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Seeing the Strategic Value of Modeling and Simulation Technology

They say beauty is in the eye of the beholder. One could also say that the benefits of modeling and simulation (M&S) are in the eye of the beholder. How does the beholder, in this case, a drug developer, see the benefits of these approaches?

All reputable businesses use “generally accepted accounting principles” to manage, measure, and communicate financial information on a regular basis both internally and externally. Yet, many of the benefits of leveraging M&S technology are “strategic benefits.”These benefits are not readily captured by accounting systems. Thus, the default system for measuring business value gives only a partial view, at best, of the value of this technology-enabled solution. In this blog post, I’ll explain why focusing solely on value as captured by your accounting departments could cause you to miss out on some very valuable strategic benefits.

How accounting influences decision making in drug development

Accounting is a powerful and well-established system for measuring businesses. This system was invented by the Assyrians in 4,000 BCE. There are 1.7 million accountants in the United States. Every pharmaceutical company has a chief financial officer who runs an accounting department and operates a principled accounting system subject to audit by outsiders. The accounting system produces monthly reports covering the customer’s entire enterprise. These organizations also work within an accounting budget.

Though accounting is a strict system, it also holds the key to the easiest of sales. Selling the benefits captured by accounting systems is easy! All you have to do is show that the accounting benefit exceeds the accounting costs of acquisition. Say you have a product or service that will reduce some element of your direct costs, for example, variable labor. Your product costs $100, and the accounting system will show immediate labor savings of $120. You’d buy this product every time. This is a no brainer because this product is putting money in your pocket.

Our challenge, though, is that many projects that incorporate M&S don’t deliver immediate and easily-measured accounting benefits. Rather, they deliver strategic benefits. These could include faster time-to-market, higher likelihood of regulatory success and attractive reimbursement, earlier go/no-go decisions, fewer late stage failures, and higher future sales. In my time at Certara, I’ve seen many cases that illustrate my point. Here are three such cases:


Using PBPK models to predict and quantify potential DDIs

M&S, also known as model-informed drug development, integrates two transformative technologies: computer-aided mathematical simulation and biological sciences. It uses preclinical and clinical data, along with published industry data to elucidate the relationships between drug exposure, drug response, and patient outcomes. M&S comprises both mechanistic physiologically based pharmacokinetic (PBPK) modeling (bottom up) and pharmacokinetic-pharmacodynamic (PK/PD) modeling (top down).

In recent years, regulatory agencies have embraced PBPK models for informing drug development decisions. The US Food and Drug Administration (FDA) Guidance on Drug Interaction Studies states that “PBPK is a useful tool that can help sponsors (1) better design drug-drug interaction (DDI) studies, including dedicated trials and population pharmacokinetic studies, and (2) quantitatively predict the magnitude of drug-drug interactions in various clinical situations. PBPK models also may offer useful alternatives to dedicated clinical studies.”

A simple Phase 1 two-way crossover DDI study can cost around $500,000. Thus, using PBPK to predict the risk of DDIs can save significant time and money by reducing the number of studies. The value of PBPK is especially large for difficult-to-test populations such as oncology, pediatric, and rare disease patients.

Eliglustat for Gaucher disease provides an example of how PBPK can inform drug development and guide clinical practice. Gaucher disease is a lysosomal storage disorder caused by a hereditary deficiency in the enzyme glucocerebrosidase, which affects 6,000 people in the U.S. Eliglustat is metabolized primarily by CYP2D6, and to a lesser extent by CYP3A4. It is also an inhibitor of CYP2D6 and both a substrate and inhibitor of P-gp.

PBPK modeling and simulation was used to understand and quantify the impact of CYP2D6 metabolizer status and concomitant medication on eliglustat exposure—as well as the effect that eliglustat has on other drugs—and guide dosing recommendations and labeling language. Simulations using PBPK models informed dosing recommendations written on the drug label. They predicted 12 DDI scenarios involving CYP2D6 extensive metabolizer (EM), intermediate metabolizer (IM), and poor metabolizer (PM) patients. For more information, you can look at the Eliglustat label.

Eliglustat (Cerdelga, Genzyme) was approved by the FDA for the long-term treatment of adults with Gaucher disease (type 1) who are EMs, IMs, or PMs of CYP2D6. The PBPK models also predicted that patients who are ultrarapid metabolizers are unlikely to achieve adequate concentrations for a therapeutic effect. Eliglustat also received orphan drug designation from the FDA. This designation provides the sponsor with additional years of marketing exclusivity.

For more information, I invite you to check out a recent webinar by my colleague, Dr. Steve Toon.

Fail faster: how “losing” can help you win

In another case, Certara scientists built predictive treatment-response models combined with an integrated metric of net patient value (Clinical Utility Index) to help Sanofi Aventis realize that it had little likelihood of competing with the standard of care. “…we stopped funding development of the compound,” said Frank Douglas, who was Aventis’ chief scientific officer and executive vice president of drug innovation and approval. “The ratio between the therapeutic benefit and the side effect demonstrated that this [compound] was not as beneficial as Evista.”Douglas … estimated that the (pharmacometrics) saved the company $50 million to $100 million, the cost of later-stage clinical trials. “We also avoided exposing a lot of women to a drug that ultimately would have failed,” he adds. “And we were able to switch to another project with a greater chance of success.”1 The key point is that the accounting system will never credit the models with having saved $50-$100 million, even though this happened.

In a final example, Certara built a reusable model of the lipid-lowering competitive landscape to help Pfizer realize that its Gemcabene project had little likelihood of improving the existing standard of care. “The results showed that the new drug was unlikely to outperform its main competitor; Pfizer discontinued development. The modeling project supported a more confident decision without investment in additional trials and allowed team members to re-deploy to other programs. It also provided an enduring, evolving knowledge repository to support future development projects.”2

Seeing beyond accounting to realize strategic value

Unlike accounting, there is no system inside pharma companies for regularly measuring and reporting strategic benefits. Strategic benefits, if they appear, may show up years later. There are no “generally accepted strategic principles” for measuring strategic benefits. The field of business strategy only dates to the 1970’s. Drug developers have a hard time basing investment decisions on such speculative, poorly measured benefits, though they may be large.

Predicting the value that will ultimately be received from investing in M&S solutions is difficult. Much of the value will be strategic while the costs will always find their way into the accounting system. I hope that the examples I presented earlier will help convince you to see beyond the accounting system and behold the full value of M&S approaches to drug development.


[1] “I Zing the Body Electric.”Forbes.com [serial online]. 2002年10月7日. Available at:http://www.forbes.com/asap/2002/1007/054

[2] PK/PD Simulation Speeds Decision Making.”Bio-IT World Best Practices [serial online]. 2006年1月23日

All information presented derive from public source materials.

Join the M&S revolution

M&S can influence every phase of the drug development process. It has the power to help develop new treatments for deadly diseases. Read our white paper, “The Benefits of Modeling and Simulation in Drug Development” to learn how M&S transforms data into information and information into knowledge.


By: Mark Hovde

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