Looking at the Big Picture: Using Point-of-Care Diagnostics to Advance a One Health Approach
Hi everyone, I'm Emily Le, from Next Generation Diagnostics Summit. I'm really pleased to have the opportunity today to speak with Professor Joshua Krieger, from the Entrepreneurial Management unit at Harvard Business School. He will be leading a business case study on Genomic health at the Commercialization of Diagnostic Tests meeting in Washington D.C. this August.
Josh, thank you for joining us.
Thanks so much for having me, Emily. It's a pleasure to be here.
Can you tell us about your background and what you're working on right now?
Sure. I am an innovation economist at Harvard Business School and that means, in general, I study the creation of new stuff. That could be anything from consumer goods to health innovations like diagnostic testing and pharmaceuticals. But most of my work focuses on innovation in the life sciences. Currently, I spend a lot of my time thinking about what types of policies and what types of firm strategies lead to more novel goods and services in health care. So, one of my projects right now looks at when firms get a windfall of cash, when they get shocked by getting more money than they thought they'd have. In profits, do they use that money on more novel drugs, if they're a pharmaceutical company, or do they take that additional cash and put it towards what people pejoratively call 'me too' drugs, so, copycat innovation and I've been spending a lot of my time sort of thinking about how do we classify different types of drugs based on their novelty and based on their impact on health.
Yeah, that's very interesting. So, you've seen a lot of those innovations in diagnostic and in health care. What makes commercializing diagnostic and other health care products different from bringing other types of technologies to the market and maybe you could comment on some of the main challenges that you think that associating with this type of technology.
So, when I teach MBA students, I'm teaching people who have interest in a wide range, in different types of technologies and different types of innovation and often what comes out is there is a lot of MBAs are thinking about, "How do I create a new type of consumer good?" Maybe it's a health product but more often than not it's something like a new type of business model. So, something like Uber or a delivery service for food and there's a big difference between sort of thinking about these health products versus when you think of those other types of goods and services and the main one is that in health, before you can even think of getting paid, which is usually from an insurance company, you need to build an evidence base.
To show that your product actually works and that it's effective and safe and if we're talking about diagnostics that might just be showing that there's added value that helps doctors make better decisions or helps match patients to the right types of therapy but when we're talking about drugs, it's both about safety and advocacy because you're also concerned about doing harm to patients and that creates a very different dynamic because while the advice to someone starting a new food company might be, "just go out there and sell your product" Or if you have a new type of clothing and you just want to get people wearing your products so the word spreads quickly, you really can't do that in a lot of health technologies.
You have to go build the evidence base first and when I'm writing the cases that are used in classrooms or when I'm talking about research, I'm often thinking about that tension, that firms are trying to move quickly and get financing, get some traction but at the same time they're trying to prove that their product is robust, works beyond what you can just see in the lab. They usually have to do this with real human patients before anyone is willing to pay them for the service or technology.
Yeah, so I want to talk about Genomic Health company, as this is a nice example of companies that changes the diagnostic field with a very innovative new test and what I found was in 2018 Genomic Health marks more than one million patients worldwide who has benefited from Oncotype DX tests and we are going to dissect this business case study at the commercialization of diagnostic tests at DC this August and you'll be leading this case. So, can you tell us a little bit, in brief, what this case is about and what you hope the audience will learn from it?
So, I'm very excited to share this case with the participants of the conference. The case is about a cancer gene testing company called Genomic Health which has a massive opportunity in front of them to help better to detect early stage estrogen receptor positive breast cancer. So, a very particular type of breast cancer and they developed a twenty-one gene panel, in which they are using as their main product to help physicians and patients get the information they need to figure out what types of treatments they're going to best respond to and the specifics of the test are interesting and the company and its leadership are interesting on their own but there's a bunch of quite general questions and lessons that I think this case us and help us wrestle with and discuss live and I hope to learn both in this soon, which in this case would be the conference participants and from their prior experience but also through this debate that you're having during the case and the first main question is going to be about how do you even think about value of a genetic test like, so, the potential savings that are associated with getting better treatment are hard to quantify.
So, unlike, say a financial product where we know what interest rate we get or we know the savings opportunities there. Much harder to think about it when it's both of us preserving human life in terms of years, preserving human life in terms of quality of life, and also all the stress and the pain that's associated with getting the wrong treatment before getting the right treatment. So, thinking through how an economist or how a business leader would think through what the right value and right price that you put on a diagnostic test like that. It's just a really hard problem and it's pretty unique in diagnostic testing. So, I spend a lot of time thinking about, "what value is created?" And then, "how much value the firms try to capture when they're charging insurers and health providers for [inaudible 00:06:20]
Yeah, so this has probably been around for a long time, right, and would you think that this is like, an older company? So, that's why we have more information to build the case and maybe educate ourselves on what we can learn from this case?
Yes, that's an interesting point about the case lesson and we go back and forth about this. When we're teaching our students at business school, do we focus on companies where we have lots of information and know the end of the story because it happened years ago, or do we write cases that are unfolding today and I think there is a lot to learn from both. What's interesting about writing case or thinking through a problem that's happening, say, today, where we don't yet know what the company shows or what the right answer was is that it forces you to make the decision as though you're in the driver seat with no hindsight bias.
The advantage when we have cases like this, where the company's been around for a while and we have a lot data associated with it and we can at the end think through what actually happened is that you just get a more complete picture and then you can also at the end, and hopefully we'll have time to do this at the conference, you can reflect and say, "how was our discussion about this decision or how to price or who sell a test to? How was our discussion different from what the company ended up doing? And what can we learn from this? Did the company choose correctly, did they choose poorly, did you think they were considering other factors that didn't come up in the way the case was written?" There's advantages to both. It's a little more real when it's a live case, happening in real time but there's more opportunity for reflection when the company's been around for a while.
Yeah, I think this is going to be a very exciting, interactive business case session. Do you have any advice for new companies who are trying to break into diagnostic market to create value?
Every company faces it's own set of challenges. The generic advice that we would sort of tell all young entrepreneurs or new entrepreneurs is think about how to manage uncertainty and find if there's a way to before spending five years of your life building the perfect test before touching a patient. There's a way to start testing early and getting feedback from patients, from doctors, from insurers because we do that. There is a way to do that earlier, better, better because then you can refine your product and keep reiterating.
That's generic advice, what's interesting about the diagnostic market, in particular, is you need to provide something that really adds value in a way that you can express what that value is to all these different stakeholders. Like the patient, like the doctors, like the insurers, and the regulators. So, it's not a market where you can just wing it and always change to new business and go. So, I would say especially for those who are waving into the diagnostic space, it's really important to take the time to write down what is the value to all these different players and what are the different ways you could create similar value and if you can't think through at least two different options for how you might create value differently for, say just doctors, within your idea, within your business model. If there aren't options, then you aren't thinking hard enough because even within a very narrowly defined review area or diagnostic space, there's always choices to be made and I think it's really tough sometimes for entrepreneurs who are excited about their idea to realize that there is more than one way to implement that particular idea.
There's more than one way to please those different stakeholders or to create value for them. Then once you get them down a few different avenues to create new captured value for each of those stakeholders, that's when you should start thinking, "how are we going to test, to understand if we want to go with option A or option B" And option A can be going for a more narrow disease area or sort of patients but option B could be something more mass market. It could be low cost versus high cost. It could be, intensive sales relationships where you're working with the customers every day versus something that's more plug and play, where you show it to the customers once and then you go away for a long time. There's always decisions like this to be made for the intensity of your business for the type of market you're going after. And I think the mistake that young entrepreneurs make, especially in the health space, is they think that they identified the one and only approach within a particular business ideas and they don't leave room to adjust.
Thank you so much for your time and insights today, Josh. I think that was very helpful to understand the diagnostic field and get some advice that you gave us on how to enter this type of market to create value. That was Professor Joshua Krieger at the Entrepreneurial Management unit from Harvard Business School. He will be leading this case study on Genomic Health at the commercialization of diagnostic test meeting as part of the Next Generation Diagnostic Summit in Washington D.C. this August and if you would like to hear him in person please go to www.nextgenerationdx.com for registration information and enter the key code 'podcast'. I'm Emily Le, Thank you for listening.