sec­tor patent.” NIH, the world’s largest sin­gle fun­der of re­search in the life sciences, pro­vides sup­port for one-third of bio­med­i­cal R&D in the United States, as well as the ma­jor­ity of fund­ing for so­called “ba­sic” or broad-based bio­med­i­cal re­search. Us­ing data on life sci­ence patents (in­clud­ing d rugs , de­vices, and other med­i­cal tech­nolo­gies), Li, Azoulay, and Sam­pat an­a­lyze the out­put of re­search grants awarded by NIH over a 27-year pe­riod and pro­vide a method for large-scale ac­count­ing of link­ages be­tween these pub­lic re­search in­vest­ments and their com­mer­cial ap­pli­ca­tions. Rec­og­niz­ing that some patents are more valu­able than oth­ers, they also ex­am­ine link­ages be­tween NIH grants and patents as­so­ci­ated with mar­keted drugs. “We find that about 10 per­cent of NIH grants gen­er­ate a patent di­rectly—an eas­ier-to-grasp met­ric that pol­icy mak­ers of­ten fo­cus on to cap­ture the near-term eco­nomic re­turns to pub­lic fund­ing of bio­med­i­cal R&D,” say the au­thors. “Ac­cord­ing to our re­search,

how­ever, a much larger num­ber of NIH grants—about 30 per­cent of them-- gen­er­ate ar­ti­cles that are sub­se­quently cited by com­mer­cial patents. Fo­cus­ing solely on the di­rect patent out­put of NIH fund­ing may dra­mat­i­cally un­der­state its im­por­tance for pro­duc­ing re­search that in­forms com­mer­cial in­no­va­tion.” In ad­di­tion, Li, Azoulay, and Sam­pat find that grants for “ba­sic” sci­ence are al­most just as likely to be cited by patents as grants for more “ap­plied” work—which may be sur­pris­ing to those who ques­tion the lat­ter’s prac­ti­cal value.

Three Har­vard Ex­perts Ex­plain How Eco­nom­ics Can Shape Pre­ci­sion Medicines

Many pub­lic and pri­vate ef­forts fo­cus on re­search in pre­ci­sion medicine, the process by which ge­nomic in­for­ma­tion and other char­ac­ter­is­tics of a pa­tient’s dis­ease are used to pre­dict which treat­ments will be most ef­fec­tive. Sci­en­tific ini­tia­tives a lone , how­ever, will not de­liver such medicines with­out strong in­cen­tives to bring them to mar­ket. An ar­ti­cle to be pub­lished in Sci­ence on Fri­day, March 17, 2017, ex­am­ines the unique eco­nom­ics of pre­ci­sion medicines in the United States and the fac­tors that im­pact their devel­op­ment, pric­ing, and ac­cess. The au­thors—As­sis­tant Pro­fes­sor Ariel D. Stern of Har­vard Busi­ness School; As­so­ciate Pro­fes­sor Brian M. Alexan­der, MD, of Har­vard Med­i­cal School and Dana-Far­ber/Brigham and Women’s Cancer Cen­ter (DF/ BWCC); and Pro­fes­sor Amitabh Chan­dra of Har­vard Kennedy School—also out­line the prin­ci­pal rea­sons why prices for pre­ci­sion medicines are likely to be higher than prices for con­ven­tional ther­a­pies and dis­cuss the types of poli­cies that are likely to in­crease pa­tient ac­cess to these medicines. In their dis­cus­sion of the in­cen­tives needed for pre­ci­sion medicine in­no­va­tion, Stern, Alexan­der, and Chan­dra cite the pas­sage of the U.S. Or­phan Drug Act of 1983 (ODA), which cre­ated in­cen­tives-- tax cred­its of 50 per­cent of clin­i­cal tri­als ex­penses and mar­ket­ing ex­clu­siv­ity for seven years rather than the usual five--to en­cour­age man­u­fac­tur­ers to de­velop new drugs for so-called or­phan dis­eases, those af­fect­ing fewer than 200,000 peo­ple. “The in­cen­tives pro­vided by the ODA,” the au­thors write, “mean that man­u­fac­tur­ers of pre­ci­sion medicines should be par­tic­u­larly ea­ger to find biomark­ers that al­low them to bring their medicines to mar­ket as or­phan drugs, in­clud­ing sal­vaging some projects by show­ing ef­fec­tive­ness in nar­rower pop­u­la­tions.” In ad­di­tion, tak­ing note of sev­eral ex­ist­ing FDA reg­u­la­tory des­ig­na­tions that en­cour­age the devel­op­ment of in­no­va­tive medicines, in­clud­ing Pri­or­ity Re­view, Fast Track, and Break­through Ther­apy, the au­thors as­sert that “A bet­ter un­der­stand­ing of how pre­ci­sion medicines will be con­sid­ered for such pro­grams will be im­por­tant for un­der­stand­ing which pre­ci­sion medicines are de­vel­oped.” Stern, Alexan­der, and Chan­dra next con­sider the fac­tors that will drive up prices for new pre­ci­sion medicines as op­posed to con­ven­tional ther­a­pies: First, af­ter the launch of a new prod­uct, com­pe­ti­tion in small mar­kets from other new en­trants will be limited, which means that there is less brand-to-brand com­pe­ti­tion early in a prod­uct’s life cy­cle. Fur­ther, com­pe­ti­tion from a generic equiv­a­lent or fol­low-on bi­o­logic drug is de­layed by statute. Sec­ond, since pre­ci­sion medicines are more likely to be bi­o­logic drugs de­rived from liv­ing or­gan­isms (for ex­am­ple, iso­lated from tis­sues from hu­mans, an­i­mals, or micro­organ­isms), prices will re­flect their more costly and tech­no­log­i­cally-in­ten­sive man­u­fac­tur­ing, with limited re­lief in sight from “biosim­i­lars,” which are un­likely to be treated as di­rect sub­sti­tutes by US physi­cians and phar­ma­cists in the near fu­ture, as a re­sult of cur­rent FDA and statelevel poli­cies.

Third, since biomark­ers iden­tify the sub­type of pa­tients for whom a treatment will be most ef­fec­tive, more ef­fi­cient tar­get­ing en­ables man­u­fac­tur­ers to charge higher prices to re­flect higher ef­fec­tive­ness. Fourth, if R&D costs are higher for pre­ci­sion medicines than for tra­di­tional ther­a­pies, then the medicines launched will be only those with po­ten­tial prices high enough to jus­tify those R&D ex­penses. Ac­cord­ing to Stern, Alexan­der, and Chan­dra, since the prom­ise of pre­ci­sion medicine re­lies on iden­ti­fy­ing pa­tient or dis­ease fac­tors that pre­dict the ef­fec­tive­ness of a given ther­apy, it is im­por­tant to un­der­stand the in­cen­tives to de­velop biomark­ers and di­ag­nos­tic ca­pa­bil­i­ties. “One mo­ti­va­tion,” they ex­plain, “is trial ‘en­rich­ment,’ in which a pa­tient char­ac­ter­is­tic such as a biomarker is used to de­fine a study sub­pop­u­la­tion so as to max­i­mize the like­li­hood of find­ing a drug’s ef­fect.” Another mo­ti­va­tion stems from the abil­ity to seg­ment the pa­tient pop­u­la­tion and charge higher prices to pa­tients who will ben­e­fit most from a pre­ci­sion medicine. A third rea­son, say the au­thors, is mo­ti­vated by pay­ers and cap­i­tated providers who have fi­nan­cial in­cen­tives not to overuse high-cost drugs. “These en­ti­ties have po­ten­tial to gen­er­ate ad­di­tional de­mand for biomark­ers for high-cost drugs,” they write. In light of all these is­sues, what kind of ac­cess will pa­tients have to the med­i­cal break­throughs that pre­ci­sion medicine can make pos­si­ble? Af­ter all, the in­abil­ity of in­sur­ers and pa­tients to pay for such drugs will re­duce firms’ in­cen­tives to de­velop them. One pro­posed so­lu­tion is the cre­ation of new fi­nan­cial in­stru­ments that would func­tion like mort­gages to spread the costs of high-value, high­price treat­ments over time, thus de­creas­ing the up­front fi­nan­cial bur­den for pa­tients and pay­ers alike. Oth­ers in­clude pub­licly fi­nanced “high-risk pools” that may help cover high-cost ther­a­pies, poli­cies that would help spread risk by de­cou­pling in­surance from spe­cific com­pa­nies by en­cour­ag­ing em­ploy­ers to pur­chase in­surance on ex­changes where mul­ti­ple em­ploy­ers pool pa­tients, and cre­at­ing price com­pe­ti­tion to pro­vide fi­nan­cial re­lief for both pa­tients and pay­ers. “Clear char­ac­ter­i­za­tion of the pre­ci­sion medicine devel­op­ment pipe­line—in­clud­ing its sen­si­tiv­ity to eco­nomic in­cen­tives such as ex­clu­siv­ity pe­ri­ods, ef­fec­tive patent length, pub­lic fund­ing, and the roles of early stage com­pa­nies and more ma­ture play­ers—will al­low pol­icy mak­ers to more ac­cu­rately an­tic­i­pate the likely pro­files of medicines that will reach the mar­ket in years to come,” the au­thors con­clude. At the same time, “Re­duc­tion in both the cost and length of tri­als means that more drugs can clear the hur­dle of com­mer­cial vi­a­bil­ity.” “My col­leagues and I hope that this ar­ti­cle will help to build fur­ther un­der­stand­ing of in­cen­tives to de­velop and use pre­ci­sion medicines,” said Pro­fes­sor Stern. “This is a topic that res­onates deeply at the in­sti­tu­tions where we work. For ex­am­ple the DF/BWCC has one of the most com­pre­hen­sive pre­ci­sion medicine ini­tia­tives through the Pro­file pro­ject, a sys­tem­atic way to match pa­tients to pre­ci­sion tri­als through the Dana-Far­ber Cancer In­sti­tute’s Match Miner, and it is de­vel­op­ing novel clin­i­cal trial de­signs to sup­port pre­ci­sion medicine. “In ad­di­tion, Har­vard Busi­ness School is deeply com­mit­ted to the Kraft Pre­ci­sion Medicine Ac­cel­er­a­tor, a part­ner­ship be­tween HBS, The Robert and Myra Kraft Fam­ily Foun­da­tion, and the Broad In­sti­tute—all made pos­si­ble by a $20 mil­lion en­dow­ment from the Kraft Foun­da­tion un­der the lead­er­ship of Robert Kraft ( MBA 1965) and Jonathan Kraft ( MBA 1990).”

As­sis­tant Pro­fes­sor Danielle Li of Har­vard Busi­ness School

Pro­fes­sor Pierre Azoulay of MIT Sloan School of Man­age­ment

The au­thors—As­sis­tant Pro­fes­sor Ariel D. Stern of Har­vard Busi­ness School

Newspapers in English

Newspapers from India

© PressReader. All rights reserved.