Can the NIH and Education Ensure Commercial Viability of Medical Innovation?

Published: December 13, 2006 in Knowledge@Emory

Good science doesn’t always make for good business. Though researchers spend years working to find cures for diseases, only a miniscule number of products ever make it through the U.S. government’s Food and Drug Administration. Why? The FDA’s approval process is arduous, say many of its critics, and consumers are the losers.

“Billions are spent and there is nowhere near the market returns from the industry. There is no real market accountability at the end of the day on what kind of research you are doing,” remarks Muta Issa, Associate Professor of Urology, Emory University School of Medicine and Chief of Urology at the Atlanta V.A. Medical Center. “Researchers can spend 30 years in the lab not benefiting one patient.”

But new moves by the National Institutes of Health (NIH) may end this decades-long dichotomy. The NIH has created an initiative process to help ensure research funded by the agency will actually make it to the marketplace.

The agency recently introduced the Institutional Clinical and Translational Science Award (CTSA). The CTSA program creates interdisciplinary teams of investigators and researchers to accelerate the application of new products and techniques, explains Jorge Gomez, chief of the Organ Systems Branch at the National Cancer Institute.

“There is a new momentum to develop translational research and to apply basic research findings from the lab to the clinic,” Gomez says. “This is tremendously important because typically NIH and other funding organizations expect research will translate to human application and to impact human disease. But we scientists are trained to do research and not necessarily in how to solve and address a particular human disease.”

The NIH began moving in this direction in 1992 with SPORE (Specialized Program of Research Excellence), a mechanism that requires an intellectual property management plan from researchers who receive agency grants, notes Gomez, who heads the program.

“Within the SPORE program researchers must explain how products and services will reach the public,” continues John Petros, an associate professor of Urology at Emory’s School of Medicine and scientist who reviews grant applications for NIH. Petros says, “Translation is the new buzz word and that means the research has to get from the lab to the patient. We are now asking scientists, ‘How does your research benefit the consumer?’”

The NIH grant process works this way: A scientist applies for a grant to conduct research. Once the grant is approved, the scientist uses a portion for research and his institution gets a portion for operating expenses. Traditionally, no money had been set aside for market analysis. NIH is spending about $95 per American this year on medical research.

Yet even if a researcher is able to meet the NIH requirements and prove their research will aid consumers, the intricacies of the FDA approval process may still prohibit a drug or delivery system from reaching market. Why?

“The process for FDA approval normally takes years and is extremely expensive,” says Charles "Chip" Frame, an adjunct professor of marketing at Emory’s Goizueta Business School and a clinical associate professor at the Emory’s School of Medicine.

To gain approval, a researcher must show that the product has been tested and found safe. Next, the scientist must prove the drug or product is effective at what it is supposed to do, and at what dosage a drug will accomplish its task. As a researcher begins to successfully navigate the intricate rungs of the approval process, the value of the intellectual property rises and the researcher becomes of interest to investors, either pharmaceutical firms or venture capitalists.

“Business people are used to a product that is ready to go out the gate. With life sciences, innovation shows more promise in stages,” explains Frame. “It’s an enormous crapshoot. But as the drug becomes more promising, the more people take interest in it.”

Unlike the FDA, however, investors are more interested in the potential market and profit of the drug not just its efficacy. For a researcher, this shift in perspective and priorities can be a rude wake up call.

“The biggest shocker is that it’s not the science that drives the project; it’s the product’s ability to be commercially viable,” says Issa, a Goizueta Executive MBA alum. “You can have the most fantastic discovery but if the market is small and if the price is high nobody is going to be interested. If it’s unprofitable, no one will want to manufacture it. So you’ve wasted your time. Doctors don’t bring products to market. And business people are not going to take on a losing proposition, irrespective of how wonderful the product is.”

As a clinical professor and a marketer, Frame understands both the researcher’s desire for medical innovation and the need for investors to gain ROI. It’s a delicate balancing act he works to demystify in a class he teaches on Biotech Market Analysis. The course joins business students with a background in venture capital or health science, and researchers in the medical school.

“The class is a natural outgrowth of Emory Healthcare System’s needs for putting research to use,” notes Frame, who has taught the class for three years. Katherine Caesar, another Goizueta alum, helps develop the class by bringing in industry experts. So far, speakers have included intellectual property attorneys and venture capitalists who discuss what they look for in innovation and how they choose clients to become partners.

MBA students are put into teams of five or six and matched with an Emory researcher who has a promising drug or product, and who has gotten far enough in their research to have a CEO of their organization, notes Frame. Students may do competitor analysis, market analysis and user capabilities.

“The class is a nice combination of researchers and business leaders who teach the MBA students the intricacies of a specific industry. Then the MBA students bring their learnings to the researchers with deliverables—marketing plans, competitive space analysis, how well it will be financed, who’s likely to be a first mover,” adds Frame.

At the end of the class, students make a presentation to interested parties, such as chief executive officers of companies, and to the class. Business students, who are at times confounded by the FDA approval process, learn real world experience. 

“The class was an easy transition into the job I have now,” notes Goizueta MBA alumnae Kristin Moon, a healthcare consultant with PricewaterhouseCoopers. “It allowed me to work in the real world with scientists who are dealing with issues of healthcare technology every day. It’s great to help them work through that on the business end.”

Scientists say they too have learned to see the big picture. “For the first time I understood the various strategies and the processes needed for successful commercial transformation of ideas and inventions,” notes Issa, who also took Frame’s course. “The majority of we academicians and scientists tend to be preoccupied in our own world with little knowledge on taking research to the next step. In fact, scientists may spend their entire career in research creating vast amount of knowledge and tens of peer-reviewed articles without impacting one patient.”

Ultimately, Issa contends, changing this disparity must come in the way researchers are rewarded and with even more enforcement from the NIH. “A researcher’s salary and standing at an institution are linked to grants,” he says. “It has never been linked to getting their discoveries to the consumer. The only way to change that is to have the NIH make it a criterion to have a business assessment for each grant application and hold researchers accountable to that.”
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