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By John Russell

May 7, 2002 | Never shy and always provocative, Oracle Corp. chairman and CEO Larry Ellison reiterated his plea for a national repository of medical records, called for dramatic changes at the Federal Drug Administration (FDA), and suggested the pharmaceutical industry business model was shifting toward Hollywood and the film industry. Oh, yes, he also talked about Oracle’s ongoing push into the burgeoning life science market.

The occasion was an invitation-only roundtable with about 30 Oracle customers and prospects during Oracle’s Life Science Day at Oracle AppsWorld held early last month in San Diego. At the conference, the database giant introduced an expanded Information Technology Architecture for Life Science initiative, which Oracle says will create a coherent framework for its database and application server offerings, and suite of e-business and e-clinical applications. The centerpiece of the new strategy is its reliance on a “single data schema” to consolidate diverse databases.

Oracle also announced several collaborations in conjunction with its life science initiative. Among them: PricewaterhouseCoopers will have a practice focused on the Oracle product; MDL Information Systems Inc., a chemoinformatics supplier, will help Oracle define domain-specific objects and act as an Oracle reseller; and startup Acero will also work on domain-based models and interfaces.

Already the dominant database supplier to Big Pharma, Oracle seems focused on increasing its application sales, such as its process manufacturing software, to this market. And for smaller biotech companies, Oracle’s strategy seems to emphasize its business process management applications and its ability to act as an application service provider (ASP) for those products. “Business disciplines are often lacking in this market,” said Jon Simmons, Oracle’s vice president of North American sales, “and we think that in vertical market like this, our ASP model can be effective.”

While conference sessions focused on the nuts and bolts of Oracle technology, the early evening roundtable provided a forum for Ellison to tackle broader industry issues. He argued for the creation of a national health records database and loosely tied such an effort to other steps needed to improve the drug discovery process.

“If I have a car accident in San Diego and get rushed off to a hospital, they don’t know a thing about me. They can’t tell if I’m allergic to penicillin --- which I’m not by the way --- but they don’t know that,’’ Ellison said. His prescription is a national database that would include everyone’s medical records, including genotype records.

Critics have jumped on this idea as a gross invasion of privacy, but Ellison will have none of it.

“You think your health records are private. I’ll tell you what -- half your health records are private because they’re lost. The other half are in a manila envelope, sitting on a shelf, being read by a 16-year-old, who’s working part-time for your doctor, bored to death,’’ Ellison said.

He argued that a single IT-based repository of medical records would be more effective, more efficient, and cheaper. Moreover, Ellison said, this kind of data-gathering is already done in the financial sector, where credit companies already maintain customers’ personal data and sell it to each other on a regular basis. Maintaining appropriate privacy, he said, would be far easier with a single database.

“The best medical records today are held by the payers [insurance companies]. They have better information than anybody. ‘You mean the insurance companies know more about medicine than the medical community?’ Well, yeah, they do. They have better data and some of them would actually like to make the information available so you could make better decisions on which doctors to use,” Ellison said.

Oracle’s outspoken CEO insists that such a database would help shorten the now onerous clinical trial process.

“If a million people go untreated, and die, the FDA thinks that’s OK. If a million people get treated with a drug, and many are saved but two people are killed by the drug, then the FDA thinks that’s really bad,” Ellison said. “It is really scandalous today that the FDA is so cautious about the delivery of a drug that may have such a bad side effect, and therefore so slow taking drugs through clinical trials. If we had the clinical records, then I could screen you for toxicity for this drug.”

It would be far better, he argued, to use modern genetic screening techniques to speed the clinical trial process and overall progress toward personalized medicine.

“Look at all of the drugs that failed clinical trials because of adverse side effects for a very small percentage of the population, where it might be efficacious for 50 percent of the people and might injure 1 percent of the people,” he said. “Even if it worked for 10 percent of the people and injured 50 percent of the people, as long as you could screen for those 50 percent or 10 percent, more drugs would make it through the trials and have a much better result for people and a much better result for industry.

“It’s the, ‘God save me from my friends -- my enemies I can deal with’ situation. They [FDA] are very well intentioned people, but they are so inefficient,” said Ellison, who despite the critical comments, indicated he believes much of what he suggests will eventually happen.

Sidebar: Time to Scrap the Blockbuster Drug Model

By John Russell

Moving drugs through R&D to market has never been more expensive, and despite all of the technology being thrown at the problem, it’s only getting worse. The issue, said PricewaterhouseCoopers partner Stephen Arlington, is the pharmaceutical industry’s fixation on the “blockbuster” model, in which a large percentage of the drugs that make it to market must eventually become $500-million-plus sellers.

“Today, over 90 percent of drugs launched are not blockbusters,” Arlington said last month at Oracle’s AppsWorld conference in San Diego. “Fewer than 4 percent deliver $500 million or more in sales. A new model is needed, and it cannot be the blockbuster model.”

Big pharmas average about three new drugs per year and one blockbuster every five years. Arlington said that will produce only a 6 percent return to shareholders --- not enough to keep investors’ money or interest. Moreover, the growth in drug research and development costs continues to accelerate. Something has to give.

Oracle CEO and chairman Larry Ellison noted: “Actually, I think there’s a very interesting model in Hollywood, how films are produced, that I think will gradually take hold in the drug industry. More and more drug development is going to be outsourced to biotech because of the cost and structure of those industries.

“I don’t think Pfizer or Merck will ever get out of drug discovery completely, but I think you’ll see a mixture, just like in Hollywood, where you see so many films made by studios and so many being made by independent developers. It’s the economics,” Ellison said. “Independent filmmakers tend to put out films on budget and on time. Cisco is an example from Silicon Valley. It’s the largest communication company in the world. It doesn’t do any research. They bagged it entirely. They just buy startups. The Hollywood model is a little like this and going to be more and more prevalent among the big pharmas.”


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