Taming the pharma monster with Hedley Rees

Allie Nawrat: Why did you describe the pharma industry as ‘a monster’ in the title of your new book?

Hedley Rees: I think there is now a perception that as a system it is similar to the banking system during the 2008 financial crash, and that it is certainly not beneficial to patients or healthcare professionals.

If you take the high profile example of insulin in the US, there are three companies in the US who are charging astronomically high prices for insulin. Patients in the US are dying because they have started to ration their insulin or are not taking it at all.

Other examples are Orkambi and gene therapies; the pharma companies will play hard ball with the NHS, [as] they are holding out until they get the high price they are looking for.

The core issue is that [companies have] patents [which] create monopolies or oligopolies, so when drugs eventually get to market, pharma companies can basically choose their price based on the [maximum] they think the market will pay.

When did this situation emerge and how has it consolidated itself?

We have to go back 40, 50 years to when the industry was vertically integrated – the large pharmaceutical companies owned the facilities for making drugs, they employed the people and they sourced from suppliers in a vertically integrated way. Companies were able to get patents for the process, not just the molecules.

Over the last 40 years that vertical integration has transformed into horizontal integration through a process of outsourcing; the expertise to bring drugs to market doesn’t lay with the big pharmaceutical companies anymore, [now] they have to work with contractors to develop drugs.

This switch originated with a battle between two anti-ulcer drugs in the early 1980s; Smith Kline and French’s Tagemet and Glaxo’s Zantac. Glaxo used the same process as Smith Kline and French, but it made its product a little bit safer for patients, and successfully used sales and marketing so in a few years Zantac was outselling Tagemet by three to one.

Therefore, it looked as if blockbuster revenues came from having a patented drug and [employing] clever sales and marketing, and so the rest of the industry copied that approach.

How do high R&D costs and high failure rates in clinical trials feed into the pharma industry’s negative reputation?

High attrition rates of drugs is also an issue; 95% of drug development ends in failure and 245 out of 250 pre-clinical candidates fail. You can imagine the disappointment of patients and relatives of the patients when they think there is a trial that is going to help them. Then the drug fails, [meaning] thousands and thousands of patients have their hopes dashed.

We are writing a white paper to send to the Health and Social Care Committee, in which we are going to ask really searching questions, such as why is the industry allowed to test its own products – there is no other industry that does that – and why aren’t there post-mortems on failed clinical trials?

There has to be learning in there about what went wrong and what didn’t – but all that is kept secret by the companies. If you compare it to the aviation industry, when there is a plane crash all the information is shared immediately across the industry as to what went wrong and what is being done to put it right.

You have to ask yourself, why doesn’t that happen in pharma? It is because we feel like medicines are different to other sectors, but they are not, there should be an obligation on those companies [like there is in other industries] to investigate failures and explain why they happened.

What can be done to break this negative cycle and bring the industry into the modern era?

I am repeating what people at the coalface – researchers, scientists and physicians – are saying to me. We want the industry to provide more evidence that their molecule could get to market, before the patent was awarded. Unless you take away the incentivisation of the patent, nothing is ever going to change.

There needs to be a consultation of trade bodies, like the BioIndustry Association and the Association of the British Pharmaceutical Industry, facilitated by government, which actually asks these questions around patents. It is about going back 40 years, looking at the benefits of vertical integration and moving back to collaboration.

The work that the FDA’s Janet Woodcock is doing in terms of the Critical Path Initiative, which is part of the agency’s 21^st century modernisation framework, could be a starting point; she says ‘don’t fight the system, change the rules’.

Technology is often viewed as a silver bullet. What role do you think emerging technologies can play?

We need to incentivise pharma companies to spend more time at the early stage to invest in predictive technologies, such as in vitro, ex vivo, Insilco technologies and organ on a chip, that really have moved on a long way, but that the industry has not embraced.

There is a lot of hype about AI because the people who have got the technology want to sell it. AI is an enabler, but if you have got a system that is overly complex, clunky, and not properly integrated then AI or machine learning will not doing anything. It has to be supported for the people at the coalface.