Written by Matthew Herper, Forbes Staff
Can cutting red tape and duplicated work help rein in the skyrocketing cost of developing new medicines? That’s the hope of a new company ten of the world’s biggest drug makers announced they were forming yesterday.
The new outfit, Transcelerate Biopharma, was created out of a regular meeting of drug company research chiefs and will focus on five areas where the clinical trials that are used to test medicines wastefully duplicate procedures like training physicians, running websites, or creating procedures to document the benefits and side effects of new medicines.
Transcelerate plans to register as a non-profit, and is looking for a chief executive. It’s backers are: Abbott, AstraZeneca, Boehringer-Ingelheim, Bristol-Myers Squibb, Eli Lilly and Company, GlaxoSmithKline, Johnson & Johnson, Pfizer, Genentech a member of the Roche Group, and Sanofi. The cost of the project will largely consist of contributing the time of experts on company payrolls.
“We in fact cause a lot of confusion by each using different computer systems to fill our data, different ways of handling our drugs,” says Paul Stoffels, the worldwide chairman of pharmaceuticals at Johnson & Johnson. “The ingoing assumption is that by simplifying we can save a lot of cost for pharmaceutical organizations and also make it easier for clinics and physicians to work with us.”
Elias Zerhouni, the head of research and development at Sanofi and the former director of the National Institutes of Health, says a concerted effort was needed to make sure that existing efforts at cutting clinical trial costs do not fail. “We want to be able to conduct large trials at reasonable cost,” says Zerhouni. “Otherwise what will happen is what we’re seeing more and more already: People are focusing on specialty drugs and not trying to develop primary care drugs such as diabetes drugs.
Transcelerate’s job will be to create industry standards. Zerhouni compares it to Sematech, the nonprofit formed by U.S. semiconductor companies in 1986 to help them create manufacturing standards to eliminate waste and compete with Japan. On a simpler level, it’s analogous to making sure that all the screws have the same threading and are interchangeable.
The idea of creating a standalone nonprofit to create these standards was first hatched by Garry Neil, then a Johnson & Johnson vice president, last August.
“Why do some [companies] record that male is a 0 and female is a 1, and others use 1 and 0, and others use M and F. Where is there any competitive advantage to doing that?” says Neil. “We do 38% of the clinical trials but 70% of the [spending on them]. IF we were to come together and try to define some of these standards it would be an enabler for efficiencies for everyone.”
The Hever Group, a council composed of the research and development heads of many of the biggest drug companies, met in November and Neil convinced them to back the initiative. He will serve as interim chief executive. He has retired from J&J, and is also a partner at Appletree Partners, a private equity firm. A group of consultants came up with 30 potential tasks for Transcelerate to tackle, and Neil has settled on five:
- Creating clinical data standards, as with the case of notation of gender, so that all clinical trials note things like gender, changes in blood pressure, and such in the same way.
- Standardizing the way that risk to patients is measured in studies, so that side effects are always handled in the same way.
- Building a common Web site for doctors enrolling patients in clinical trials to use, so that each company isn’t running its own portal with a different look and feel.
- Standardizing the process of training doctors and qualifying clinical trial sites, so that a physician doesn’t need to go through separate but similar training programs in order to work in clinical trials run by two companies.
- Standardizing the process by which companies strike deals to do clinical trials that compare an experimental drug to a standard regimen made by another company.
There is no question that the costs of developing new medicines has spiraled out of control, with companies reporting late-stage studies for some medicines costing billions of dollars. An analysis I did of research and development productivity earlier this year found that the amount companies spend per approved drug varies wildly. There have been concerns on Wall Street that research and development expenses are no longer justifiable with current success rates.
But the biggest driver of costs is the number of drugs that make it into late-stage studies and fail. Can the growth in costs be slowed by being more efficient and wasting less money? It’s possible – and it makes sense that companies would at least want to try to pinch their pennies by pooling resources, given the alternatives.