Personalized medicine has always represented a bet on the future—but forces are now converging that suggest its benefits are within reach for patients, payers, and providers. There are substantial challenges as well, including creating the infrastructure needed for stakeholders to execute the defining objective of personalized medicine: to utilize an individual’s unique genomic information to optimize disease prevention and therapeutic strategies.
The potential of this new “upstream” platform to transform how medicine is practiced also raises significant strategic questions for the industry. One of the most critical is whether profits can be spun through a more niche-driven, service-oriented model rather than a commodity-purchase model geared to the premise that all patients are the same. This is an important decision point for companies as fewer new therapies carry the potential to emerge as “blockbusters,” with sales that can be leveraged over many years as maintenance therapies for large, undifferentiated populations.
Companies also have to consider changes in standard business practice, such as building R&D investments around not just drugs but complementary diagnostic tools that pinpoint the origins of disease and response to medication in specific subpopulations; linking P&R more closely to the early-stage drug development cycle; and embracing costly post-approval service delivery models that place medicines at the center of prevention, wellness, patient compliance and other broad public health interventions. Partnering better with patients and a variety of new community stakeholders is another imperative.
The Promise and the Profits
The most important deliverables around personalized medicine are as follows:
In fact, there are examples suggesting that personalized medicine is already here, at least in terms of the basic infrastructure. The science of molecular medicine is generating new knowledge about health and disease at an unprecedented rate, to the point that concern is growing that existing IT systems will not be able to cope with the overload of data.
The resulting insights into pharmacogenomics are opening new pathways to therapy beyond the traditional pharmaceutical blockbuster. Clinical trials are using genotyping to stratify patient selection and recruitment. Regulators are beginning to incorporate companion diagnostics in labeling for existing and future therapies. Other relevant trends include patient empowerment through open access and the sharing of health information on the Internet, as well as the search by governments for new ways to manage soaring health expenditures.
Taken together, these trends suggest that the future for innovative brand medicine looks very different than it did only five years ago. Biomarkers, in particular, will become essential to selling access to a new drug therapy among payers, while promotion will be dependent on a much narrower hierarchy of influential stakeholders. And while much of the hype has settled, there are still expectations of rapid market growth. A report by Pricewaterhouse-Coopers projects that revenues from the core personalized medicines market—covering pharmaceuticals, medical devices, and diagnostics—will grow from $24 billion at present to $42 billion by 2015.
Screening for Clinical Value
Diagnostics in high-profile growth sectors like oncology are driving much of the interest in personalized medicine. Diagnostics are critical to bridging the barriers erected by payers reluctant to pay for expensive medicines without evidence as to whether they work in the intended patient population.
Many high-cost therapies are being tied to molecular diagnostics. For example, Dako’s HercepTest is frequently given to determine if Genentech’s Herceptin should be used to treat breast cancer. Genomic Health’s Oncotype DX breast cancer assay examines a breast cancer patient’s tumor tissue at a molecular level and scores the likelihood of recurrence based on a 21-gene assay. This information can help individualize breast cancer treatment planning, and potentially avoid aggressive chemotherapy in patients with low recurrence scores. The National Comprehensive Cancer Center Network (NCCN) has incorporated the Oncotype DX test results into the guidelines for breast cancer adjuvant chemotherapy. XDx’s AlloMap, another of these new tests, is a noninvasive gene expression test that identifies patients most likely to reject a heart transplant and helps clinicians determine immunosuppressive therapy. It has become an integral part of routine clinical practice at many medical schools, including Baylor, Hahnemann, and Columbia.
Molecular diagnostics and genotyping also are being used to salvage old drugs. An example is Gencaro (bucindolol hydrochloride), a fourth-generation beta blocker that was recently fast-tracked by FDA. It has the potential to be the first genetically targeted treatment for heart failure. ARCA biopharma, the drug manufacturer that pioneers genetically targeted cardiovascular therapies, believes it can predict patients’ response to Gencaro based on genetic markers. The company will soon launch a clinical study in 3,000 patients with chronic heart failure who have the genotype for a favorable response to Gencaro. The composite end point of the study is reduced hospitalization and mortality in those patients compared with metoprolol.
Most important, new diagnostic research discoveries will have a major impact on treatment of diseases like multiple sclerosis (MS) and Hodgkin’s lymphoma. For example, researchers have developed a genotype test that predicts whether patients with MS will respond to beta interferon drugs like Avonex (Biogen Idec), Rebif (EMD Serono and Pfizer), and Betaseron (Bayer). These discoveries could have a substantial impact on this $6 billion market.
Another test will soon launch that stratifies Hodgkin’s lymphoma patients’ response to therapy based on genomic biomarkers. Many patients are being overtreated, and nearly 1 in 5 will not respond to current therapy with radiation and chemotherapy. A simple blood test will soon identify biomarkers that help stratify which patients are at risk for a poor prognosis, sparing them aggressive treatment, and identify the 80 percent to 85 percent who may respond well to chemotherapy alone.
Molecular diagnostics don’t always boost sales. Plavix, a platelet inhibitor and the world’s second most widely prescribed drug, was caught up by new genetic research concluding that up to 30 percent of patients with acute myocardial infarction may not benefit from the blood thinner due to genetic mutations causing them to have a higher rate of cardiovascular (CV) events, stent failure, and other adverse complications. Investigators made this discovery when they began seeing patients who had severe reactions and noticed a correlation between a certain genotype and poor responders. This finding has potential implications not only for Plavix, but also for newer competitive drugs like Effient (prasugrel) (Daiichi Sankyo and Eli Lilly) and other drugs of this class currently in development.
Reliance on this kind of value-based approach to providing access to diagnostics increases the revenues of diagnostic companies; in some areas, it may impact the healthcare dollars available for Big Pharma’s drugs. Overall, however, growth in this complementary segment should help advance the quality of clinical practice through greater efficacy, fewer side effects, better tolerability, and improved compliance. Although the number of units sold may fall in response, companies may be able to justify higher prices by delivering a superior clinical outcome to payers.
How Soon Standard Practice?
A few big medical centers are beginning to incorporate molecular diagnostic testing and targeted therapies into their standard practice. Massachusetts General hospital will be the first center to genotype all patients’ tumors—an estimated 5,000 to 6,000 patients a year. Their strategy is to customize treatments and avoid the “hit or miss” approach to cancer care. This strategy will also help predict the efficacy and side effects of current drugs and those in development.
El Camino Hospital in Silicon Valley is the first community hospital to incorporate genomics into standard practice. They recently opened the Genomic Medicine Institute, offering patients personalized medicine in virtually every therapeutic category. Cardiology patients, for example, will be genetically screened to predict their risk for high cholesterol, early heart attack, and cardiomyopathy. Genetic tests also will be used to screen patients prior to prescribing statins, Plavix, and warfarin. Psychiatric patients will be tested for antidepressant and antipsychotic drug response by screening for CYP2D6 or CYP2C19 enzyme metabolism.
These and other high-profile examples are being tracked by both the private and public sectors. If it can be shown that the investments in proactive testing and targeted therapy yield better outcomes at manageable cost, then the trickle is likely to become a flood, particularly as incentives embedded in the new US health reform legislation kick in.
Big Pharma’s Playbook
In the meantime, industry is playing catch-up. With Roche and Abbott as major exceptions, Big Pharma companies do not have a record of expertise in diagnostics. The prevailing strategy for these aspiring players is to seek out strategic partnerships geared to pairing good diagnostics with new therapies.
GlaxoSmithKline and Abbott are partnering to develop companion diagnostics to select patients for a skin cancer drug clinical trial, while Abbott and Pfizer are developing companion diagnostics for a non–small-cell lung cancer drug currently in development by Pfizer. Also emerging are independent molecular diagnostic companies that are partnering with pharma. AstraZeneca and Dako are developing companion diagnostics for multiple oncology drugs. Pfizer and Qiagen are developing companion diagnostics for a Phase II brain cancer drug. And Novartis has formed an in-house molecular diagnostics unit to reduce the friction formed by these alliances and to codevelop diagnostics and therapeutics from their inception.
Consumers Driving Change
Patients are also a source of momentum behind personalized medicine. Consumer interest in tracing the genetic footprint has spawned a new industry. In 2005, DNA Direct became the first company to offer genetic testing and interpretation via the Internet. In 2006 and 2007, several new firms entered the market, selling ancestry information and DNA analysis. Notable among these consumer genomics companies are 23andMe and Navigenics.
Launched as direct-to-consumer vehicles, these Web sites have allowed interested individuals who wish to pay a few hundred dollars out-of-pocket to learn about their risk for a variety of diseases before symptoms appear. The consumer orders a DNA kit, deposits a saliva sample, and receives a scan of the specific genes that may put them at high risk for up to 60 different conditions or diseases, as well as their ability to respond to certain drugs.
While the sites have increased consumer awareness of genomics, their initial incarnations were not financial home runs. However, they have expanded the range of information capabilities in test interpretation and genetic counseling. This in turn has come to the attention of payers, who are now more interested in “consumer genomics” as a tool for utilization review, test evaluation, and reimbursement. Procter & Gamble (P&G) has purchased a stake in Navigenics; and DNA Direct was acquired early this year by Medco, the giant pharmacy benefit manager (PBM). Already a pioneer in incorporating pharmacogenomics in its PBM offerings, Medco now plans to expand into education and utilization review. This will include a consulting service to help its members identify what genetic tests should be covered as a way to manage the drug bill.
Genetic Test Kit Controversy
Despite the slow take-up of patient-oriented Web-based applications, the consumerist thrust behind personalized medicine has led to predictions that genetic testing may soon be available at the local pharmacy. However, mass marketing of simple genetic test kits is creating controversy, as many insurers and health advocates fear the public will misinterpret the results and seek unnecessary care. Last month, Walgreen announced that its 7,500 stores would sell the Pathway Genomics Insight Saliva Collection genetic testing kit, becoming the first US retail chain to do so. CVS is expected to follow suit.
In an interesting development, Pathway Genomics has temporarily halted the launch, after FDA said it may require regulatory clearance on grounds that the tests are making a health claim. FDA is grappling with the issue of how to regulate consumer genetic-testing kits, so the move to market the tests may accelerate a ruling that is needed to define future commercial opportunities in this space.
Trending With the “Foodies”
Big Pharma must also consider the presence of other sector competitors seeking to grab a share of the personalized medicines market. P&G, L’Oréal, and Nestlé are partnering with scientists to apply genomics to their wellness, health, and beauty aid products. Last year, P&G launched Olay Pro-X, a line of anti-aging skin creams, and sold it through drug stores in mass markets. It was one of the first consumer companies to use gene chips to detect the differences between old and young skin. The company is applying genomic sequence technology to identify a new fungus in order to reformulate Head & Shoulders shampoo. P&G is also studying how gene activity changes when gums develop gingivitis and then are able to recover, applying these learnings to market Crest and Oral-B.
L’Oréal, the parent company of Lancôme, has introduced another anti-aging product called Genifique. It coined the phrase “youth activator” as a new skin category, promoting it with the promise: “Youth is in your genes. Reactivate it.” Created in collaboration with Quebec’s University of Laval hospital center, Genifique is based on 4,400 gene analyses and targets 3 key genes and 2 proteins. First-year global sales have reached $100 million.
Finally, Nestlé is positioning itself as the world’s leading marketer of “personalized” nutrition. The company is investing in the nascent fields of metabolomics and proteomics with the aim of providing foods, diets, devices, and even services for particular subgroups of the population. Nestlé forecasts that by 2017, global sales of nutrition for “specific need states” could reach $100 billion.
PBMs Move In
PBMs are another stakeholder seeking strategic partnerships to engage in personalized medicine. They see the future and want to be able to respond to physician questions and requests about molecular diagnostics and targeted therapies. As mentioned, Medco recently purchased DNA Direct to form the Medco Personalized Medicine Program, which incorporates a variety of services geared to using genetic tests as a way to manage drug spending more efficiently among its client insurers and providers. CVS Caremark has increased its investment in and partnered with Generation Health, a company billing itself as a genetic benefit management company (GBM), focused on assuring optimal utilization of genetic testing.
Pharma companies may not find the PBM interest in genetic testing to be good news. For example, Medco’s “Genetics for Generics” program has an objective to “maximize the generic (or soon to be generic) market in the face of market erosion due to imminent new drug approval.” It demonstrates that the widespread view that personalized medicine is all about promoting take-up of the latest innovations is not entirely correct—there is a story yet to be told here.
One of the barriers to personalized medicine has been the absence of a consistent regulatory pathway to create the incentive to move in this direction. The healthcare reform bill enacted in March signals a change as the first major piece of legislation other than the Genetic Information Nondiscrimination Act (GINA) to codify principles of personalized medicine. The legislation promises to:
The Personalized Medicine Coalition (PMC), a group that addresses policy, business, technology, and other issues critical to the advancement of personalized medicine, endorsed the reform bill as a victory for patients and personalized medicine. It noted that the measure contains a number of pilot projects that promise to restructure reimbursement and delivery practices to incentivize targeted therapies, and to reward prevention and wellness schemes in key areas like primary care. “With the passage of this watershed bill, policymakers can now turn their attention to the issues surrounding medical innovation, improved patient care, and reduced systemic costs,” said Edward Abrahams, president of the Personalized Medicine Coalition. “Personalized medicine and targeted therapeutics will help us get there.”
The bill also includes provisions to administer more than a billion dollars in economic stimulus funds to promote clinical comparative effectiveness research (CER) on drugs and other new technologies. Although the Coalition accepts CER in principle, some advocates argue that enhancement of resources around a CER agenda will thwart the application of personalized medicine by promoting broad, population-based standards of evidence.
A New Business Model
Personalized medicine is a prime example of “disruptive innovation” that will force the entire healthcare community to plan for the future. Big pharma is in the same predicament as other sectors: to be successful, strategies to embrace the changes driven by advances in molecular science must be comprehensive and forward-looking—not just the retooled, retrospective plans based on what worked in the past. Can big pharma manage the transition? Success will fall to those with good science, superior information, a focus on outcomes built on patient awareness, and the organizational flexibility to adapt to the demands of a changing marketplace.
Discoveries in genomics are helping drive the future of healthcare, but they also raise important unresolved issues about personal privacy, insurance coverage, and life-changing health decisions. Here are five of the most pressing questions.
1. How valid are test results?
The science of personalized medicine is constantly evolving. Most disease targets remain unidentified, and many genetic tests do not yet yield clear-cut answers. Consumers want results, especially regarding disease risk, while healthcare professionals worry that patients will fail to grasp the ambiguities of the data. There is no single standard for validity.
2. How can patient confidentiality be ensured?
After a 13-year struggle, GINA became law in May 2008, creating a federal standard for all 50 states and prohibiting discrimination in employment and health insurance based on genetic screening results. However, it does not cover life, long-term care, or disability insurance.
3. How much regulatory oversight is appropriate?
Genentech, the maker of Herceptin, requested that FDA regulate all laboratory-developed diagnostic tests. This stirred controversy in the personalized medicine community. Some groups claimed that Genentech’s position would delay introduction of critically needed diagnostic tests and that it ignored regulatory requirements already imposed on laboratories.
4. How can the physician education gap be bridged?
Physicians have not incorporated this new science into their clinical practice. They will have to master its complexities of genetic testing and therapy—perhaps by hiring genetic counselors—or cede oversight to payers, PBMs, and GBMs. Lack of time is, of course, a barrier to physician acceptance, indicating that other HCPs may play a major role in personalized medicine, including NPs and PAs.
5. Who owns a person’s DNA?
The legal issues surrounding the intellectual property of genetic science are in great flux. A recent case involving Myriad’s ownership of the BRCA1 and BRCA2 breast cancer gene patents made headlines when the court struck down seven of the company’s patents, in part because ownership of these genes prevented not only other companies from developing competing BRCA1 and BRCA2 gene testing but patients from getting a second opinion or less expensive test. Most legal experts expect the arguments over gene ownership to play out in the courts for years to come.
Physician Response Lags
Personalized medicine has been embraced by patients—but what about the physicians responsible for applying the information explosion to drive clinical outcomes? How much do they know about personalized medicine? The answer is “not much.”
Medco and the American Medical Association [AMA] conducted a survey last year among 350,000 physicians in many different specialties. Of the 10,000 who responded, 98 percent believed that genetics will affect a patient’s drug response. Unfortunately, only 23 percent said that they had any prior education in pharmacogenomics, and only 10 percent felt informed about pharmacogenomic testing. A mere 12 percent had ordered a molecular diagnostic test in the past six months, and 57 percent said they did not have enough knowledge to order such tests.
One can see the looming disconnect between patient desires for such tests and the ability of physicians to respond: a survey by Cogent Research reported that over 90 percent of consumers want information about their risk for certain diseases and would like to know of at least one genetic disease risk. While payers and PBMs are trying to sort out what works, pharma has an opportunity to seize the initiative in educating physicians and communicating how to integrate personalized medicine into clinical practice.