BIO 2010: Potemkin Pavillions and the Power of NICE

Last month's annual meeting of BIO in Chicago once again proved illustrative in showcasing the high profile that governments now plays as the biotech sector's chief advocate.  While private venture capitalists confined themselves to the margins of the meeting, the Convention hall was bursting at the seams with host country  'pavilions', each designed to highlight its status as destination partner of choice for the industry.  

Missing from the slick videos, graphics and takeaway tchotskes was any real sense of the importance of pricing and reimbursement levels that can accommodate the high cost of capital, increased regulation and long development lead times that together have sharply lowered effective periods of market exclusivity for biotech.   Instead, the talk was all about building more Potemkin villages around infrastructure - tax breaks, R&D allowances, funding for basic research and facilitation of academic partnerships - that do little to compensate those who risk private capital for a profitable return on the investment.    

The essential steps required to promote rapid commercialization of research, where government has to pull back and basically let the market work for itself, just didn't  seem to be part of the conversation.  It's another sign that the 'public utility' model may well be the most realistic scenario driving the industry's future; ironically, its the most innovative research segment - biotech - that seems to be leading the way.

One example of this disconnect between advocacy of 'front end' support for innovation and neglect of the 'back end,' where products face an increasingly skeptical phalanx of payers, was the appearance of Sir Michael Rawlins in a series of impromptu exchanges at BIO hosted by the UK Department of Business, Innovation and Skills. Rawlins heads the National Institute for Health and Clinical Excellence [NICE], which reviews medicines for evidence of cost-effectiveness prior to listing on the NHS. NICE is criticized in some quarters of industry for holding back access to medicines on grounds that their clinical value is insufficient when weighted against strict metrics of affordability.

Rawlins made a number of useful points in suggesting where governments are heading in this puzzling, increasingly disconnected game to 'promote' biotech:

        What's wrong with good evidence to help politicians decide where to commit scarce public funds for health? Rawlins noted flatly that results of the UK election will not compromise the mandate of NICE in critically appraising medicines for listing in line with the priorities and resources of the NHS - all three major parties support the organization's role 'without hesitation.'

        NICE has broadened its roots as a leader in the politics of public health. Rawlins himself is chairing a bipartisan government commission to review the entire UK regulatory climate for medicines, with recommendations due by the end of the year.  By default, NICE is thus likely to survive this critical review unscathed.

      Austerity will help promote the NICE reputation by deflecting criticism away from politicians in making unpopular resource choices. Rawlins believes that drastic cuts in public spending to restore the fiscal balance in the UK will actually enhance the value of metrics-driven tools to ensure decisions are made fairly and on the basis of independent evidence. Hence NICE is actually likely to grow in political stature as a consequence of the urgent need to curb public spending.

        Can you 'define' innovation? NICE believes it can. A new priority for NICE in 2010 is identifying areas to 'disinvest,' including recommending the removal of some medicines from NHS reimbursement. However, Rawlins is no fan of the big pharma 'headroom for innovation' argument - new molecules will still have to prove their merit as 'value drivers,' regardless of whether such disinvestment frees up funds for alternative use.

      NICE work carries significant implications beyond the UK. As the financial crisis spreads to more countries, reliance on appropriate evidence to ration health care will increase, and NICE is determined to sell its model to anyone who is interested.  Rawlins said NICE has created an international consulting unit with a five person staff.  It is working closely with a number of multilateral agencies - including the World Bank and the Inter American Development Bank [IADB] - as well as the UK Department for International Development [DFID] to promote health technology assessment tools in emerging middle-income markets. The focus is on helping countries decide what to spend on medicines through therapeutic targets and clinical guidelines, rather than individual product appraisals. Nevertheless, it's a trend that will affect biotech fortunes for good or bad in markets that are slated to account for much of the growth in global pharmaceutical spending over the next 10 years.