Policy Research Institute page Publication of Research Reports of the Policy Research Institute (1) Research Paper No. 76, "Multidimensional Evaluation of the Social Value of Pharmaceuticals
(2) Research Paper No. 77, "Research on the Introduction and Establishment of Next Generation Drug Discovery Platform Technology

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The Policy Research Institute publishes the results of its daily research and studies in the form of public documents. In addition to the regular publication of "Policy Research Institute News" in March, July, and November of each year, the Institute also publishes "Research Papers" and other publications that summarize the content of individual research studies. Here, we would like to introduce Research Paper No. 76, "Multidimensional Evaluation of the Social Value of Pharmaceuticals," and Research Paper No. 77, "Research on the Introduction and Establishment of Next-generation Drug Discovery Platform Technology," both of which were published in the spring of 2021.

In Japan, a cost-effectiveness evaluation system was introduced in 2019 as a mechanism to evaluate the value of pharmaceuticals from an economic perspective. In addition to cost-effectiveness, it is also desirable to discuss and consider value from more diverse perspectives such as social aspects.

Therefore, in this report, we focus on social values among the various values, and investigate the current status of outcome indicators and measurement of these values, as well as the current status of evaluation overseas (mainly in the U.K.), with a view to considering and evaluating the various values of pharmaceuticals in the near future. First, the social value elements covered in this report are based on the nine elements from a social perspective among the 12 elements of value proposed in the International Society for Pharmacoeconomics and Outcomes Research (ISPOR) report, as well as on evaluation cases of the National Institute for Health and Care Excellence (NICE) in the U.K. and on trends in evaluation organizations in the U.K. and Canada in the wake of the new type of coronavirus infection. Based on the trends of the National Institute for Health Care Excellence (NICE) in the U.K. and evaluation organizations in the U.K. and Canada in the wake of the new coronavirus infection, we also considered "reduction of care burden (mainly for family caregivers)" and "reduction of medical burden (human and material)" as important elements, and decided to include these value elements in the study ( Fig. 1 ).

Figure 1 Social value elements to be studied
Source: Isao Kamae, New HTA System of the Ministry of Health, Labour and Welfare, Vol. 7: The Relationship between Value and Price from the Perspective of Continued Pharmacoeconomics, PMDS.50(3).135-141 (2019), partially revised figure.

We then conducted a survey on outcome indicators and measurements for these social value elements (a total of 11 elements: 9 elements and 2 additional elements). As a result of the survey, only two elements, "labor productivity" and "reduced burden of caregiving," had clear outcome indicators or outcome tools. For these two elements, it was confirmed that there are reports of evaluations by NICE (UK) and other organizations, as well as reports of their use in clinical trials ( Figure 2 ).

Figure 2 Social value elements organized along two axes (quantifiability, acceptability to Payer)
Source: prepared by the author

In order to understand the current status of outcome measurement in clinical trials in recent years, we conducted an additional survey and discussion using data from ClinicalTrials.gov, a clinical trial registration system operated by the National Institutes of Health (NIH) in the U.S., to determine the number of trials using each outcome measure and the number of studies that used each outcome measure. We were able to confirm the number of trials that used each outcome measure and the target diseases. In addition, examples of value presentation or evaluation using the outcome measures identified in the survey are presented, divided into cases that can be considered quantitatively and cases that can be considered qualitatively.

As a summary of the survey as a whole, the value elements that constitute the value of pharmaceutical products are diverse, but the number of value elements that have clear outcome indicators and that can be quantitatively measured is currently limited. However, "labor productivity" and "reduced burden of caregiving," which are considered to be quantifiable and relatively easy to evaluate, could be considered and evaluated in Japan, although there are still issues to be addressed. However, at NICE in the U.K., for example, discussions were held based on "real voices" from clinical specialists and patient groups to see if there were any values that had been overlooked during the evaluation process, and in some cases, qualitative considerations were taken into account, such as "taking into account the value of the patient's care when making decisions. In some cases, qualitative considerations, such as "taking into account when making decisions," were taken into account. In Japan, "difficult to quantify" does not necessarily mean "no need to consider at the time of evaluation," and it may be necessary to build a foundation to consider qualitative evaluation and consideration while recognizing that there are limits to the value of pharmaceuticals that can be captured by outcome measurement tools, etc.

In order for discussions on the various values of pharmaceuticals to progress in the future, it is desirable that the various values of pharmaceuticals be widely understood by society as a whole, and at the same time, information dissemination and social communication from companies and industries will become even more necessary to ensure that these values are properly understood. ( Figure 3 ).

Figure 3 Supplement: categorization of social value factors
Source: prepared by the author with reference to the figure (p. 4) in the presentation material of Kevin Haninger, PhRMA, at the 2019 International Symposium on Medical Technology Evaluation "Institutionalization of Medical Technology Evaluation - Issues and Future Directions"

Looking at the recent trends in the ethical drug sales market over a period of about 20 years, small molecule drugs have the largest market share, but their growth has been slowing. In addition, the share of recombinant protein products has increased over the past 20 to 10 years, but has been shrinking over the past decade. On the other hand, the share of antibody drugs has increased over the past two decades, driving growth in the overall pharmaceutical market ( Figure 4 ); as of 2020, new modalities (nucleic acid drugs, gene therapy, gene cell therapy, and cell therapy) accounted for only a small share of the market, but are expected to grow in the future.

Figure 4: Ethical Drug Market (by modality) Drug Market Composition (left) and CAGR by modality (right)
Source: based on data from EvaluatePharmaTM by EvaluatePharma (February 2021)

Looking at the nationalities of the companies creating drug pipelines by modality, the U.S. leads in all modalities. Japan has the highest percentage of small molecule drugs, but the percentage of biopharmaceuticals (antibody drugs, gene therapy, gene-cell therapy, and cell therapy) created by Japanese companies is lower than that of small molecule drugs ( Figure 5 ).

Figure 5 Breakdown of Originator Nationality of Developed Products
Source: Compiled based on EvaluatePharma's EvaluatePharmaTM data (September 2020)

In terms of company classification, the largest percentage of biopharmaceuticals in all modalities are created by Biotechnology companies, mainly biotech start-ups, while the largest percentage of small molecule and antibody drugs are created by Global companies (global pharmaceutical giants) and nucleic acid drugs by Specialty companies (Japanese semi-major to medium-sized pharmaceutical companies). The classification of the companies that discovered these drugs is unique depending on the modality. In addition, Global has created its own antibody drug, which is thought to be a result of the drug discovery platform technology it acquired through the acquisition of Biotechnology in the past.

The primary means by which pharmaceutical companies access new modalities is through in-licensing of individual development pipelines or through mergers and acquisitions (M&A). Looking at the trends in the acquisition of development pipelines by each of these means, in-licensing of low-molecular-weight drugs is more common in the domestic pharmaceutical company group (domestic pharmaceutical companies in the Regional and Specialty categories) at a later stage of development than in the Global group (including Takeda Pharmaceutical Company Limited), and the number of new modality in-licensing is lower than that of low-molecular-weight drugs. The Japanese companies tended to be more risk-averse than the Global companies (including Takeda), as they tend to in-license drugs at a later stage of development and acquire fewer new modalities than small molecules. In addition, the current approval rate (approval probability) of small molecule drugs in-licensed by Japanese companies since 2001 is higher than that of Global, and the reason for this is thought to be that Japanese companies in-licensed and developed pipelines that were previously developed overseas ( Figure 6 ).

Figure 6 Development stage of past in-licensed products in small molecule drugs at the time of contract and
by current status and in-licensed company classification
Source: based on data from EvaluatePharma's EvaluatePharmaTM (February 2021)

In recent years, there have been large acquisitions of biotechnology companies, mainly in the Global market, for more than US$1 billion, but the number of pipelines held by the acquired companies was only a few in some cases, and most of them were pre-approval. In some cases, the acquired companies had only a few pipelines, and most of them were pre-approval, so the main objective was to acquire not only the pipeline but also the underlying technology. Prior to these large acquisitions, the companies had introduced the relevant modality or made smaller acquisitions to acquire knowledge in the area.

The innovation ecosystem plays an important role in the process of creating and commercializing innovations related to pharmaceuticals, and suggestions from Boston's ecosystem, which is the largest in the world in the field of life sciences, include the following: each player (universities, research institutions, start-ups, start-ups, and companies), especially the universities One of the implications of Boston's ecosystem, which is the world's largest in the life science field, is the creation of a network of players (universities, research institutions, startups, hospitals, investors, and companies) ( Figure 7 ). Currently, a bio-cluster concept is being promoted in Japan, centered on the Tokyo and Osaka areas.

Figure 7 Boston Ecosystem Geographic Characteristics
Source: courtesy of the Consulate-General of Japan in Boston

New drug discovery technologies are being utilized in the development of vaccines and therapeutics against new coronaviruses, which have become a new threat to mankind. In particular, mRNA technology, a new technology that has never before been used in practical applications, was utilized in vaccine development, leading to the approval of the drug only one year after the completion of the decoding of the viral gene sequence, an extremely short period of time unprecedented in drug development to date. In addition to the technical superiority of the new technology (mRNA vaccine), other factors contributing to this success include past experience in drug development with drugs for infectious diseases, funding and know-how provided by the government and NPOs, collaboration with outside parties for mass production, and the use of IT to speed up development.

Pharmaceutical companies often need to collaborate with academia and start-ups to acquire fundamental drug discovery technologies for new modalities. Taking on the challenge of developing a new technology involves the risk of investing in highly uncertain technology development, but the superiority of the technology possessed by academia is an incentive to overcome this risk. In addition, investment and technological development related to manufacturing are barriers in the process of technology commercialization, and by creating such an environment, individual pharmaceutical companies can avoid focusing on conventional drug development, especially for small molecule drugs, and instead focus on the development of new modalities that have high risk but the potential to establish a dominant position in the market if they succeed. Research and development of new modalities that have high risk but have the potential to establish a dominant position in the market if successful will be promoted.

Based on the above, this study proposes the following measures that are particularly effective for domestic pharmaceutical companies to establish basic technologies for new modalities and promote their commercialization.

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