Molecular Diagnostics
ii Alignment of partners with different business mod- els: this requires consideration of the fact that the CD and drug have different value considerations.
Assuming that a partner in the form of a CD company is preferred, then Lauber9 points out that the pharmaceutical company must also:
i Assess needs and priorities before seeking a best- fit partner. Since the CD company may own the CD product then alignment is critical and commu- nication essential. ii Determine preferred formats/platforms for cur- rent and future CD type(s) as well as regulatory considerations, availability, and costs. iii Consider how decisions will be made regarding test format, scoring, methods, validation, control of clinical results, commercialisation strategy including co-ordination of activities – joint or sole. iv Consider what are potential partners’ business models/risk sharing strategies; and competing products.
Lauber has described the complex decision- making process for the pharmaceutical company on whether to partner or undertake in-house CD development efforts9. In addition there are several other critical factors to consider. For example the creation of development timeline for co-develop- ment of a CD and drug is a difficult and inter- woven process. Several initiatives from the US FDA, including the Drug-Diagnostic Co- Development Concept Paper and the Critical Path Initiative19, seek to promote CD usage in an attempt to speed the development process and cre- ate safer compounds. However, as Meltzer and Johnston have noted: “The Co-Development Concept Paper provides a framework for combi- nation product submissions, but lacks a sustain- able business model to account for the differences in timing between clinical development studies and diagnostic device trials”20. In addition, anoth- er significant issue is the language in the drug label, since this could be a point of conflict between the CD and pharmaceutical company. In the USA, the FDA decides on final language and the CD can be described as either ‘required’, ‘rec- ommended’ or ‘for information only’. Clearly the CD company would prefer the strongest recom- mendation for the CD use. However, the pharma- ceutical company might see that it violates thera- peutic drug ease of use by the patient/consumer. This issue has been discussed in much more detail by Meltzer and Johnston elsewhere20. Finally, the thorny issue of reimbursement continues to bedev-
Drug Discovery World Summer 2010
il the pharmaceutical companies. Unlike the value- based reimbursement of therapeutic drugs, a CD test is usually reimbursed on a cost basis relative to the procedural (CPT) codes employed for that assay. This makes it difficult for the pharmaceuti- cal company to make an estimate on the ROI “based on higher pricing for costs and procedures outside the CPT system such as royalties, patients and extensive clinical trials”20. Meltzer and Johnston have argued that the reimbursement sys- tem in effect does not adequately compensate the CD assay, and we have discussed this issue from the CD company perspective above. At present at least four different pharmaceutical business models have emerged to take into account the complexities and difficulties of co-developing a drug with a CD, and they include:
i Partnership/licensing model: collaborate with a CD company(s) to bring in a defined CD assay. This model is practised by companies such as Astra- Zeneca and Bristol Myers Squibb (BMS). For exam- ple, DxS-BMS agreement in September 2009. ii Buy-in model: the pharmaceutical company actu- ally acquires a diagnostic/CD company. For exam- ple, Solvays acquisition of Innogenetics in 2008. iii In-house model: develop in-house capability and expertise to develop the CD assay. This necessitates the fact that in-house knowledge and experience of diagnostic discovery and development is available. Companies such as Abbott, Johnson and Johnson and Roche, which already have both therapeutic drug and diagnostic development expertise practise this model. In the latter case it is noteworthy that they are also listed as three of the top five diagnos- tics companies. iv Hybrid model: collaborate with tool companies to bring in diagnostic expertise but actually devel- op an in-house CD development capability. Very recently, Novartis announced that it was taking this approach to CD development21.
The pharmaceutical companies continue to grapple with their business models to accommo- date the co-development of a CD with their thera- peutic drugs. They are cognisant of the usefulness of CDs in the DDD process and post market launch, but they continue to struggle on how to monetise the value of the CD itself. This is a rap- idly-evolving situation as the regulatory authori- ties begin to weigh-in with their thoughts and directives. Ultimately executive management will have to decide on the importance of CDs to their products and invest resources in a timely, proac- tive manner.
References 1 PricewaterhouseCoopers – Pharma 2020. I) The vision; ii) Which Path will you Take?; iii) Marketing the Future; iv) Challenging Business Models; v) Taxing Times Ahead.
http://www.pwc.com/pharma- life-sciences/pharma- 2020/index-html. 2 Naylor, S. Systems Biology: Information, Disease and Drug Discovery. Drug Discov. World. Winter Edition: 23-33 (2004/2005). 3 Naylor, S. Technology – Bane or Bonanza for the Pharmaceutical Industry? Drug Discov. World. Fall Edition: 51- 58 (2007). 4 Goodman, M. Pharmaceutical Industry Financial Performance. Nature Rev. Drug Discovery. 8: 927-928 (2009). 5 Pharmaceutical Research and Manufacturers of America (PhRMA).
http://www.phrma.org/. 6 Liebman, MN. Personalized Medicine – End of the Blockbuster? Pharma Focus Asia. 9: 4-8 (2008). 7 Naylor, S. NostraPharmus Revisited: A Future of Splendid Isolation or Multilevel Participation for
Pharmaceutical Companies. Drug Discov. World. Supplement: Sx-Sy (2010). 8 Naylor, S and Cole, T. Overview of Companion Diagnostics in the Pharmaceutical Industry. Drug Discov. World Spring Edition: 67-79 (2010). 9 Lauber, AH. Personalized Medicine in the Pharmaceutical Industry. Cambridge Healthtech Institute (CHI) Companion Diagnostics: Integration of Companion Dx. Molecular Medicine Triconference February 27th, 2009. San Francisco, CA, USA. 10 Averbuch, S. Biomarkers and Clinical Care: Lessons Learned from Case Studies. October 22nd 2009.
www.aaas.org/spp/PM/ppts/Ave rbuch.pdf.
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