	The competitive landscape for life science companies around the world is changing rapidly. We are now in the “New Health Economy” in which drug pricing pressures, scientific breakthroughs, expanding global demand for healthcare access, and emerging digital and analytical capabilities are pushing the healthcare industry toward a new ecosystem defined by collaboration, quality, and consumer value. 

	Change requires a new strategic approach-one that enables companies to understand market trends and build the internal capabilities needed to execute. This article explores specific trends affecting pharmaceutical companies and provides clear guidance for how organizations can best respond.

	The central thread running through our view of the New Health Economy is that strategy requires distinct capabilities to position a company ahead of its competitors. A capabilities-driven strategy requires three elements: 

		Coherent positioning that includes a clear “way to play.” 

		A set of underlying capabilities needed to differentiate the company from competitors.

		An aligned portfolio and geographic focus. 

	Each of these elements warrants a closer look. The first element is a clear “way to play,” meaning a specific, well-defined means by which the company creates value for its customers. For example, in the automotive business, Mercedes-Benz and Kia both sell cars, but they have highly distinct ways to play. Mercedes sells expensive vehicles that emphasize performance, while Kia emphasizes value. The pharmaceutical industry clearly differs from the automotive industry, but the theme of creating a distinct value proposition for customers is relevant to both. 

	The second element is a set of differentiated capabilities that help the company execute its chosen “way to play.” By capabilities, we mean unique attributes that collectively differentiate a company from the competition. Each capability has underlying elements-people, processes, technology, competencies, behaviors, and operating models-that the company systematically acquires or builds up over time. Some capabilities may be similar across organizations, yet only those players that can execute the capabilities at a high level will outperform their peers. In consumer electronics, for example, Apple has strong capabilities in product design, intuitive user interfaces, and aggregating the rights to digital content. 

	The third element is the right mix of products, services, and geographic markets. Once a company has defined its way to play and has established the corresponding set of capabilities, some components of a company’s portfolio will naturally align, while others may no longer fit.

	Last, these elements must be consistent with market dynamics over time. A perfect strategy today will need to evolve tomorrow, as market conditions change and new risks and rewards emerge.

	Our research has shown that across all industries, companies with a capabilities-based strategy deliver higher returns to shareholders.

	 But getting these elements right isn’t easy. It forces management teams to go beyond traditional strategy development and ask themselves some tough questions: How does the company truly create value? How viable is such a way to play over the long term? Has the company identified and aligned its most critical capabilities, and can it leverage these capabilities in unison? Most important, are leaders willing to make difficult choices to ensure that everything the company does is coherent with its strategy?

	Before looking more closely at each of the strategic options, it’s worth discussing two “megatrends” currently impacting pharma: the broadening demand for healthcare products and services, and severe cost pressures. An aging population, urbanization, and growth in emerging markets are all putting a greater strain on healthcare systems worldwide. For pharma, that means a huge influx of new customers and greater demand for medicine. But spending increases for drugs are triggering public and private efforts to reduce prices and tightly manage utilization.

	Government reforms vary widely, but often include efforts to improve the effectiveness of their healthcare spending by forcing pharma companies to demonstrate value, both for patients and for healthcare systems. Some governments are applying the blunt instrument of price freezes and drug spending caps. Others are using formal health technology assessment (HTA) organizations. And some developed markets like the US and UK are pushing control over budgets down to provider organizations (such as accountable care organizations, or ACOs), which are implementing tools like mandatory care protocols or strict formularies to manage the total cost of care within a set budget. 

	For chronic diseases, governments are also seeking more comprehensive treatment programs, including wellness and prevention, along with more advanced approaches to population management.

	Finally, digitization and the explosion of data are rewriting the playbook for pharma. New technology-including cloud, mobile technology, analytics, and social media-can drive better patient education, engagement, and results. Wearables, biosensors, FDA-approved mobile apps and devices, and remote monitoring engage patients by providing the tools they need to receive treatment, and the feedback necessary to maximize drug effectiveness. Electronic health records (EHRs) and emerging digital technologies on the provider side are catalyzing new partnerships between health systems and pharma companies, with the goal of leveraging patient data to demonstrate health outcomes and differentiate products in the real-world setting. Such technology can also transform the drug development process by improving patient recruiting and enhancing clinical trials.

	Each of these evolving trends will have ramifications for a company’s strategy in the New Health Economy. Management teams need to understand and act on new risks and rewards as they emerge by capitalizing on opportunities, or adapting their strategy and capabilities to reflect new developments in the market. 

	Every company will need to find its own “way to play,” meaning its own value proposition that will distinguish it from competitors. In pharma, these value propositions generally fall into four broad categories:

 such as Celgene and Gilead create value by focusing on novel technologies and platforms that produce clearly differentiated products and lead to demonstrably better patient outcomes. They are able to leverage these technologies and platforms across a variety of diseases and therapeutic areas.

, such as Shire in rare diseases, have historically differentiated themselves based on their expertise in specific diseases. Today, they are looking to take on a greater role through a focused product portfolio in ensuring optimal outcomes.

 create value by generating commercial and operational efficiencies that lead to cost advantages across large global networks. These companies rely heavily on inorganic growth through acquiring and integrating companies and other mature assets to fuel growth. 

, such as many of the larger legacy pharma companies, create value through commercial and financial discipline and by leveraging capabilities across a broad portfolio of diversified products in multiple global markets. This category includes many large incumbents that have historically been able to operate with a large, nonspecialized portfolio of business units and product areas.

	These four options apply primarily to established pharma companies. New market entrants can pursue a fifth strategic option, in which they focus on a narrow portion of the value chain. Examples include players that enter through areas such as biologics manufacturing or commercializing smaller assets bought from big Pharma-with the potential to expand their role from such a base. 

	Each of the four approaches leads to a set of corresponding choices for a management team, such as its acquisition strategy, its level of investment-and focus-in R&D, and its degree of product concentration (see Figure 1). 

	We looked at the historical market performance (defined as the annual total shareholder return, or TSR) of companies in all four categories, over the last three years. Critically, the results show that performance is not bound by strategy. The leaders in all four performed well in the market, with median annual returns ranging from 13% to 29 % from 2013 through 2015 (see Figure 2 below).

	Disciplined Portfolio Managers posted the lowest median TSR among the four groups, suggesting that firms with a single clear value proposition do better than those that combine several approaches. But top performers in that category still outperformed some of the laggards in other categories. The clear implication is that a company’s “way to play” is only part of the answer; there is a wide range

 of performance within these alternatives based on whether a company is able to deliver through differential capabilities.

Shaping the four  ‘ways to play’   

	All four of the strategies we’ve analyzed require a clear understanding of their potential risks and rewards-driven by changes underway in the market-along with a set of underlying capabilities that allow companies to better execute. The most important capabilities will vary from one company to the next, but the leading-edge companies will always have one thing in common: they will define and build out a set of strengths that others will have difficulty matching.

	Breakthrough Science Developers create value through novel technology and deep, targeted innovation. They have built capabilities needed to win in the current market, such as a portfolio of first-in-class products that help them rapidly adapt existing products for additional therapeutic indications. Commercially, Breakthrough Science Developers have clinical tools and predictive analytics to help them identify and stratify patients, along with patient case-management models that allow them to reduce costs and increase the effectiveness of their products. And these companies have strong but focused R&D pipelines and the ability to validate targets across multiple disease states.

	New trends are pointing to clear rewards for Breakthrough Science Developers. Clinical and scientific breakthroughs have helped them roll out innovative new drugs, and persistent demand for differentiated products supports premium pricing. In addition, analytics-for both individuals and populations-are allowing companies to identify potentially high-value products earlier in the R&D pipeline and target patient populations more effectively.

	Yet Breakthrough Science Developers face risks as well. Pricing pressure from governments and payers is pushing pharma companies to make drugs more affordable (to varying degrees across markets), regardless of value. Attractive therapeutic areas can also become crowded, and an accelerated pace of technological advances can shorten the life cycle of innovative new therapies. For acquirers, highly desirable new technology assets draw extremely intense competition. There is a limited number of sustainable technology platforms (such as monoclonal antibodies, enzyme replacement therapies, and vaccines, among others).

	In this environment, we believe Breakthrough Science Developers will need to be true market leaders in their capabilities across several core areas. For example, they need to establish and develop partnerships and collaborations with research centers. They also need to understand priority technology applications, including more complex and efficient platforms (such as delivery systems, drug-antibody conjugates, and bispecific antibodies). And Breakthrough Science Developers need capabilities in M&A, in order to acquire-or partner with-companies that have attractive new technology and pre-launch products. 

	We also see the most innovative, research-based companies moving into a new frontier of drug discovery and product development that is fueled by analytics. For the last four decades, medical information has grown exponentially in terms of volume and variety, due to advancements in EHRs, high-resolution medical imaging, and next-generation genomics. Yet integrating, aggregating, and analyzing medical data and information at an enterprise scale has not been possible due to technical limitations and high costs. Today, those constraints are disappearing, and advanced analytics capabilities are driving enhanced productivity. 

	In this example, a fundamental reorientation of internal and external data integration and insight generation is required, which demands new skills, technologies, and tools to develop advanced insights that are both scientific- and operations-based. These capabilities will be the key driver in unlocking the power of new data, and in determining the industry’s path forward for the next decade of R&D.

	As another example, Celgene has been particularly adept at advanced research partnering and collaboration. The company excels as a Breakthrough Science Developer, particularly in its ability to strike deals for promising companies. Celgene has a clinical development team that works closely with the business development function to target and acquire-or partner with-VC-backed companies that have products in pre-clinical testing. Celgene focuses on rapidly emerging advances in biomedicine, including epigenetic-based drug development, cancer metabolism, antibody drugs, gene therapy, immunotherapy, and regenerative medicine. It has no strict deal template, instead working on a case-by-case basis to determine the right structure (such as strategic equity investments, option licensing deals, and structured acquisitions). Moreover, management has developed a corporate culture that puts science, and scientists, first, and allows younger and more nimble biotechs wide leeway to control their own operations-making it more attractive to potential future partners. The company closed 10 acquisitions or partnerships in 2014, and it has 37 current active alliances.

	Historically, Disease Outcome Enablers excelled by having the best understanding of a disease, developing a leading cohesive portfolio of products based on that understanding, and demonstrating leading expertise, credibility, and relationships in the market area of focus. These companies are often able to identify and segment patients at a highly granular level, and they can engage with patients and providers far more directly than their competitors due to their knowledge and focused disease portfolio. Similarly, they can design treatment pathways for better interventions, along with offering patient-support programs with services such as disease education, injection training, adherence support, and co-pay assistance. Last, they often benefit from an established network of academic and technology companies, which allows them to combine resources and insights.

	Current trends in the market are pointing to clear rewards for Disease Outcome Enablers. Providers and payers are more focused on outcomes to create value, and increased data and analytics techniques are available that can generate more detailed patient insights and segmentation. Consumerism is a growing trend, with greater expectations for more coordinated, convenient and integrated care across healthcare sectors. Advanced technologies-often in the form of new digital tools-are helping patients measure, monitor, and manage their own health to achieve better outcomes.

	Yet risks are emerging as well. Some market experts question whether pharma can truly add value in many disease areas. Regulatory hurdles could limit the ability to develop and offer integrated pharma offerings, as could challenges in working across healthcare sectors or patient populations. For example, some of the biggest opportunities from integrated care involve complex patient populations, where medical issues may be just one element of their needs. As with Breakthrough Science Incubators, pricing constraints put a greater priority on true product differentiation to obtain the premium pricing needed to support more advanced patient-care models. 

	As a result of these challenges, we believe that Disease Outcome Enablers will need to integrate drug, device, and technology platforms in order to better track needs and outcomes, adjust therapies, monitor dosing compliance, and report data to both patients and providers. Disease Outcome Enablers will also need to design and implement treatment pathways across healthcare sectors to continuously improve patient outcomes. That will entail working with healthcare providers and other players across the value chain where they will need to assess and assume risk that ties their compensation to patient outcomes.

	Although many organizations in this group tend to focus on a single disease area, Shire has built an emerging position in the broader rare disease space through a common set of capabilities needed to excel. As a result of seven acquisitions in recent years, the company has built a portfolio of highly valuable franchises such as Cinryze and Firazyr for hereditary angioedema (HAE), which require select capabilities for patients that need more personalized attention. 

	Shire has also created and scaled the US OnePath program, which designates a personalized case manager as a single contact that can coordinate patient care and access to therapy. Case managers use regional, field-based, patient access managers to work with nurses, genetic counselors, pharmacists, and physicians in order to prevent and address potential barriers. Beyond securing reimbursement, this team can help manage the transition to home care, coordinate with specialty pharmacies, and get critical information and resources to patients.

	Commercial Value Optimizers thrive by generating efficiencies through both organic and inorganic measures. Companies that adopt this strategy have built up capabilities in operational and commercial efficiency. For example, they typically have a portfolio of low-risk, established products and a strong focus on commercial operations, often through highly efficient infrastructure-including both supply chain and commercial aspects-along with targeted investment in the products with the greatest growth potential. Commercial Value Optimizers also tend to have strong operational networks and quality compliance in facilities around the world. An aggressive stance regarding M&A has allowed them to become adept at identifying acquisition candidates and smoothly integrating them. 

	These advantages are generating potential rewards for Commercial Value Optimizers as several trends unfold. Growing global demand for effective healthcare across multiple types of customer channels and segments will likely boost their business. Continued pricing pressure supports mature players that have the operating efficiencies needed to reliably deliver high-quality, low-cost products. Similarly, consolidation among both payers and providers favors pharma companies with scale efficiencies. Innovative technologies have emerged to help fuel operational efficiencies as well, such as advanced manufacturing tools that help lean manufacturers accurately plan demand.

	But this market segment is not without risk. Low product differentiation and intense pricing pressures are threatening reimbursement, and much of the potential value available through acquisitions and incremental cost controls has already been captured, meaning that future gains in these areas may be more difficult.

	In response, Commercial Value Optimizers will need to focus on several specific capabilities. Most important, they need to build a diverse portfolio of higher-priced, premium products along with lower-priced commodity products, with a strong focus on ROI management across the portfolio. Commercial Value Optimizers also need internal skills in deal-making and financial engineering. And they need to manage channels through a distinct combination of markets, customers, and products, using advanced analytics to make the right decisions to optimize profits.

	Disciplined Portfolio Managers traditionally deliver value through a combination of commercial and financial efficiency, built on reasonably productive R&D sourcing. These are typically large incumbents that have built up diversified portfolios of business units and products. Accordingly, Disciplined Portfolio Managers have built up capabilities such as efficient product management across multiple therapeutic areas and distinct global geographies. These companies can also source and execute deals based on capacity in order to fill in gaps in their portfolios, along with forming strategic partnerships. They have strong market expertise at both the global and local level, and they can rapidly develop new markets by leveraging strong commercial operations.

	Several market trends could support this strategy. Increasing demand for healthcare worldwide, along with larger customers (due to consolidation) both favor established pharma players with a range of products and global networks. Additionally, strategic data analysis can now help portfolio managers generate insights that allow them to expand products across multiple indications. And very broad product portfolios can generate leverage with major customers, potentially leading to data-sharing and other partnerships that focus on outcomes.

	Perhaps most compelling, the highly dynamic market means that Disciplined Portfolio Managers may be better able to respond to market shifts, by reallocating resources among their various businesses (some companies in this category encourage competition for resources among various parts of the portfolio). A wide range of capabilities helps minimize downside risk to the company and its investors. And in terms of talent management, Disciplined Portfolio Managers can create a wider range of opportunities for high-potential managers and executives.

	However, there are also clear risks for Disciplined Portfolio Managers in the current market. This strategy has not significantly advanced compared to the others discussed above-which likely explains why its shareholder returns are lower. It is simply harder for a company to differentiate itself from competitors, which limits the potential upside. Companies that have grown through acquisitions may struggle to maintain deal volume, as competition for assets gets tougher. Even those that can may struggle to differentiate themselves in a sustainable way.

	In a sense, Disciplined Portfolio Managers need to overcome longer odds to succeed. They need to apply the capabilities-driven approach to strategy-with a clear way to play, and an accompanying set of products and services-within individual business units. At the corporate level, they need to ensure they have the right portfolio in place and that they are funding business units appropriately. Disciplined Portfolio Managers also need to determine how to capture synergies among multiple business units while still preserving the right level of autonomy. One approach that could work is to borrow best practices from other industries, such as consumer products, where management teams are highly skilled at managing a portfolio of products on an ROI basis and allocating resources accordingly.

	In the New Health Economy, success requires staking out a clear and differentiated position. That means a strategy with a specific way to play; the underlying capabilities needed to execute; and a portfolio of products, services, and geographic markets that is aligned with those capabilities. Moreover, management teams need to understand how evolving trends will create new risks and new rewards-requiring that companies adapt their strategy accordingly. Many companies say they do these things, but the market will reward those who are able to do so in a truly differentiated way.  

 is a partner with Strategy& PwC and leads the strategy group within the Pharma and Life Sciences practice. He can be reached at 

 is a partner with Strategy& PwC and leads the UK Pharma and Life Sciences consulting practice. She can be reached at 

 is a partner with PwC and the advisory leader of PwC’s Global Pharmaceuticals and Life Sciences practice. He can be reached 

 is a partner with PwC and the leader of PwC’s Global Pharmaceuticals and Life Sciences practice. He can be reached at 

Articles

Features

Positioning for success in biopharma requires a self-critical analysis of the risk and rewards among four categories of value differentiation. The key question: How do you define yourself against the competition?

Beyond 2020: Building Strategic Coherence in the New Health Economy

	Decades ago, a study would typically be performed by a seldom-changing team, sometimes working out of a single site. Now, clinical trials have become much more intricate: protocols have skyrocketed in complexity, multiple outsourced providers manage operations, and sites are located across the globe in search of adequate patient populations and lower cost locations.

	The rising risk of errors, particularly those with complex sources that may be difficult to ascertain in large organizations, has led the upcoming 2016 International Conference on Harmonization guidelines for Good Clinical Practice (ICH GCP) to include an addendum to its Non-compliance (5.20) section, which now instructs: “When significant noncompliance is discovered, the sponsor should perform root cause analysis and implement appropriate corrective and preventive actions.”

	The addendum specifies three distinct needs: risk identification, root cause analysis, and bespoke corrective action. The currently predominant practice of 100% source data verification (SDV) does not support the three requirements of the ICH GCP addendum, nor do many risk-based monitoring (RBM) initiatives. The industry is thus expected to adopt new standards.

	This article will examine the deficits in current risk mitigation approaches and then present a new paradigm for risk management that is aligned with the new ICH GCP guidelines. This paradigm, called the human factors analysis and classification system (HFACS), has been employed by organizations in many other industries, from commercial aviation to mining, to resolve otherwise difficult to detect causes of errors. To date, eight pharmaceutical and biotechnology companies have adopted the approach in ongoing clinical trials.

	To highlight the deficits of cur- rent approaches to identifying errors in clinical trials, consider a theoretical study with 16 sites during which traditional data monitoring reveals one site with an abnormally high number of errors (see site P in chart below).

	At the problem site, adverse effects and concomitant medications were recorded in source or hand-written logs, but not entered in the electronic data capture (EDC) system. The traditional mitigation response is to

 retrain staff on the EDC system. Will retraining solve the problem? Possibly. The problem is that this method of analysis and response only addresses errors that stem directly from improper training.

	The underlying fault lines may run deeper, perhaps hidden within discrepant versions or translations of the study protocol. Other problems, particularly for modern multi-site trials, may be within a site’s organizational structure or inadequacies in its resourcing or culture. Such error sources are invisible to traditional analytical methodology and RBM. Furthermore, they cannot be resolved by retraining. In fact, some errors may have multiple causes, which may be overlooked by even the most experienced clinical research associates (CRAs) if they lack a standardized framework to evaluate errors’ root causes.

	The proposed ICH GCP requirement for root cause analysis and bespoke corrective responses is not novel. It draws upon a history of reform in other industries that addressed difficult to recognize sources of risk in complex organizations.

	One example is commercial aviation, which suffered from a poor safety record for much of the twentieth century. In the late 1990s, several systematic estimates suggested that 70-80% of aviation accidents could be attributed at least in part to human errors, not aircraft malfunctions. Identifying why the errors occurred through classical approaches of root cause analysis, in which each incident is analyzed and corrected individually, proved unsuccessful because patterns could not be drawn amid the heterogeneity of the primary analyses.

	The response from the Federal Aviation Administration was adoption of HFACS, which allowed the agency to “systematically examine underlying human causal factors and to improve aviation accident investigations.” The ability to aggregate events for standardized analysis elucidated a set of factors, including cultural and communication issues, that contributed to errors and were common to many organizations. Reforms aimed at preventing those issues helped the airline industry to halve the incidence of plane crashes.

	Another HFACS success occurred in the high-risk Australian mining industry. An HFACS evaluation of 508 incidents was able to pinpoint specific skill-based operator errors as the primary causative agent. Further, skill-based errors in the mining operation were found to be homogenous across mining sites, while a smaller number of identified decision level errors were found to be significantly different between sites. The results were focused, specific, and actionable in terms of corrective actions for retraining or protocols to ensure the presence of required skillsets at critical time points. Furthermore, HFACS stratified root causes to prioritize those corrective actions to reduce accidents as quickly as possible.

	The standardization, aggregation, and granularity of HFACS makes it exceptionally appropriate as an analytical framework for clinical trials. In particular, aggregation allows CRAs and project management team to create a corrective plan that is actionable not only in addressing the error itself, but also in mitigating all structural break points that are identified in the process.

	HFACS stratifies the system into four layers, the top most of which is the active failure layer where active errors are identified.

	The next three layers-preconditional, supervisional, organizational-go deeper into clinical study design and identify latent (dormant or undetected) errors. The preconditional layer identifies errors resulting from physical or mental states or limitations that predispose the system to failure. Errors at the supervisional layer are leadership errors, which may result from poor training of study operators, poor protocol implementation, improper supervision, and other leadership failures. Organizational errors may result from poor organizational climate, process, or resource management. If left unaddressed during corrective actions, any of these latent failure layers will continue to embody a breakpoint in study design with the potential to reemerge.

	The combination of real-time data, data visualization, and HFACS is a powerful tool for CRAs to rapidly identify errors in trial execution and address the actual instigating factors. ICON has adapted HFACS for clinical trials through a methodology called Patient Centric Monitoring (PCM), named for its focus on significant errors that affect patients safety and trial integrity. To date, eight sponsors have applied PCM including HFCAS in their trials’ monitoring protocols.

	Two sample case studies follow and draw upon data from ongoing trials that employ HFACS.

	After aggregation and analysis of error reports, there were 13 high impact errors identified with adverse event reporting, by the CRAs at eight investigator sites and across multiple subjects, with Human Factor “Processes” as category.

	In prior studies, without HFCAs, the CRAs would have recorded the error, if noted. Having identified the errors, and the underlying Human Factor for these high impact errors as "process," the CRAs described the error and root cause in adequate detail for effective preventative action.

		“The site recently started a new process to include the study coordinator in the review of electronic medical health records for adverse events. Previously data managers were responsible and study coordinators would document on log for grade and causality. Study coordinators are still transitioning to the new process which has caused issues with recording of adverse events in the CRF/AE log.”

		“Adverse event was febrile neutropenia. The study coordinator ended the adverse event when the neutrophils returned to normal, while the study nurses ended the adverse event when the fever resolved.”

		“The study coordinator has not presented adverse event log to principal investigator.”

	In response, rather than retrain staff on a study protocol that would not be adequately supported across the organization, the CRAs prevented future errors by helping the sites to establish standardized processes for handling adverse events.

	In this trial, CRAs identified 33 high impact errors at 15 sites, which were due to the human factors classifications of “training” and “supervision.” These error sources spanned all categories of study procedures.

		"The pharmacist did not makethe correct calculation.”â¨

		“Two different study coordinators had worked with the subject. Appropriate oversight was not in place to ensure the back-up study coordinator made all copies.”â¨

		“The study nurse did not adequately review the subject’s signature.”

	The specificity of human factors underlying the identified errors, and their root causes, allowed the CRAs to implement responses to the actions and people introducing risk to the trial and patients. Importantly, the analysis ensured that 

the immediate circumstances when the error occurred were not errantly conflated with the incidents’ true causes.

	In each of these two case studies, the causes of the errors were not homogenous. It follows that our response to errors also cannot be homogenous. In comparison to training-based remediation approaches such as those traditionally associated with 100% SDV, the power of HFACS is its ability to elucidate structure in the study errors, allowing CRAs the ability to isolate or consolidate corrective action resources as appropriate, protecting data quality across a wider swath of the trial and, over the course of the study, saving both money and time.

	We are encouraged by the results of the first clinical trials to employ HFACS, and our initial successes are encouraging further groups to adopt this methodology. The new guidance from the ICH GCP is an acknowledgement of a perceived need for the biopharmaceutical industry to evolve better safeguards for study integrity and data quality. Adoption of HFACS complies with the new requirements, as well as builds a new base of knowledge to make future trials, protocols, and training programs even more prepared for the complexities of the modern, global clinical trial.

 is Vice President, Clinical Risk Management, ICON plc. She can be reached at 

Columns

As new ICH GCP draft guidelines now require root cause analysis, novel methods for risk analysis and triage must be adopted in drug development.

What Errors Do We Miss in Clinical Trials?

	For big Pharma today, the currency of public trust is its most devalued asset, the restoration of which depends on hefty investments in transparency. Progress toward this goal can fairly be described as variable and 

. While drug pricing remains almost entirely non-transparent, we now have an emerging industry commitment to publicly

 disclose results from research studies and clinical trials, including work that company sponsors abandoned for internal reasons, like failing to secure a desired endpoint. You can call it a bankable addition to that depleted account of public trust. 

	However, in the business of biopharma,  it always pays to be careful what you wish for. Data disclosures designed to promote openness in the public eye must account for the complexity of today’s R&D enterprise. Approximately 800,000 research articles are being added to US public data bases each year-a raw byproduct of industry’s $60 billion annual investment in developing new medicines for patients. 

	This is data dumping on a prodigious scale. Disclosure is a worthy goal, but can this by itself deliver the larger aim of raising the bar on both the value-and credibility-of the industry’s published research? 

	Two issues come to mind. First, how do you control to separate out real insights-the signal-from the background noise induced by volumes of disaggregated data that are hard to place in the proper context? Second, what additional steps, beyond disclosure, are needed to “de-risk” for errors or misinterpretation of publicly disclosed research that could end up leading medical practice and public policy in the wrong direction?  

	This second question is important if industry is to prevail. It’s good to know that, in addition to the efforts of trade associations like PhRMA and EFPIA, a multi-stakeholder initiative is in place to tackle the practical details that must undergird any commitment to research transparency. The International Society for Medical Publication Professionals (ISMPP), a non-profit group whose 1,400 members are drawn from big Pharma, CROs, communications agencies, and medical journals, focuses on making the process by which data developed within the R&D industry is compiled and published. ISMPP’s goal is to make this information accurate, analyzable, and accessible through best practices to address challenges like publication bias, statistical rigor, and reliance on paid ghostwriters.

	 A big step in this direction was the agreement last year on a “Guideline on Good Publication Practice for Communicating Company-Sponsored Medical Research,” published in the 

e. With 70% of funding for clinical trials coming from private industry, parties to the Guidelines know that public confidence in the integrity and interpretative value of this research starts with manuscript development-when data is compiled, evaluated, and brought forward to conclusion. The Guidelines stress that failures here “may result in poorly informed decision-making and reduce the efficiency and quality of healthcare.”  

	It is also encouraging to see some timely moves to address the misuse of statistics that drive the analytics behind the research.

 readers might look with interest at a recent commentary in the peer-review journal, 

). Janet Forrester, an Associate Professor at Tufts University Medical School, reviewed recent manuscripts submitted to the journal to track the frequency of common statistical errors made by authors and identify measures to reduce them, such as recognizing the limitations of statistical software and to include more statistical experts as part of the manuscript review process.  

	Forrester notes that “many articles in the literature do not explain the statistical analyses in detail, leaving the reviewer to trust that the analyses are valid.” Her review concludes that errors in published works are, in fact, quite prevalent. The most basic flaws are using the mean where the median is appropriate; not measuring variability in summary statistics; not accounting for missing or non-independent data; and reporting P values on the role of chance in a complex table without stating what test was used. Each of these errors can result in a skewed finding, with significant implications for the research as a guide to policy or clinical decision-making. 

	All this is a reminder to industry that true transparency-and the reputational benefits that accrue from it-depends on the truthfulness of the evidence that binds it. It’s a work in progress. Let’s call it hopeful.

From the Editor

With the emerging industry commitment to publicly disclose research and clinical trial results, two pivotal issues come to mind - and serve as a reminder to companies that true transparency depends on the truthfulness of the evidence that binds it.

Data Disclosure: Sealing the Error Envelope

	The Zika virus outbreak has given us the photogenic image of the year. Pictures of newborns with microcephaly have provoked horrors in the public’s imagination in a way that few things outside of tropical jungles and insidious targeting of the unborn can.

	The jungles of South America remain shadowy and treacherous, but the potential for insect-borne maladies of rainforest derivation striking urban populations, even at non-tropical latitudes, is more of a possibility than ever given global trade and travel. 

	Like the jungle itself, the Zika virus is shrouded in mystery. Its method of transmission, level of virulence, and the primer for the long-known virus’ recent and epidemic ascent are still unclear. Meanwhile, the precise link to birth defects remains speculative while researchers search for a causative connection and comb for potential secondary factors. What is clear is that Zika has grabbed the attention of the populace. Media and state agencies will continue to report and prey on a frightened public, as will conspiracy theorists. And with more frightening pictures to come, the global 24-hour news cycle will keep a close eye on just how far the 

	With the drama of a potential global epidemic as background, biopharma firms have sprung into action. Sanofi’s vaccine division, Sanofi Pasteur, announced that it would lead the way against Zika. Given its recent successes launching the dengue fever vaccine Dengvaxia, the French giant hopes its recent experiences can be beneficial to expedite Zika vaccine development as rapidly as possible. Zika is “dengue-like,”noted Jim Tartaglia, VP for new vaccine development at Sanofi Pasteur, so the firm will look to leverage its proven vaccine technology for dengue, and other flaviviruses, toward Zika, and will also look to apply what it learned developing its dengue vaccine

	Big Pharma, along with government agencies and the non-profit ecosystem that targets diseases in the developing world, will bring significant resources to bear in the coming months and years. But truly accelerated progress might require more than partnerships and funding. The World Health Organization (WHO) has reported that about 15 groups and/or companies are working on a Zika vaccine, though the effort is dispersed and in its infancy. The world’s vaccine and drug developers, along with government agencies, are struggling to answer the needs for more responsive capabilities when it comes to responding to disease outbreaks. Important lessons have been learned from the response to last year’s Ebola virus pandemic as well as how the industry and various stakeholders have engaged and aligned around HIV, Tartaglia explained.

	“I believe there will be rapid development of vaccine candidates for Zika,” noted Lynlee Burton, director of project delivery, vaccines, with PRA Health Sciences. It remains to be seen how strong a response researchers can get from early products, but based on experience with clinical development for Ebola treatments, leveraging of data to expedite the process and the willingness of collaborators and regulators to fast track clinical steps will be paramount.

	With Ebola, the industry saw a willingness to move forward with successive trials before full data analysis from preliminary safety studies were completed. Zika doesn’t confront researchers with the same level of lethality, but the mania around it will facilitate a similar sense of haste to advance development stages before every last “i” is dotted or “t” is crossed. Additionally, the clinical trial industry is notoriously slow-mired in decades-old technology and bottlenecks around steps like data transfers. “But our ability to get data in-house, cleaned, and in place to facilitate decision making is greatly improved,” Burton explained. Certainly, one can hope that modernized and efficient clinical testing practices will be utilized fully with modern IT systems; waiting for fax machines to transmit will not be accepted practice.

	Unfortunately, the fact that Zika is generally a mild disease, and many infected individuals don’t even know they have it, makes accurate detection and diagnoses essential. Developing a vaccine and determining efficacy and safety for a disease that moves through the human population with such stealth will be tough. This is not something that’s killing adults, and the congenital defects are occurring at an unknown percentage, added William B. Smith, professor of medicine, University of Tennessee Medical Center. 

	The most prone population  appears to be pregnant women and the unborn fetus; so researchers face the difficulties of considering inoculating this vulnerable population, with the consequent fear of doing more harm to the mother and unborn than good. Because of the inherent challenges to targeting a disease that until recently was seen as rather innocuous, virtually no drug developers have had a background of putting Zika in their crosshairs. And with all the challenges accentuated by this newfound urgency, some outside- the-big-Pharma-box thinking might be necessary.

	Vaccines have historically been an area for industry consolidation. “We see pressures where big Pharma has developed epicenters of expertise for vaccine development and manufacturing, said Kevin Fitzpatrick of the IMS Consulting Group. Manufacturing requires massive facilities for growing vaccine products, fill and finish, etc. The safety of 

such products that are generally going into healthy subjects, often children, clearly delineates the need for an extreme high bar for safety and quality necessitating top-notch manufacturing. An established reputation for supply security and ability to leverage portfolios commercially-requiring significant up-front investment-have been factors that have made vaccines primarily the realm of big pharma, though certainly exceptions do exist.

	That perspective is changing along with the profile of disease. We are seeing more nimble companies who have new vaccine approaches that could offer better, more ready, and proactive approach, explained IMS’s Nitin Mohan. Some of these small companies could capitalize on new technologies for better responses to massive, constant or recurring threats, like the flu, but their platforms may also be valuable in approaching pop-up threats like Zika.

	“We’ve made a vaccine construct based on the consensus antigen for targeting the Zika virus, and we think in principle, our approach could do well in vaccinating against the disease,” said Wouter Latour CEO of Vaxart, a South San Francisco-based biotech firm focused on developing recombinant vaccines administered by tablet rather than by injection. Vaxart’s current pipeline is centered on flu, norovirus, and respiratory syncytial virus (RSV), but Latour believes the company’s oral vaccine platform is highly suitable to take on Zika. 

	Indeed, the potential benefits of pill-based vaccines are clear for the poorer nations of the world and tropical regions, said Mohan. Vaxart’s technology has some obvious advantages over injectables, being easy to transport and are stable without cold chain storage, which could be essential in outbreaks. Given that a pill doesn’t need to be injected also takes out the need for a healthcare professional to be present when the vaccine is administered, another major benefit in regions with little public health infrastructure. 

	Another biotech firm with a California startup address that thinks it can leverage its expertise is Redwood City-headquartered PaxVax. “Along with many others, PaxVax is now in the early stages for developing a Zika vaccine,” according to CEO Nima Farzan. 

	The company has worked on dengue and has proprietary technology targeting that virus, which Farzan thinks could also be applied to Zika. The company hopes to take its early findings into animal tests soon, he stated. PaxVax’s business model emphasizes the pursuit of socially responsible strategies to address unmet medical need while finding a profit by serving the affluent  traveler’s vaccine market. This will give it both the tools and resources to positively  impact the spread of infectious diseases of the developing world.

	Zika’s impact on the Brazilian healthcare system and tourism during the Rio Olympiad will certainly be significant. But could there be a dampening effect on attention in the all-important US market, which remains the source for much of the research-and funding-on infectious diseases. Given the uncertainty around the virus’ link to the congenic defect, it is possible that microcephaly will become diminished as a part of the story if a solid link isn’t found. Additionally, with non-vaccine approaches like mosquito control being emphasized, and as summer gives way to winter and the mosquitoes dwindle, calls for a vaccine solution could dwindle, Farzan speculates. Just imagine if the disease fails to cross the borders in sufficient numbers and if the US sees little or no impact. How strong will the resolve be to go forward with an expensive Zika vaccine development program? 

	PaxVax’s business model is built to target disease outbreaks in emerging nations, so its incentive structure could keep the firm on track where others might put it on the backburner, should  Zika’s popular prominence lessen. The company’s US-marketed product, Vivotif, an orally administered, live-attenuated typhoid fever vaccine, illustrates its designs around infectious diseases typically non-endemic to the US or other developed regions, which are rarely the subject of conversation or  major headlines.

	Another example of PaxVax’s approach is its single-dose oral cholera vaccine Vaxchora, for which it has an action date for approval with the FDA on June 15. The firm has attracted investors, raising a solid $105 million, which it announced in December would go in part to support the launch. PaxVax also hopes the vaccine will warrant a priority review voucher (PRV) from the FDA, a designation that has become an increasingly valuable asset in the industry.

	There are existing vaccines available in Europe and India for cholera, but these products are offered in a two-dose format. PaxVax’s product can be given in a single dose, ideal for travelers and thus a US market, but in addition, the impact of a single dose product for outbreaks and natural disaster settings could be substantial. The company’s model, incentivized partially by FDA’s PRV system for which Farzan says PaxVax is a “poster child,” lays out a clear path from profitable drug and/or vaccine development to impacting populations and emerging nations positively. “This is a good example of the PRV system working,” said Farzan. PaxVax’s approach with the PRV incentive in mind proved a major motivator for the company, he said. 

	Of note, PaxVax’s clinical testing in cholera included a challenge study in which 120 subjects were given the disease and monitored at US university medical centers. The challenge testing was necessary to show the vaccine’s efficacy in a population that is generations removed from cholera’s ills and thus would never have been exposed to the sickness. Giving 120 volunteers a dose containing cholera is, on the surface, a rather risky strategy, with potential for extremely negative headlines and liability fallouts. It only stands to reason that a big Pharma firm, with huge assets at stake, would feel averse to the consequences. 

	Zika could also be an area for aggressive clinical development. And it’s not just Zika. Given globalization, expanding world travel and global warming, the potential for outbreaks is constantly expanding. PaxVax believes small companies with proper incentives may have the mindset to take on risks where others can’t.

	Incentives to develop improved vaccine treatments for influenza are more obvious for big and small vaccine makers, given the diseases seasonal impact in the massive markets of the developed world, not to mention its economic impact with missed work days and ER visits. The disease also remains lethal in vulnerable populations like the elderly. Sanofi Pasteur’s strategy to protect its Fluzone franchise through life cycle management, along with efforts to develop an offering with more broad protection, makes influenza seem like the realm of industry giants only.

	But new approaches and the need for faster, more reactive manufacturing processes have innovators making waves. BiondVax Pharmaceuticals, another small vaccine developer, with its sights set on a universal flu candidate M-001, can manufacture its product in six to eight weeks, with the recombinant product fermenting in E. coli overnight. BiondVax has government support and hopes to overcome the challenges in the current flu vaccine set up of requiring vaccination yearly.

	Vaxart’s oral approach, targeting the gut immune system, and delivering via a convenient room temperature-stable tablet, has displayed promising results so far. Moreover, where existing vaccines have stumbled to predict and protect, leading to bad flu years, Vaxart thinks it can be more reactive and better prepared with a model protecting against different flu subtypes. Rather than attempting to prognosticate the prominent strains and manufacture doses months ahead of time, Vaxart’s pills could be manufactured closer to flu season and the appropriate pill cocktail can be distributed based on a given year’s predominant strains. 

	Vaxart began enrollment of a Phase I trial testing its influenza B tablet vaccine in December. This trial builds on momentum from its earlier Phase I look at its influenza A treatment, which displayed cellular and mucosal response on top of the standard outcome, hemagglutinin inhibition.

	Vaxart’s lead programs are targeting norovirus and RSV, for which its tablet vaccines and broad immune responses would offer important potential advantages. The company is on track to initiate Phase I clinical studies for both indications by the middle of 2016. 

	A company with building excitement for a RSV vaccine candidate is Novavax, which was the first to ever demonstrate efficacy in any clinical trial in any population for the disease. The company’s senior vice president of research and development, Gregory Glenn, MD, noted that its recombinant protein nanoparticle is grown using insect cell lines, which fold and modify the RSV F protein in unique way. The technology may enable priming of the immune system to create the first vaccine for RSV after over 50 years of failure.

	The appetite for a solution in RSV, which strikes infants and elderly, was made abundantly clear when Novavax announced that it had completed enrollment of 11,850 older adults at 60 US sites in December for its Resolve trial, after just five weeks. The company expects top-line results from Resolve in the second half of 2016. Novavax also initiated a Phase III trial, the Prepare study, that will enroll over 5,000 pregnant women. It will  take two to four years to complete. Enrolling healthy pregnant women with much tighter criteria will be a different task than targeting an essentially “all comers” population of elderly trial subjects.

	Perhaps the most exciting-and medically revolutionary-work on vaccine is on the therapeutic side for chronic, non-infectious conditions. Vaccines have a sordid history in oncology, but new and improving understanding of the immune system may help overcome past failures. 

	Innovative methods for stimulating an immune response means that oncology is seeing an upsurge in interest in vaccine technologies that carry significant  potential.

	One company, Neon Therapeutics, launched with a $55 million Series A in October and an impressive list of founders including Eric Lander Jim Allison, Ton Schumacher, and Bob Schreiber. Neon will build its treatments around the new biology of neoantigens.

 Cary Pfeffer of Third Rock Ventures, Neon’s interim CEO, explained that ongoing developments in immune oncology like checkpoint inhibitors have broken open the neoantigen space. Novel antigens that arise due to accumulating mutations in tumors are inherently non-self inducing and would be expected to be highly immunogenic. 

	Neon plans to develop treatments highly specific to individual patients, as well as vaccines that would target neoantigens shared by patients with similar cancer types. The company intends to file an investigational new drug applications (IND) to start a trial by the third quarter of this year. Along with its support and impressive pedigree of scientific minds, Neon has inked a collaboration with Bristol-Myers Squibb to combine its vaccine technology with the PD-1 checkpoint inhibitor Opdivo in a Phase I look at melanoma, smoking-associated non-small cell lung cancer, and bladder cancer.  

	While personalized cancer vaccines aren’t likely to carry small price tags, the value of potential cancer cures will be seen as worth the effort. The current Obama Administration “cancer moonshot” strategy for fast tracking these solutions display the popular desire to accept the risks and make the effort. Likewise, vaccines for infectious diseases are already seen as highly cost-effective in terms of overall  population health, though they do not always get the political credit they deserve. 

	Given the social consensus around vaccines’ return on investment, greater recognition is due whether it is for the prevention of persistent, nagging diseases that afflict the many but make few headlines or for the sudden outbreaks of smaller, episodic infections that dominate the headlines by terrifying the public. 

	The public health payoff from investment in vaccines stands in stark contrast to that of the industry’s modest expectations in terms of profit and earnings, which is why vaccines seldom get top billing as the fodder for conversation in investment circles. But small vaccine developers with biotech-like disruptive technologies are garnering respect on the investment circuit and hoping for significant gains in the clinic. Watch this space-carefully.

’s Senior Editor. He can be reached at cmcdonald@advanstar.com

A new wave of technologies supported by innovative business models is transforming the vaccine landscape - and raising the bar on performance. As the demand for cures for chronic diseases accelerates, and with more global outbreaks of viral diseases like Zika and Ebola a virtual certainty, solutions can’t come soon enough.

Vaccines 2016: Big Bets for Global Threats

	
	One of the more exciting trends in science today is the innovation taking place in the way medicines are administered, absorbed, and tolerated in the human body. It’s no longer just about the pill or syringe-new testing and delivery platforms, from the 3D 

printing of molecules to ingestible miniaturized “nanobots” targeting pathogens directly through the bloodstream-promise more precise therapeutic outcomes as well as the standard benefits from increased utilization and higher rates of adherence. 

	To assess prospects for this neglected branch of the medicines discovery tree, 

recently convened a Roundtable with top executives from four start-up companies committed to scoring big in this emerging field. The consensus? There is both promise to patients and profits to producers in stretching what is feasible in the process of drug delivery. 

 Innovation in the way that medicines are administered and absorbed in humans is emerging as an important driver of industry R&D. Can you explain your company’s contribution to these new technologies focused on platform process improvements to drug delivery? 

 Pulmatrix is a pulmonary drug delivery company with a novel inhalable dry powder technology, iSPERSE, invented in-house. Our platform allows us to deliver most classes of drugs, from small molecules to biologics, to patients in a manner that is both tolerable and efficacious. Compliance is also very important because our delivery platform ensures that patients will get the prescribed dosage, even on their worst day. Our lead investigatory program is an inhaled anti-fungal drug for cystic fibrosis, which will represent a therapeutic advance against the current oral anti-fungal regimen, administered at a high dose, and with lower tolerability due to side-effects. We are also testing the technology for inhalation treatment of idiopathic pulmonary fibrosis, a relatively rare

 condition with few options for patients.

How does administering the drug directly to the lung work better than a pill or injection?

 Fungal infection occurs in the airways; reliance on a pill or syringe is a secondary pathway to the pathogen. Airborne fungal spores harbor the infection and deposit in the airways after inhalation. The nice thing about our inhalable technology is that you can match the drug to the size of the fungal spore and attack the condition directly at source. This potentially enhances its efficacy as a treatment, with a higher prospect of achieving the intended therapeutic outcome due to the higher lung tissue levels. 

Yuval Cohen, CEO, Corbus Pharmaceuticals:

 Corbus is a new company-we were founded in the spring of 2014. Our mission is directed toward orphan diseases originating from deficiencies in the human immune system. These deficiencies can result in an inflammatory response that can damage human tissues, with severe morbidity and high mortality. The approach we are taking is different than current clinical research efforts that focus on blocking or suppressing inflammation. 

	Instead, we are studying how to “reprogram” the immune response by activating an endogenous process known as “resolution of inflammation.” This is the process by which an activated immune system returns to homeostasis. This occurs routinely in healthy individuals via a cascade of signaling molecules, triggered by endocannabinoids. The point here is our therapeutic aim is not to suppress the immune response itself but to nudge it back to normal before it can cause more damage through inflammation. 

	We are testing our lead drug candidate, resunab, for treatment of cystic fibrosis (CF). Resunab has received fast-track status and orphan-drug designation from the FDA. It has demonstrated efficacy in preclinical models for inflammation and fibrosis and is now undergoing a Phase II study for treatment of CF with $5 million in financial support from the CF Foundation. We expect to share the results of this study by the end of 2016. We are also studying the efficacy of this compound in two additional autoimmune conditions-systemic sclerosis and dermatomyositis. 

Andrew Wright, Vice President, Digital Medicine, Otsuka America Pharmaceutical Inc.: 

In 2012, Otsuka signed an agreement with California-based Proteus Digital Health Inc. to develop a digital medicine drug/device combination tablet that measures medication-taking patterns. With the patient’s consent, our drug/device is able to share personalized health information with their authorized healthcare professionals and caregivers. A key component is an ingestible sensor which communicates with a wearable sensor that measures medication ingestion and certain physiological responses. The accompanying software is installed and used across various mobile devices and personal computers as a secure, web-based application. This information provides objective data to physicians and may contribute to better healthcare delivery for patients.

	 If approved by the FDA, the drug/device combination will measure adherence to Otsuka’s Abilify (aripiprazole), which is indicated for treatment of schizophrenia, manic/mixed episodes of bipolar disorder and as an adjunctive treatment of major depressive disorder. Many people with these diagnoses face challenges in taking their medication as prescribed, which can lead to disease relapse and recurrence. But this device and related technology may encourage patient engagement by allowing individuals to gain insights about their medication ingestion and biophysical activity, helping them become informed consumers of care rather than a passive beneficiary. Our filing with the FDA for the drug/device is examining human factor studies to examine patients’ ability to use the technology.   

Anthony Giovinazzo, President and CEO, Cynapsus Therapeutics:

 We are a specialty CNS pharmaceutical company based in Toronto, Canada. Our current objective is to commercialize a fast-acting and easy-to-use sublingual thin-film for the management of debilitating OFF episodes associated with Parkinson’s disease. OFF episodes, where symptoms of Parkinson’s disease reemerge after regular use of conventional drug therapy, are very frequent and add to uncertainty and quality-of-life issues for patients. 

	Our lead drug candidate, APL-130277, is a reformulation of an already registered product, apomorphine, a dopamine agonist (not a narcotic). We are developing it to give Parkinson’s patients with OFF episodes an easy-to-use, on-demand product that can be applied quickly to address this condition immediately, as it occurs. We think apomorphine, delivered with our film strip taken orally, is far more convenient than the current standard of treatment, an injectable drug that is often not available when needed, can be painful to administer, and can result in adverse injection site reactions. 

	Prospects for our therapy rests on a strong foundation, with an experienced management team, extensive IP and trade secret protection, an abbreviated Section 505 [B] [2] regulatory pathway, and solid financing, with a fresh injection of funds received in 2015 at the time of our Nasdaq IPO.

I’d like to ask Les Funtleyder, Pharm Exec’s Editorial Advisory Board member and in-house investment analyst, to comment on the trend toward process technology innovation as exemplified by the portfolios of these three companies. 

Les Funtleyder, E Squared Asset Management: 

These are companies with early stage products or pipelines with a small cap investment tag. They conform to our desire to look for novel products developed by transformational companies. The risk investors take is so high that we seek a reward that exceeds what we could obtain by investing in a big company like Pfizer. The difference is stark: whereas we might expect a 7% return on our investment in Pfizer, that return might have to reach the 700% range or above in the case of a privately-held start up. 

	However, it is a great time to be an investor. The science behind these products is very interesting, driven by progress in our understanding of molecular biology and genomics. 

There is a lot of crossover technology between drugs and devices; integration of the two product streams is a trend that will accelerate in the next few years.  

	 The down side from the abundance of new science is the difficulty of assessing all the opportunities. It also raises the prospect of a misallocation of capital, as evidenced by the fantastically high valuations of some start-up biotech companies and healthcare in general. The higher the valuation of an asset, the more capital you require to play in that space. The risk of financial exposure grows in tandem, which is one reason we are starting to see a pullback in available capital along with some caution about investing in the sector. 

	Companies here today are also aware of the risks involved in securing market access for their novel technologies. Regardless of their clinical merits, if the companies don’t nail down a commitment to payer reimbursement, they risk being left behind. It’s almost like presenting a legal case, and the prep work must begin very early in the product cycle. This can be a diversion-a costly one for a smaller start-up operation. 

Have you assessed the merits of digital health as a high potential market segment? 

We have taken a stake in two digital health enterprises. You can say we are voting with our checkbook-an indication we think the trend toward digital is real. One is Otsuka’s health engine, which allows patients to comparison shop for different types of provider services. The other is TextPro Analytics, which works with accountable care organizations (ACOs) to manage their spending and cost exposures. The challenge is that much of the activity around digital health is aspirational. A lot of money has been put forward, with relatively little return. We have not yet seen digital health becoming essential to those real-life interactions in medicine.

 In a larger context, have information and related analytics shaped decisions on your product offering and value proposition to regulators, payers, and patients?

 Not a great deal. One example I can cite from our experience is the work of the Cystic Fibrosis Foundation in developing a patient registry, which now includes data from 95% of CF patients in the US. The registry covers, among other things, the type of gene mutation associated with the patient’s condition as well as patient participation in clinical trials. No other patient advocacy group in the rare disease space comes close to this level of detail. The registry is useful to our research and clinical trial work. Vertex Pharmaceuticals used the registry to get 1,000 CF patients enrolled in its Phase III Combi study in only three months. The speed in which the trial was enrolled would not have been possible without access to the registry.

Our data shows that spending on digital health is growing very fast, with investments focused on six categories: wearables and biosensing; big data analytics; consumer health engagement; telemedicine; electronic health records; and eClinical applications. US Federal Reserve Bank policies are making it easier to push investments

 into this segment through mechanisms like Series A bonds. But it is still taking time to realize the necessary convergence between high tech and biotech so that investors see the potential from these two streams of product innovation. 

	 Ultimately, what the value of digital medicine will be depends on how it helps manufacturers evidence outcomes that are meaningful to payers. At present, there is an absence of clarity on what a higher level of adherence to drug therapy means in dollar and cent terms to payers.  Resolving that question will ultimately win the argument for digital medicine.  

 If we can offer a sophisticated, evidence-based argument on how medicines create savings for the health system by keeping patients healthy or alleviating their symptoms, then we will have a sustainable business model in biopharma. If our industry cannot do that, then we will be in trouble. 

 Our objective is simple. We plan to align ourselves with the current standard of care product costs for Parkinson’s disease patients vs. setting a price that is [many] multiples beyond  the pricing of the current competitor. 

The new drug delivery technologies you are developing often require a different approach to securing regulatory approval. How receptive is the FDA and other national approval authorities to advancing your commercialization objective? Where are the gaps that should be filled to help the approval system work better for your business? 

 The essential task is to stay on top of how the FDA works, day to day. In our case, that requires staying in close touch with the FDA pulmonary branch as well as other branches with whom the pulmonary staff consults, including the rare disease and infectious disease groups. Each branch has its own areas of focus and specific approach that we’ll need to navigate. For example, views on clinical trial design issues might differ. Understanding that the therapeutic experts are ultimately the ones driving the bus will avoid potential pitfalls. 

	Another point to emphasize is our device has a tangible physical outcome, where you put a capsule in, close it, and then inhale, with dosing cues for the patient based on the sound created by the capsule spinning. Demonstrating how it works from a physical context allows us to take some of the safety and efficacy issues-that often create problems for a complex biologic drug-off the table. 

	Third, engaging productively with the FDA is accentuated when you can count on support from disease advocates-in our case, the Cystic Fibrosis Foundation. Having the Foundation in our court and relaying their feedback helps us in our work with the FDA. 

	Finally, one other issue is the different standards on registration between the US and the EU, which are the two critical gatekeepers if you want to market your product globally. From our work on inhalable devices, we find the European Medicines Agency (EMA) is far more accommodating regarding the rules of engagement. One of our other development programs is a copy of a bronchodilator that opens the airways for chronic obstructive pulmonary disease (COPD) patients. Under EMA rules, we can seek approval based on pharmacokinetic bioequivalence. That option is not yet permitted by the FDA, which complicates the global market potential for our innovations. Understanding such differences in expectations and the rules between geographies is vital to our development programs. 

 Conflicting national standards relating to approval are an efficiency constraint. In Europe, we have clinical trials on CF underway in five countries. We must obtain approvals and process our trial work in each country, which can become a major headache in terms of duplication of effort. 

We are dealing with multiple divisions of the FDA in the pursuit of our mobile medical app and drug/device combination. There is a positive element here because what we do will help facilitate an agency consensus on how to handle these emerging technologies in the future. On the other hand, you need substantial resources to help move the process forward, which is lacking in many start-ups and small cap companies. 

I think we all agree that regulatory agencies must put safety first-no exceptions. If that commitment requires a longer process and more paperwork, it’s our default position not to criticize the desire to err on the side of caution.  

 The challenge is how to think outside the box to generate innovative solutions. First, Cynapsus is using the 505[B][2] pathway to seek FDA authorization of our product. It is fortunate that the active ingredient we are using is an already approved product, which gives us the opportunity to rely on previously conducted studies required for the original new drug application (NDA) approval. This provides a faster, less expensive route to approval compared to the traditional path. More such creativity in navigating the regulatory process in diseases with significant unmet needs would improve prospects for other companies in the life sciences.  

	Second, regulators must be supportive and encouraging of partnerships between companies. We think the future business model will consist of new breakthrough technologies developed by smaller, nimbler companies, funded through partnering with larger firms or organizations. 

How important is a FDA designation of fast track, breakthrough, and orphan drug status to the ultimate commercial potential of your technology? 

It is important, especially in attracting the attention and support of potential investors and market observers. Designation also gives you a more attentive hearing from FDA reviewers. We view it as a big de-risker overall.

Many of the new platform delivery devices rely on software packages and other digital technologies-enhanced information-gathering capabilities is an important aspect of their appeal to the market. Is the regulatory climate supportive of this trend? 

Can novel drug delivery technologies offering options beyond the traditional tablet or syringe transform the therapeutic experience for patients?

Pharmaceutical Executive-03-01-2016

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Data Disclosure: Sealing the Error Envelope

Vaccines 2016: Big Bets for Global Threats

Drug Delivery Roundtable: More than the Pill

Can FDA Control Drug Prices?

Orphans of the Storm

Country Report: The Netherlands

Pharmaceutical Executive, March 2016 Issue (PDF)