August 13, 2012

Alph Bingham spent more than 28 years at Eli Lilly and Co. and from there co-founded InnoCentive Inc., a Massachusetts-based organization that organizes crowdsourcing to help companies solve internal challenges. The Carmel resident spoke about the challenges now facing pharmaceutical companies, which are buckling under ever-rising costs to develop new drugs with lower rates of success and worsening prospects for reimbursement. Bingham’s solution is for pharma to embrace crowdsourcing and other “open innovation” concepts in order to spread the risk of R&D among more partners.

IBJ: How can drug companies rethink their research and development processes to adapt to this new age of austerity?

BINGHAM: I don’t frame where the industry is at as a cost problem, or a productivity problem. I frame it as a risk problem. If you recognize it as a risk problem, then you realize there’s a whole population of people out there willing to share the risk with you: patients. There’s also the fact that you’ve got all these in academia that want to test this ligand [a kind of organic molecule]. They’ll test it for you. All you have to do is pay in ligands. There’s a lot of risk-sharing opportunities that you miss when you think of it in a cost-sharing environment.

IBJ: How would sharing risk with patients and physicians help drug companies?

BINGHAM: You’ve got a professional skill here, medicine, that perfectly lends itself to crowd-intelligence types of mechanisms. Because the crowd has more intelligence, more bandwidth. The medical community needs to figure out how to tap into that crowd knowledge. It’s not that they are not doing it, but they’re doing it in a pretty rudimentary way. I envision crowdsourced clinical trials on R&D. You would begin at that point simulating the market experience to a greater degree. Some of the variables that get introduced after [a drug] is launched would be introduced [before] the time of launch.

IBJ: Isn’t reducing costs a way for pharmaceutical companies to reduce their risks, too?

BINGHAM: Getting the cost down is getting the risk down, obviously. I don’t want to dismiss the importance of doing that. I simply point out that, again, how much cheaper are we really talking about? There’s a handful of risk management and risk attenuation that are experimented with, but it’s dabbling. Bounty mechanisms like InnoCentive uses could be much more widespread. Drug companies could use royalties from future sales to pay for research. They need to be managing a whole set of innovation challenges. Ten percent of work [should be] going through internal, not 99 percent. But how many boards would follow a truly visionary CEO down this path? The easiest story to tell is that the good old days are just around the corner. They don’t want to see the story about how we’re completely restructuring this as a series of external channels.


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