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The healthcare system is coming to grips with the wave of genomic diagnostics that has followed new biological therapy introductions
Biomarkers, one way or another, have been a near-constant part of drug development and medication therapy—think of testing for the presence of an infectious agent, or how a tumor can be judged to be cancerous or not. But in the wake of new biopharmaceuticals brought to market, a comparable flood of genetic and protein tests has been created. In some cases, these biomarker tests confirm the presence of diseases that can now be treated earlier in their progression. In others, the biomarker can be a “surrogate end point” to decide that a therapy is working, even if the outcome of the disease is years in the future. And yet in others, the biomarker becomes a gateway, indicating that a therapy will only work for certain with the “right” genetic mutation—and precluding therapy for others. These “companion diagnostics,” as they are called, are becoming a booming industry in their own right—and in some cases, are being written into the label requirements of an approved drug.
Add to this picture the fact that not all biomarker tests are 100% definitive measures, and that some of them can carry significant expense to administer (many are also surprisingly inexpensive), and the biomarker scene becomes a mixed bag of opportunities and challenges for drug developers, test developers, payers, physicians and patients.
Biomarkers are becoming an especially prominent part of cancer therapy (although, as will be seen, other diseases are also being targeted). “When novel agents are prescribed based on a more targeted patient population based on knowledge of some enabling mutation, patients experience higher response rates, fewer adverse events and improved survival,” says Harish Dave, MD, MBA, a VP in the Oncology Therapeutic Delivery Unit of Quintiles (Rockville, MD). “These improvements can lower clinical trial costs, speed drug development, extend market exclusivity and improve favorable reimbursement decisions.”
'From blockbusters to niche-busters
Although pharma may have to give up on the mass-market model, which has produced so many blockbusters (exceeding $1 billion in sales), companion diagnostics may usher in an era of niche-busters. Analysts are forecasting sales topping the blockbuster mark for some of the new drugs paired with a diagnostic, despite their limited target populations.'
-PwC, Diagnostics 2011
Defining the diagnostics market
Market estimates and categories vary widely by definitions of terms and types of technologies. “All diagnostics” (if such a term can be used) break down into in vitro tests (IVDs) and laboratory-derived tests (LDTs); IVDs divide into molecular (genetic) and tissue testing. “Companion” diagnostics are competing, conceptually, with “theranostics” (diagnostics essential to therapy). Market estimates range from about $1.5—$5-billion currently to $3.45 billion, (“Companion Diagnostics,” Visiongain, 2011) to tens of billions (“Companion Diagnostics and Personalized Medicine,” Trimark Publications) in 2015. Molecular diagnostics alone was estimated to be worth $5.4 billion in 2011, according to market analyst Research and Markets.
FDA, contending with situations where a drug is being reviewed without an approved diagnostic test accompanying it, or a test being reviewed without the drug, or—the ideal situation—the drug and test being evaluated together, issued draft guidance, In Vitro Companion Diagnostic Devices, last July. Industry was looking for better guidance on how tests would be evaluated, but FDA chose to focus on the interrelationship between drugs and devices, and left test reviews to be determined on a case-by-case basis.
PwC, in its Diagnostics 2011 report, noted a steady growth in the volume of M&A activity among diagnostics companies themselves, and between those and pharma companies. A “Top 9” ranking in the report (Fig. 1) was already out of date when published (in December 2011), based on the acquisition of Beckman Coulter by Danaher Corp. (Washington, D.C.) for $6.8 billion; and Phadia, an Uppsala, Sweden, test developer, by Thermo Fisher Scientific (Waltham, MA) for $3.5 billion.
Fig. 1. Market leaders by share of 2009 IVD revenues
Credit: PwC Diagnostics 2011, based on 2009 Roche data
Fig. 2. Number of companion diagnostics partnerships with pharma 2004—2010
Drug + biomarker = ‘niche buster’
In addition to building their own businesses, biopharma companies are eager candidates for partnerships, both with diagnostics companies and with other biopharmas (Fig. 2). According to PwC, the blockbuster model of the past for the pharma industry could be replaced in the near future by “niche buster” combinations of diagnostics and drugs for disease subpopulations. When the right diagnostic pinpoints the patients who respond most favorably, everyone seemingly wins.
Consider two leading biomarker-driven oncology agents that launched in 2011—Pfizer’s Xalkori (crizotinib) and Roche’s Zelboraf (vemurafenib). “Each has demonstrated impressive efficacy are its respective subpopulations, and this is expected to drive rapid uptake,” says Kate Keeping, principal analyst for Decision Resources’ Pharmaview (London). “Thanks to the early identification of their respective biomarkers, both drugs were also able to progress extremely rapidly through development (roughly five years from IND to approval), and speeding time to market helps to extend market exclusivity for the producers.”
“Payers are definitely on board with biomarker tests, particularly when it means that they are paying for drugs that patients will likely respond to—and conversely are not paying for several months of drugs or chemotherapy that will have little positive effect,” adds Gordon Gochenauer, director at Kantar Health (Philadelphia). “And the cost of the biomarker tests is relatively inexpensive compared to the targeted therapies. Zelboraf and Xalkori cost approximately $9,500 each for a month of therapy. Eligible patients will likely be on therapy for at least six months to a year, dwarfing the cost of the biomarker test.”
However, given the proliferation of genetic test options in recent years, many healthcare plans are struggling to decide which biomarkers to test, which genetic tests to include in their coverage decisions, and what levels of coverage to provide. “Payers are scrambling to analyze the scientific data and complete the necessary patient care and financial impact analyses,” says Doug Neely, CMPE, MHA, senior director for Xcenda, a unit of AmerisourceBergen Consulting Services. As yet, there are relatively few standard coverage policies for biomarker tests, and as a result, coverage for many is still determined on a case-by-case basis.
For instance, one “genomic recurrence assay”—OncotypeDx from Genomic Health (Redwood City, CA)—can predict whether early-stage breast cancer patients are likely to have a disease recurrence after removal of the tumor. “The goal is for patients who have a high likelihood of recurring to receive aggressive chemotherapy, while conversely avoiding having to administer chemotherapy to patients with a lower likelihood. Not having to administer chemotherapy saves the patients from toxicity, cost of chemotherapy, and generally saves resources,” says Kantar Health’s Gochenauer. “However, payers often push back on paying for OncotypeDx (which can run $4,000—5,000) if the results of the test are not followed—for example, if a physician uses the test and finds a low likelihood of recurring, but the patient and physician choose to ignore the result and administer chemotherapy anyway.”
He says that many payers have written policies that say they will not reimburse for OncotypeDx in these cases. “The policy arguably exists because the assay is so expensive. In this case, the physicians are left with the bill but might attempt to push the expense on to the patient.”
Meanwhile, having too many choices in a given disease state can add challenges for prescribers and payers. For instance, while Roche’s Zelboraf is approved for melanoma patients who have the BRAF V600E mutation, another medication—Bristol-Myers Squibb’s Yervoy (ipilimumab), an immunologic therapy for metastatic melanoma also approved in 2011—does not require patients to have the molecular BRAF abnormality. “With the availability of these two options in the same disease class, oncologists now have an additional layer of complexity to assess prior to choosing how to treat patients,” says Jane Quigley, RN, senior principal of IMS Health (Stamford, CT).
And, while diagnostic tests can help oncologists find the proverbial needle in the haystack to identify suitable patients, such screening efforts also have long-term cost implications for payers as well. Wen Shi, practice executive at Campbell Alliance (New York), points out that in non-small cell lung cancer (NSCLC), Pfizer’s Xalkori is indicated for just 5% of NSCLC patients. “This means that 20 patients need to be tested to find each one who is eligible for the drug. With the cost of the diagnostic test at $1,500 per patient, this can be substantial.”
Finally, beyond these therapeutic and reimbursement issues, biomarkers represent a significant drug-pricing hurdle for manufacturers. A biomarker can identify a subpopulation for whom the therapy is ideal, while simultaneously excluding a large part of the potential market. Market size is one of the factors that goes into pricing decisionmaking, and when the market is significantly contracted, the pricing analysis breaks down.
For every potential downside, there seems to be an upside to biomarkers and pharmaceutical markets. In May, Pfizer announced that its lung cancer drug Xalkori appears to be a highly effective treatment for children with a rare but aggressive type of lymphoma and other cancers—specifically, children with anaplastic large cell lymphoma (ALCL) who also have a mutation in the ALK gene—according to data from an early-stage study. “The study highlights a new understanding of how some cancers operate, one that is based on the patient’s genetic profile rather than the organ in which the tumor originates,” said the company. “The hope is that by identifying more instances of a genetic connection, doctors will be better able to target a drug for treatment.” Pfizer is also investigating Xalkori for children with neuroblastomas and a rare form of sarcoma, and are trying to identify whether the presence of the ALK mutation or some other biomarker will improve outcomes for such patients.
In fact, more than 80% of oncology clinical assets in the pipeline have associated biomarker programs; and the majority of leading oncology companies, including Roche, Novartis, Bristol-Myers Squibb, Merck, Pfizer, Lilly and GlaxoSmithKline, have publicly stated their intent to develop biomarkers for most or all of their drugs in clinical development, says Shi of Campbell Alliance. “Having a strong biomarker program has increasingly become a cost of doing business—rather than the true differentiator it once was.”
“FDA has asked for all new drugs to have an associated biomarker, and that is a good thing. But, not all drugs will necessarily have a relevant biomarker,” notes Roy Beveridge, MD, chief medical officer, McKesson Specialty Health and The US Oncology Network.
Putting diagnostics on the market
The diagnostic-testing industry is built around the development standalone tests or kits that are approved by regulatory agencies, and distributed and supported by diagnostic companies. Diagnostic test kits or protocols are not marketed directly to the oncologist or private practice, but to the pathologists and clinicians who work in hospital pathology labs or standalone diagnostic labs.
One specialized category of testing is the “laboratory-derived test,” or “LDT,” which is prevalent at hospitals and cancer centers with dedicated, high-throughput pathology laboratories and many large independent diagnostic laboratories. With LDTs, the lab derives its own methodology, using medically accepted laboratory practices and equipment; however, the test does not go through an FDA approval process. As some LDTs require fairly expensive equipment, the high-throughput labs can amortize the costs over time, across a large patient base. “The ability to rely on LDTs instead of proprietary tests can help these labs to keep costs down,” says Gochenauer of Kantar Health. “On average, the cost of an LDT to test for the biomarker might be in the range of $100, while a corresponding proprietary test might be in the range of $200—$250.”
“A key function of diagnostic manufacturer companies is the sales and support of diagnostic kits that are sold into such lab environments,” says Brad Smith, vice president of drug development in Quintiles’ Planning and Design Unit.
A good example is the current ALK test for Xalkori (crizotinib) from Abbott Diagnostics, notes Loreen Brown, MSW, an SVP at Xcenda. “The probe (the DNA that binds to the biomarker) is sold as a kit, but because it is a fluorescent probe, analysis requires a fluorescence microscope, and many oncology offices don’t have one.”
In general, the costs of such companion tests vary depending on what is being measured and by what means. For example, some diagnostic tests may analyze protein biomarker levels using a blood or urine sample; others may determine the expression of a genetic mutation in a tissue sample; while others work by conducting gene-expression profiling. Competing methods include: Immunohistochemistry (IHC), Polymerase chain reaction (PCR), and Fluorescence in situ hybridization (FISH), among others.
IHC tests typically cost $100—$150, while PCR tests typically cost $400–$500, and more novel or esoteric tests, including proprietary tests, are often priced significantly higher. In oncology, biopsies are extracted or blood samples are drawn as a normal part of treatment, so additional costs are minimal, and the added costs come in the reagents, specialized equipment, and labor to perform the analysis.
Looking beyond oncology
While oncology drugs are leading the charge in pairing novel agents with companion diagnostic tests to identify strategic biomarkers, for researchers and drug developers working in other disease states, efforts to replicate this model have remained elusive, but many of the efforts are just getting under way.
Genentech, Roche’s US-based biotechnology unit, announced in May that it had won the right to try its experimental Alzheimer’s drug crenezumab on people with no signs of dementia—the first such trial to assess whether early intervention can prevent or slow the disease. HHS is backing the trial with a $16-million grant as part of the government’s National Alzheimer’s Plan. According to the company, the drug will be tested among members of an extended family of about 5,000 people from Colombia, who carry a mutation on a gene called presenillin that makes it “virtually certain to develop Alzheimer’s disease early,” with some experiencing symptoms of memory loss in their mid-30s.
Shi of Campbell Alliance notes that the HIV drug Selzentry (maraviroc) from ViiV Healthcare is indicated for the treatment of adults infected with only CCR5-tropic HIV-1 infection. Infectious diseases generally are believed to represent about half of the molecular diagnostics market, according to Research and Markets, an industry analysis publisher.
Immune disorders are also being targeted by companies involved in the development of personalized healthcare. For example, Roche is developing a periostin ELISA companion diagnostic for its potential asthma treatment lebrikizumab (an anti-IL-13 MAb), which is in Phase III trials, says Kate Keeping of Pharmaview. Genentech’s rontalizumab (Phase II for systemic lupus erythematosus) and Roche’s RG7449 (Phase II for asthma) are also in development, with a companion diagnostic being developed by Roche.