Early Market Testing Can Benefit Health CareStephen Wunker and Joe Sinfield
Health-care companies often think experimentation is for the lab bench. Drug discovery and development requires remorseless trial-and-error—and only about 1 in every 10,000 compounds created will eventually make it to market. But once a molecule emerges from that process, experimentation tends to cease.
With tight regulatory supervision and a product pipeline that typically yields only a small handful of new launches each year, pharmaceutical companies invest heavily in the few products that do emerge. A typical drug launch can easily cost tens of millions of dollars or more. With patent expiration dates dictating the product life cycle literally to the day, firms want to maximize sales while they can.
Blowing the Opportunity This situation is perilous. Pfizer (PFE), the world's largest drugmaker, offers a telling illustration. Beginning in 1996, it invested heavily in creating an inhaled form of insulin to treat diabetes. On its face, such a product seems an excellent idea. The market for injected insulin is several billions of dollars per year, and people do not enjoy sticking themselves with needles.
In 2006, Pfizer received Food & Drug Administration approval to market the inhaled insulin product Exubera, which it had licensed from biopharmaceutical company Nektar. Pfizer invested approximately $2.8 billion to get to that milestone and predicted annual sales of $2 billion. Then came the big commercial launch, with slick commercials and armies of sales reps. Total sales? $12 million a year. In 2007 the company pulled the plug on this extraordinarily expensive failure.
What went wrong? Diabetic patients were concerned with the ability to "feel normal" again. However, the Exubera product was a flashlight-sized tube that had to be used as if it were a large pipe. Dosing insulin into the tube required measuring in unfamiliar increments. Patients had to have a special lung function test before being allowed to use the product.
Further, as one endocrinologist put it, "I can teach someone how to use an insulin pen in five minutes, but it would take nearly an hour to teach a patient to use inhaled insulin." Finally, many doctors continued to worry about the fact that 90% of the inhaled insulin did not make it into the bloodstream and might have unknown effects in the lungs.
None of these concerns required an actual product launch to validate. Experimentation could have helped Pfizer avoid this expensive failure. Experiments could have included giving patients a mock-up of an Exubera tube to use and then asking them how they felt about the experience. Pfizer could have done research into the impact of unfamiliar dosing, lung function tests, training time, and safety concerns—research that would have cost less than even Exubera's eventual sales.
Levers for Experimentation There's a big lesson to be learned from the Exubera debacle. Before spending serious money, pharmaceutical and medical device firms would do well to undertake a disciplined process of evaluating their major assumptions and risks, and how much they could experiment. Here are some areas ripe for such experimentation:
Which outcomes are critical to prove in a clinical trial? Does a weight-loss drug need to establish that it reduces incidence of diabetes, or that it reduces weight by a certain percentage, or that it reduces weight when combined with a specific diet? The answers depend upon which stakeholders will most affect the product's adoption—regulators, health insurance companies, or patients. Exactly what each of these stakeholders wants can be understood through straightforward interviews or survey-driven research before clinical trials ever begin.
What stakeholder challenges should be addressed to facilitate clinical trial success? Clinical trials can fail for many reasons other than efficacy. Patient frustrations can lead to lack of compliance. The inability to facilitate communication between patients and physicians can lead to incorrect use of medications that could alter outcomes. These types of pitfalls can be avoided by pretrial observational research.
What is the overall patient experience that will create and sustain market demand? While the drug molecule or device construction may be inalterable, many variables that make up the overall experience for patients and physicians are not. These variables ultimately influence practitioner recommendations, patient willingness to adopt, and long-term patient adherence to therapies. Experiments could be performed on ways in which:
People become aware of their condition
The condition is diagnosed
Other therapies are considered
The company's therapy is administered
Patients and practitioners are educated about the therapy
The condition is monitored both inside and outside the physician's office
Pharmacists dispense medications
Patients understand medication side effects and how to handle them
Information to define these variables can be gained through patient surveys, in-depth interviews, and observational research, as well as consultations with practitioners and other experts—all of which can be carried out before an actual drug or device is even available.
Who are the "foothold" customers, and how should they be approached? Historically, many in the health-care arena have aimed for the biggest market in order to maximize their chance of a home run. An alternative is to focus narrowly on a group that will value a therapy very highly, adopt it readily, and sing its praises. Although this shift in focus requires the pharmaceutical company to be able to prioritize "small" ideas and scale back traditional launch activities, the reward can be a handful of platforms for future growth.
In remaking its business model from blockbuster-seeker to champion of tailored drugs, Novartis (NOVN) has successfully followed this approach with Gleevec. This anticancer drug was launched initially for a rare type of blood disease affecting only a few thousand people a year, and since then has grown to be approved for six other conditions. In the process its sales have grown to $3.7 billion a year.
We often hear that experimentation is not possible when the stakes are life and death. This argument misses the point that pharmaceutical and medical device companies are in the business of science, and experimentation underlies the scientific method. This method should not stop at the laboratory's door.