Panel presentation considering risk-sharing agreements with CROs, payers, and investors.

1. Risk-Sharing Partnerships in
Drug Development and
Commercialization
Perspectives from a CRO,
Payer, and Investor
Patrick Jordan
Managing Director
Quintiles

2. Disclaimer
• The views and opinions expressed in the following PowerPoint
slides are those of the individual presenter and should not be
attributed to Drug Information Association, Inc. (“DIA”), its
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3. Description and Agenda
• Description
– This panel will share CRO, Payer, and Investor perspectives on
biopharma partnerships that reduce risk, enhance innovation, and
ultimately create value
• Agenda
– Introductions
– Panel Perspectives
• Sponsor-CRO Relationships: Emerging Models and Key Learnings
• Risk Management: Pharmaceutical and Payer Initiatives
• Product-Based Investing in Biopharma
– Panel and Attendee Discussion on data from the 2012 New Health
Report
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4. Managing Biopharmaceutical Risk with
New Partners
CROs: Clinical Risk
Tim Dietlin, MBA
Vice President, Alliance Management, INC Research, Inc.
Payers: Commercial Risk
Ed Pezalla, MD, MPH
National Medical Director for Pharmacy Policy and Strategy, Aetna
Investors: Financial Risk
Will Robb, MBA
Partner, NovaQuest Capital Management
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5. New Health Report 2012
WHAT IS THE NEW HEALTH REPORT?
• Annual survey of stakeholders who are involved in or impacted
by drug development
• Responses received from biopharmaceutical executives,
managed care/payer executives, investors and patients being
treated for a chronic illness
• Respondents were from the U.S. and the U.K.
HOW MANY PEOPLE PARTICIPATED IN THE SURVEY?
• >1,350 U.S. and U.K.-based biopharmaceutical executives,
managed care executives, investors and patients being treated
for a chronic illness
– 102 biopharmaceutical executives
– 75 managed care executives in the U.S.
– 72 NHS executives in the UK
– 100 investment professionals focused on healthcare and biopharma
– 1,000 adults in the US and UK who were diagnosed with and
receiving treatment for a chronic illness; and 100 investment
professionals focused on the healthcare/biopharma sector.
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6. Implications for the Industry
• STAKEHOLDERS EACH POSSESS A UNIQUE PERCEPTION AND TOLERANCE LEVEL OF
RISK/BENEFIT WITH REGARDS TO HEALTHCARE AND MEDICINE.
– Biopharma respondents themselves have no clear consensus as to whether their company should
accept more risk in clinical development and commercialization. This could partly be explained to
the current financial state of the company, as companies with looming patent expirations or thin
pipelines will have a different risk-tolerance appetite than companies who are performing well.
• BETTER TOOLS ARE NEEDED TO ACCURATELY ASSESS RISK.
– Current metrics used by biopharma and payers are insufficient and fail to account for the varying
degrees of weight different stakeholders assign to clinical, quality-of-life outcomes and value.
• BIOPHARMA AND PAYERS NEED BETTER ACCESS TO ROBUST SOURCES OF DATA.
– Biopharma continue perceives Phase III as the most risky, but also as the phase in which they
feel less confident about available data.
• DESPITE THE PERCEIVED OBSTACLES, OPPORTUNITIES EXIST TO MITIGATE RISK.
– Pre-competitive alliances and risk-sharing agreements are supported by both biopharma and
payers, and are perceived as increasing patient access to new therapies.
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7. Biopharma’s Biggest Challenge
• Biopharma still
perceives the FDA as
its biggest challenge,
although a roughly
equal number of
respondents also say
financial concerns or
increasing evidentiary
requirements is their
company’s biggest
challenge.
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8. Biopharma’s Risk/Reward Balance
• Biopharmaceutical
executives are divided
on risk:
– As many executives
believe they should
take more risks as
those who think they
should take less
• 55% of executives
think the reward for
risk is less today than
5 years ago
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9. Who Should Take More Risk?
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10. When Are Payers Involved?
When Do They Want to be Involved?
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11. Biopharma and Payers Sharing Risk
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12. The Pharma Investor’s Paradox
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13. Investor and Biopharma Perception of Risk
by Development Phase
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14. Precompetitive Alliances
• Biopharma executives • 37% report that their firm
support the concept of pre- currently participates in pre-
competitive alliances, yet competitive alliances. 25% of
fewer than half say their the remaining executives felt
organizations participate. that their firm was very likely
to in the next 5 years.
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15. A Reason for Optimism?
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16. Implications and Opportunities
• The drug development enterprise is well known for its risks, whether they
manifest as clinical risk, regulatory risk, financial risk, or commercial risk. Yet,
with risk comes opportunity.
– Strengthening the design of studies with CROs contributing know-how and experience
– Attracting capital to do more with less, sharing the downside and upside
– Demonstrating a clearer “value of pharmaceuticals”
• Sharing risk is more than just reducing the downside. It is also about
increasing the magnitude of the upside.
– The whole of biopharma, CRO, investor, and payer insight is more than the sum of the
parts
• The industry expects more risk- and cost-sharing agreements, but managing
them isn’t all that easy.
– Risk sharing should not always be risk transferring
– Effective governance to align goals and the way partners achieve them
• Time is short but expectations are high.
– We are all in the business of improving health and quality of patient lives
– There is tremendous opportunity for new parties in healthcare that collaborate to
innovate