Diagnostics & Imaging Week Washington Writer

WASHINGTON – While patients already are experiencing the benefits of personalized medicine – the use of genetic analyses to target therapies to those most likely to benefit – the return on investment (ROI) for biotechs and pharmaceutical firms will depend on how early drugmakers change their R&D strategies from the blockbuster approach to one that focuses on more therapies for smaller markets, researchers said in a report issued this week.

Consumers stand to gain the greatest ROI from personalized medicine, often within the first year, while healthcare payers – public and private – are the least likely to experience a positive ROI, the Deloitte Center for Health Solutions, part of Deloitte LLP, said in a new report released at a forum hosted last week by the Personalized Medicine Coalition (Washington).

As targeted therapies displace traditional medicines, drug manufacturers that are slower to embrace personalized medicine risk losing substantial market share, researchers said in the Deloitte report.

The investigators reviewed 300 peer-reviewed articles from medical journals and identified 75 with "relevant information" about ROI to better understand some of the economic factors of personalized medicine, said Paul Keckley, the Deloitte unit's executive director.

The researchers developed a framework that factored in the ROI for personalized medicine by examining case studies categorized by two scenarios: alterations to the current course of care and introducing a targeted therapy.

The Deloitte investigators used breast cancer for the study's framework because it is an "optimal" condition that might be generalized across other conditions.

While consumers consistently experienced a positive ROI across both of the study's scenarios, biotech and pharma firms only achieved a positive ROI when they were involved in R&D for targeted therapies, according to the study.

Despite having smaller markets, firms developing targeted therapies charged substantially higher prices for their products, and therefore, had a positive ROI. Personalized medicines also displaced traditional medicines, leading to a reduction in the market for those products, the researchers said.

Personalized diagnostics can identify those likely to benefit from chemotherapy, resulting in a shrinkage of the market for standard drugs, the investigators noted.

"Personalized diagnostics will segment the market into optimal responders and those that should not receive a particular treatment," the report's authors stated. "New personalized therapies may be more efficacious than current treatment approaches, thus rendering current therapies obsolete."

The reduction in volume of therapeutic interventions is "disruptive to established markets," the researchers noted.

However, personalized medicine approaches also can enhance patient recruitment and scientific processes, which streamlines R&D processes, leading to a decrease in expenses, the investigators argued.

While drugmakers have invested heavily in R&D for targeted therapies and significant progress has been made, most notably in cancer, the full promise of personalized medicine "is still a long way off," said Aidan Power, vice president and global head of molecular medicine for Pfizer (New York).

He noted that Pfizer and other drugmakers are considering whether to develop diagnostic tests in-house in conjunction with their investigational drugs or partner with firms that develop the tools.

"When you have a diagnostic being developed by a diagnostic company and a drug developed by a drug company, the likelihood is that both will charge too much for each of their products, which means it makes it more difficult to get the right kind of pricing model," Power said.

In an ideal world, he said, a diagnostic that is cheaply available and does not impede access to care is the most likely to be reimbursed.

But Randy Scott, executive chairman of Genomic Health (Redwood City, California), said it would pose a conflict for drug companies to develop diagnostic tests because "you wouldn't expect them to look for a diagnostic that would cut their market in half."

Pharmaceutical firms that own diagnostic subsidiaries, he said, must keep the two businesses separate.

A separate diagnostic industry, Scott insisted, is needed to act as a "check" on the pharmaceutical industry and vice versa.

Before personalized medicine can move forward, Scott said, a more clear structure for reimbursement needs to be established.

The greatest problem payers encounter in coverage determinations for diagnostic tests, said James Utley, vice president and medical director of commercial business for Coventry Health Care (Bethesda, Maryland), is when physicians do not have the correct understanding of the therapeutic implications of the tests they order.

When physicians and other clinicians order tests they do not understand or lack the training to properly interpret the tests, that result in wasted healthcare costs, Utley charged.

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