Savvy biotech companies developing, say, cancer drugs, will have to do more in the future than just look at whether a new drug is safe and kills tumors, according to Roger Longman. They’ll also measure things that really count for payers, like length of hospital stays, and—set aside your bowl of Cheerios—how much time it might save nurses from having to clean up vomit.
Longman, the CEO of Real Endpoints and former managing director of Windhover Information, made this point last week during a private dinner at Seattle’s Four Seasons Hotel, which was hosted by Wilson Sonsini Goodrich & Rosati. He told an anecdote about a biotech CEO who’s developing an oncology medicine that’s somewhat better than the standard of care. Nurses, the CEO said, really like the thing because it doesn’t cause patients to vomit as much as other treatments. That means the nurses save time, and their time can be better spent doing other things.
Smart biotechs, Longman said, had better start thinking along these lines. That’s because it’s not enough anymore to prove your drug is safe and effective enough to pass muster with the FDA. Now it’s also about proving a drug can generate savings and value for the healthcare system in the new era of cost containment, a relatively new concept to most people now running biotech and pharma companies.
“Is the time nurses spend cleaning up vomit an endpoint in your studies?” Longman asked. “Are you even measuring it? If not, you should be.”
This is really all part of the broader reckoning that’s occurring at the end of period of hyper-inflation in drug pricing, Longman said. The pharmaceutical industry, seeing this shift, has started to decrease R&D spending on drugs for the first time in 20 years, while spending more on consumer products, generics, and vaccines, Longman said. Biotech companies, for the most part, don’t offer quick fixes for what ails Big Pharma. As more and more of Big Pharma’s top moneymakers lose patent protection and start facing competition from cheaper generics, biotech has got to start thinking about how it can really offer value that payers will pay for.
“Biotech’s challenge is to solve Big Pharma’s challenge, and Big Pharma’s challenge is to show value to payers,” Longman says.
Big Pharma has been stung lately by some costly cases in which it overestimated how much value it thought was bringing to the system. AstraZeneca and Bristol-Myers Squibb “spent a ton” on launching saxagliptin (Onglyza) to compete with Merck’s sitagliptin (Januvia) in the same class of DPP4 inhibitors against diabetes. Johnson & Johnson introduced golimumab (Simponi) to compete with Abbott Laboratories’ adalimumab (Humira) in rheumatoid arthritis patients. And Eli Lilly poured huge resources into the launch of prasugrel (Effient) to challenge the $6 billion incumbent clopidrogel (Plavix) from Bristol-Myers and Sanofi-Aventis among anti-clotting therapies.
Each of the new drugs is expensive, and its backers each thought they had an advantage of some kind, like more convenient dosing. But that’s not going to cut it
