Collaboration: Part of the Pharmaceutical Industry’s New Normal

June 1, 2014

“We try never to forget that medicine is for the people… How can we bring the best of medicine to each and every person? We cannot rest until the way has been found with our help to bring our finest achievements to everyone.“¹

George Merck’s call to action is as true today as it was 64 years ago. Like other business sectors, the multitude of challenges facing pharmaceutical companies has led some to conclude that there is a crisis requiring systemic change.² Ultimately, the means for delivering to patients the pharmaceutical industry’s “finest achievements to everyone” will hinge, in large part, on collaboration.

THE PHARMACEUTICAL INDUSTRY’S GRAND CHALLENGE

Wholesale changes in healthcare legislation, expiring patents, expanded regulatory scrutiny and a recent trend of potential mergers, acquisitions and drug portfolio divestitures, compounded by a still-lagging economy, are all forcing industry change.³ Perhaps the most significant precipitating change is the industry’s grand challenge: Identifying innovative solutions to improve the productivity of new drug research and development.⁴

The facts present a stark research and development landscape: Nearly 86% of all prescriptions written in the U.S. are for generic drugs.⁵ Depending on the study cited, the average cost to develop a new pharmaceutical drug ranges from $1.8 to $4 billion.⁶ In 2013, R&D spending was estimated at just over $51 billion, with total R&D as a percentage of total sales at 17.8%.⁷ Only two in 10 marketed drugs return revenues that meet or exceed research and development costs.⁸

Yet the pharmaceutical sector has suffered less than others. An aging population, rising incidence of chronic diseases, opportunities in emerging markets, technological advancements, production innovation and impending positive impacts from healthcare reform extending insurance coverage are all contributing to the industry’s growth despite these circumstances.⁹

In 2012, pharmaceuticals generated $959 billion in total revenue, with the Americas contributing the largest share at $417.6 billion.¹⁰ In 2013, the pharmaceutical industry accounted for 810,000 direct jobs and nearly 3.4 million indirect jobs.¹¹ Currently, there are 400 medicines in development, with 70% of those considered potential first-in-class medicines.¹²

The era of me-too and blockbuster drugs may be ending, and a seismic shift to focusing on discovery research and early translational medicine is underfoot.¹³ As part of that change, a growing consensus suggests that developing true breakthrough medicines will first require a complete understanding of human disease biology.¹⁴ However, the scope and breadth of deciphering the most complex and challenging disease states, for which few or no effective treatment options are available, is simply enormous.¹⁵ Consequently, now more than ever, collaboration and open-source drug discovery may prove to be the key to deciphering complex and widespread disease states in ways that can result in truly breakthrough medicines.¹⁶

THE FOUNDATION OF COLLABORATION

To be sure, collaboration is not new to drug discovery and development. After Alexander Fleming’s 1928 discovery of penicillin, more than 1,000 scientists from 40 laboratories needed another 10 years before bringing it to market, and Henry Kaplan’s oncology breakthroughs of the 1950s harnessed disparate disciplines including medicine, physics and statistics.¹⁷ Explosive industry growth in the 1980s led to widespread adoption of strategic alliances – “Kissingeresque marriages of convenience” —as industry stakeholders recognized that no one company could take on the challenge alone.¹⁸

Moreover, groundbreaking federal legislation fostered both collaboration and transparency. The 1980 Bayh-Dole Act laid the foundation for public-private collaboration by permitting universities and other nonprofits to retain patent rights secured from government-funded grants.¹⁹ The 1997 Food and Drug Administration Modernization Act mandated registration of most clinical trials involving developing pharmaceutical therapies by establishing an online database – ClinicalTrials.gov – providing public access to information about trials, outcomes and adverse events.²⁰ In addition to key legislation, in 2005 the International Committee of Medical Journal Editors implemented a requirement that clinical trials be registered on ClinicalTrials.gov as a condition to publication.²¹

As a result, today’s pharmaceutical and larger life sciences industry has evolved into an ever-growing, interdisciplinary R&D ecosystem.²² Constituents of this thriving ecosystem are academic research institutions, venture capitalists, startup companies, clinical research organizations, nonprofit foundations, business incubators, and forward-thinking local and state government leaders and are at the center of truly thriving hubs and industry.²³ However, generating cutting-edge scientific breakthroughs requires collaboration through reliance on the various ecosystem members.²⁴

COLLABORATION IN PRACTICE

Generally, successful models of collaboration take at least two broad forms implemented at various stages in the drug discovery and development process: (1) sharing data and basic scientific understanding and (2) developing focused, strategic alliances within the R&D ecosystem.

Transparency Through Data-Sharing Pre-clinical collaboration.

One of the most exciting alliances created to date is the Accelerating Medicines Partnership (“AMP”), a pre-competitive public-private partnership. Announced in February 2014, the AMP is a five-year cost-sharing pact between the NIH and 10 major rival pharmaceutical manufacturers.²⁵ Focusing on early-stage pre-competitive research, the AMP collaborators will use $230 million in NIH funding, coupled with sharing scientists, tissue, blood samples and data to decipher the biology of Alzheimer’s, type 2 diabetes, rheumatoid arthritis and lupus.²⁶ Not only will the AMP develop testing techniques to assess the response to treatments, but the alliance prevents participants from using any discovery for their own competitive drug development efforts until the data on that discovery has first been made public.²⁷

Sharing Clinical Trial Data.

In addition to pre-competitive data sharing, an ardent call to share study-level and even patient-level data has emerged. Characterized as a “boon” to drug developers, some commentators have opined that “an era of open science through data sharing is necessary” to increase drug development efficiency, cost-effectiveness, improve comparative-effectiveness analysis and reduce duplication of efforts among trial sponsors.²⁸

In response, a number of major manufacturers – GlaxoSmithKline, Roche and Medtronic – have taken voluntary steps to allow researchers access to participant-level data.²⁹ Recognizing the importance and inevitability of this trend, in mid-2013 the Pharmaceutical Research and Manufacturers of America (“PhRMA”) jointly published with the European Federation of Pharmaceutical Industries and Associations (“EFPIA”) five Principles for Responsible Clinical Trial Data Sharing.³⁰ Under the Principles, PhRMA and EFPIA member companies commit to enhance data sharing to “expand research and scientific knowledge, foster a collaborative scientific discovery process and support patient care – all with the ultimate goal of improving public health.”³¹

Academic-Industry Collaboration.

Viewed as the United States’ linchpin to securing its lead in innovation and global competitiveness, the Bayh-Dole Act continues to foster innovative and indispensable alliances by harnessing the strengths of academic and industry stakeholders “to identify breakthroughs in basic research that may translate into clinical development opportunities …”³²

Traditional, widely used academic industry partnerships fall into several broad models: (1) companies providing unrestricted research support, permitting the academic partner to operate independently; (2) a principal investigator or several principal investigators from the same institution are retained by an industry partner to research a specific problem; and (3) fee-for-service research, in which a company identifies a problem and the solution, contracting out related projects to one or more academic partners.³³ However, a number of innovative and increasingly implemented partnership models have emerged, including corporate venture capital, bio clusters and academic drug discovery centers.

EMERGING MODELS OF ACADEMIC INDUSTRY COLLABORATION

Corporate Venture Capital.

While private capital has become a mainstay in fostering and supporting life science startups, corporate venture capital (“CVC”) funds established by pharmaceutical companies have proven successful new initiatives, with CVC funds involving 18% of all deals between 2010 and 2011.³⁴ For example, the Boehringer Ingelheim Venture Fund (“BIVF”) is a private equity fund created to invest in biotech and startup companies that provide groundbreaking therapeutic approaches.³⁵ The BIVF focused on companies from the beginning to enable their likelihood of success, and established U.S. offices in Cambridge, Massachusetts, and Fremont, California.³⁶

Corporate Mini-labs.

Sometimes called bioclusters, corporate mini-labs entail academic and industry experts working side-by-side to harness the combined expertise of each. For example, Pfizer’s Centers for Therapeutic Innovation (“CTI”), started in 2010 and now located in Boston, San Francisco, San Diego and New York, are characterized by an “open innovation model that puts Pfizer scientists in the lab with academic investigators, where they share their understanding of target biology and translational medicine expertise.”³⁷ Similarly, Johnson & Johnson’s Innovation Centers – in Boston, San Francisco, London and Shanghai – represent “a new approach to partnering aimed at advancing early-stage innovation to collaborate with scientists and entrepreneurs at universities, academic institutes and startup biotech companies to accelerate cutting-edge science into healthcare solutions.”³⁸

Academic Drug Discovery Centers.

Similar to the pharmaceutical model, academic drug discovery centers undertake most of the elements of drug discovery by collaborating across various disciplines within an academic institution and other external entities, such as a contract research organization.³⁹ For example, the Alabama Drug Discovery Alliance (“ADDA”) is a collaboration between the Southern Research Institute (a Birmingham, Alabama-based CRO) and The University of Alabama at Birmingham’s (“UAB”) School of Medicine, Center for Clinical and Translational Science and Comprehensive Cancer Center. The ADDA’s objective is to facilitate drug discovery and development by utilizing the resources that exist at UAB and Southern Research.⁴⁰ Similarly, the recently established Emory Institute for Drug Development (“EIDD”) provides “organization, facilities and resources to translate academic drug discovery into clinical candidates.”⁴¹

CONCLUSION

Collaboration is now an integral part of the pharmaceutical industry’s new normal. Although collaboration “represents a significant departure from the traditional lengthy and linear process of target discovery to eventual drug development,”⁴² its continued adoption will be vital to successfully crossing the Valley of Death – the “translational gap between drug discovery and clinical development” – in 21st-Century drug development. Sixty-four years later, George Merck’s call for patient-focused drug development justifies the change, just as one leading industry consultant observed: “Collaborating to better comprehend [the] … etiology [of poorly understood

[i] George W. Merck, address to the Medical College of Virginia, Dec. 1, 1950; Merck Code of Conduct (https://www.merck.com/about/code_of_conduct.pdf).

[ii] Joseph S. Ross & Harlan M. Krumholz, “Ushering in a New Era of Open Science Through Data Sharing,” JAMA, Vol. 309, p. 1355 (Apr. 3, 2013).

[iii] Deloitte Touche Tohmatsu Ltd., 2013 Global Life Sciences Outlook, p. 1.

[iv] Steven M. Paul, et al., “How to improve R&D productivity: the pharmaceutical industry’s grand challenge,” Nature Reviews Drug Discovery, Vol. 9, p. 203 (March 2010).

[v] “Key Facts,” PhRMA 2014 Pharmaceutical Profile.

[vi] “Key Facts,” PhRMA 2014 Pharmaceutical Profile; Munos, B., ”Lessons from 60 Years of Pharmaceutical Innovation,” Nature Review Drug Discovery, Vol. 8, p. 964 (Dec. 2009).

[vii] “Key Facts,” PhRMA 2014 Pharmaceutical Profile.

[viii] “Key Facts,” PhRMA 2014 Pharmaceutical Profile.

[ix] Deloitte Touche Tohmatsu Ltd., 2014 Global Life Sciences Outlook, p. 1.

[x] Deloitte Touche Tohmatsu Ltd., 2014 Global Life Sciences Outlook, p. 1.

[xi] “Key Facts,” PhRMA 2014 Pharmaceutical Profile.

[xii] “Key Facts,” PhRMA 2014 Pharmaceutical Profile.

[xiii] Paul, et al., p. 213.

[xiv] Paul, et al., p. 213.

[xv] PhRMA 2014 Pharmaceutical Profile, p. 53.

[xvi] Paul, et al., p. 213; Monica Langley & Jonathan D. Rockoff, “Drug Companies Join in NIH Study of Alzheimer’s, Diabetes, Rheumatoid Arthritis, Lupus,” U.S. News (Feb. 3, 2014); Bernard Munos, “Can Open-Source Drug R&D Repower Pharmaceutical Innovation?,” Nature, Vol. 87, p. 534 (May 2010).

[xvii] Munos, p. 534.

[xviii] Barry Werth, The Billion Dollar Molecule, p. 69.

[xix] Michelle Mello, et al., “Preparing for Responsible Sharing of Clinical Trial Data,” New England J. of Med., 369; 17; p. 1651 (Oct. 24, 2013).

[xx] Mello, et al., p. 1651.

[xxi] Mello, et al., p. 1651.

[xxii] PhRMA 2014 Pharmaceutical Profile, p. 29.

[xxiii] PhRMA 2014 Pharmaceutical Profile, p. 29.

[xxiv] PhRMA 2014 Pharmaceutical Profi le, pp. 32, 53.

[xxv] Monica Langley & Jonathan D. Rockoff.

[xxvi] Monica Langley & Jonathan D. Rockoff.

[xxvii] Monica Langley & Jonathan D. Rockoff.

[xxviii] Eichler, Hans-Georg, et al., “Access to Patient-Level Data – A Boon to Drug Developers,” New England J. of Med., 369; 17; p. 1577 (Oct. 24, 2013).

[xxix] Mello, et al., p. 1651.

[xxx] http://www.phrma.org/phrmapedia/responsible-clinical-trial-datasharing#sthash.NRliMjuj.dpuf.

[xxxi] http://www.phrma.org/phrmapedia/responsible-clinical-trial-datasharing#sthash.NRliMjuj.dpuf.

[xxxii] Christopher-Paul Milne & Ashley Malins, pp. 3-4.

[xxxiii] Christopher-Paul Milne & Ashley Malins, pp. 16-19.

[xxxiv] Christopher-Paul Milne & Ashley Malins, p. 16.

[xxxv] http://us.boehringeringelheim.com/news_events/press_releases/press_release_archive/2013/12-02-2013-boehringer-ingelheim-venturefund-gmbh-establishes-us-operations.html.

[xxxvi] http://us.boehringeringelheim.com/news_events/press_releases/press_release_archive/2013/12-02-2013-boehringer-ingelheim-venturefund-gmbh-establishes-us-operations.html.

[xxxvii] http://www.pfizer.com/research/rd_partnering/centers_for_therapeutic_innovation.

[xxxviii] http://www.jnjinnovation.com/.

[xxxix] Christopher-Paul Milne & Ashley Malins, pp. 18-19.

[xl] https://www.uab.edu/medicine/adda/about-adda.