The Terrible, Horrible, No Good, Very Bad Pharma Day*

You form a drug/device company whose R&D will be funded by philanthropy. However, your company will need to wean itself off of philanthropy after FDA approval, so you establish a partnership with an established commercial entity that will handle manufacturing, sales, and marketing. The partnership stipulates a pricing strategy to ensure access for your target patients, but also provides some funding back to the company for additional trials or new products.

If this approach sounds like fantasy, head over to this (#longread) Bloomberg story by Karen Weise about Medicines360, Allergan, and the recently approved Liletta.

Drug makers, whether branded, generic, or specialty, are expected to generate substantial profit from the drugs they sell. No amount of regulation (incentives or disincentives) will change that. We are in the midst of amazing changes in disease-related philanthropy and patient driven activity.  Groups such as the Leukemia and Lymphoma Society and the Cystic Fibrosis Foundation are helping to fund development of new therapies. While risky, the Cystic Fibrosis Foundation partnership with Vertex led to a new, FDA approved CF drug as well as $3B for CFF on sale of their portion of the drug royalties. Patient-driven foundations have even formed drug development companies, such as Charley’s Fund and the Nash Avery Foundation as the founders of Akashi Therapeutics that is developing drugs for Duchenne muscular dystrophy. Similarly, a new breed of company could be developed to address drugs with small markets or shortages of critical drugs, which are often associated with low margins.

Harkening back to the days of pride stemming from Merck’s decision to give away a cure for river blindness to countries that couldn’t afford the drug, pharma should play a significant role. Pharma can support these non-traditional entities in a number of ways, including: foregoing (or placing at risk) the usual licensing/acquisition fees, providing expertise to support manufacturing transitions, and delivering material for bridging studies.

While smaller margins would be manageable, the transition away from a philanthropy once products are for sale will be a critical component for long term success of such a model.

This post is the seed of an idea about aligning interests to improve access. And in the discussion about drug pricing, execution of ideas to provide efficacious drugs to patients when they need them would be worth more than millions.

To me, ideas are worth nothing unless executed. They are just a multiplier. Execution is worth millions.

– Steve Jobs