Venture capital fantasyland: Venrock’s proposal to reform drug development

It's all part of my VC fantasy

It’s all part of my VC fantasy

Here come the dancers one by one,
Your mamas calling but you’re having fun
You’ll find you’re dancing on a number nine cloud
Put your hands together and sing
it out loud

It’s all part of my rock ‘n’ roll fantasy.
It’s all part of my rock ‘n’ roll

-Bad Company, Rock ‘n’ Roll Fantasy (1979)

The Calculus of Cures, a Perspective in the April 17 New England Journal of Medicine, presents a provocative proposal to transform drug development and distribution. Although it makes some good points, overall it’s an unrealistic and self-serving piece by two leading venture capitalists.

Here’s the essence of their pitch:

  • Cut development costs by 90% and time required by 50% by lowering the threshold for approval to focus on efficacy and “fundamental safety”
  • Provide conditional approval for drugs, and then require more post-marketing surveillance to pick up rare events that aren’t captured in clinical trials anyway. Pull drugs off the market that later prove to be unsafe
  • Reduce selling costs to primary care physicians by introducing drugs that are more differentiated (a supposed effect of their development reforms), use IT to reduce the need for in-person sales forces, and improve segmentation of physicians to avoid wasting resources in non-productive pursuits

Here’s what I like about the proposal:

  • It represents a serious attempt to find a way to spur drug development for common conditions like high blood pressures, where there are already good, cheap treatments on the market
  • It points out the inefficiency of using so many in-person salespeople

Here’s why I’m skeptical:

  • The proposal is nakedly self-serving. A venture capitalist is likely to exit its investment around the time of drug approval. If approval comes faster and cheaper it aligns exactly with the venture investor’s goal and also makes it more likely that the developer can gain approval without having to give away a lot of upside to a bigger development partner
  • The  authors assert that their approach will lead to the development of drugs with more differentiation. But differentiation from existing products is notoriously difficult to predict at the outset of clinical development and they don’t explain why we’d see more differentiation if the development path were shorter. The authors are confident that as their predicted flood of more differentiated drugs reaches primary care markets that selling will be cheaper since primary care docs will essentially pull these products in. I doubt there will be so much differentiation, and if a lot of new drugs arrive at once the sheer number of new products will make it harder and more expensive to break through the clutter
  • The societal trend is to place more importance on drug safety, not less. The authors make a reasonable argument that “most clinical development programs go far past the point of diminishing returns for frequent safety events, but they do not go far enough to permit detection of rare events.” They might convince statisticians with this line of reasoning, but the public will be much more wary. If we’re really talking about cutting development time in half and knocking out 90% of costs there will be a difference in the safety assurances of at least some new products as they hit the market. How will you feel as a patient about being one of the first to receive a conditionally approved blood pressure medicine when you already have something that works reasonably well? I doubt I’d want my doctor to prescribe it to me
  • Conditional approval with more post-marketing surveillance sounds reasonable, but in practice FDA has had trouble getting companies to comply with post-marketing promises. Why will it be different under this new scheme?

So thanks, Venrock for challenging the current drug development and marketing approaches. But we might be better served by a conversation on how to more appropriately balance benefits and risks. That might lead us to a paradigm of requiring even more safety data before approval of drugs for common conditions that already have good treatments, and less for diseases with more serious unmet needs. One could even go so far as to advocate that any drug with a very strong safety profile be allowed on the market even if its efficacy is weak or unproven. That would make it possible that the few people who could benefit from the drug would have the chance to try it.

photo credit: Express Monorail via photopin cc

By healthcare consultant David E. Williams of the Health Business Group


Three lesser known Democrats for Governor speak on healthcare

Three in contest for governor striving hard for visibility in today’s Boston Globe trains the spotlight on Don Berwick, Juliette Kayyem, and Joe Avellone. They are serious contenders for the Democratic nomination in Massachusetts but remain less well known than Attorney General Martha Coakley and State Treasurer Steve Grossman.

I interviewed all five of them (plus the two Republicans and two Independents) about healthcare policy for the Health Business Blog. If you’re interesting in learning more about where they stand, check out the summary post, which links to all the individual interviews.

By healthcare consultant David E. Williams of the Health Business Group

Physician ratings edge closer to the mainstream

Doctor ratings and reviews have gotten a bad name, especially from doctors. There are concerns about their validity and usefulness. And while I share these worries I also believe ratings and reviews are important and have the potential to become much more prominent and useful over time.

I’m encouraged that some healthcare providers are reversing course and starting to publish ratings and reviews on their own websites. University of Utah is doing it, the Cleveland Clinic is considering following along, and others are also starting to think about it (Hospitals get into doc rating business).

That’s a good sign that patient reviews are going mainstream. We’ll be even better informed once the sites include other information that’s becoming available, such as the recently released Medicare claims data and complementary data on quality and cost from the private market, such as information that will be provided by the Robert Wood Johnson foundation-sponsored DOCTOR Project.

By healthcare consultant David E. Williams of the Health Business Group

ObamaCare signups: More than just the exchange numbers

All that hyperbole for nothing!

All that hyperbole for nothing!

President Obama just announced that 8 million people signed up for coverage on federal and state health insurance exchanges during the initial open enrollment period for the Affordable Care Act, aka ObamaCare. That’s higher than originally projected, and much higher than how things looked when the glitch-filled sputtered out of the gate. Cynics will pick at that accomplishment, claiming that it overstates the law’s impact by counting people who already had insurance, and those who don’t end up paying their premiums.

ObamaCare is a complex law (remember the big excitement about how many pages it takes to spell out) and it’s much more than just the exchange websites.

Focusing just on the 8 million who have signed up through the exchanges actually seriously underestimates ObamaCare’s impact on the number of people with insurance. Consider:

  • Close to 4 million people have signed up for Medicaid since October. It would have been more if opponents hadn’t blocked Medicaid expansion in so many states
  • Millions have signed up for private health insurance outside of exchanges: through brokers or directly with the health insurers
  • Many formerly uninsured young adults are insured through their parents up to age 26 instead of being dropped

There’s also another way to look at the folks who already had insurance who have signed up on the exchange. ObamaCare opponents have made a big deal out of people having their plans canceled because those plans didn’t meet the new law’s requirements. We’re suddenly told how everyone loves their existing plan –something I never heard touted prior to ObamaCare. Considering the hassle involved in getting a policy through an exchange, one could reasonably assume that people are getting better, cheaper coverage than what they had before. Even if that doesn’t increase the number of insured people, it improves the overall level of insurance within the population.


photo credit: Fresh Conservative via photopin cc

By healthcare consultant David E. Williams of the Health Business Group

Zohydro ban: Disagreeing with Governor Patrick

Massachusetts Governor Deval Patrick is trying to ban Zohydro ER, a new prescription painkiller, under a state of emergency he’s declared to combat opiate abuse. I agree with the Governor that opiate addiction is a huge problem in Massachusetts (and many other places) but the attempt to ban sales of Zohydro is a bad idea that’s likely to have a negligible impact on the addiction crisis while potentially harming one of Massachusetts’ most important industries.

The argument against Zohydro ER (the ER stands for “extended release”) is that it promotes abuse by providing a higher dosage in one pill than comparable immediate release products and that it lacks tamper resistant features that could make the pill harder to abuse. That’s probably why the FDA’s own advisory panel voted overwhelmingly against approval and why the drug has taken so much heat.

Historically states don’t attempt to interfere with the FDA approval process, but Patrick argues that approval is only a minimum requirement for sale and that states are free to impose additional restrictions beyond what the FDA mandates.

Here’s why I think Patrick is misguided:

The drug does address an unmet need and has real benefits

  • It allows some people who need round-the-clock pain relief and who currently use immediate release drugs such as Vicodin to take fewer pills and to avoid Tylenol (aka acetaminophen or APAP) that is typically combined with hyrdocodone and which can harm the liver

The harms presented by this drug are not unique, and the formulation technologies available to deter abuse are not especially effective

  • Some painkillers –such as Oxycontin and Opana ER– have been reformulated to make them harder to abuse, but others including the generic version of Opana ER are available without tamper resistance
  • Search Google for how to defeat tamper proof Oxycontin and you’ll find simple and effective methods to do so. Sure there’s some value to adding such technologies but it’s no cure-all

It would be bad news to establish the precedent that states could place additional restrictions on approved drugs

  • It really perplexes me that Patrick would promote the idea that FDA approval is insufficient to allow a drugmaker to sell its product throughout the US. Is he nuts? It’s a novel idea, laughed at by the first judge –but who knows how other judges will rule and what other states will seek to do if the principle is established
  • It’s expensive and difficult to get a product from lab to market as is. And, regardless of the merits of the Zohydro ER situation, it’s a bad idea overall to make marketing a new drug even harder. Add more uncertainty, cost and hurdles and it will reduce investment in R&D and may eventually have an adverse impact on the availability of new products for patients. Massachusetts is home to many pharmaceutical and biotechnology companies, so I’m especially surprised Patrick would take this step, which is so contrary to the state’s economic interests

The FDA’s decision to approve Zohydro surprised me and many others. It may or may not have been the best decision. But it’s a bad idea for individual states to try to overturn the approval through unilateral actions.

By healthcare consultant David E. Williams of the Health Business Group