It’s Time to Heal is a special
package about engineering the future of bio and healthcare. See more at: https://a16z.com/time-to-heal/.
For too long, we’ve confused the status quo for stasis
in healthcare. We’ve accepted certain things as true, things we believed to be
immutable, intractable, or at the very least, extremely hard to change—like that
it takes years to develop a vaccine, or that virtual medicine will never scale
for doctors or patients, or that the regulatory system can’t adapt to innovation
quickly enough to support lasting change.
But then came 2020, a year of stark contrasts.
The COVID-19 pandemic highlighted many broken
and ossified aspects of our healthcare system, but the whole bio ecosystem
responded heroically and faster than ever before in so many ways. We’ve been plunged into one of the greatest periods of
innovation we’ve ever seen, as bio and healthcare adapted, and adopted, new
technologies and approaches with incredible agility and speed. A COVID-19
vaccine was designed in 48 hours. Telemedicine got
normalized. 59 new drugs were approved by
the FDA, across indications ranging from precision oncology to peanut allergy to
COVID-19. We saw positive clinical trial results for multiple exciting drug
modalities, including antibody drug conjugates in cancer; siRNA in
cardiovascular disease; and gene-edited ex vivo cell therapies for rare blood
disorders. New regulations on drug prices,
telehealth licensure, reimbursement, and more swept through the government. We
relied on technology like never before, to supercharge a system fundamentally
built around centralized, brick-and-mortar facilities. After 2020, much about
bio and healthcare will never look the same.
We relied on technology like never before, to supercharge a system fundamentally
built around centralized, brick-and-mortar facilities. After 2020, much about
bio and healthcare will never look the same.
Tech is often criticized for a culture of moving fast
and breaking things. But what we saw this year was tech enabling bio and
healthcare to move fast, to heal. We will always need regulation and
process to keep us all safe; healthcare will always be among our most human
endeavors. But technology will enable us to fundamentally shift the frame from
what we do, to how we’re doing it. Our new tools and technologies will change how we
approach everything, from new drugs to the global market of healthcare—what we
design, how we develop it, and how it’s deployed to patients.
Here are the 16 biggest trends we believe will transform biology, medicine,
and healthcare.
- Patient data moves beyond the EHR. We’re finally at a tipping point where patient data generated outside of
traditional electronic health records (EHRs) will be more valuable than the
data generated within it. At-home
diagnostics, virtual care clinics, patient-reported outcomes, remote patient
monitoring, social determinants… all of these contribute to a more holistic
and longitudinal understanding of patients’ health, which in turn will lead
to more precise clinical research for drug development, better underwriting
of risk for value-based care, and much more. Perhaps the biggest opportunity
is flipping the entire care delivery paradigm on its head: emerging
virtual-first care models that utilize these continuous data streams can
take us from a reliance to patients initiating an encounter, to truly
meeting patients where they are, on their terms.
- Health insurance gets unbundled. The employer-sponsored insurance model was put to
hard test during the pandemic, from mass unemployment forcing consumers to
shop for their own coverage, to self-insured health plans needing to plan
for utilization spikes post-pandemic. Consumers scrambled to figure out
where they could get affordable virtual care, pharmacy services, or COVID-19
testing when the pandemic hit, showing just how much patients are on the
hook for the cost of their own healthcare, and without useful tools for
navigating options. Because of this, we’ll start to see more emphasis on
consumer fintech products for facilitating out-of-pocket healthcare spend,
as well as more low-acuity healthcare services being offered as monthly
memberships or simple online e-commerce-like purchases.
- Virtual care becomes a first-class citizen…
It took our healthcare system a decade to hit
single-digit telehealth utilization—and 1 month to hit 40% utilization after
the start of the pandemic. The initial wave of virtual care last year was
mainly around transactional, low acuity services. Now, we’ll start to see it woven into a
broader set of care models across the entire acuity spectrum. The results of this digital
health maturation will change all kinds of new patient/clinician,
supply/demand dynamics. Competition for traditional providers will no longer
be just local; national-scale, virtual-first providers will be able to reach
patients across state lines, at any time of day.
- …with its own operating
system. For far too long, we’ve
struggled with outdated, clumsy software products of healthcare IT from
years past. But we will soon have entire patient populations being treated
primarily with virtual-first care models, powered by novel tech operating
systems that are purpose-built for virtual-first engagement, value-based
business models, and patient-centric experiences. And those new companies
need infrastructure tools: think Okta and Plaid for patient data, Shopify
for standing up digital clinics with national reach, Instacart for last-mile
medical product delivery. When those digital health companies integrate into
the traditional healthcare value chain to achieve true scale, traditional
healthcare organizations will need to modernize their service models (or
perish), which over time will drive the injection of this modern tech stack
into the legacy system.
- The home becomes a primary site of care (again).
The home-based services that became necessary
during the pandemic showed us how much more care can actually be
delivered in the comfort of one’s own home. Reimbursement tailwinds driven by new CMS policy
will cement the home as a valid site of care, and continue to propel the
movement of services away from acute and post-acute care settings. The
ability to tap into the underutilized capacity and expertise of ancillary
care providers—like EMTs and phlebotomists—also creates a new pool of supply
for cost-effective home care.
- Mental health gets engineered. Mental health issues reached crisis levels during
the pandemic across all demographics. After many years of being treated as a
separate, carved out benefit with serious access issues, payors and
providers are beginning to take strides towards more accessible, affordable,
and integrated mental health services. Technology will play a key role in
making this system more efficient: facilitating scalable patient-provider
matching, logistics, communication. But the biggest change will come from
enabling us to finally measure outcomes. Tech will help us understand 1) if,
when, and how we’re actually helping patients; 2) whether novel therapies
move the needle on the biology underlying psychiatric disease, and 3) how to
iteratively improve the care system as a whole. That, in turn, will cascade
into compounding improvements across all areas of treatment—not just
behavioral therapies, but also what medicines we use, and how drug
development happens.
- Value-based care comes for Rx. If COVID-19 has shown us anything, it’s that the
status quo is not sustainable. You can’t pay millions of dollars upfront for
every novel therapy, but we shouldn’t have dramatic annual price hikes for
drugs developed decades ago, either. Insulin shouldn’t be so expensive;
epipens shouldn’t be hard to get; antivirals and antibiotics should be
available in every hospital; diagnostic tests shouldn’t be hard to secure in
a pandemic. Meanwhile, the science creating new medicines is blazing ahead;
regulation is becoming more flexible and responsive; and technology is
facilitating the flow of data, of process, of money, all through traditional
sticking points in the industry. All of this, under the specter of
government action on drug pricing, is driving a re-examination of old
assumptions. New approaches for rapid development and commercialization of
novel therapies against validated disease targets have the potential to
increase competition and drive down prices in highly-contested areas like
oncology. The emergence of more one-and-done treatments—like the prospect of
durable cures being seen in sickle cell anemia—are bringing manufacturers
and payors to the table to explore installment plans and pay-for-performance
models. All these innovations, in both technology and business models, will
usher in an era where we increasingly pay for therapeutic outputs
(performance) over inputs (doses).
- Illumina for X. A
coming cohort of tools will enable us to affordably and comprehensively
illuminate new aspects of biology, the way Illumina did for DNA. We already
know that proteins, metabolites, DNA, RNA, and many other components of
cells all interact in complex, dynamic, and even spatially regulated ways.
We also know that they become dysregulated in disease. New research tools
will allow us to study biology at higher precision, and at lower cost—making
them incredibly valuable for fundamental R&D, but also for a future in
which we can better diagnose, modulate, and intervene upon disease. This
will lead to the development of waves on waves of tools that allow us to
quantify biology, health, and disease in ways barely imaginable now.
- Infectious disease diagnostics and therapeutics
attract investment dollars again. Over
the last several years, many pharma companies moved away from infectious
disease programs. This was partially due to a difficult commercial reality:
unlike chronic disease therapies, which patients may take for years, many
anti-infectious therapies are taken for a single short course, and drug
developers don’t get ‘credit’ for making a better therapy which avoids
hospitalization or ICU stays. The COVID-19 pandemic has brought these
tradeoffs to the forefront of public discussion and highlighted the scale of
impact that uncontrolled infectious disease can have on the world. Many
scientists fear that the growing antibiotic resistance crisis will be our
next pandemic. With the need for preparedness becoming all too apparent and
governments stepping up with contracts and incentives, there is once again a
viable market for developing the medicines and tools that will protect us
from the next big bugs.
- Clinical trials (finally) go digital—with FDA
support. Clinical trials must be
rigorous, to ensure the safety and efficacy of new therapeutics. But current
clinical trial processes are still weighed down by “clipboard culture”, and
have been widely viewed by investigators, sponsors, patients, and even regulators as ripe for disruption by software. Adoption of
technology to modernize clinical trials was already accelerating prior to
the pandemic: over 1100 clinical trials initiated in 2018 included use of a
connected digital product in the
protocol. COVID-19 has accelerated this
trend dramatically. This year the FDA issued guidance allowing some clinical outcome assessments to be
conducted remotely, or via telehealth. Many more aspects of clinical trial
design and execution will be streamlined by software, including screening,
consent, data capture, and patient engagement. Say farewell to the
clipboards, and hello to cheaper clinical trials that include more sites and
get new therapies to patients faster.
- Personal genomics finally goes clinical. The human genome was sequenced 20 years ago, but most patients today still have
never taken a genetic test to guide their medical care. That’s because
genetic tests are used in relatively limited settings today such as tumor
sequencing, hereditary cancer predisposition testing, non-invasive prenatal
testing, and rare disease diagnosis. For most common diseases—like diabetes,
heart disease, or common forms of breast cancer—many small changes in a
person’s genetic sequence act in combination to influence risk of disease.
This is where polygenic risk scores (PRS) have recently come in, to provide
risk stratification based on thousands of different genomic variants. A PRS
score might identify a woman with breast cancer risk equivalent to that of a
BRCA mutation carrier (and thus suggest early screening); or PRS scores
could identify candidates for intensive lipid lowering or lifestyle changes.
It has taken time, but more and more physicians are becoming familiar with
genetic tests (~60% of PCPs nationally have now ordered one). And unlike the first
go-around (driven largely by consumer curiosity), we now see willingness on
the part of health systems, payors/employers, and pharma companies to invest
in population genomics programs to keep patients healthier.
- Working on rare diseases gets more common. A substantial fraction of new medicines approved
by the FDA in recent years have been so-called orphan drugs, or drugs
targeted at very rare disease indications—thanks in part to the Orphan Drug Act. Interest in rare disease therapeutics is only
accelerating. Because the precise genetic causes of thousands of rare
diseases is now known (a result of the genomics revolution described above),
many biotech and pharma companies are increasingly turning their attention
to rare diseases, or rare, early-onset forms of common diseases. And because
there is high unmet need, a relatively small clinical trial may provide a
meaningful readout. These programs are viewed as attractive ways to de-risk
platform technologies before applying them to more common, complex diseases.
This will pressure-test both our research and reimbursement systems, but
will continue to be a win for rare disease patients worldwide.
- Biotech reaches the industrial
age. Because of the complexities
and unknown unknowns in biology, drug discovery can be a highly bespoke,
artisanal process. A new generation of industrialized bio platforms are now
poised to enable ‘plug and play’ medicines, or new therapies that leverage a
common foundation and reuse programmable components. Moderna, for example,
was founded in 2010, but the company’s first approved product will be the
COVID-19 mRNA vaccine, developed at an unprecedented pace. This first
therapy represents a blueprint for a long list of other therapies that will
benefit from the same underlying innovation. As platform biotech companies
like these continue to reach maturity, they will have an outsized impact on
drug discovery timelines. This will be true in essentially all areas of
biotech: small molecule discovery, protein engineering, genome editing, gene
delivery, cell therapy, and more.
- Targeted delivery of complex
therapies. One of the key hurdles to
implementing gene therapy in the clinic is safely and effectively delivering
the genetic payloads (like siRNA or CRISPR editors) into the correct disease
cells. Many groups are working to improve AAV—the current workhorse of gene
delivery—but a wave of technologies with optimized qualities are also coming
online, like lipid nanoparticles (as used by Moderna and Pfizer/BioNTech for
delivery of the mRNA vaccines), or other antibody or peptide-based targeting
approaches, in turn spurring further interest in new delivery modalities.
Ultimately, we need delivery vehicles that can target payloads to specific
cells and tissue types all over the body. And all these delivery modalities
need to be safe, and easy to manufacture (just like the cargo itself). Given
the pace of advances in this area, we expect to now finally see not only
cutting-edge cargo, but also multiple novel delivery platforms reach
patients in the clinic.
- Biotech R&D goes more virtual. The CFI bio team has a running joke about a
fictional biotech start up called Beach Biotech (which may or may not be
headquartered in Miami) where employees can sit with a laptop on the beach
and perform everything necessary for drug design through a combination of
machine learning, biophysical simulation, robotized experiments, and
external development and manufacturing services (CROs and CDMOs). Every
aspect that contributes to the dream of Beach Biotech has matured such that
it’s now more than a beach fantasy. It’s a real model for operating a
biotech business far more efficiently, tapping into specialized expertise
all over the world rather than re-inventing the wheel in-house, and
accessing a much broader pool of talent. This vision is not just becoming
reality, but being quickly battle-tested by the reality of COVID-19. Welcome
to the world, Beach Biotech.
- The bright line between life sciences and care
delivery blurs. Healthcare and life
sciences are two sectors that traditionally have been very siloed from each
other. Today they are increasingly converging, as payment models transform
and therapies become more complex. When you are deploying 1-time curative
therapies, for example, the notion of static reimbursement rates for drugs
against a monolithic formulary no longer makes sense; value-based pricing is
needed. Or take the delivery of complex therapies made by engineering live
biological samples, which require all kinds of new logistics and operational
systems. These are therapies that are in themselves “care delivery”, and the
process is the product. The next generation of life sciences companies will
need to develop new competencies in reimbursement strategy, care delivery
operations, and longitudinal, real-world patient monitoring far sooner than
their historical peers. On the flip side, care delivery organizations and
individual providers will have to evolve new ways to diagnose, treat, and
manage the logistics around complex conditions that require novel
therapeutic modalities, like gene therapy and cell therapy. There will be
huge opportunities for companies to be built in the white space of this
nexus.
All of these trends—and the regulatory tailwinds
driving them forward—will bring more change to the healthcare system than we
have seen in a generation. There has never been more opportunity to attack
problems in the world of healthcare and bio. COVID-19 has accelerated the
future; things that were hard to build but impossible to introduce are now
arriving. It’s time to build.