BMS Tightens the Reins on Clinical Excesses
There was a time when pharma companies didn’t think twice about the ancillary costs of clinical development. In the salad days of robust earnings growth and a seemingly endless supply of blockbusters, clinical supply excess—overproduction of active pharmaceutical ingredients (APIs), oversupply of formulated drugs for trials, and an expansive trial network—was de rigueur.
In today's tougher operating environment, companies are tightening the reins. Bristol-Myers Squibb, for one, is paying closer attention to the smaller details of clinical development. “We were spending a lot of money on stuff that never becomes a drug,” Mark Powell, senior vice president of pharmaceutical development, told the audience at the Argyle 2010 Leadership in Pharmaceuticals and Biotechnology, held yesterday in New York.
Powell outlined several efforts BMS has made to reduce costs and increase efficiency in clinical development---many of which translate into lower volumes of APIs.
First, BMS, like many of its big pharma compatriots, is significantly reducing its manufacturing footprint. Five years ago, the company had about 40 plants; by the 2011-2013 timeframe, it will be down to about 10 sites. In fairness, a good chunk of that reduction came from the divestiture of Mead Johnson Nutrition, but there is still some good old fashioned manufacturing consolidation going on as well. Already more than 70% of all chemical manufacturing steps are run outside BMS walls, according to Powell.
But the cost-cutting isn't limited to big, expansive manufacturing runs. Powell said the company has halved its demand for compounds that have yet to reach studies in man. Powell didn't provide any figures for whether the number of compounds entering Phase I has changed significantly (which could account for some of that drop in demand), but did say the company's overall pipeline has increased by 50% in recent years. Of note to the process chemists out there: as part of that reduction in early API demand, the company has backed a lot of its small lot manufacturing out of pilot plants and into smaller, more flexible glass plants.
The company is also trying to pare back clinical supplies, which cost the company about $200 million each year. Powell pointed out that the industry routinely makes 50-100% more material for clinical trials than actually ends up being used. As recently as five years ago, companies had “no clue” how much clinical supply they were making, largely because the manufacturing and formulation costs were trivial compared to the overall cost of running a clinical trial, he added. Better to have way too many pills than scramble for supplies if a trial site needed them, was the thinking.
The economic environment has changed, and BMS has set the goal of keeping its clinical trial supply overage to 25%, a figure Powell said is saving the company about $40 million each year.
BMS isn’t the first company I’ve heard talk about the excesses of clinical trials. GlaxoSmithKline has been working on reducing the waste by improving efficiency in its clinical trial network. In the past, supplies were sent to trial sites that never recruit a single patient. By tightening up its network, the company saves not just on clinical supplies, but also on site validation—it can cost upwards of $40,000 to validate a clinical center.
The moral of the story? The smaller expenses that were once viewed as “rounding errors” in that $1 billion or more it costs to develop a drug are staring to matter. Readers, are any of you seeing these types of shifts at your own pharma company?