Health Breakthroughs Demand Regulatory Revolution
Executive Summary:
The transformation of the automotive world has many lessons for biopharma, especially on the regulatory front, believes Viren Mehta of Mehta Partners.
Driving an electric car since June of this year is not only a true joy, it has also prompted me to consider the lessons for the pharma industry.
The consumer is free to adopt an electric car, and Tesla and other electric car makers have navigated a web of regulations to be able to offer this consumer access. In contrast, the biopharma consumer faces an additional barrier to accessing innovations, a barrier of payers and regulators, who are trying to adapt but face many challenges of their own. Biopharma managers have an opportunity to catalyze the regulatory and reimbursement shift into the 21st century, or risk the consumer taking charge of their own healthcare.
The automotive industry consists of countless stakeholders, including the powerful petroleum producers, auto manufacturers, dealers, and all the secondary and tertiary offshoots, not to mention the governments with their dependence on tax revenues. Any chance of successful disruption calls for effective innovation at every step, from making battery power practical, to on-the-air software updates that offer unprecedented performance and safety from fully integrated data, to a charging network that rivals petrol station access, to transparency in all transactions – all at an increasingly affordable price. The impact of the electric car on many walks of our daily life far beyond just the transportation industry is accelerating, especially as the regulators recognize its merits.
The biopharma industry faces an equally momentous mix of innovations. Being much more regulated than the auto industry, all our stakeholders have multiple, often conflicting, objectives. The regulatory barriers extend to how the providers may interact with patients even as new drugs and online apps justify a closer dialog. But patients are becoming true consumers with these tools. They are gaining confidence that they have lacked to date, and are asking for the same value that they feel entitled to when they buy a car. The incentives among biopharma stakeholders are being reshaped. The pace of this transformation – or electronization – of biopharma, will depend on payers and regulators keeping pace with innovation. A handful of examples can illustrate the magnitude of what is afoot.
Take the CRISPR-Cas system, which has evolved over a very short span. The 1987 discovery of repeating sequences remained grossly underappreciated until experimental molecular biologists began to deploy more sophisticated sequencing tools. It was clear by 2009 that we could eradicate diseases and improve crop quality with this quick, precise, and cheap gene-editing tool that came into full view around 2012. It was only six years later that clinical studies began. Today, CRISPR-Cas and its improved follow-ons have begun to enhance almost every part of life. Its power of customization is redefining personalized medicine. For example, one patient in California with an albino gene defect is asking CRISPR researchers to treat his illness so that he can lead a normal life, and not be confined to working only during the night shift. The maturation of these tools will enable more patients to custom order their treatments, diminishing the role of regulators.
AI, or artificial intelligence, meanwhile, promises to redefine human intelligence. Its reach is unlikely to spare many walks of life, though the intense debate about many of the AI claims befits the hype phase this science is presently going through. At one end of this debate, the European Patent Office prognosticated just last February that AI was unlikely to progress fast enough that its patent forms would need any change for at least another 50 years. Yet, only a few months later patent applications were submitted by a team of legal experts for two designs by a machine dubbed DABUS (device for the autonomous bootstrapping of unified sentience). The designs – a plastic food container and a flashing light – represent a landmark challenge to the international patents regime. Although the products in question are unrelated to healthcare, many IT companies are accelerating the pace of their AI-based innovation, from drug discovery to patient-focused healthcare apps. One AI-focused drug discovery startup claims to already have the first such drug. The US FDA has approved over two dozen online patient apps for a wide range of illnesses in 2019 alone, forming the basis for CVS and other major payer/providers to roll such apps out to hundreds of millions of consumers in the US. Much of the AI frontier addresses specific needs of the patients, again bringing the longer-term role of regulators into question.
A third example of the quickening pace of innovation is equally striking – the deployment of mRNA to enable our own cells to make the necessary antigens to protect against a range of infectious and inflammatory assaults – which could turn prophylactic and therapeutic vaccine paradigms on their head.
Slow, Slow…Fast
It took 25 years for cellphones to become virtually universal, but only five years for the application of these phones to call a car service to become widespread. Now, rapid adoption of ever more powerful mobile health apps is beginning to change how we use healthcare, and even what we think healthcare should be all about and what role the traditional stakeholders ought to play. The science underpinning CRISPR, AI, and mRNA has been evolving over the past 25 years, but their application will change our lives in a matter of a few years.
“Regulators recognize the potential value of these rapid-fire advances, but their hands seem tied”
One of my recent columns discussed the potential implications of curative therapies on healthcare systems globally. (Also see “Mehta Analysis: Welcome to BioPharma 2.0” – Scrip, 29 May, 2019.)
The exciting challenge for all the stakeholders in our healthcare system is obvious when one considers the multiple scientific breakthroughs, including the personalization prospects of gene sequencing; stem cell banks accumulating curative matched cells; the tools of CRISPR-Cas that can diagnose and define a path to cure; AI that can streamline these processes for timely and successful delivery of care while also accelerating cost-effective innovation; and online healthcare apps that ensure that every patient as a consumer is not only aware but is well educated to reach out for the best treatment option at a fair price.
Today the consumer lacks direct access to these innovations, unlike an electric car or a mobile phone. Payers and regulators remain formidable gatekeepers who control how swiftly these new life changing therapies and tools may reach the consumers. Many payers are beginning to take steps, from including companion diagnostics in covering a disease to value-based payments by installment for ultra-costly therapies. Some have implicitly laid the groundwork for biosimilar substitution with preferred formulary placement agreements with biosimilar manufacturers, thereby opening up budgetary savings for newer therapies while enabling access to biologics for many more priced-out patients – all without waiting for the regulators to act.
Revolution Or Bottleneck?
Regulators recognize the potential value of these rapid-fire advances, but their hands seem tied, in part because of a lack of resources, and also because the legislature so far has been unable to refresh their mandate for the 21st century. Our society will lose out if we do not take action to untie those regulatory hands. As things stand, we are heading for a suffocating bottleneck that will throttle the pace at which breakthroughs can mature and reach consumers.
We need a fresh regulatory framework that is adapted to cope with the dramatic progression of life science innovation. Without forgetting the catalysts that ushered in efficacy and safety regulations in the 1930s and the 1960s, the time has come to put the patient at the center of the regulatory world, supporting her with all the tools that will enable her to make pragmatic decisions. Let the resulting crowd choices lead us iteratively towards a rational healthcare model that achieves much better and more cost-effective outcomes, with balanced regulatory processes as a healthy by-product.
China and Singapore with their monolithic systems are incubating many of the healthcare breakthroughs to adopt them in a holistic framework. China has many steps underway to harmonize its regulatory system with the west without losing its pragmatic focus on optimal outcomes at a fair value. Singapore has the additional advantage of being a relatively homogeneous city-state that can quickly iterate and adapt.
If successful, the west will follow, but most healthcare stakeholders, especially the biopharma companies, would struggle to adapt as their ethos aims to satisfy the present regulatory demands, no matter how dated they may be. Their challenge will come into sharper focus with the advance of the 140 gene therapy clinical studies under way, a quarter of which are for much larger populations with more than one gene malfunction, as opposed to simply targeting the more easily tractable single-gene rare diseases or cancers. Of course, the list of exciting innovations goes far beyond just the gene therapy pathways, but curative treatments call the very business model of biopharma industry into question.
These global healthcare companies understandably are torn between the great regulatory barrier that keeps their competitors at bay while enabling them to play the market forces to their advantage, and seeking the freedom to break loose, with every patient guiding the industry toward timely and cost-effective outcomes. Would they choose the right course for the longer term, or will the onslaught of breakthroughs choose for them?
This column originally appeared on Scrip Biopharma Intelligence, Oct 04th, 2019.