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Chronicling one leader’s call to duty in dermatology. (The story of Frank Watanabe, president and CEO of Arcutis Biotherapeutics and a 2023 Emerging Pharma Leader.)
Emerging Pharma Leader, Frank Watanabe, president and CEO of Arcutis Biotherapeutics since 2017, has always been greatly influenced by a principle instilled by his father, an academic physician: “It’s not about the money you make. It’s leaving the world a better place than you found it.”
In his late 20s, Watanabe stumbled into the pharma world by initially taking on a “grunt marketing role” at Eli Lilly. Prior to that and concurrent with his extensive pharma career, Watanabe was an official in the US government and spent 25 years as a commissioned officer in the US Navy Reserves, doing what he felt made the most difference—defending the country.
Throughout his entire career, Watanabe has drawn upon the lessons ingrained during his upbringing and military service, seamlessly integrating them into his leadership style to drive success in the pharmaceutical industry.
Whether it’s for investors, the medical community, the public, or his teams (“who deserve all of the credit”), Watanabe is the face of Arcutis, a mid-sized biopharma company that focuses on developing and commercializing dermatological disease treatments. Arcutis’ first drug approved by FDA was Zoryve, a non-steroidal cream for plaque psoriasis.
“Zoryve entered a market with many drugs that were effective but unsafe for chronic use or safe but less effective; so, there was a clear need for something both safe and effective considering the level of psychosocial impact plaque psoriasis patients face,” says Watanabe.
Watanabe’s influence on Arcutis’ culture is unmistakable. Its operating ethos is an extension of his father’s early lessons about making the world a better place. “The patient is paramount” is the center of every behavior at the company, its foundational value when making decisions regarding drug development, pricing, promotion, and optimization of access.
Watanabe confides, “Regrettably, I’ve been in situations during my career where I’ve worked on remarkable, life-saving drugs priced so high that patients in need couldn’t access them. Such circumstances entirely undermine the purpose of our work. If the people who need it can’t access it, then something’s wrong. We’re not helping and not fulfilling our intended mission.”
This profoundly influenced Watanabe.
In the US, 57% of working adults have sufficient insurance coverage, leaving a staggering 43% facing inadequate protection due to underinsurance, coverage gaps, or a complete lack of insurance.1 Watanabe believes in optimizing access for as many patients as possible, an approach that requires Arcutis to go above and beyond.
“We have confidence our drugs can replace topical steroids; so, our strategy is based on the belief that if our drugs are effective and safe, if we can price them so they are broadly available, while we might end up making less per unit, we’d ultimately generate more revenue by selling a higher volume and have the benefit of helping more people simultaneously,” Watanabe tells Pharm Exec. “Dermatologists agree that there needs to be a better solution. So, this is a win-win value proposition.”
As a result, Arcutis takes a responsible approach to pricing—it strategically priced at a point at which insurance companies wouldn’t put any unnecessary restrictions on access. It’s a bit of a deviation as companies often price as high as they can, higher than competitors, believing their product is new and superior. Zoryve, for example, now has two of the three major national pharmacy benefit managers covering it without requiring prior authorization, which is unusual for a branded drug.
“When we launched, we were priced at 30% less than the last five topical drugs that launched,” says Watanabe. “We’re not overly focused on competitor pricing. We’re more concerned with how the insurance company is going to pay for it and how we can make our drug available to patients. ‘The patient is paramount’ infuses everything we do.”
To better address patient access issues for those facing financial challenges or the underinsured/uninsured, Watanabe assigned one of his eight in-house clinicians to develop an ideal patient assistance program called “Arcutis Cares” from a healthcare provider’s perspective. Considering the US has a population of around 330 million people, with 43% of working adults categorized as under/uninsured, the comprehensive access strategy and Arcutis Cares initiative represent a truly bold and commendable endeavor.
Watanabe’s leadership style has largely derived from his time in the military. He smiles proudly and states: “There’s this perception that the military is this very hierarchical organization. On the surface, that’s true. But one of the things that the US military does incredibly well is delegation. There’s this concept called ‘mission command,’ where you communicate the mission and the desired end state and allow a subordinate to figure out how to accomplish that. This ultimately empowers them, gets the best out of people, and prepares them for the next level.”
The proof is in the pudding, as the company had less than 5% regrettable departures in 2022, subsequently doubling in size during the “great resignation.” In seven years, Arcutis has grown from “three guys with $150,000 in the bank to a mid-tier dermatological company.” Zoryve is its first product launch and off to a great start. Moreover, there’s a lot of potential in its pipeline. The company has filed for a foam version of Zoryve for seborrheic dermatitis, will file the cream for eczema later this year, and will eventually file the foam for scalp psoriasis. Arcutis also recently went into the clinic with a new topical for the treatment of alopecia areata.
The CEO lives in Park City, Utah, embracing every opportunity to ski, catch live music, and indulge in food and wine. While he takes pride in his achievements, his greatest joy comes from his two sons, whom he speaks of with genuine admiration.