When Worlds Collide: Healthcare and Start-Ups 

New players are entering the healthcare market every day, flush with venture capital cash. Is that a bad thing for patient safety?

You’ve probably heard of Elizabeth Holmes and Theranos. The company once valued in excess of $10 billion is now worth $0. Whistleblowers and a reporter from The Wall Street Journal exposed massive fraud, setting in motion a fall from grace. While more scintillating than most stories of fraud, the Theranos story raises interesting questions about the start-up ethos – “move fast and break things” – and its place in healthcare. Here’s our take:

Better together: Pharmaceutical and diagnostic companies are well-established with (typically) stable infrastructure, distribution channels, and familiarity with regulations. Start-ups can provide agile methods for rapid and iterative product development and technical skills to develop companion technology. Novartis’ remote monitoring and heart failure medication combo is just one great example of the power of collaboration between the pharma and start-up worlds. Keep an eye out for continued proliferation of this partnership model going forward.

Safety First. Safety must remain paramount, but regulations and lengthy approval processes contribute to higher costs, and sometimes fewer options. In early 2020, the declaration of a public health emergency due to COVID led the FDA to restrict development of lab-directed tests and require emergency use authorization. This move was meant to promote accuracy but many have argued it led to the US having severe testing shortages at the beginning of the pandemic. Shortages that we saw continue as at home testing options were developed. In 2021 the US had just six over-the-counter COVID test options while Germany had around 60 on the market – some for less than $1. This balancing act between safety and efficiency extends to drugs. The US, perhaps the most tightly regulated pharmaceutical market in the world, spends more out of pocket on a per-capita basis than other comparable countries. Congress has been trying to address the issue of pharmaceutical costs but to date has been unable to meaningfully rein them in. Watch for disruptors like EQRx which aims to provide access to necessary medications at a lower price point by cutting down on development time and associated cost.

Speed can breed mistrust. Speed to market can backfire when it comes to public opinion. As we learned during COVID, some individuals will refuse fast-tracked medical treatments or at a minimum, be reluctant to accept them until they have been further proven effective. Hopefully we can find a way to develop trust when a therapy is approved in less than 10 years, the average time it takes to bring a drug from discovery to approval.

The Big Picture

Healthcare is a complex industry – we walk a fine line between regulation/patient safety and innovation towards advanced therapeutics and diagnostics. Let’s hope we can capitalize on one of the lessons learned from COVID – piggybacking on recent success in diagnostic testing and drug development can pave the way for a faster trip to the future.