The biopharma sector has had quite a year. Under FDA Commissioner Scott Gottlieb, the regulator approved a record number of drugs and helped usher in innovative gene therapy treatments. Behavioral health drugs also marked a milestone with the approval of Otsuka Pharmaceutical’s Abilify MyCite, embedded with a sensor developed by Proteus Digital Health to remotely monitor medication adherence for people with schizophrenia and bipolar disorders. The convergence of biopharma and digital health technology is a trend that’s poised to accelerate in 2018. Peter Meath, Managing Director and Head of Life Sciences for J.P. Morgan’s Commercial Banking business, shared his perspective in a phone interview, which has been edited for clarity.
Note: This interview was done before the tax bill became law. The responses have been updated accordingly.
Peter Meath, Head of life sciences for J.P. Morgan Commercial Banking
We saw a lot of activity this year in beyond the pill technology, from remote monitoring tools to investment in technology to make clinical trial recruitment easier. From where you’re sitting, how will this trend play out in 2018? Do you think we will see more pharma companies adopt these kinds of technologies?
I think there are two different aspects of digital health technology in pharma. I think you will definitely see increased chatter on it and increased focus on it but not necessarily from pharma companies. One interesting thing to consider is it’s not just pharma companies that benefit, it is the insurance companies as well. It’s a double-edged sword. The potential upside with use is it can increase safety — people will be taking medications as prescribed. Also [poor medication adherence] costs lots of money each year and these technologies could lower insurance costs to benefit consumers. On the other hand, there’s the issue we have seen everywhere in technology — who owns the data and who benefits from it? Could insurance companies use this data to deny you coverage? Will these programs be voluntary or non voluntary? Data ownership is much more of a macro issue that will be [increasingly] pushed to the forefront.
Any particular areas of need you’d like to see biopharma apply digital health tech in 2018?
A Deep-dive Into Specialty Pharma
A specialty drug is a class of prescription medications used to treat complex, chronic or rare medical conditions. Although this classification was originally intended to define the treatment of rare, also termed “orphan” diseases, affecting fewer than 200,000 people in the US, more recently, specialty drugs have emerged as the cornerstone of treatment for chronic and complex diseases such as cancer, autoimmune conditions, diabetes, hepatitis C, and HIV/AIDS.
Opioid abuse is a great example of an area of need where [remote monitoring technology] could be applied. It’s a huge crisis. Integrating this tech could lessen the impact significantly. Are opioids being taken as prescribed or are they being abused? This technology is not going to solve the crisis but it could have an impact on the problem.
Could the integration of digital health tools have an impact on drug prices?
We will see it driven by insurance providers — I do know several health systems using digital health tools for pilot programs…but pharma is not pushing the conversation.
The chatter and proliferation of using AI in the drug discovery pipeline is getting quite a lot of attention and is similarly to be determined. Many large pharma companies have already put in time on this but it’s unclear whether those efforts will bear fruit.
If you recall in the early 2000s there was a push in drug development to utilize high throughput screening that unfortunately did not end up bearing fruit to expectations once in a clinical setting.
What about using technology to make clinical trial recruitment easier?
When it comes to clinical trials and tech, that is a question of when not if.
There are plenty of ways to apply it. A lot of clinical trials are gathering data in paper form and putting it into disparate systems — that is probably shocking for people in the tech world but it gives a sense of how massively antiquated these systems are.
I don’t care if it’s healthcare or life sciences, where paper is used to gather data overall you will see a push to automation. Steps will have to be made before they get there.
With an eye to the tax bill, will biopharma companies use the repatriation holiday? If they do, where will the money go? M&As?
It will be interesting from an M&A perspective — that will be another interesting aspect of the tax [law] . Sometimes people can overreact and expect there to be a great boon to the pharma sector. Hopefully, there will be because anytime you can give more smaller companies a new pathway to exit, that’s a good thing. There have been a lot of IPOs but M&A activity has been muted. Anytime you can open up a new pathway, it adds more benefit. If you look at what is going on [with] M&As in medtech, it has been completely top line, building the top line out. Will biotech and life science companies take a similar approach? Instead of platforms will they focus on top line growth which in some segments has been sluggish?
The tax bill also cuts credits for companies pursuing orphan diseases. How will that play out with investment and interest in rare disease R&D?
Any piece of legislation like that will have some impact. I think it will be interesting to see the impact on orphan drugs. Quite a few companies that invest in orphan drug development are primarily early stage companies, which do it to bring products to market faster. For these companies, the impact might not be felt as strongly, but there will still be a strategic impact. This is also true for the R&D tax credit implications in the bill. Life sciences companies by nature invest heavily in R&D and, depending on how companies file, this could impact the strategic investment decisions they might make. Anytime you are disincentivizing people not to use a pathway to market, it will have an impact.
FDA is becoming a lot more business friendly. Is that changing the industry and the way companies and investigational drugs are valued?
I don’t think it is changing the way drugs are valued. I think the expectation for a lot of folks was that they were going to approve everything, but in practice they have been more balanced on what they’re doing. They came out with policies on regenerative medicines and orphan drugs to improve the pathway to market, but have…been more muted on other issues. They stopped a House bill that would have potentially given U.S. soldiers access to experimental drugs, they have tightened tobacco regulations, increased regulations on opioids — it has been a balanced approach.
How will the life science industry fare in 2018, compared to the rest of the economy? What are the selling points and drawbacks of the biopharma sector right now?
The demographics of the country obviously favor more developments in the CNS space. Alzheimer’s disease is a very big space. [Companies with] legacy products for older medicine categories will have to look at new platforms.
The companies that are looking at how to treat next-generation gene therapy will be fascinating to watch. You are developing inherently risky products in a highly regulated industry. Positive outcome produces value creation for shareholders and negative outcomes have the opposite effect. Biotech is really a company-specific investment decision, very beholden to the clinical trial process to create value. That is not going to change.
Gene therapy, digital pills are fascinating spaces to be in right now. The pace of change is higher than it has ever been. I think next year you will see partnerships between big tech and big pharma more and more.
Earlier this year, Stryker and Microsoft developed the virtual OR. I think that is very interesting. Where might that go? Is it a Google that gets into that fray? Another tech giant?
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