Precision medicine – using genetic or molecular information to identify patients who could benefit from targeted treatments – could lead to more judicious use of therapies and improved patient outcomes. I recently attended a meeting where biopharma leaders discussed their precision medicine strategies. I was struck by the challenges they must overcome to bring precision medicine to the real world.
Precision medicine has generated excitement across government, research communities, and the biopharma industry. The federally funded Precision Medicine Initiative seeks to build a database of 1 million patients that researchers will be able to use for studies to improve understanding of factors related to the prevention, diagnosis, and treatment of disease. The 21st Century Cures law, which passed in December with bipartisan support, includes $1.4 billion in funding and directives for the Department of Health and Human Services (HHS) to advance precision medicine through public-private partnerships.
Biopharma companies that develop drugs that target a specific sub-segment of the population also tend to achieve higher returns on investment, according to a recent study we conducted on the return on pharmaceutical innovation. These companies are able to help providers and payers identify which patients stand to benefit from tailored treatments. By narrowing the patient population, providers can more confidently prescribe treatments, and payers are better able to control the costs.
Three key challenges for biopharma
Despite the promise of targeted therapies, challenges remain for the biopharma industry to develop, commercialize, and get paid for drugs that target a narrow sub-set of the population.
Development: First, biopharma companies need to decide whether to develop a new drug for the broad population, or tailor it to a sub-set. To make this decision, companies should consider:
- Identifying the target population likely to benefit most from the drug. If a company evaluates the efficacy of a drug in a broad population, but it only works really well in a smaller group, it may not look very effective overall. If instead the drug is studied in that smaller group, the pivotal trial may be smaller and the clinical significance of findings higher.
- Determining which biomarkers (or combination of biomarkers) show the effectiveness of the drug. Multiple mechanisms may be in play – a limited biological understanding of the progression of some complex diseases can make it difficult to determine which factor to focus on.
- Developing a diagnostic tool to define which groups should receive treatments. Biopharma companies that do not have the capabilities to develop a diagnostic tool on their own might consider partnering with other groups.
Commercialization: Clinicians are likely to prescribe targeted therapies if the clinical evidence is compelling for a specific sub-population.
One consideration for companies commercializing these treatments is that the introduction of a companion or complementary diagnostic that helps identify which patients will benefit from treatment can complicate the care delivery process. Using diagnostics can slow down the process if physicians have to administer an additional test first, and then wait for results before treating the patient. Biopharma companies may need to educate physicians of the importance of these diagnostic tools to increase market adoption of a precision drug therapy.
Payment: As the health care system shifts from volume to value, many health plans and providers are experimenting with new payment models. In oncology, some bundled disease-specific payment models are starting to take hold at the same time that clinicians are seeing the value of precision medicine drugs. We recently studied some of the challenges related to innovation in the context of value-based payment models for oncology. Many health systems are using clinical pathways to direct prescribers to the most cost-effective treatments, but if the pathways are not updated frequently enough, health systems may not adopt new diagnostics and drugs. Even if pathways include provisions for including new technologies and therapies through appeals processes, clinicians may not want to go through the administrative process.
Further, most pathways do not specify which diagnostic tests will be paid for. If physicians are unsure of payment, they might hesitate to order the tests.
Finally, while many bundled-payment models are incorporating the cost of precision-medicine drugs, the bundles are sometimes not specific to type of tumor, because of a lack of data to define them this precisely. As a result, the bundle payments can be based on average costs for a cancer type and physicians may be reluctant to consider using expensive treatments that might put them at financial risk, even if appropriate for a sub-population.
The meeting I mentioned earlier raised several open questions on improving the process of developing, commercializing, and paying for precision-medicine drugs. For example – will we be able to discern which genetic abnormalities are primarily associated with the cause of disease? Can we rethink the development process and approve drugs, or complex combinations of drugs, based on genetic expression rather than a specific indication? Will we be able to effectively develop value-based payment models that segment patients by their specific characteristics and genetic make-up? Getting to a world where precision-medicine treatments are effective for very small sub-populations will likely challenge not only biopharma companies, but providers, health plans, and regulators as well.