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Pharma: ‘Digitalization’ Not A Panacea – A Basic Step For Giant Leaps

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The hype of ‘Digitalization’ in the pharma industry, virtually as a panacea, is palpable all around. It gives many a feel, directly or indirectly, that this one-time, resource-intensive, disruptive transformation would reap a rich harvest for a long time. In some way, good or bad, the sense of urgency underlying the hype, could possibly be akin to Y2K, that one witnessed before the turn of the new millennium.

Notwithstanding the current ballyhoo, the process of digitization in several Indian pharma companies began since quite some time and is now gathering wind in its wings. Several studies vindicating this point, were reported by the Indian media, as well. One such report of October 31, 2016 highlighted – even around 2013, a number of Indian drug players commenced adopting digitization. They mostly began with the use of modern technology for scientific detailing to doctors, often using algorithms for better insights into issues, like patient compliance. A similar trend was seen also in China, the report added.

Be that as it may, this article will explore whether or not ‘Digitalization’ is a panacea for all pharma business hurdles. Or, it is the backbone to build and maintain a patient-centric organization, with need-based subsequent giant technological leaps, for game changing sustainable outcomes. For better clarity of all, I shall dwell on this concept with AI as the next disruptive step, as it would play an increasingly critical role to be in sync with the customers of the fast-growing digital world.

Digitization is the bedrock to move forward with newer technologies:

That digitization is the backbone of AI adoption was brought out in the May 2019 paper by McKinsey Global Institute - titled, ‘Twenty-five years of digitization: Ten insights into how to play it right.’ It articulated, leveraging, and transitioning from, digital to new frontier technologies is an imperative, as several new frontier technologies are opening up, such as AI.  It also spotlighted that early digitization is the foundation of AI deployment.

Elaborating the point further, the article wrote: ‘70 percent of companies that generate 50 percent of their sales through digitization are already investing in one AI domain. The evidence suggests that incumbents that have adopted AI early and are savvy about deploying these technologies have experienced strong profit growth. In effect AI is a new, higher- performance type of digital technology that may boost the ability of firms to accelerate their digital performance.’

No doubt, several hundred AI use cases would provide evidence of widespread benefits to operations and profitability for AI adoption. However, from the drug industry perspective, the possible dilemmas that will be important to understand, what factors are prompting faster adoption of AI in pharma. Besides, how to make out – what type of use of AI is likely to be most effective for an organization.

Regardless of the dilemma, the AI buzz is gaining momentum:

The fervor around AI is now peaking up, more than ever before. Regardless of the general dilemma – ‘what type of use of AI is likely to be most effective for an organization.,’ several companies are working on AI application in various areas. In sales and marketing domain, these include, improving customer interactions, maximizing product launches, understanding patient insights. This was also corroborated in an article, published by ZS on July 24, 2019.

Why is the AI buzz increasing in pharma?

The above paper identifies 3 broad elements for rapid increase of AI buzz in the pharma industry, which I am paraphrasing as follows:

  • Data requirement for any meaningful business decision-making process has exploded, facilitated by increasing use of internet- based digital platforms.
  • With the increasing digitization of virtually anything in everyday life, paper-based processes are fast disappearing.
  • Realization of game changing impact of new AI algorithms with high degree of precision, on business.

As AI-based interventions are making a radical impact on everyday life, most pharma and biotech players are progressively getting convinced that it will eventually transform many critical areas of the business, despite a slow start.

AI can deliver much more than ever before, across pharma domains: 

AI has a great potential to meet critical requirements of almost all domains of the drug industry. For example: AI may be used to help a medical representative get top insights for his particular day’s or a week’s or a month’s call with doctors by sifting through all his daily reports for that period. Some companies are already moving into this direction. For example, Novartis, reportedly, has equipped sales representatives ‘with an AI service that suggests doctors to visit and subjects to talk up during their meetings.’

Similar AI-based cognitive insights may be obtained from the patient-collected data in the apps or other digital tools. Deep understanding of the process of thinking of important doctors and patients, would facilitate developing customized content for engagement with them, and thereby help achieve well-defined goals with precision.

There are instances of significant success with the use of AI in R&D, clinical trials, many areas of sales and marketing, including supply chains. Nevertheless, the general concern of sharing confidential patient information, often limits access to requisite data for use in AI solutions. Appropriate regulations are expected to address this apprehension, soon.

Big Pharma players are already in it:

The paper – ‘Artificial Intelligence in Life Sciences: The Formula for Pharma Success Across the Drug Lifecycle,’ published on December 05, 2018 by L.E.K Consulting, discussed this point in detail. It says, ‘each of the major pharma players is investing in the technology at some level.’

For example, pharma and biotech majors, such as Novartis, Roche, Pfizer, Merck, AstraZeneca, GlaxoSmithKline, Sanofi, AbbVie, Bristol-Myers Squibb and Johnson & Johnson, are either collaborating or acquired AI technologies to acquire a cutting-edge in business.

The paper also reiterates, developments in AI applications are occurring across the spectrum of pharma business, from target discovery to post-approval activities to automate processes, generate insights from large-scale data and support stakeholder engagement. Let me illustrate this point with an example below.

Example of use of AI for better patient compliance, improving sales and profit:

As highlighted in my article, published in this blog on May 20, 2019, effective use of AI for better patient compliance, can help improve concerned company’s both top and bottom lines. I mentioned there: ‘According to November 16, 2016 report, published by Capgemini and HealthPrize Technologies, globally, annual pharmaceutical revenue losses had increased from USD 564 billion in 2012 to USD 637 billion due to non-adherence to medications for chronic conditions. This works out to 59 percent of the USD 1.1 trillion in total global pharmaceutical revenue in 2015.’

Several reports vindicate that drug companies are making phenomenal progress in this area. Let me cite an example of achieving huge success to improve treatment adherence of patients during clinical trials. The September 26, 2016  Press Release of AiCure, an AI company that visually confirms medication ingestion on smartphones, announced that use of AiCure AI platform demonstrated 90 percent medication adherence in patients with schizophrenia, participating in Phase 2 of the AbbVie study.

Opportunity to make more effective drugs faster and at reduced cost:

Besides, drug discovery, clinical trials, patient monitoring, compliance monitoring – AI applications have been developed for marketing optimization, as well. As AI technology spreads its wings with a snowballing effect, taking a quantum leap in organizational effectiveness, productivity and outcomes will be a reality for many. Moreover, AI now offers a never before opportunity of making novel, more effective and safer drugs, faster and at much reduced cost.

Thus, I reckon, AI-based technology would be a basic requirement of the drug industry for effective operation with desirable business outcomes, in less than a decade. Its slow start as compared to many other industries, notwithstanding. Further, the pharma industry’s endeavor for a swift digital transformation – the backbone of AI adoption, as captured in recent surveys, also vindicates this belief. Other business realities are also generating a strong tailwind for this process.

Pharma’s swift digital transformation to create a solid base for AI:

The ‘White Paper’, titled ‘Use of Artificial Intelligence and Advanced Analytics in pharmaceuticals’ by FICCI captured this scenario quite well. It pointed out, two seismic shifts in the pharma business, namely, – reducing prices and demonstrating greater value from their therapies, along with a swing from treatment to prevention, diagnostics and cure – are prompting the industry for a holistic transformation of business.

Which is why, pharma players are exhibiting greater intent for ‘Digitalization’ of business, paving the way for quick adoption of different modern technologies, such as AI and advanced analytics. This fundamental shift will not only improve efficiencies and reduce costs, but also significantly help adapting to more patient centric business models. Yet, post digital transformation the key question that still remains to be addressed – how does an organization identify and focus on the right areas or ‘good problems’ for AI intervention, fetching game changing outcomes, on an ongoing basis.

Conclusion:

There could be many approaches to address this situation. However, according to ZS, building the capability and the muscle first for AI, and then looking for the problems, may not be a great idea. This could make a company, even post ‘Digitalization’, flounder with the right applications of AI technology. Thus, while venturing into AI intervention for watershed outcomes, the top priority of an organization will be to resolve this dilemma for precise identification of the right problems.

These areas may even include crucial bottlenecks in the business process, AI interventions for which, would lead to not just incremental benefits, but cutting-edge value creation, for a giant leap in an all-round performance. The name of the game is to start selectively with the right problems, evaluate the upshots of AI use, before scaling up and adding new areas. Ongoing value creation of such nature can’t be achieved just by one-time digital transformation, sans imbibing other disruptive technologies, proactively.

This, in my view, has to happen and is practically unavoidable, primarily driven by two key factors, as below:

The first one was the focal point of the ‘2018 Digital Savvy HCP Survey Report of Indegene.’ It found, the highest jump of digital adoption by healthcare practitioners (HCPs) was seen in 2018, compared to its similar surveys done from 2015 to 2017, signaling physicians’ fast-growing digital preference, as we move on.

The second one comes from an important ‘consumer behavioral perspective.’ and is specially in India. According to a report by the Internet and Mobile Association of India (IAMAI) – with 451 million monthly active internet users at the end of financial year 2019, India is now second only to China in terms of internet users. More, importantly, the digital savvy customers are also using other disruptive technologies, mostly smartphone based.

Thus, disruptive digital transformation in pharma domains, including sales and marketing, is a necessary basic step. It will help companies being all-time ready to imbibe other leading-edge technologies, such as AI, for giant leaps to higher growth trajectories.

By: Tapan J. Ray

Disclaimer: The views/opinions expressed in this article are entirely my own, written in my individual and personal capacity. I do not represent any other person or organization for this opinion.

 

 

Gene Therapy Price: Commercial Viability And Moral Dilemma

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On May 24, 2019, Novartis announced the US-FDA approval of ‘the first and only gene therapy’ – Zolgensma, for a type of Spinal Muscular Atrophy (SMA), a lifesaving treatment for infants of less than 2 years of age. This unique drug halts disease progression with a single, one-time intravenous (IV) infusion.

On value offerings of Zolgensma,the Novartis CEO said: “The approval of Zolgensma is a testament to the transformational impact gene therapies can have in reimagining the treatment of life-threatening genetic diseases like spinal muscular atrophy. We believe Zolgensma could create a lifetime of possibilities for the children and families impacted by this devastating condition.”

Unquestionably, this development in medical science is indeed commendable. But, the jaw-dropping price tag – USD 2.125 millionattached to this product, has brought back gene therapy at the center stage of the incensed debate on access and affordability of such treatment for a vast majority of the population, across the world. Besides, two important issues related to gene therapy need to be effectively resolved – long-term commercial viability and the ‘moral dilemma’ that its market launch would prompt. And both are interconnected and also associated with the pricing rationale of such therapies.

I am terming  the second factor as a ‘moral dilemma’ rather than an ‘ethical dilemma’ because, “ethics is a more individual assessment of values as relatively good or bad, while morality is a more intersubjective community assessment of what is good, right or just for all.”In this article, I shall deliberate on these two interrelated issues. But, before delving into it, let me recapitulate in simple terms, what exactly is ‘Gene Therapy.’

What exactly is ‘Gene Therapy?’

According to US-FDA, human gene therapy seeks to modify or manipulate the expression of a gene or to alter the biological properties of living cells for therapeutic use.

Gene therapy is a technique that modifies a person’s genes to treat or cure disease. Gene therapies can work by several mechanisms:

  • Replacing a disease-causing gene with a healthy copy of the gene
  • Inactivating a disease-causing gene that is not functioning properly
  • Introducing a new or modified gene into the body to help treat a disease

Gene therapy products are now being studied to treat diseases including cancer, genetic diseases, and also infectious diseases.

Gene therapy price has been going higher than highest, thus far:

‘At USD 2.1 million, newly approved Novartis gene therapy will be world’s most expensive drug,’ says another report of May 24, 2019.It is noteworthy that Zolgensma price has been kept higher than the highest priced drug before this product came. If his trend continues, the future gene therapy cost is likely to exceed even Zolgensma price, the implication of which for patients who will need such treatment to save life or manage the disease, will be huge.

Intriguingly, the high treatment cost for a rare ailment like, SMA - a degenerative disorder that usually kills an infant within two years, is not limited to just gene therapy.  According to the April 04, 2019 article titled, ‘Biogen SMA drug price, Novartis estimates for its treatment far too high – U.S. group’ of Reuters, the price of another drug for SMA – Biogen’s Spinraza, which is not a gene therapy, is also very high. Its list price is USD 750,000 for the initial year and USD 375,000 annually. As reported, ‘Spinraza, an important growth driver for Biogen, took in USD 1.7 billion in 2018 sales.’

What should have been the actual prices of these drugs?

Interestingly, to determine the value of these drugs, the nonprofit Institute for Clinical and Economic Review (ICER) ‘used a measure known as “quality-adjusted life year” (QALY), in which each year of healthy or near-healthy life resulting from the treatment is worth USD 100,000 to USD 150,000.

Using the QALY benchmark, ICER, reportedly, said Spinraza should cost between USD 72,000 and USD 130,000 for the first year of treatment, and cost USD 36,000 to USD 65,000 per year after that, for infants not yet showing symptoms of the disease.

Further, with an alternative benchmark, known as life-year gained (LYG) based on the additional number of years a person lives due to a treatment, Spinraza is, reportedly, worth USD 83,000 to USD 145,000 in year one, and USD 41,000 to USD 72,000 annually thereafter, as ICER determined.

Zolgensma, on the other hand, would, reportedly, be worth USD 310,000 to USD 900,000 for Type 1 SMA patients based on the QALY assessment, and USD 710,000 to USD 1.5 million using the LYG calculation, ICER said.

Notwithstanding, whether one takes the QALY assessment or LYG based price of Zolgensma and Spinraza, the treatment cost of rare diseases, such as SMA for infants, is beyond the affordability of most people – whenever these drugs become the only choice to save lives. Thus, the question comes: Is gene therapy commercially viable or sustainable?

Is gene therapy commercially sustainable?

Undoubtedly, the development of gene therapy signifies yet another milestone in medical science to save lives, which is highly commendable. Nevertheless, the question arises, who will be able to afford this treatment? Thus, is development of gene therapy commercially viable and could be a money churner for a company on a long-term basis? There doesn’t appear to be a clear answer to these questions, just as yet. There are several reasons for this apprehension. But, I am citing below just two examples – related to their humongous treatment cost.

According to the article, published in the Scientific American, in the past five years, two gene therapy drugs have been approved in Europe and one in the United States. The name of this article is ‘Gene Therapy Is Now Available, but Who Will Pay for It?’ Interestingly, only three patients have so far been treated commercially with gene therapy, in Europe.

UniQure’s Glybera, used for a very rare blood disorder, costing around USD 1 million per patient, has been used just once since approval in 2012. However, in 2017, due to commercial reason UniQure decided to withdraw Glybera from the market. Similarly, Strimvelisof Orchard Therapeutics – used for severe Combined Immunodeficiency, costing USD 700,000, ‘has seen two sales since its approval in May 2016, with two more patients due to be treated later this year.’ Interestingly, these apprehensions have not deterred many companies. The ball keeps rolling.

But the ball keeps rolling:

That the ball keeps rolling, and at a faster pace, is evident from what US-FDA envisages in this field. According to US-FDA, by 2025, they are likely to approve 10 to 20 cell and gene therapy products a year. This is based on an assessment of the current pipeline and the clinical success rates of these products.

Importantly, despite apprehension of many, even some of the top pharma players, are fast moving into this space – based on their own assessment of the market. But, to move meaningfully in this direction, there are many several critical success factors, most of which are quite challenging and cost-intensive. A few of these, for example, are – a right collaborative model, ability to develop a scalable manufacturing process and overcoming various technical and regulatory challenges on the way. Interested pharma players, apparently, have realized these needs.

Big Pharma players joining ‘Gene Therapy’ bandwagon:

Big Pharma players, such as, Pfizer and Johnson & Johnson (J&J) have started moving into this space. Let me illustrate the point with just a couple of examples.

On March 20, 2019, Pfizer announced: ‘Pfizer has acquired a 15 percent equity interest in Vivet Therapeutics and secured an exclusive option to acquire all outstanding shares.’ Both the companies will collaborate on the development of Vivet’s proprietary treatment for Wilson disease – a rare and progressive genetic disorder, if remains untreated may cause liver (hepatic) disease, central nervous system dysfunction, and death.

Just before this, on January 31, 2019, Janssen Pharmaceutical of Johnson & Johnson (J&J) announced a worldwide collaboration and license agreement with MeiraGTx Holdings plc – a clinical-stage gene therapy company, to develop, manufacture and commercialize its clinical stage inherited retinal disease portfolio, including leading product candidates for achromatopsia. Even prior to this, on January 05, 2018, J&J had announced that the company has established an exclusive research collaboration with the University of Pennsylvania’s ‘Gene Therapy Program’ for fighting Alzheimer’s disease with gene therapy. There are several such instances of gene therapy collaboration for Big Pharma.

With a slightly different collaborative model for gene therapy, on April 12, 2018, GlaxoSmithKline (GSK) signed a strategic agreement to transfer rare disease gene therapy portfolio to Orchard Therapeutics, taking a 19.9 percent stake in the company and a seat on the board. Simultaneously, this agreement strengthens Orchard’s position as a global leader in gene therapy for rare diseases.

What could be the moral dilemma in gene therapy pricing?

The dilemma with gene therapy is that they are frightfully expensive, but at the same time is ‘life-transforming’ for many, across the socioeconomic spectrum. This could be another ‘moral dilemma,’ as such exorbitant, if not seemingly ‘vulgar pricing’, as it were, would raise many questions on the company’s own principles regarding right and wrongin saving lives of patients with its gene therapy.

The reason for this moral dilemma in, especially gene therapy pricing is aptly elucidated in an article titled, ‘How to pay for gene therapies in developing nations,’ published in  Evaluate Vantage on March 22, 2019. Admitting that discrepancies in healthcare between rich and poor nations are nothing new, the article also raises a flag, indicating: ‘The potentially curative nature of many gene therapies heightens the moral conundrum that companies will face if and when these projects get to market.

Acknowledging that gene therapies are hot right now, with their developers taking aim at everything from hemophilia to rare eye diseases prevalent in rich nations,the author raises a pertinent question: ‘With rich countries like the US finding it hard to fund gene therapies, it is worth asking whether these projects will ever reach patients in developing countries. And if they do how will companies cope?’

Intriguingly, to create a larger market some are also targeting disorders, largely seen in poorer areas, such as sickle cell disease that could prove valuable also in the developing world. Expectedly, the pressure will mount from many corners to provide gene therapy at an affordable price. Big pharma players are likely to face this strong head wind, adding further fuel to fire of the moral dilemma of gene therapy pricing, especially for the developing world. As on date, no one knows what percentage of people in the developing world will have access to gene therapy. Even Novartis, reportedly, does not seem to have any plan to make its product available in the developing nations.

Conclusion:

Despite what has happened so far, as described above, looking around, we find a steady flow of gene therapy, some even promise remedial treatment outcomes. Big pharma companies, as well, have commenced a long-haul journey in this direction, with big stake investments.

Regarding, not achieving a huge commercial success with gene therapy, so far, one point is common for all, these are for the treatment of very rare diseases. Probably, because of this reason, some companies, having taken a cue from it, are moving away from ultra-rare diseases. Illustratively, GSK is still looking to use gene therapy in a collaborative platform, to develop treatments for more common diseases, including cancer and beta-thalassemia – another inherited blood disorder – as the above Scientific American article reported.

That said, the point to ponder now, if the effort to come out with a remedial gene therapy for these indications fructifies, would it ensure a long-term commercial viability, alongside giving rise to a moral dilemma on the rationale for gene therapy pricing? This seems to be akin to a ‘chicken and egg’ situation. It will be interesting to witness how it pans out, as we move on.

By: Tapan J. Ray   

Disclaimer: The views/opinions expressed in this article are entirely my own, written in my individual and personal capacity. I do not represent any other person or organization for this opinion.