[Ip-health] Businessweek opinion: How Biotech Hurts Health Care

[Sarah Rimmington]

http://www.businessweek.com/innovate/content/jul2009/id20090726_841135.htm
Businessweek
Viewpoint July 27, 2009, 9:17AM EST text size: TT
How Biotech Hurts Health Care
Biotechnology has the potential to orient health-care around individual
patients. But it won't while the industry follows Big Pharma's lead


By Saul Kaplan

The national health-care debate is many things to many business
interests. To the biotech industry, it seems to be a matter of life and
death. Makers of biotech drugs, which are derived by manipulating
genetic material in living organisms, insist that their products must be
patent-protected from generic "biosimilars" for at least 12 years. That
would ensure monopoly prices, which the industry says are required to
earn back their big investments in research and development.

To reform the U.S. health-care system, the government shouldn't be
creating a road map to biosimilars, however long the trip. Instead, it
should open the floodgate to "biodissimilars" and to the personalized
medicine options they will enable.

Biotech is a great U.S. innovation success story with the potential to
be the disruptive force that makes personalized medicine possible.
Personalized medicine creates remedies designed for your specific
genetic makeup or condition and offers a path toward better, longer
lives, and lower health-care costs. Unfortunately, the biotech industry
has moved away from its disruptive potential and morphed into Big
Pharma, adopting the pharmaceutical industry's unsustainable
"blockbuster or bust" business model.

Blockbuster Bust
Biotech executives will claim that they are different from the
pharmaceutical industry. Don't believe it. Just check out the overlap of
their participation in the Biotechnology Industry Organization (BIO) and
PhRMA, the Pharmaceutical Research & Manufacturers Assn. The biotech and
pharmaceutical industries have locked into identical business models,
both dependent on producing a steady stream of blockbuster products, or
drugs that generate at least $1 billion a year in revenue. Blockbuster
drugs offer a one-size-fits-all therapeutic approach=97think Lipitor or
Advair=97and the antithesis of personalized medicine.

Today both industries are valued on Wall Street solely by the net
present value of their product portfolios and compounds under
development. In addition, the few biotech companies with branded
products market them exactly as pharmaceutical companies do. It works
both ways. Check out almost any pharmaceutical company and you will find
that it has fully integrated biotech platforms into its R&D
capabilities. You can't tell the difference between these two industries.

Initially, all new technologies are deployed as a sustaining innovation.
Biotechnology is no different. As predicted by Clay Christensen's
disruptive innovation theory, the pharmaceutical/biotech industry has
deployed biotechnology tools and platforms in an effort to sustain its
current blockbuster business model. Both pharmaceutical and biotech
companies will fight to the death to wring out every possible
blockbuster product from the current industry model. There is still
money to be made=97a lot of money, in fact=AD=97but the model is not sustai=
nable.

Imagine needing to introduce three, four, or five products every single
year each with more than $1 billion in market potential. That is the
scale it takes to compete in the drug industry today. This daunting
challenge will force another wave of consolidation as a few very large
companies try to feed the voracious appetite of the blockbuster monster.
Everyone else will be either a niche company or a development company
feeding products to the few behemoths left standing.


Fail Faster!
I don't know how long it will take, but all of the disruptive innovation
theory and supporting evidence predicts that the current industry model
will fail. We need it to fail faster because the patient is waiting.
Reform, as currently contemplated, is little improvement. Legislation
under consideration today does nothing more than extend access and
marginally increase the efficiency of our current system. Costs will
continue to escalate out of control and outcomes will not improve.

Biotechnology has the potential to change the way we understand and
treat disease. It has the disruptive potential to put the patient at the
center of a new system with individualized diagnostic and treatment
approaches. As such, it could deliver better care for less money.

To fix the U.S. health-care system, we need to design a system where
incentives are realigned and the roles of the players=97doctors, patients,
insurers, hospitals, etc.=97are reconfigured to create a "well-care"
system that puts the patient in charge and at the center of the system.
Biotechnology can help enable the transformation to personalized
medicine, but not until we take better advantage of its disruptive
potential.

Saul Kaplan is the founder and Chief Catalyst of the Business Innovation
Factory. Saul also blogs at It's Saul Connected.

--
Sarah Rimmington
Attorney
Essential Action, Access to Medicines Project
Washington, DC
Tel: +1 (202) 387-8030
Cell: +1 (202) 422-2687
www.essentialaction.org/access/