Using Innovative Financial and Business Models to Speed Science to Patients
Innovative financial and business models are emerging to create a more dynamic market for biomedical advances. Non-profit drug development organizations are promising to use scientific advances to help poor and underserved populations. Spin-outs from large biopharmaceutical companies are opening up new sources of capital to ensure that valuable science progresses for patients.
Shortages in generics are being eliminated through innovative arrangements, ensuring stable supply for hospitals and those who need them. In short, a wave of trailblazers is beginning to address what ails us and helping to optimize the societal value of our collective investment in science.
During this webinar, we will explore the challenges that these innovators are addressing, as well as the solutions that are surfacing. Compounds with promising science but lower commercial prospects are often deprioritized within pipelines. How can we unlock new sources of capital and create new channels to develop these valuable compounds for patients? Incentives can be weak for generics manufacturers to produce a stable supply of critical medicines at prices palatable to hospital systems. How could incentives be better aligned to address the needs of all stakeholders in the system? Overall, we will explore how we can learn from and expand promising financial and business models that have the potential to transform the landscape for biomedical advances.
• Freda Lewis-Hall, Executive Vice President and Chief Patient Officer, Pfizer
• Dan Liljenquist, Senior Vice President and Chief Strategy Officer at Intermountain Healthcare, Chair of Civica Rx
• Colleen Rye, Director, FasterCures, a center of the Milken Institute
• Tanisha Carino, Executive Director, FasterCures, a center of the Milken Institute (moderator)
On February 20, FasterCures, a center of the Milken Institute, held a webinar exploring innovative financial and business models that could speed therapies to patients and catalyze future investments in biomedical R&D.
- Tanisha Carino, Executive Director, FasterCures, a center of the Milken Institute
- Freda Lewis-Hall, Chief Patient Officer and Executive Vice President, Pfizer
- Dan Liljenquist, Senior Vice President and Chief Strategy Officer at Intermountain Healthcare, Chair of Civica Rx
- Colleen Rye, Director of the Aligning Incentives Program, FasterCures, a center of the Milken Institute
Rye provided an overview of FasterCures’ work in this area. The core issue, as Rye described, is that there are several channels for developing promising therapeutics that may not be a strategic fit for an organization or have uncertain commercial value—such as those with unclear reimbursement, weak patent protection, or small patient populations—even if there is promising science. Though these therapies could impact lives, they struggle to garner the needed investments, are cut from industry pipelines, and are fated to sit on a shelf unused.
FasterCures and the Center for Financial Markets, two centers of the Milken Institute, are collaborating to identify new pathways to capitalize the development of these underinvested therapeutics. They are investigating what an “ideal” market for these compounds might look like, how society could unlock fresh capital for innovation, and how new business models can be scaled to the ecosystem.
To open the market for new forms of capital, compounds must be out-licensed between organizations more freely. Traditionally, out-licensing has been a pharma-to-pharma transaction. But other transactions are possible: pharma to nonprofits, to spin-outs, to government agencies, or to virtual drug developers. New players bring new capital sources which could lower the cost of developing new therapeutics.
Dr. Freda Lewis-Hall: Pfizer; Board Member of SpringWorks Therapeutics
Lewis-Hall spoke about her experience with the Pfizer portfolio and the creation of SpringWorks Therapeutics, a drug development company that was spun-out from Pfizer.
Pfizer’s portfolio is large and includes internal R&D, in-licensed compounds, integrations, and collaborations with academic researchers. Such a large portfolio needs to be concentrated on funded, innovative, and strategic assets. Inevitably, many compounds fall outside of Pfizer’s strategic focus and remain unfunded. But, if these unfunded compounds are pharmacologically active, do not present safety concerns, fail their original indication, and have the potential for “off-strategy” indications, then they can be available for strategic partnerships. Since Pfizer has many ongoing partnerships, including collaborations with foundations, NGOs, academia, and venture philanthropists, its executives began to ask if Pfizer could create a fit-for-purpose model to advance deprioritized compounds.
SpringWorks was launched in September of 2017, with a portfolio of compounds in-licensed from Pfizer across several therapeutic areas. It was founded with financial backing from life sciences investors and is led by an experienced team of accomplished drug developers. As Lewis-Hall phrased it, when you put the right assets and the right people in the right place, you create a “sweet spot” for advancing therapeutics. SpringWorks expects to start to pivotal trials with two compounds from its portfolio in the first half of 2019. Both compounds are for rare oncology indications—neither of which currently have an approved therapy. According to Lewis-Hall, SpringWorks is “the beginning of a proof-point that is putting the financial and human resource investments in a novel mechanism, giving an opportunity to speed these therapies to patients with unmet need.”
Dan Liljenquist: Civica Rx
Dan Liljenquist provided an overview of Civica Rx and its efforts to address the shortages and monopolies in the generic drug market. Medication shortages, largely driven by consolidation, has affected many hospitals around the country by disrupting the supply chain for key drugs and created instability. Civica Rx, which Liljenquist describes as a democratized utility company for the manufacturing of generic drugs, will have the important role “to bring competition to the generic drug market focusing on value, price, and quality, and specifically to bring competition to areas… where there is a dominant player that has essentially cornered the market for a particular [generic] compound that we rely on for patient care.” Civica’s three chief objectives are:
- Focusing on value and invigorating competition in the market for generic drugs
- Ensuring a stable and predictable supply of essential generic drugs to correct shortages
- Serving as a check against the aggressive pricing behavior of some generic drug manufacturers
According to Liljenquist, Civica Rx approach will be to establish fair, sustainable, and transparent pricing at all times, with no fees or rebates. The company also intends to become an FDA-licensed manufacturer, offering long-term, guaranteed contracts to hospital systems, with redundant manufacturing and safety stocks to avoid shortages and ensure the continuity of patient care. Finally, Civica Rx will implement a labeling system that, for transparency, indicates where a drug was manufactured.
Since the initiative was announced in January 2018, Civica Rx has received generous amounts of interest, news coverage, and support. In fact, one-quarter of the U.S. hospital market has signed agreements with the company. Liljenquist expects that the company will have its first 14 drugs on the market this year. Furthermore, Liljenquist believes that Civica Rx’s democratized utility model for the manufacturing of generic drugs can be scaled and replicated to other parts of the market.
Partnering with patients
When asked how SpringWorks has worked with patient organizations, Lewis-Hall explained that patient input was helpful for the process of choosing compounds and therapeutic areas to advance. There are a variety of considerations in this process aside from just commercial potential, such as the regulatory environment, how to successfully measure outcomes in clinical trials, and how to identify the patient population, especially in the case of rare diseases. Patient organizations have been integral for SpringWorks to prioritize and balance such considerations.
Liljenquist addressed a question about whether the Civica Rx model passes on savings to patients. He said that Civica Rx would publish its market prices with the goal of driving transparency. Patients will be able to see if their health system has marked up the price of a drug.
Partnering with philanthropy
Lewis-Hall and Liljenquist both addressed the role that philanthropy has played for their organizations. In Lewis-Hall’s view, philanthropic organizations and foundations bring value not just for their financial contributions, but for their subject matter expertise, convening power, and relationships with patient groups and other stakeholders. As the system shifts from traditional models of collaboration to a more thoughtful “all hands on deck” model, the deep knowledge and expansive networks of philanthropic organizations will help advance therapies.
Liljenquist said that Civica has incorporated philanthropists onto their board for many reasons, but in particular, to ensure that in the future the capacity being built at Civica Rx will not be monetized by its members.
The path forward
Responding to a question about what is needed to scale current efforts and create more innovative models, Lewis-Hall noted three things that she would like to see accomplished:
- A network or system for facilitating knowledge sharing and connecting different stakeholders so that potential investors would know what assets might be available for investment
- A cultural shift in the way we think about creating collaboration in what has traditionally been a go it alone environment. Scientists and industry may be reluctant to release their work to other parties for collaboration and further advancement, but this needs to change.
- A recipe or algorithm to discover what types of models fit specific development needs. Variables that might be included, for example, include information on the patient community, unmet therapeutic needs, potential investors, and available assets. The most effective collaboration structure would output a series of opportunities and models that could be a good fit.
The issue, in both the development and manufacturing of therapeutics, is that patients often can’t get the therapeutics they need either because they don’t exist, they aren’t available, or they aren’t affordable. Rye provided a trenchant diagnosis of this issue; Lewis-Hall and Liljenquist gave prescriptions. SpringWorks Therapeutics is a replicable model for funding compounds that are deprioritized by pharmaceutical companies. Civica Rx is a disruptive business model for building and bracing a supply chain of affordable generic drugs. If these companies are successful as case studies, they may offer the biomedical system fresh models for getting patients the products they need—faster and more affordably.