Pharma needs an R&D strategy

Recently a knowledgeable pharma veteran lamented the fact that the industry has not widely adopted what he considers a particularly useful approach to drug development. 

One company "had it right," he wrote, "when their research model was to study particular pathways and find drugs to affect various receptors and proteins that would account for unique differences among patients.  Unfortunately they abandoned that model and decided to go after blockbusters and easier targets."

The approach that he was extolling is known as "targeted therapy."  While it has not been widely adopted as the cornerstone of pharma's drug development, it has acquired that status at Novartis under Mark Fishman and his group in Cambridge, Mass.  Others in the industry consider this strategy for drug development an example of academic medicine run wild.  

A hallmark of targeted therapeutic development is that instead of using market forecasting to decide whether or not to put a promising compound into expensive clinical development, the people in charge of such decisions ignore those projections and proceed largely on the basis of how "innovative" they consider its mechanism of action.

Novartis had one major success using that approach, Gleevec, and that is apparently what prompted them to remake their entire drug development strategy in its image. Gleevec's drug development model offered a sound basis in oncology because that therapeutic area has long followed a pattern of getting a product registered for whatever niche indication it can obtain.  Since off-label use is a routine part of cancer treatment, after the product gains approval, oncologists will frequently try it in other tumor types, including one or more of the big four (breast, lung, colorectal, prostate).  So for example, Bristol-Myers Squibb's Taxol was a billion-dollar drug back in the '90s and 80% of its use was for breast cancer, even though it didn't have a breast cancer indication until late in that decade.  Its principal indication for most of the time it was selling a ton in breast cancer was for ovarian cancer, a relatively small market.

But outside of oncology, this approach to developing drugs based on the appeal of their mechanism takes the inherently risky business of drug development and makes it even riskier by gambling that something which works for a small, niche condition will then be effective in a larger, more lucrative application.

This MOA approach to drug development has also created a growing backlash because Novartis accompanied it with the business practice of tripling the annual, per patient cost after a drug demonstrates effectiveness in broader applications.  For example, a few weeks ago more than 100 cancer specialists published a letter in an esteemed clinical journal where they derided pharma companies for raising the prices of new cancer drugs to an unconscionable level that excludes far too many people from treatment. 

In the case of Gleevec, Novartis priced it at $30,000 per patient per year in 2001 when it seemed effective for limited uses.  That price that would have allowed the company to recover its research costs within two years.  Then after Gleevec was shown to have broader application, Novartis raised its per patient cost to $92,000 a year and annual sales for the product approached $5 billion.  That price increase occurred even though Novartis recovered all its research and development costs from the first $1 billion of Gleevec sales.  

Gleevec's principal ongoing expenses were those allocated to selling/marketing and to additional studies for exploring its use in still more cancer areas.  Despite those continuing expenses, the additional revenue from the steep price increase represented a windfall profit for Novartis.

Another problem with basing drug development on serendipity is the follow-the-leader way pharma has always operated.  This creates the potential that a focus on mechanism/pathway can lead the whole industry down blind alleys.  

Again using Gleevec as an example, other pharmas tried to emulate its development pattern by identifying a unique gene expression and then developing a targeted therapy to turn the responsible gene off or on.  In cancer the oncologists found that most products developed this way created some very good results for about six months, after which tumors came roaring back as the malignancies developed other pathways for metastasizing.

Besides increasing the risks of drug development, price gouging, and creating a blind-leading-the-blind phenomenon, there are other problems with using MOA as the basis for developing new drugs.  In many diseases/conditions, the optimal therapeutic approach involves "cocktailing" by using drugs that work with two, three, or four MOAs.  The problem there is that often the best results come from combining a product from company A that works through pathway 1 with a product from company B that works through pathway 2.  Unfortunately, that approach gets derailed if, say, company B acquires its own compound that works through pathway 1.  Suddenly company B decides it won't collaborate with company A on studies that use products from both pharmas. 

This is exactly what occurred recently in Hepatitis C.  The knockdown, best results ever to appear in treating Hep C came in a Phase 2 study that used Bristol-Myers Squibb's (BMS's) NS5A inhibitor and Gilead's NS5B inhibitor.  It produced a 100% sustained viral remission in the genotype that is most difficult to treat.  The combination was also highly effective among relapsers and non-responders to previous therapies.  In addition it offered the benefit of an all-oral regimen that used no interferon or Ribavirin, and thereby avoided the debilitating side effects associated with those two standard therapies.  

The problem was that after those results appeared, Gilead paid $11 billion to acquire Pharmasset and an NS5A of their own.  At the same time BMS paid $2.2 billion to acquire another company and get an NS5B for itself.  Gilead decided they wanted to pair their newly acquired NS5A in studies with their NS5B that produced such terrific results when it was used with BMS's NS5A.  By using only their own compounds, Gilead's executives decided they could keep all the revenue from both of the cocktail's components.   So they decided they would no longer collaborate with BMS on developing the combination that produced such outstanding Phase 2 results.

About five years ago another type of obstacle emerged, this time in HIV/AIDS.  In 1996 Abbott launched Norvir, a protease inhibitor (PI) for HIV that it originally developed as a result of an NIH grant.  Norvir sold well but later products from other companies captured most of its market share because of the product's debilitating side effects.  Then around 2002 researchers found that one-sixth of the regular Norvir dose substantially enhanced the efficacy of several, new PI’s.  Abbott, however, had developed its own, follow-on PI, Kaletra, a fixed-dose combination that included Norvir.  The vast majority of physicians treating HIV/AIDS, however, preferred to add Norvir to other PI’s such as Bristol-Myers Squibb’s Reyataz.  So in December 2003, Abbott raised Norvir’s price by 400%, from $54 per month to $265 a month, without raising Kaletra’s price.  This was clearly a baldfaced ploy to make Norvir prohibitively expensive for use as an adjunct with competitors’ newer PI’s.

So another problem with basing drug development on MOA involves pharma execs that have lost any moral compass and act with greed as their principal or exclusive motivation.  If developing the most effective cocktail impedes their avarice, that's too bad for the best therapy.

An occasional companion strategy to basing drug development on mechanism of action involves first developing a diagnostic or biomarker and then synthesizing a compound to target and affect the identified site or process.  That idea formed the basis for Roche's drug development strategy starting in the late 1990s.  With that as their basis, Roche bought Boehringer-Mannheim in 1998, principally for its molecular diagnostic unit.  The central concept was for diagnostics to lead pharma.  

Although Roche's idea holds substantial appeal, their only notable success with that approach has been Herceptin.  Some Roche sources even claimed that identifying biomarkers before developing compounds kills more compounds than it advances.  The process worked for Herceptin because the diagnostic identifies the 30% of people with breast cancer that are HER-2 positive and, therefore, represent candidates for the drug.  Thirty percent of breast cancer sufferers constitutes a big market, but in most cases the diagnostic-first approach can't identify a segment of a tumor population that is large enough to warrant clinical development.  

Instead of using a diagnostic that rules out most potential candidates, R&D managers prefer products such as Avastin that work for some undifferentiated segments of various tumor types.  That encourages many oncologists to try the product on other cancers, based on an educated hunch.

All of this means pharma doesn't even want to develop major advances if (a) its most effective use involves cocktailing with someone else's product or (b) a companion diagnostic limits its use for patients whose doctors might otherwise try it on a roll-the-dice basis.

Pharma's tendency to deliberately tie one hand behind its back in these ways leads to the reasonable suspicion that it will be some time until the industry can regularly develop compounds capable of considerably advancing the respective standards of care.  At the same time the industry's historic business model is in trouble because public and private payers will no longer pay premium, branded prices if vastly cheaper generics can produce roughly similar outcomes.  Branded drugs that offer only marginal improvement will no longer generate adequate returns on capital for pharma companies.

This situation suggests that pharma must find another way of turning a dollar until their R&D can find a research paradigm capable of regularly producing genuine, substantial advances.  There are at least two such alternatives that pharma has so far shunned.  More on those in a later posting.

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