Guest Blogspot: Pharmaceutical R & D – the value of radical innovation versus incremental progress

What we really want is affordable products that benefit patients, whether or not they are “innovative” in the usual sense of the word. Scientific innovation is not a medical end in itself. The ultimate aim of pharmaceutical R&D is to discover important new medicines, which can either be new drugs replacing older, inferior products or treatments for illnesses where no drug previously existed. Giving higher prices to more valuable drugs is not the only way in which the pricing system could set out to encourage pharmaceutical R&D. Companies with important new products ready to launch are not the ones that most need encouraging to sustain or add to their R&D spending.

The generally accepted definition of “innovation” is about how new, different or unexpected an invention is, not about its value, usefulness, price or affordability. Sir Michael Rawlins, Chairman of NICE, has defined innovation in the NHS differently, as a product or process that “significantly improves healthcare at a price the NHS can afford”. If we work using his definition, then the new drugs that we want are necessarily “innovative” but only because of the way in which he defines the word. In this blog we use the terms “innovation” and “innovative” with their normal meanings because Sir Michael Rawlins’ use of the words is unusual and could be misinterpreted.

We must never forget that in medicine the aim of R&D is to help find ways of meeting previously unmet medical needs. An innovative drug is of no use if patients cannot be identified for whom it is better than existing products. No drug is of any value if it fails to improve outcomes for identifiable patients or has unacceptable side effects, no matter how innovative it may be. Work that is not innovative is not research. However, R&D should be directed towards trying to improve the treatment of patients as much as possible irrespective of the degree of innovation involved.

The absurdity of trying to value drugs at around the time of launch, of seeking to measure innovation or of predicting exactly what will emerge from R&D is most apparent from looking at case studies. The principles have not changed over time.  Old case studies are the most useful because we know what eventually happened and there are no current commercial interests clouding the debate. In addition, the answers to the key medical questions have generally ceased to be controversial.

The difficult issues involved in valuing innovation or predicting the future for individual drugs are apparent from many case studies. I have chosen to focus first on the development of a class of drug called beta-blockers. The relevant history is one of the classic pharmaceutical R&D stories. Beta-blockers were discovered by Sir James Black, in connection with which he won a Nobel Prize. His work ranked amongst the most innovative ever carried out in the pharmaceutical arena. Beta-blockers cause the heart to beat a little less rapidly and are of value in reducing high blood pressure, in angina, in helping certain patients with irregular heart beats and in reducing the risk of a second or subsequent heart attack in people who have already suffered one. The development of beta-blockers was pioneered by ICI Pharmaceuticals (now part of AstraZeneca), for whom Sir James Black worked at the time.  Other companies have also developed beta-blockers but ICI was the frontrunner and the main lessons can be learned by focusing principally on this company.

The first beta-blocker to be launched by ICI was Alderlin (pronethalol) in 1963. However, this drug was later withdrawn from the market because it was found to cause tumours in mice. The potential risk of the product eventually turning out to cause cancer in humans was judged to be too high to justify long-term usage. A value-based assessment of the value of Alderlin if no improved product had become available would have been very controversial, since the cancer risk would have been considered too great to justify usage outside a narrow group of patients with particularly severe heart problems. The value of the drug to these patients would have been critically dependent on who would have been considered eligible to receive it and on subjective judgements about the extent of the cancer risk.

ICI’s first beta-blocker suitable for widespread use, Inderal (propranolol), was launched in 1965. This drug transformed the lives of many patients, for whom it represented a breakthrough in treating unmet medical needs. However, the degree of innovation involved in its discovery is debatable, since Alderlin already existed and from a scientific standpoint Inderal was conceptually only a small intellectual advance. Nevertheless, Inderal was suitable for widespread use in addressing unmet medical needs whereas Alderlin was not. Unfortunately, this important difference of crucial relevance to pricing would not have been fully apparent when the products were first introduced.

Alderlin and Inderal had the drawback that, as well as reducing heart rate, they also reduced oxygen intake into the body by contracting the lungs. Reduced heart rate and a reduced need for oxygen are closely linked in healthy people and so a connection between the two is not scientifically surprising. However, a reduced oxygen uptake is undesirable in asthma and angina patients. ICI therefore sought to design beta-blockers that worked selectively on the heart and affected the lungs relatively little.

ICI’s first heart-selective beta-blocker was Eraldin (practolol), launched in the UK in 1970. This product was certainly innovative but not to the extent of Alderlin as the latter involved pioneering the beta-blocker drug class as a whole. Unfortunately Eraldin was eventually found after launch to have severe side effects in some patients, including serious eye damage that sometimes resulted in blindness.  The drug was withdrawn from use outside specialist hospital units in 1975. With the benefit of hindsight a value-based analysis should have assessed the value of the drug, as used, at nil (or maybe even at a negative figure on the grounds that the drug did net harm). This conclusion is despite the fact that the product did not cause severe side effects in the vast majority of patients and that many people benefited.

The severe side effects of Eraldin turned out to have been bad luck and not to arise with other beta-blockers. In 1976 ICI launched a successful selective beta-blocker, Tenormin (atenolol). This product became for many years the third best-selling pharmaceutical in the world behind the ulcer drugs Zantac (ranitidine) and Tagamet (cimetidine). Sir James Black received his Nobel Prize in 1988.

Tenormin can be credibly argued to be the least innovative of ICI’s beta-blockers in terms of the incremental work needed to discover it. Yet Tenormin is clearly the one that has done the most to satisfy the unmet medical needs of patients.

Despite the human tragedy relating to Eraldin’s unexpected side effects ICI’s overall beta-blocker programme has definitely made a major net contribution to mankind. The problems of Eraldin could not have been uncovered at the time in any way other than giving the drug to enough patients for the position to become apparent.

Another interesting case study is provided by the ulcer drugs Tagamet and Zantac. Tagamet, like beta-blockers, was the brainchild of Sir James Black. Despite his track record he had to move from ICI to SmithKline in order to gain support for the ulcer project.  This fact alone shows that even companies intimately involved in evaluating potential R&D projects can have difficulty in seeing their potential.

Zantac was a small but real improvement over Tagamet and was developed under one of the all-time great research directors, Sir David Jack of Glaxo. Tagamet was discovered before Zantac and is therefore more innovative. Both drugs work in the same way. However, Zantac is slightly better and so it would be hard to argue that it should have a lower price.  Zantac therefore achieved higher sales even though Tagamet was more innovative. There is no easy way in which SmithKline could have been rewarded for pioneering the drug class with Tagamet when Zantac was a marginally superior product.

The bottom line is that trying to award a higher price to more innovative drugs is fraught with dangers, inconsistencies and unintended consequences. My view is that the best way to encourage productive R&D through the pricing system is to encourage companies to keep going throughout the ups and downs.  Companies should be rewarded for trying, whether or not they succeed. The greatest support is needed during barren periods in R&D. Market forces are already sufficient to ensure that drug companies will direct their R&D towards illnesses where new drugs are needed. Companies also have to consider the worth of their ideas for R&D projects and what expertise they have. The way forward is not for governments to try to impose views on the direction of R&D.

Even ICI did not always fully recognise the value of Sir James Black’s work on beta-blockers. In an autobiography Sir James Black wrote:

“Egged on by their local representative, I successfully approached I.C.I. Pharmaceuticals Division for help and ended up being employed by them at their exciting new laboratories at Alderley Park, Cheshire. During my six years with them Dr Garnet Davey (subsequently Research Director) constantly supported me and, I have no doubt, fought many battles on my behalf to keep the initially controversial programme going.”  


About Barbara Arzymanow

Barbara Arzymanow is a Research Fellow at 2020health and is a founding director of an independent healthcare consultancy firm. She has been an investment analyst specialising in Pharmaceuticals for 25 years, prior to which she carried out academic medical research in university laboratories. Her experience, obtained entirely from outside the pharmaceutical industry, gives her a unique, political perspective independent of commercial lobbies. She has extensive experience in financing the biotechnology industry, which is vital for the long-term standing of medical research in the UK. She has always been inspired by the scientific excellence within the UK and would like to see collaborations between industry, the NHS and academia strengthened. For more information about Barbara's research and writings including submissions to Government Departments please visit . Barbara also tweets as @barbararesearch .
This entry was posted in Business, competition, Department of Health, Drugs, Emerging technologies, Finance, Healthcare, Innovation, NHS, Patients, Pharma, Policy, Research, Technology, Uncategorized and tagged , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , . Bookmark the permalink.

Leave a Reply

Please log in using one of these methods to post your comment: Logo

You are commenting using your account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s