Innovation key to solve disease—governments should invest not degrow

[Margaret Anderson, Kimberly Myers, Nina Gonzalez, 5-23-2023, "Unlocking the potential of biomedical innovation: The crucial role the government and partnerships play in accelerating progress," Deloitte Insights, ] WL

Innovation leading to bedside therapies rarely comes from single entities but rather local community-based ecosystems that leverage local players and infrastructure.62 For instance, Boston has both talent and infrastructure for biomedical innovation because of the interconnectedness of industry biopharma players, academic institutions, and health systems that lead to an abundance of startups in the biotech space. Novel, disruptive ideas helmed by such startups are nurtured by a supportive ecosystem. Successful development is not just about the capital but also the talent at all levels, e.g., research, management, regulatory experts, and clinical research organizations to streamline the clinical development, among others. It is typically difficult for a single innovator or startup to check all these boxes, but can be even more difficult when the startup is located outside of a major metropolitan innovation hub. Agencies can consider funding promising new investigators from diverse locations to let local innovation flourish and spread throughout the United States, creating novel innovation clusters. With a skilled workforce, specialized infrastructure, and supportive institutions, innovation clusters can blossom in new places.63 “Once you get a success and you’re a repeat founder, it is easier to get funded. The next idea [is to have] a team ready to run it, or even venture capital going upstream doing company creation.”64 – Interviewee De-risk research and development in cases of high-risk, high-expected social returns. Contrary to popular belief, government and nongovernmental institutional investment in biomedical areas do not reduce private spending on R&D.65 In fact, private spending on pharmaceutical R&D has increased dramatically in recent years despite increased government investments.66 The expected cost to develop a new drug is now estimated to range from a little less than US$1 billion to more than US$2 billion.67 If government and partners are ambitious enough to tackle all 10,000+ diseases, at a commercial level there needs to be demand for therapies that may otherwise lack the market to bring industry peers to the table. Therefore, government’s ability to subsidize research and development in areas of unmet need can serve as a mechanism to drive input into the last-mile pipeline. Two mechanisms are key: push and pull incentives.68 Push incentives reduce the cost of development by offering financial, tax, and technical incentives regardless of anticipated failure in the market. Pull incentives reward developments already considered relevant in the market and scientifically viable by ensuring developers’ financial viability into the future, even in inefficient markets. Studies have shown that governmental increases in basic biomedical research funding, a push incentive mechanism, tends to increase private funding in related disease areas.69 Rationally, industry seems to find it difficult to spend outsized amounts on research generating knowledge that is not directly translatable to a product, while NIH funding for basic science uncovers many of the mechanisms such applications could then leverage. To adjust supply and demand for therapies that could aid in underfunded disease areas, the government could implement a variety of push-pull policies (Fig. 2). As funding gets tighter in the private sector, “government funding is now gap funding” was the thought of one interviewee.70 Additionally, the idea that ARPA-H program managers can essentially place bets was important to many we talked with. It can be uncomfortable to bet on something that may fail, especially when the track record will likely be assessed so closely. But for years those in innovation circles have discussed how the way to move forward is to know what works, and what does not. Many interviewed expressed hopes for ARPA-H to have both wins but also failures. The way forward Government can catalyze disruptive innovation that changes the world for the better. The challenge is to do so without the external pressures of a pandemic. There should be careful consideration of the factors that worked during crisis and how to leverage these for future scenarios, crisis or not. Three major drivers of government’s success that can propel innovation forward were identified: Optimized partnerships on a scale unmatched before: Key success factors for the future could be incentives for all players in the ecosystem to participate, continuously measuring progress and outcomes, and a central entity like FNIH to coordinate disparate groups Patient- and community-centered solutions to inspire innovation toward some of the hardest-hitting issues facing those most in need Last-mile funding infrastructure via programs such as ARPA-H that can boost novel but commercially fragile innovations to reach the marketplace. Government has already made great strides in this direction, proving instrumental in responding to one of the biggest biomedical crises in human history and engendering truly disruptive innovation: catalyzing the development and deployment of mRNA vaccines for COVID-19. Progress continues. Breakthrough biomedical innovations are not only possible, but probable, with government’s investment in the right infrastructure and incentives for an ecosystem approach to solving for the toughest problems. And yet many pieces that helped lead to effective COVID-19 vaccines were there in advance of the pandemic, and the system was not completely able to assemble them until the crisis. The question is: How can blind spots be both identified and reduced going forward to accelerate disruptive innovation?