1. Medical Innovation 101
12:00- 1:00 pm
Tuesday, February 14, 2017

2. Keith R. Yamamoto, Ph.D.
Vice Chancellor for Science Policy and Strategy, UCSF;
Director, UCSF Precision Medicine;
Vice Dean for Research, School of Medicine;
Professor, Cellular & Molecular Pharmacology, University of California San Francisco

3. Role of academia and basic research in the R&D continuum and precision medicine
Keith R. Yamamoto
Vice Chancellor for Science Policy and Strategy
University of California, San Francisco
Medical Innovation 101
February 14, 2017

4. Biology is complicated, for a good reason!
Cellular “antennae” receive physiological and environmental signals that fine-tune
the ways our genes work so each of us is unique
The result:
Biology is complicated. Therefore, so is disease. Mutations in antennae or underlying interacting networks affect risk or course of disease.
And a corollary…
Biological process, disease process
(e.g., increased cell division, blood glucose, etc.)

5. Fundamental biological processes are often solved in simple organisms
Simple organisms contain fewer antennae, simpler networks
Simple organisms allow simpler, more definitive experiments
It works. Look at the sources of big breakthroughs:
Breakthrough Experimental organism
Gene regulation bacteria and their viruses
Cell division baker’s yeast, clawed toad
Cancer genes chicken virus
Development fruit fly, sea urchin, fish
Aging and lifespan soil worm, pond scum
Learning and memory sea snail
Neuron-target connections chicken
Basic discoveries are gateways to human studies; critical elements of R&D continuum and precision medicine

6. A Google Maps-like knowledge network for precision medicine
Defines disease mechanisms
Drives drug development
Informs prevention and diagnosis-therapy decisions for individuals

7. Academic basic research, the R&D continuum
and Precision Medicine: Impacts
Understand logic and mechanisms of biological processes
Knowledge network builds iteratively, contributes continuously
Evidence-based prevention, diagnosis, therapy, cures
Prevent and control chronic, infectious, rare diseases
Health and healthcare democratized, tailored to the individual
Smaller, faster, more successful clinical trials
Focused development/deployment of drugs and clinical tests
Reduce slope of healthcare cost curve

8. Brian Gill
Vice President of Corporate Affairs, Celgene

9. Our Mission and Vision
Celgene is building a preeminent global biopharmaceutical company focused on the discovery, development and commercialization of innovative therapies for patients with cancer, immune-inflammatory, and other unmet medical needs

10. What it Takes to Make a Medicine

11. What it Takes to Make a Medicine

12. Developing Medicines is a Risky Proposition
It takes $2.6 billion on average to develop a medicine
It takes an average of 12 years for an experimental drug to travel from the laboratory to your medicine cabinet
Chances for success are less than 10 percent
Only 5 in 5,000 compounds that enter preclinical testing advance to human testing
Only 1 of those 5 compounds tested in people is approved by the FDA
Just 2 in 10 FDA-approved medicines produce revenues that exceed average investment

13. Society Benefits from New Treatments and, Ultimately, Lower Costs
Developing a new medicine takes an average of years; the Congressional Budget Office reports that “relatively few drugs survive the clinical trial process.” Innovative therapies have a limited time in their lifecycle to recapture investment and fund future innovation. 1
APPROXIMATELY 5,000 to
10,000
COMPOUNDS 5
DISCOVERY AND
DEVELOPMENT
FDA
REVIEW
INNOVATOR
EXCLUSIVITY
GENERIC
$2.6 BILLION
3-6 YEARS
Preclinical
0.5-2 YEARS
FDA Review
FDA-Approved Therapy
FOREVER
6-7 YEARS
Clinical Trials
Source 10: Pharmaceutical Research and Manufacturers of America. Drug Discovery and Development: Understanding the R&D Process. Available at Accessed August, Congress of the United States Congressional Budget Office. Research and
Development in the Pharmaceutical Industry. October Available at Accessed August, Tufts Center for the Study of Drug Development. Cost to Develop and Win Marketing Approval for a New Drug is $2.6 Billion. Available at Accessed August, 2015.

14. over the past half century
Bringing Medicine Costs into Context
Spending on cancer, relative to total healthcare spending, has remained constant
over the past half century
Total personal healthcare spending
Billions
Cancer treatment spending
1893
1971
2015
1917
1988
1947
Source: National Cancer Institute. Cancer Trends Progress Report – 2007 Update. Table L1: National Cancer Treatment Expenditures in Billions of Dollars ( ). Available at Accessed August, Cutler, D. Are We Finally Winning the War on Cancer? J Econ Persp. 2008:22(4);3-26. Mariotto AB, Yabroff KR, Shao Y, et al. Projections of the Cost of Cancer Care in the United States: 2010–2020. J Natl Cancer Inst. 2011;103(2): Centers for Medicare and Medicaid Services. National Health Expenditures; Aggregate and Per Capita Amounts, Annual Percent Change and Percent Distribution: Selected Calendar Years Available at Accessed August, Bastian, A. The Rising Cost of Medical Care: Understanding the Problem and Exploring Solutions. GFK Market Access. Presented at American Society of Hematology Annual Meeting 2015. 14

15. Joe V. Selby, MD MPH
Executive Director, Patient-Centered Outcomes Research Institute (PCORI)

16. The Role of Comparative Effectiveness Research in Medical Innovation
Joe Selby, MD MPH
Executive Director, PCORI
February 14, 2017

17. Role of Comparative Effectiveness Research in Innovation
PCORI
Others

18. CER Complements Precision Medicine Research
Pre-Approval
Drug and Marker
Development
Post-Approval CER
Targeted Medications;
Genetic Tests
Evaluate new tests, therapies
Identify potential Genetic Markers of
treatment Response, risk
Approval

19. John E. Schneider, Ph.D.
CEO, Avalon Health Economics LLC

20. The Value of Biopharmaceutical Innovation
John E. Schneider, PhD
Avalon Health Economics |

21. Pharmaceutical Innovation Requires Patience & Resources
Pharma companies have learned to be more efficient and productive in their drug discovery, and have in recent years leaned more on the smaller biotech industry for drug discovery.
This has resulted in the number of new discoveries tracking growth in R&D expenditures– a trend that ran the opposite way in the decade preceding 2005
Nevertheless, as we saw on the previous slide, it still costs on average more than two and half billion dollars to bring ONE medicine to the market.
2015 & 2016 Profile: Biopharmaceutical Research Industry, PhRMA
Avalon Health Economics |

22. Clinical & Economic Value
There are many areas in which Rx innovations are good “value for money” because the utilization of a drug decreases costs elsewhere in the system:
Rx innovations in undertreated disease areas (HIV/AIDS, CF, MS, MM, etc.)
Rx innovation in therapeutic areas where Rx substitutes for more expensive interventions, such as surgery or high volumes outpatient care
Rx Innovation in areas where there is poor adherence (e.g., a next-generation oral RA treatment replaces an injectable)
If it costs more that $2.5 billion to bring a drug to market, are we getting value from that? All indicators are supportive of this.
2015 Profile: Biopharmaceutical Research Industry, PhRMA
Avalon Health Economics |

23. But there is also Direct Value to the U.S. Economy…
At $57 billion, Rx R&D annual expenditures account for nearly 18% (!) of ALL domestic R&D expenditures (based on 2013 data)
The U.S. pharma industry devotes nearly 11% of net sales revenue to R&D, which is more than 4-times the national industry average
Nearly 20% of biopharma industry employment is devoted to R&D, again this is substantially above the US industry average
Rx innovation remains a very human-capital intense industry– across major industry components (R&D, manufacturing, distribution, and administration), the US industry supports just under 1 million jobs (+ another 3 million indirectly)
The net result is an economic impact of more than $1.2 trillion annually
At $57 billion, pharmaceutical R&D annual expenditures account for nearly 18% (!) of ALL domestic R&D expenditures (based on 2013 data)
The U.S. pharmaceutical industry devotes nearly 11% of net sales revenue to R&D, which is more than 4-times the national industry average
Nearly 20% of biopharma industry employment is devoted to R&D, again this is substantially above the US industry average
While advances in data analysis has helped with drug development, it remains a very human-capital intense industry– across major industry components (R&D, manufacturing, distribution, and administration), the US industry supports just under 1 million jobs
The Economic Impact of the U.S. Biopharmaceutical Industry, PhRMA & TEConomy Partners, 2016
Avalon Health Economics |

24. Eleanor M. Perfetto, Ph.D., MS
Senior Vice President of Strategic Initiatives,
National Health Council

25. Medical Innovation 101
12:00- 1:00 pm
Tuesday, February 14, 2017