Solving the Risk Management Puzzle - Pharmaceutical

Expert Profile

Section 1: Current Approach to Risk Management

1.1. How does your industry frame risk management?

In Pharma we frame risk management around the costs and competitiveness of the trials we wish to undertake. So, where there are gaps in the market these are the greatest opportunities for developing products, such as in niche markets.

The biggest gaps where the greatest returns can be met in the shortest period of time are in the oncology area. There’s obviously lots of innovation and developments in there, and lots of innovative clinical designs are being developed by companies and encouraged by regulatory authorities. The greatest innovations are in oncology, as a consequence, you see elements from those developments and innovations applied into other therapeutic areas.

Pharmaceuticals is a high-risk area, if you’re trying to achieve a therapeutic benefit in your product, or present evidence of efficacy, in the shortest period of time, the risks of not getting your expected results are high.

In more traditional models of clinical design development, there are cases where you can go to phase three studies and complete years of development before you find your study has failed. So, the risk is high. And the returns if you are successful, are high.

In my experience of 30 years, I’ve probably had only about 4-5% of the projects I’ve worked on actually proceed beyond phase three into market.

1.2. How do you detect the internal and external risks to your company?

First is to look at the competition, in particular. We look to see how what stage our competition is in their development, and indeed whether we can accelerate past them. It’s also in terms of the research and development budget we have available. And, where we can reduce those risks in the competitive landscape, in the speed with which we can establish whether our product is likely to be efficacious or worth developing. So, that’s through these innovated model opportunities that exists. And then, obviously, it’s the therapeutic area where you’re most likely to get returns on your product, compared to more less competitive areas where the returns for your investment might be a lot lower.

1.2.1. How do you monitor/track these risks over time?

We continuously have product portfolio reviews every year in determination to the developments of the products, where they should be, whether they’re on schedule or not revewed. Recruitment obviously is a higher risk area for our studies. All too often I’ve seen over-promising and under-delivering in clinical studies. So, if your patient recruitment is quite poor, you’ve got to reevaluate how to accelerate it, or even potentially change indication you’re going for, or even drop the project because there’s such poor recruitment.

And also, looking at the competitive landscape, because if some of your competition have a product that actually is approved ahead of yours, then you’ve got to look at whether it’s actually worth continuing development of your product.

1.3. What are the best practices for determining risk appetite?

In drug development, one of the key areas is working with the regulatory agencies to get feedback on your design and your studies. So, interaction throughout, bringing them on board, in terms developing the products.

Second, is looking at patient involvement as well.

The third one is actually working with the market access and drug reimbursement areas.

Together those three can actually help in determining the design of your studies and you chances of success. If you only look at one of those three, invariably the other two elements will come into play at some point in the development process. If you bring them in too late, then you could severely prolong the development to your product.

1.4. What does your decision-making process for responding to risks look like?

The quality and design of the product is a risk, you have to ensure it is scalable and is reproducible. You must bring in quality into risk management. Then obviously, it’s the market access is key, in terms of how well your product will sell in the market. And you have involvement from the senior management team to see if the product is reaching the company requirements, the mission statements of the company and ensuring you’re making profit.

It starts with your compound, what are the possibilities of that compound? What indications can you actually go for? Where are gaps in the market, and with who?

The risk management is over the risk of the investment and whether that’s going to deliver a return, and the timeframe in which that return will be achieved.
 So, you’ve got to increase your revenue and increase your profitability. You’ve got to have an R&D portfolio of products that will fill those gaps whilst accepting that a high percentage drop off. So, the risk, it starts with the R&&D team. And it starts with the amount of budget that you can actually release per year to actually develop your products.

And the steps through that are establishing the clinical trial designs, the scaling of the product, the toxicology, in terms of supporting with development of the product as it goes through the clinical trial phases. And “Does it reach those key milestones?” So, for each product you’d have the project team who report back to the senior management as to whether those goals were being met, always keeping an eye on the competition, as to whether they’re over or underachieving in your market intelligence, and, where you can accelerate those processes. Then, in those reviews, you have those key milestones as to whether they meet the endpoints for those clinical studies, phase two, phase three, continuously reviewing that.

It ends with whether the number of successes and the approaches you’ve had in your product development is actually being met, or whether you’re getting too high a drop off rate, and therefore what can you do to mitigate those losses? So, sometimes you’ll see a lot of companies just bring in or buy in developments from other companies, because internally it’s not working particularly well. So, they go outside to fill the gaps.

Section 2: Building Blocks for Dynamic Risk Management

2.1. What are your ambitions for the future of risk management?

The future is actually continuing to work with the regulatory agencies and interact with them as you develop your products, because they have a lot of knowledge. The companies doing it in isolation are risking too much. There are gaps in any company, because the agencies have a wider remit, in terms of the access to products they actually have a deep knowledge of the product. And so, they have a greater input into your proposed development programs.

The other key piece is what we refer to as the fourth hurdle, which is market access. Where, you get your product approved, but you couldn’t get it on the market in particular countries because you hadn’t met the reimbursement or the market access criteria for those particular countries.

So, in the future, it’s trying to get involved with those groups as well at the same time. Global development is very difficult across the EMA, FDA, and the PDMA. If we could get those agencies together to agree to a platform, that would be a great ambition to fulfill. It’s there in principle, but it hasn’t been often used.

The patient groups as well, because they have quite a strong voice and can actually provide a different perspective. And indeed, can actually in some respect, overturn the agencies’ perspective of the perceived risk that a patient is actually prepared to take.

2.2. How will technology play a role in contributing to your risk strategy?

Some of the big companies were putting increased investment into computer modeling. There’s some very interesting in vitro and ex vivo models that are used to investigate particular findings. So, if you have a safety finding, you can investigate that finding to determine whether your particular compound is behaving in a particular way through in vitro models that are available for sale. So, there just standard models you can process your compound through, depending on the adverse event you actually see in your study.

2.3. Why is it important to transform your culture in creating dynamic risk management?

Compared to other industries the risks in the pharma industry, are excessive. I appreciate the returns can be greater. But it can take you 10 plus years to get a product to market, and in that time, you may have 50 or so projects you’re working on, and if you’re only getting 5% of those actually to market, you are investing an awful lot of money for a potentially low return.

For smaller companies that only have three or four projects, the chances they actually come to any fruition or make any profit is negligible. The key is actually driving down the decision points you reach for your product development. That is why a culture shift becomes crucial. In the end it boils down to trying to reduce the cost and reduce the time it takes to come to a decision as to whether your product is worth developing. Company culture is changing. It’s always time about how you can accelerate your product development and speed to market.

One other element is that you have a finite resource, because there are only so many patients available. Patient recruitment can be overestimated and under-delivered in many circumstances resulting in delays beyond your planned goals for achieving particular recruitments, and therefore evaluations of your product.

COVID-19 certainly hasn’t helped, because obviously the product development was severely affected because the number of patients and subjects available for trials was severely impeded. These factors are leading to a movement towards agile operations.

And, if this challenge continues it suggests that there have to be other methods for determining your product developments. And, hence the reason why the opportunities for potential in modeling to come up to have more precise evaluations of your product. So, you can determine the potential safety concerns, and pinpoint the potential efficacy, and your primary endpoints, and the number of patients.

2.4. What are the barriers to rapid decision-making in your industry and how do you overcome them?

There is still a degree of acceptance that the rate of bringing products to market is low, but this is changing. Over 30 years it’s always been the case to live with limited success however there’s still processes that work, even though you know they take a long time, if you follow the prescribed routes, follow the guidelines it is still a path well-trodden that has minimal risk. There challenges to breaking down those norms and create new pathways, and encouraging the regulatory agencies to come on board with those novel approaches and involve them in the development of joint guidelines.

There’s a big piece where the agencies, and the companies, sit in their own little silos and talk about the patients they’re going to treat. It’s only now that the customer is brought onboard more, to actually have a voice and determine the level of risk they’re prepared to take with a product. So, often it’s always a benefit risk analysis for any product and ultimately, the regulatory agency determines the benefit risk. But the patients may have a different perspective and may be prepared to take a higher risk than that determined by the agency. The regulatory agency aren’t taking the product, or even with the diseases, but the patient is the person that should ultimately have a big say in the level of risk.

As a consequence, you may actually get a change in the number of products that would be available to patients, because if their voice is heard and it is accepted by the agency, and where the agencies are prepared to let the patient take that risk, then you might get a greater innovation or greater approval rates. You can take vaccines for COVID, as an example. They came to the market in one to two years. Whereas it will normally take 7-8 years. So, what we’ve looked at the vaccines as a potential model. It’s an example of how the barriers were broken down. I strongly believe that the patient can have a significant play in that.