Drug Baron

April 8, 2013
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The power of crowds – and their limits

The first internet revolution in the 1990s saw the emergence of on-line service providers who offered the same service as off-line competitors, but cut costs.  Big winners included Amazon and LastMinute.com.

But the second, and arguably bigger, internet revolution in the 2000’s was the emergence of social networks, with Facebook, LinkedIn and Twitter in the vanguard.  These surprisingly simple tools – Facebook is little more than a village noticeboard with millions, rather than dozens, of potential contributors – unlocked the power of the crowd.

Crowds can do some amazing things.  Whether you need to find someone extra smart, or aggregate thousands of tiny contributions to create something huge, virtual crowds organized through social networks have made possible what was previously unthinkable.

And the next target for crowds seems to be funding businesses – and most recently even academic science.

In principle, it sounds like a great idea: a small, almost invisible, contribution from enough people can together deliver enough resources to change the world.  Platforms, like Microryza, are springing up like mushrooms to harness these ‘donations’ and channel them to deserving causes.  “Crowdfunding” is on everybody’s lips.

The key difference with crowdfunding lies in the distributed decision-making capacity, rather than just distributing the cost

Can crowdfunding really shake the foundations of current financing models for biotech companies and for academic science? Or will it remain a niche opportunity dwarfed by conventional funding mechanisms?

DrugBaron predicts that initial excitement and expansion in the sector may rapidly be followed by disappointment and contraction – unless a solution can be found to the quality control issue when the funders cannot be expected to understand the details of the projects they are being asked to fund.

After all, existing public funding of academic science is nothing but “crowdfunding”.  Can social networks really do a better job of distributing our communal investment in research than research councils or even venture capitalists? Crowds can do amazing things, but crowdfunding biotech business or academic research might be a step too far.

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March 19, 2013
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Biosimilars are not similar enough: A proposal for true ‘biogenerics’

As the debate rumbles on about biosimilars, DrugBaron cannot help wondering if they are not in any case the wrong solution to a very real problem.  After all, when it comes to biologic drugs is biosimilar similar enough?

The principle of generic drugs mostly works very well, ensuring that at the end of the state-sponsored monopoly period, which allows super-normal profits to compensate and incentivize innovators, normal market economics applies to drug pricing.

It works because almost everyone (medical professionals and patients) believe the generic to be functionally identical to the proprietary drug.  Not just similar, but identical. The initial high price was pay-back for discovering and developing the drug in the first place, not a premium for quality.

Biosimilars attempt to extend the same principle to biologic drugs.  But the core tenet of the generics system (functional identity of the generic) is demonstrably absent.  Healthcare professionals and patients will not, and should not, accept that similar is good enough.

Yet no-one can doubt the need to find a solution to the problem of indefinite premium pricing for biologics.  As their ranks swell on the medicine cabinet shelf, it’s a pressing problem for the world’s healthcare providers.

Maybe, then, its time to look for a different solution? There is an alternative to biosimilars. Enshrine the principle of patent law directly into the regulatory framework for biologics: in return for approving the drug, ten years after approval the registrant must license others on pre-agreed terms to make the identical product.  Such a system, creating true ‘biogenerics’, would allow market economics to determine the price of biologic drugs while providing the patients with the real product, backed by extensive hard end-point clinical trial, not some cheap imitator.

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March 5, 2013
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Please DO cut the science budget!

As President Obama signs the sequester cuts into the budget, amid dire predictions of global economic melt-down and howls of protest at the impending reduction of the science budget, there is at least one UK scientist who wishes the same were happening here.

DrugBaron would cut the science budget in the UK overnight by 10% – along with all other government spending

The US sequester, then, is the perfect policy.  Maybe its only fault is that it doesn’t go far enough.  It’s a once-only measure.  Spending has become so bloated over several decades that an annual reduction across the board would be justified for quite a number of years.

Not surprisingly, spending cuts get a bad press.  There is a mismatch in the coverage given to those who squeal because they lose out than to those who benefit from the reduced cost burden.  This mismatch arises due to gearing: cuts affect a smaller number of people to a bigger extent than the savings spread over the whole population.

Those who lose out then marshall all kinds of “but its bad for all of us” arguments to support their case.  In the case of the science budget, the superficially strong-sounding argument is usually one of growth – knowledge is the foundation of economic prosperity, so how can it make sense to cut the science budget?

Simply because the link between input cost and output value is not only imperfect, but completely illusory.  It is one of the most pervasive, and most dangerous, fallacies of the 21st Century world: that input equals output – that spending is a measure of production.

“There is no selective pressure in abundance” Kevin Johnson, Index Ventures

Trouble is, its simply not true – in science or anywhere else.  Recessions and cuts are not just beneficial, they are essential.  Only in the face of cuts are weaklings weeded out, and efficiency maintained.  The general public, investors and governments are addicted to an unachievable, and undesirable, fantasy of steady, monotonic economic growth.  Its time to learn to love cuts – like DrugBaron.

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