This piece originally appeared in the Timmerman Report.
Remember the patent cliff and the general lack of new and innovative medicines in the industry pipeline? That was the big story of the past decade in biopharma. It caused a lot of searching for the next best way to organize R&D to improve productivity. One doesn’t hear that quite as often today. There are more innovative drugs both recently approved and moving forward through the pipelines of several biopharma.
The conversation these days has shifted toward drug pricing, and how the public is going to pay for some of these new, exciting drugs (the answer, in some cases, is maybe it can’t).
I don’t think the industry out of the woods yet. One of the main reasons drug prices have become such an issue is because even though there are new, innovative drugs, there aren’t enough of them. At the same time many of the drugs being approved are incrementally better but nevertheless being priced at a premium. And good reporting has made the public more aware of how many of our existing drugs are rising in price on a yearly basis. Especially in a time of little inflation, prices of most goods have not been going up at nearly the rate of pharmaceuticals.
Biopharma sits in a tough place. Analyses suggest the cost of developing a new drug has generally been doubling every nine years, which may be a by-product of some combination of the complexity of biology, our inability to predict which drugs will work, and the “better than the Beatles” problem. The question then is how to overcome these issues and increase the efficiency of developing new, innovative drugs. Without some kind of change, the industry is looking at a very difficult future in which price hikes run headlong into the wall of payers who finally say enough. Then what? Continue reading
All opinions are my own and do not necessarily reflect those of Novo Nordisk.
The story in the Times of London about GSK’s new strategy for incentivizing its R&D teams by rewarding millions (yes millions) of dollars to deserving members of the team that gets a drug to approval has provoked a flurry of responses. You can see posts from Derek Lowe, John LaMattina, and David Shaywitz that do a nice job of summarizing why this seems like a really bad idea in a lot of ways. I don’t want to restate their arguments, other than to agree wholeheartedly that rewarding the lucky scientists will overall disincentivize researchers, will be difficult to administer fairly especially given the collaborative nature of biomedical research and the long, long timeframe for a drug to be approved, will have a great likelihood of upsetting and causing hard feelings in employees, and also misses the point that motivation is hardly what’s lacking in R&D these days.
I’d like to touch on that last point with respect to what I feel is particularly worrisome in this: the complete externalization of motivation on the part of scientists, and the downstream consequences for ethical behavior and human health. A recent survey commissioned by the Law Firm of Labaton Sucharow suggests that ethical standards on Wall Street are troubling. About a quarter of respondents had observed or had firsthand knowledge of misconduct at their companies, and about a quarter also admitted they would engage in insider trading to make $10 Million if they thought they could get away with it. If these GSK-type bonuses become the standard in BioPharma R&D, will we see a rise in unethical behavior on the part of scientists? And could that lead to endangerment of human health, with clinical trials performed on compounds that are pushed farther than they should be because the R&D team is looking ahead to the possible prize?
I remember a mentor at Merck asking me after my first year how I liked my bonus. I responded enthusiastically. He nodded, smiled a little and said, “Enjoy the feeling. Because next year it won’t be the same. It’ll just be something you expect.” And he was right. We talk about the perks of working for BioPharma, but there’s actually a cost to being in an environment that provides the kinds of lavish benefits we get in industry. It can cause the personal source of motivation to shift from internal to external rewards. Ultimately, for people who are creative, I think the best work is done when internal motivators are a strong part of the driving force–something Daniel Pink describes in his book Drive. It’s why I think games work so well as a tool for getting things done. They tap into internal motivating factors. After all, no one (other than World of Warcraft Gold Farmers and the like) spends hours playing a game because they’re being paid to. We should not be trying to make an engaging, exciting pursuit like research into just something we do because it pays the bills.