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 a16z 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.