Why pharma clinical development must go beyond its means

Chris Fidyk


This article explores the history of the pharmaceutical industry, with regards to clinical trials and the legislation changes over the years.

As the American healthcare system marches slowly, but steadily, away from its fee-for-service roots towards a fee-for-value future, understanding the full impact of this shift is practically impossible. But to quote the Jonas Brothers (or Swedish pop duo Roxette long before them), “things will never be the same”.

Pharma clinical development is not immune to this shift. But to understand why, it’s useful to learn from the world’s greatest teacher: history.

Wind the clocks back 111 years to 1901, the year before the federal government took its first measure to impose controls on the drug industry in the name of public safety. In 1901, there were no such controls. The closest thing to regulation was the nearly 80-year-old US Pharmacopoeia, a voluntary undertaking by the private sector to impose its own quality controls on the production of drugs throughout the nation (think the Motion Picture Association of America for drugs). In 1901, it was truly the Wild West of drug production.


“…the drug industry established the clinical trial as a scientific, hypothesis-driven model for assessing a drug’s effects in humans.”


But then the inevitable happened. A contaminated batch of vaccines, the very things designed to prevent sickness, caused the deaths of numerous children. The public was outraged. Politicians politicked. And a year later, the Biologics Act of 1902 was passed into law, giving the federal government the power to regulate the approval of drugs for the very first time. (Of note, the term “biologics” had a very different meaning in 1902 than it does today, back then it referred to things like vaccines.)

Next, the federal government passed the Pure Food and Drugs Act of 1906, which recognized the already widely adopted US Pharmacopoeia as the de facto standard for drug production. This Act also imposed drug labeling standards for the first time and made it illegal to mislabel a drug, later the Act was extended to drug advertising. The Food, Drug and Cosmetics Act of 1938 formally brought the FDA into existence and legislated its powers over drug approval, manufacturing quality, et al.

In response to these Acts – particularly those of 1938 and thereafter – the drug industry established the clinical trial as a scientific, hypothesis-driven model for assessing a drug’s effects in humans. To be sure, the clinical trial that we hold so near and dear today, and that most herald as the “gold standard,” was borne out of necessity and in response to an evolving drug industry landscape driven largely by federal government legislation.

Is today any different?

The shift from a fee-for-service model, where healthcare providers are compensated for the services they provide, to a fee-for-value model, where they are compensated for the outcomes they achieve and the value they generate, is but one of a number of transformational forces that may re-shape the drug industry. But unlike some of these forces, in a fee-for-value world, clinical trials as they are today won’t mean much. That’s because a provider in a fee-for-value world will no longer read a drug’s monograph to determine how a patient may respond to that drug. The reasoning is simple: if in order to be compensated, fee-for-value providers must actually improve patient outcomes, they need to understand in advance how a specific decision they make is going to impact a specific patient.


“Clinical development must reconsider the entire purpose and architecture of clinical trials…”


In the context of drugs, fee-for-value providers must have this understanding before they make a treatment decision. The results of clinical trials today do not contain the necessary data to help a fee-for-value provider make that decision. These results are highly compressed into drug monographs or peer-reviewed journal publications, typically with the results explained in such population-level measures as percentiles and means.

In a fee-for-value world, pharma clinical development must go beyond its means. Since providers will be held accountable for the outcomes of their patients, the drug industry will be forced to be accountable as well. Clinical development must reconsider the entire purpose and architecture of clinical trials so that they actually generate the best data to support patient-centric decisions.

How will they do this? Through the implementation of competing information systems. Much of this groundwork has already been laid by managed care for years, but its importance becomes magnified in a fee-for-value world. Providers themselves will need information models that help them understand what decision they should make for a specific patient at a far deeper level than any clinical trial dataset or drug monograph can currently convey. Providers are just beginning to use clinical measurement tools centered on patient outcomes, such as PatientsLikeMe and Electronic Medical Record systems, within the care environment. When used consistently, these tools will help providers deliver truly personalized medicine.

The drug industry will no longer be able to evaluate only a highly selective subset of the potentially treated patient population or deliver data readouts in percentiles and means. A fee-for-value world will demand greater evidence of the expected outcome of a specific intervention for a specific patient.


“Further, the data from clinical trials will need to be uniformly liberated and made actionable to facilitate provider decision-making.”


To compete in a fee-for-value world, pharma clinical development will need to invent a clinical trial architecture that both clears the threshold for regulatory approval and accommodates the level of data resolution necessary for a provider to confidently decide that treating a specific patient with a specific intervention will result in an improved outcome. The current cost architecture of clinical trials clearly makes this prohibitively expensive. It may be the case that the rigor of the clinical trial model is unnecessary to accurately satisfy provider decision-making and information needs in a fee-for-value world.

Further, the data from clinical trials will need to be uniformly liberated and made actionable to facilitate provider decision-making. The current format, while possibly adequate in a fee-for-service world, is not adequate in a fee-for-value world. If pharma clinical development does not do this, fee-for-value providers will likely turn to competing information systems, such as those architected in the accountable care organization within which they now practice, to facilitate their decision-making in lieu of the drug industry’s clinical trial results.

The federal government is once again evolving the drug industry landscape, this time by implementing powerful financial models that aim to align compensation and performance throughout the American healthcare system. As history has taught us, the government’s actions sometime precipitate a change in how the drug industry thinks about its business and operates its practices. Now certainly seems to be one of those times, as pharmaceutical companies shift their focus from cost reduction to value generation.


About the author:

Chris Fidyk is Director of Business Development at health data sharing website PatientsLikeMe, responsible for managing strategic partnerships and proposing, implementing and supervising the delivery of custom solutions to pharmaceutical and other healthcare partners. Before joining PatientsLikeMe, Chris held several management positions with Amgen. He holds a master of business administration degree from the Anderson School of Management at the University of California, Los Angeles as well as a Bachelor of Science degree in computer science from the Fu Foundation School of Engineering and Applied Science at Columbia University.

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