Mar 15, 2017
Robert Hunter recently joined the BCC Research Editorial team as a new Senior Editor, Healthcare. He is the author of Companion Diagnostics: Technologies and Markets. We recently asked him a few questions about his latest report.
Companion diagnostics are key to the long-awaited promise of personalized medicine, as they help select the best drug for a specific patient profile, bringing better effectiveness with less side effects.
Traditional blockbuster drugs provide only a limited degree of efficacy in as much as 70% of patients. In cancer standard drug treatments work only 25% of the time, resulting in unnecessary toxicity to many patients and high cost to the healthcare system.
New targeted drugs are changing that with the help of companion diagnostics (CDx). For example, Herceptin is a targeted drug that relies on the ability of a CDx to accurately identify those early breast cancer patients whose cancer tests positive for a genetic mutation called HER2.
The number of targeted or personalized drugs is increasing. From 2005 through 2013, the FDA averaged about 25 novel new drug approvals per year, however this shot up to 41 in 2014 and 45 in 2015. Of these novel new drugs, the percentage deemed to fall under the ‘personalized’ category has increased to 25%.
On the surface progress has seemed slow, with less than 30 companion diagnostics officially designated by FDA as ‘mandatory required’ for the use of certain drugs. But on further analysis there are hundreds if not thousands of other tests being used to guide selection of therapies, and monitor patients for therapy response and disease recurrence. In addition to the diagnostics which are FDA cleared (via 510k route) or approved (via PMA), there is a vast universe of lab developed tests (LDTs) which thus far have not been regulated by FDA. However, after years of FDA threatening to become more proactive, it appears that regulation is on the near horizon.
The development of companion diagnostics is increasingly complex. And yet, despite their critical importance to new high value drugs, economic incentives are often meager by comparison. So yes. And the answer is money.
For therapeutics companies, the economic model for personalized medicine is contrary to that of the blockbuster drug model.
Co-development aspects of timing and the simultaneous budgeting of tests and drug also present challenges. Two separate development programs, usually conducted by two separate companies (pharma and diagnostic), must be coordinated and tracked so that both can be ready in time for regulatory submission, all while protecting intellectual property (IP) and assuring optimal quality management. This affects the overall value of the tests’ development, their cost and their effect on drug sales, as well as insurance reimbursement.
The lack of clear guidance from regulatory agencies such as the FDA for companion diagnostics development has also been a big challenge. The first draft for in vitro companion diagnostic devices was released only in 2011.
The lack of comprehensive reimbursement, even in cases in which the diagnostic is on the label and recommended or required by the FDA, has been an impediment. The lack of early evidence linking diagnostic tests to health outcomes caused payers to be skeptical initially, but this is relaxing as leading companies bring forth clear compelling data.
These pressures, along with increasing requirements for whole genome sequencing, proteomics and “big data” solutions, are leading to the emergence of new and potentially disruptive offerings often termed ‘universal CDx’. These are typically performed as lab developed tests (LDTs) which currently bypass FDA regulation and are contracted increasing with insurance companies (payors) directly.
Although there is currently a lack of clarity on the exact numbers, the FDA and industry agree there are about 11,000 labs in the U.S. offering as many as 100,000 LDTs.
One area that’s really exciting is liquid biopsy coupled with next generation sequencing (NGS). In cancer we’re at a tipping point where technology has advanced to non-invasive liquid biopsy based on merely a blood draw instead of a surgical biopsy, and is being used to monitor drug response and disease recurrence. Now innovators are actively working on tests even for early diagnosis. For example, next-generation sequencing leader Illumina has funded a spin out called Grail specifically for this.
By now it’s prudent to assume greater FDA regulation of LDTs in the near future, which could slow the pace of CDx innovation marginally. And yet fueled by recent developments, we still see the CDx market growing 32% CAGR to $17 Billion by 2021.
In the future, you could see some patients paying out of pocket for early cancer detection and other tests, in fact there are small segments where that is happening now. But genomic-based testing will probably not replace traditional methods tied to pathology, but rather will work side by side in complement of them.
And whereas most of the development in personalized medicine is currently focused in oncology, many experts envision cardiovascular could ultimately be twice as large, and central nervous system (CNS) one and a half times as large.
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