You just don't understand (R&D)

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The dilemma in biopharmaceuticals is that the industry (in which I work) is dependent upon products it struggles to reliably create.  When you think about it, it’s a non-trivial issue if you are in the business of say, making drugs, and don’t have any idea where your next one is going to come from.

This problem has especially vexed consultants, who generally see this as a production problem, and typically reach into their toolkits for Taylorized approaches to goose the machinery along.  Several big pharma companies (I suspect probably almost every big pharma company) has tried to create productivity incentives – advance a target number of early candidates, receive a bigger bonus.  It worked – in that more candidates were advanced (imagine that), but visibly, this approach hasn’t translated into durable success.  (This anonymous comment on Derek Lowe’s blog reportedly from an ex-big-pharma researcher rings true.)

This week, we learn about another initiative from a big pharma – the awarding of a huge prize to scientists responsible for working on a candidate molecule that ultimately becomes an approved drug, available to patients (see thoughtful reactions from Derek Lowe and my Forbes colleague John LaMattina).

I’m not going to focus on any specific company, but will discuss the concept.  As delighted as I am by the prospect of more money flowing to R&D scientists, the idea that this approach is going to be helpful suggests a fundamental lack of understanding about the nature of R&D, and the factors limiting its success.

A prize, it seems to me, makes sense when you are trying to crowdsource an activity, whether it’s a method of determining longitude or an algorithm for making better video recommendations.  It attracts attention from those who might not otherwise think about the problem, and motivates the search for a solution.

But giving a massive, lottery-size prize to company scientists who happened to be involved in a successful endeavor seems harder to justify.   Essentially, it assumes that progress is limited by unmotivated scientists, and with the opportunity to win big money, they’d start to apply themselves and finally get something done.

I doubt motivated scientists are the limiting factor in drug development.  Rather, they are constrained by our existing understanding of the science (see here, here), and by the fact that most reasonable things they try happen not to work, often for reasons that are difficult or impossible to fully anticipate.  (Of course, you can always rationalize failure afterwards, but that hardly counts.)

In fact, if you take seriously the thoughts of creative drug developers like David Grainger – this post and this post (which, disclosure, references this post of mine) should be essential reading for anyone in the business – you start believing that many of the upfront risks of a drug development program are unknowable, that frequent failure is inevitable, and the key is getting to the definitive experiment – and quite possibly killing the drug – as fast and as cheaply as possible.

While perhaps coming at the problem slightly differently, most management consultants also recognize (and argue) that quick kills are key to pharma success.

But if the success of a given program is relatively random, or unknowable upfront, and if quick kills are desired, what worse way of motivating ultimate success could you come up with than a prize that seems to reward luck and incentivizes keeping your molecule alive and advancing through development?

In theory, you might argue that since the prize is awarded not for sequential progression but only for reaching the point of a successful launch, research scientists might be quick to kill programs that they didn’t truly believe had legs.  However, this approach makes far more sense to me in the context of the sort of lean, asset-focused drug development that VC’s such as Index and Atlas advocate, where responsibility and decision rights belong to a small leadership team and the activity of each function is outsourced.  By contrast, most of the R&D folks in a large company who presumably would be eligible for something like a Drug Prize have relatively little say over whether a particular program will be progressed; their focus is on doing their segment of the work as effectively as possible.

Moreover (as LaMattina pragmatically points out), assigning credit will be problematic, and I suspect you will create the sorts of tension around recognition that is more traditionally associated with academia, while not materially impacting the actual motivation of a group of researchers who were drawn to the business precisely because they wanted to make medicines that impact patients’ lives.

In this last sense, the misunderstanding is similar to the one I attributed (NPR comments here; Forbes post here) to Zuckerberg and colleagues, who set up a high-profile prize so that successful researchers (like the Broad Institute’s Eric Lander, MIT’s Bob Weinberg, Rockefeller’s Cori Bargmann) would be more likely to be viewed like rock stars, and inspire others to pursue their path.

The issue, in both cases, isn’t that researchers somehow need more motivation to cure cancer or develop a meaningful drug.  The trouble is that doing these things is incredibly difficult, and arguably requires more support, adequate resources, and increased tolerance for failure at the early levels — rather than even bigger prizes for the few who, through some blend of luck and skill, ultimately arrive at the desired destination.


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