Do current radical innovation measures actually measure radical drug innovation?

A Review of Current Approaches to Defining and Valuing Innovation in Health Technology Assessment

OBJECTIVES

The growing focus on the value of new drugs for patients and society has led to a more differentiated notion of innovation in the context of pharmaceutical products. The goal of this article is to provide an overview of the current debate about the definition and assessment of innovation and how innovation is considered in reimbursement and pricing decisions.

METHODS

To compile the relevant literature, we followed a 2-step approach. First, we searched for peer-reviewed literature that deals with the definition of pharmaceutical innovation. Second, we reviewed health technology assessment (HTA) guidelines of 11 selected countries (Australia, Belgium, Canada, England, France, Germany, Italy, Japan, Norway, Sweden, and The Netherlands) regarding aspects of innovation that are currently considered as relevant by the respective HTA bodies.

RESULTS

All countries in our sample use 1 of 2 types of reward mechanism for novel drugs that they consider provide some sort of benefit. Generally, the focus is on the therapeutic benefit of a drug, whereas, depending on the exact arrangement, other aspects can also be taken into account. A reduction in side effects and aspects of treatment convenience can be invoked in some of the countries. Mostly, however, they are not considered unless they are already captured in the clinical outcomes used to measure the therapeutic benefit.

CONCLUSION

Our review shows that although the health economic literature discusses a range of aspects on how innovation may generate value even without providing an immediate added therapeutic benefit (or on top of it), these are only selectively considered in the reviewed HTA guidelines. For most part, only the added therapeutic value is crucial when it comes to pricing and reimbursement decisions.

Determinants of radical drug innovation: a systematic literature review

Radical drug innovations are of great importance to pharmaceutical firms and public health. Understanding the determinants involved in successful radical drug innovations is key to increasing this type of output in the future. The objective of this review is to search the literature for key firm-level determinants of radical drug innovation. Following a systematic literature review approach, we considered more than 4100 peer-reviewed journal articles and PhD theses, of which we included 38 in the narrative synthesis. To guide the review, we use Crossan and Apaydin’s (J Manag Stud 47:1154–1191, 2010) model of firm-level determinants of innovation for the first time within the pharmaceutical industry, which is unique due to the risks, costs, and time frames associated with radical drug innovation. We focus on three groups of determinants: leadership, managerial levers, and business processes. We find the following to be particularly important for radical drug innovation: external knowledge sourcing (managerial lever); internal knowledge management (managerial lever); ability of top leaders to innovate, as determined by educational background and professional experience (leadership); and leaders’ focus on shaping innovation and performance cultures (leadership). We offer a conceptual framework of critical determinants of radical drug innovation and highlight managerial implications. We also discuss gaps in radical drug innovation research and provide suggestions for future study. Many of the findings discussed in this paper are contradictory because they rely on different definitions and measures, which inhibits our full and accurate understanding of radical drug innovation development. More research is needed to address untested measures of radical drug innovation.