Let’s put patients at the center of impact investing

By Laura Kleiman, PhD, Founder and CEO of Reboot Rx

More investors than ever want their money to make a positive impact on the world while producing a financial return. As the Founder and CEO of the tech nonprofit startup Reboot Rx, I am interested in solving a particular market failure: the development of low-cost cancer treatments through repurposing of FDA-approved generic drugs. I think impact investors have an important role to play here.

I recently had the opportunity to moderate the “Investing for Social Impact” panel at the WuXi Global Forum. I discussed diverse approaches to health impact investing with leaders from Adjuvant Capital, American Cancer Society's BrightEdge Fund, MPM Capital's Oncology Impact Fund, and Leaps by Bayer. You can watch the panel discussion. I left inspired that we will be able to tackle some of our most pressing health challenges, and it got me thinking about how impact investing could solve the problem we face at Reboot Rx around the lack of funding for clinical trials testing new uses for generic drugs.

Generics are off-patent and sold by many manufacturers, which drives down the drug prices due to competition in the marketplace and increases global availability. Drug companies typically fund the clinical trials necessary to prove that new treatments are effective, but they are not interested in funding trials with generics. Although repurposing a generic drug for an additional indication would increase drug sales, it wouldn’t lead to a large enough increase in profits for any individual generic manufacturer to justify paying for the clinical trials. So the definitive evidence is never gathered, and patients are unable to benefit from these promising and affordable therapies.

What if investors could fund these trials and receive modest financial returns based on healthcare cost savings, instead of drug sales? When patients have better outcomes with inexpensive therapies and avoid future hospitalizations and treatments, healthcare payers like private insurance companies can save an enormous amount of money. If payers do not want to fund the trials themselves - they may find it too risky - they could make an upfront agreement with investors that they will provide a “success payment” for the treatments that are proven to be effective and actually save them money. This return on investment could come from a portion of the cost savings using a model like social impact bonds, which are also known as pay-for-success programs and outcomes-based contracts.

Take for example the repurposing of ketorolac, a $50 generic nonsteroidal anti-inflammatory drug (NSAID). Ketorolac could reduce the risk of lung cancer relapses following surgery by 50% and eliminate the need to spend $114,000 to treat each recurrence. This could save 12,000 lives and $1 billion each year in the U.S. alone. Even within our fractured healthcare system, this would mean substantial cost savings for individual payers, like $30 million saved each year for the Veterans Health Administration. A clinical trial to prove whether ketorolac works would cost only $8 million. Everyone would win - payers would save money, investors would get a return, and patients would have effective treatments.

There are many challenges in implementing this model, some of which Reboot Rx and our collaborators at Mission: Cure are working on. Healthcare payers need to see the value that these new treatment options could provide for their constituents and be open to innovative approaches. We need to figure out how to measure realized patient outcomes and within the time frame investors require.

That brings me to an overarching reflection from the panel: Within 5 years, I hope that patient outcomes will be the primary success metric of health impact investments and that investment decisions will be driven by maximizing improvements to meaningful patient outcomes. This will necessitate creative solutions for generating financial returns, such as social impact bonds, that balance optimizing profits and public good. It will lead to opportunities for investors to have a major impact on people’s health and result in life-saving treatments accessible to patients worldwide. Only then can we truly say that we’re putting patients first.