Brief Reflections on the Creation of a Health Innovation Eco-System
February 23, 2010
Notes for a speech to The Biotechnology Initiative Gala Awards Evening: “Celebration of Success”
February 23rd, 2010, Toronto Canada
Thank you for the privilege of addressing you tonight. As with all privileges, I know this one comes with responsibilities. Your stomachs are empty, and I stand between you and dinner. I am also due out the door by 7.10 pm. So, this is what management consultants like to call — an alignment of incentives! …That’s something that doesn’t happen much in Canadian healthcare.
I am very glad that The Biotechnology Initiative [TBI] is recognizing and celebrating the achievements of four outstanding individuals and an exciting company. More specifically, I am deeply honoured to be the warm-up act for your evening with John Dirks, Murray McLaughlin, Gregg Szabo, Marc LePage, and Axela Biosystems.
For my part, I have only five points to make.
- We need to sustain our societal and industrial support for fundamental and applied health research.
- Ontario has fabulous firepower in that respect. And the Toronto region, in particular, is wonderfully positioned to make a huge difference to the life sciences landscape, both through disciplinary excellence, and convergence with non-bioscience disciplines.
- We must, however, do better at translating our discoveries into new ventures. We need a stronger health innovation eco-system.
- Part of creating that improved environment means some serious re-thinking of the healthcare system and how we make decisions within it.
- Last, you know all these things already. That’s one of the reasons TBI was created and why you’re here. Our collective challenge is therefore equally obvious. We need to pull together the relevant stakeholders in the life sciences sphere, make our case more often and more persuasively to leaders in the public and private sectors, and get on with innovating regardless of their response.
With that, I should probably leave the podium. We could all go back out to the reception area for another drink and some kibitzing! However, I’ll instead elaborate quickly on each point.
1. We need research.
As I said a few months ago on the occasion of the 50th anniversary gala of the Gairdner Foundation, fundamental and applied research in the life sciences has never been more important.
We have made substantial progress. Age-adjusted death rates from most of the major scourges are falling in the industrialized and industrializing countries. Billions of people are living longer and better, albeit often living with and suffering from one or more chronic diseases.
This progress, in recent decades, has been due in major measure to the more effective prevention and management of a vast range of diseases. And that progress, in turn, has its foundations in a combination of fundamental and translational bioscience, clinical and epidemiological research, and advances in the organization and delivery of healthcare.
But our successes are still mixed. Let me give a few examples.
We fiddle brilliantly with blocked or narrowed arteries, and the standard cocktail of medications prescribed after an acute myocardial infarction reduces medium-term mortality by up to 80%. Then again, we do not really have a definitive intervention to prevent let alone rapidly reverse atherosclerosis.
We have made huge strides in cancer control. However, the toll of cancer remains massive, and it will be decades before we have definitive treatments for this baffling and protean family of proliferative disorders.
We have eradicated smallpox and polio, and we can cure many infectious diseases. However, emerging and re-emerging infectious diseases are still taking a massive toll worldwide. That claim is underscored by the recent impacts of SARS and H1N1, and the continuing global challenge of HIV.
We have transformed the management of inflammatory arthritis with immuno-biological agents. However, we still ultimately treat osteoarthritis of the hip and knee with joint replacements. And in that respect, as with cardiac valve replacements or dialysis or organ transplantation, we are still in the spare parts business. We have yet to reap the full benefits of regenerative medicine, be it through in situ regrowth of damaged tissue, or through in vitro bioengineering with subsequent transplantation.
It is true that we must relentlessly and rigorously synthesize, critique, validate, and apply the evidence that we already have.
It is true that clinical prevention and public health strategies have great untapped potential.
And it is also true that some two billion people worldwide still suffer because of dirty water, malnutrition, substandard housing, poor education, and oppressive political circumstances. We must rededicate ourselves to mitigating those shameful health disparities.
But we also know what comes next as populations move out of the shadow of the diseases of poverty. They fall prey to the chronic diseases endemic to members of this audience. And as that happens, the quest to conquer chronic diseases, and the marshalling of global forces to counter emerging and re-emerging infectious diseases will become, more than ever, a great unifying preoccupation for humankind.
To repeat: We need great research.
2. Canada needs Ontario to be even more successful as a global life-sciences hub.
Natural resources remain a huge comparative advantage for the Canadian economy. However, given the decline of the manufacturing sector in Ontario, and given global arbitrage in manufacturing more generally, everyone has recognized the need for diversification of our economy. That means more enterprises based on innovation – and a stronger culture of innovation more generally.
Life sciences are a logical priority in that regard. Ontario has numerous universities, colleges, research hospitals, and innovative companies, all contributing to create a huge and dynamic life-sciences footprint.
A word here about the Toronto region…
I know that the T in TBI no longer stands for Toronto. And I know Canadians love the mythology of small and feisty. Perhaps that’s understandable given our national self-perception with respect to the US. So it is that not many Canadians love big old Hogtown.
But there are two relevant realities that I believe most Canadians also recognize.
First, Ontario is still the economic engine of Canada. No question about it. And in that regard, I hope our national government and the other provinces appreciate a basic principle of animal husbandry: You don’t starve your cash cow in hard times and expect the farm to thrive long term.
Second, Toronto matters more than ever – not just to this province, but to Canada as a whole. Consider this fact. On a proportionate basis, Toronto contributes more to Canada’s GDP than New York, Chicago, Boston and San Francisco combined contribute to America’s GDP.
In North America, Toronto is third or fourth among conurbations in the scale of its bioscience and healthcare sector.
Toronto has the third largest information and communications technology sector in North America. No Canadian region is close.
And just this week, an influential US venture capitalist published his global top-ten list of clean-tech development clusters. MaRS in Toronto was fourth world-wide.
It’s partly this concentration and convergence of disciplines that creates huge opportunities not just here in Toronto but right across Ontario.
That said, as I noted at the outset, we still don’t have all the winning conditions for investment and innovation in the life sciences.
3. We’re just not doing well enough turning discoveries into new products and services.
It’s somewhat puzzling. We have tremendous health research activities across Ontario and a massive publicly-financed healthcare enterprise. There’s a sincere and growing interest in the local development and commercialization of discoveries and new technologies. Every one in the audience knows the catchphrases: bench to bedside and beyond; from genes to populations and back again; or, in the same vein, from molecules to marketplaces.
Fancy phrases aside, what are we missing?
For starters, we urgently need more and better seed-stage investment and more venture capital.
We need a stronger culture of innovation in all our universities, colleges, and hospitals. And that, I’m happy to say, is really starting to happen.
We need more companies to invest in Canadian-based R&D. Nortel, whatever its management foibles, was far and away the national leader in that regard, and other companies in all sectors, including the broad health sphere, must step up urgently.
We also need a stronger culture of collaboration between academe and industry. And those are not always easy relationships.
The academy strongly values freedom of inquiry, while industry focuses on accountability and the bottom line. I make no apology for defending academic freedom, but we also need to consider our social responsibilities. Academic research is hugely subsidized by taxpayers through grants to individual scientists, and by publicly-derived operating funds transferred to universities, colleges and hospitals. We owe it to our fellow citizens to ensure that some of our discoveries and technologies are translated into products and services that will yield health gains for patients and economic benefits for the population.
On that front, one of our challenges in academe is that we try to turn good ideas into fledgling inventions and companies too early. We need more proof-of-principle funding and developmental capacity so that innovations carry some practical weight when they are presented to potential investors or industrial partners. Otherwise, we end up doing one or more of three things: We waste our own time and money, or we waste the time and money of our partners, or we end up selling off a promising invention at bargain basement prices, usually to American investors.
There is a great deal more to say on this topic but it can be summed up briefly. Other small nations – Israel, Finland, and Singapore – are building innovation eco-systems with clarity about how all the pieces inter-connect. We need that clarity here in Canada. On a national basis, it is arguable that there is already lots of government money in play in the technology transfer and commercialization sphere. We simply haven’t deployed it very effectively.
4. The healthcare system should be an enabler of innovation.
I understand that we do not have a perfect environment for investment in novel drugs, medical devices, and healthcare software in Ontario. And yes, the incentive structures are better developed in Quebec where so many of your tax dollars are hard at work subsidizing companies that might otherwise have invested more in Ontario.
However, if we look past the direct incentives to start-ups or to established companies, there is an elephant in the room.
We spend about $45B through the public purse on healthcare in this province. It’s not simply a set of costs that go into services and products to meet the needs of patients and communities. Healthcare is a value generator, with huge advantages – both obvious and subtle. It contributes to many sectors, even subsidizing the manufacture of cars in Ontario.
In that latter regard, our quasi-system, with all its warts and shortcomings, remains a sound alternative to the mounting chaos and high costs of healthcare south of the border. But frankly, we haven’t moved the structure of the system forward to any meaningful degree since the mid-1990s.
That’s true not just in Ontario, but right across the country where the big push to regionalization took place over a decade ago. Since then, oddly, we’ve been adrift.
A core problem is that costs and incentives are poorly aligned. This will come as no surprise to those in the audience tonight, but let me give a couple of examples.
A new and expensive device – let’s say it was invented at McMaster or Western — is installed in a hospital. The installation shortens patients’ lengths of stay and allows more intensive use of in-patient beds without any adverse outcomes. An economic analysis confirms that while post-acute home care costs rise slightly, the overall cost impact is extremely positive on an episode-of-care basis.
However, it’s totally unclear how that device gets widespread adoption. The hospital is largely funded by a global budget, and increased intensity of bed-use isn’t adequately rewarded in the reimbursement formula. It therefore loses from being a first-mover to enable innovation. The community care access centre also faces an increase in its operating costs that may or may not be offset. And the administrators, doctors and nurses who pushed to adopt the new device have no incentive to repeat the exercise when the next made-in-Ontario invention comes along.
The same type of silo-based budgeting completely bedevils the approval of new drugs.
One way or another, we not only have to spend healthcare dollars more efficiently. We also have to re-jig our quasi-system so that it promotes and rewards the development and sensible field-testing of new products, services, information systems, and management strategies.
These aren’t new ideas. More than a decade ago Drs Henry Friesen and Cal Stiller championed this sort of reframing of our healthcare system. And the arguments for integration of the system with alignment of incentives go back even further. A number of us were making them at least 15 years ago.
Perhaps now, with the unhappy attenuation of our manufacturing sector, and the renewed economic pressures on the provincial budget, we can restart a serious dialogue about fundamental changes to make the healthcare system an enabler of innovation.
5. We know what we need to do
Those with stomachs growling will be glad that I’ve reached my final and briefest point!
As I mentioned at the outset, we are in a remarkable position in Ontario and in Toronto, with great opportunities and some strong competitive advantages. Those advantages must be front and centre in our advocacy with public and private sector leaders.
With better collaboration, focused and strategic investments by all the relevant sectors, and some overdue reforms to the healthcare system, we assuredly can create a world-leading health sciences cluster in Ontario… One that would foster basic and applied research, facilitate knowledge translation, innovation and commercialization, and promote a dynamic culture of creativity and entrepreneurship.
The outputs would be even better educational opportunities for our students and trainees, more jobs, greater prosperity, better patient care, and healthier populations at every stage of the life cycle.
Achieving that vision, ladies and gentleman, may not be immediately at hand, but it is entirely within our reach. And, as I said earlier, if the decision-makers won’t listen, I recommend that we simply get on with the collaborations required to make some changes happen.
In this regard, I want to acknowledge the role of TBI. You are not only recognizing excellence – as signified by the outstanding award-winners celebrated this evening. You are also working hard to tell our collective story to stakeholders and governments. That story is already very good indeed, and if we pull together I am convinced that it can become a truly great narrative of collective success.
Again thank you for inviting me to join you, and my warmest congratulations to tonight’s award-winners.
Check against delivery.