NEW YORK – In the next few years, drugmakers are projected to seek regulatory approval for more than 100 new precision medicine drugs and biologics, signaling ongoing pharmaceutical industry investment in developing therapies for biomarker-defined patient populations, especially in oncology.
However, these new drugs, if they pass regulatory muster and hit the market, are unlikely to reach many who are likely to benefit from them due to continued inefficiencies in the testing ecosystem, according to a new report released this week by diagnostics data analytics company Diaceutics.
"The march forward in precision medicine is also a march towards dependency on the synchronized commercialization of precision testing, and here the march falters. Specifically, patient access to better treatments is still significantly impeded because of an ill-prepared diagnostic clinical ecosystem," Diaceutics CEO Peter Keeling wrote in the report, which contains research and insights of experts at the company, draws on the firm's experience with more than 500 drug/diagnostic projects, and features real-world data from its data analytics platform.
After spending 15 years advising leading drugmakers on how to integrate diagnostics into their therapeutic development and commercialization efforts, Diaceutics is still seeing slow test adoption and a difficult reimbursement climate impeding patient access to precision drugs, in addition to poor physician education and testing guidelines lagging behind guidelines supporting the use of the drug.
Moreover, stakeholders' reluctance to address the uncertain regulatory environment around lab-developed tests has soured drugmakers' willingness to making use of the vast laboratory network through which most healthcare testing is performed. These challenges are further compounded by the fact that pharma companies continue to underestimate the real-world tensions in the testing space and rarely put forth the approximately $50 million Diaceutics estimates it takes to truly support the launch of a test with the help of publications, guidelines, physician and payor education, direct-to-consumer advertising, social media outreach, patient advocacy, and interacting with lab and physician networks.
The good news, according to the report, is that investors are also becoming more savvy about the space and Chinese companies are seriously looking to purchase companies with precision therapy assets. These and other impending pressures may force the US testing market to evolve and may help ease patient access to expensive precision drugs that to date have been out of reach for many.
By the end of 2018, Diaceutics counted 173 precision therapies on the market and projected that this annual count is on a sharp uphill trajectory in the next half decade (see image below, courtesy of Diaceutics). There are more than 500 Phase III precision medicine trials slated for completion over the next two years, primarily for various biomarker-defined cancer indications. Assuming only 20 percent are successfully completed, drugmakers could be submitting around 100 new drug or biologic license applications to the US Food and Drug Administration over the next few years.
At this rate, Diaceutics is projecting that in 2020 and 2021, the number of new precision medicine drugs the FDA approves will exceed the non-precision medicine drugs the agency greenlights. For comparison, in 2017, Diaceutics estimated that more than 40 percent of drug approvals fell in the precision medicine category.
However, the precision medicine paradigm relies on diagnostics to identify which patients should receive the drugs. Within a controlled clinical trial setting, a test may successfully identify patients who are most likely to respond to the investigational therapy, but once the FDA-approved companion diagnostic hits the market, it takes time for that test to be available through enough labs so patients who should be tested are receiving the test. Diaceutics reported an average lag of 4.5 years between the launch of a biomarker-based treatment and when its companion test is diffused sufficiently in the market to be able to identify the entire intent-to-treat population.
In oncology, for example, Diaceutics' data shows that when the companion test launch is not appropriately planned, only around 50 percent of patients eligible for testing for precision treatments are getting this analysis. Moreover, it takes around 36 months for more than 70 percent of labs to offer the relevant companion diagnostic.
Even when tests are adopted by labs, there are quality issues that hinder access. Another Diaceutics analysis, from 2017, estimated that as many as 156,000 cancer patients in the US and Europe may be missing out on precision medicines due to delayed testing, poor sample management, and false-negative results. This translates to $16.6 billion in lost revenues for pharma annually.
The report further calculates the impact of testing inefficiencies in terms of patients who miss a treatment opportunity each month and lost revenues associated with 10 specific predictive biomarkers. PD-L1 testing in non-small cell lung cancer fares the worst in terms of both metrics, with 2,813 patients not treated per month, and $422 million in lost pharma revenues (see table below, courtesy of Diaceutics).
Drugmakers, in the last decade, have expected their companion diagnostic partners to manage these testing issues, but this has only led to further concentration of the diagnostic supply chain. As of this year, Diaceutics reported that the revenues of 54 personalized cancer therapies are tied to tests developed by six diagnostics partners. At the top of the list is Roche and its family of diagnostics companies, which are responsible for 37 testing platforms developed in partnership with nine pharma companies.
"In any other industry, the concentration of more than 50 percent of the supply of key technologies into the hands of a few would be regarded as risky at best," according to the report, which suggests that relying on only a handful of test providers only exacerbates the patient access issues.
Keeling noted that in contracts with pharma, diagnostics firms may promise to get the test integrated into as many as 30 or 40 labs, but that's not enough. For example, HER2 testing, which has been around for more than 20 years to identify cancer patients who should receive HER2 targeted treatment, is offered by more than 1,200 US labs. "If you're going to launch a new test into 40 labs, you're a long way short of what optimum looks like," Keeling said. "The labs remain the forgotten stakeholders."
Pharmaceutical companies have historically avoided working with labs, in large part due to ongoing uncertainties around FDA regulation of lab-developed tests. The agency has told the life sciences industry through guidances that tests that predict whether a person will respond to a particular drug must also be labeled and approved for that use. The FDA has recently taken action against labs performing pharmacogenetic testing without regulatory approval or clearance, which industry players are now pushing back against.
The agency's guidance and the contentious environment around LDT regulation has led drugmakers to primarily rely on test kits that can be performed at multiple labs, but these companion diagnostics, once FDA approved, aren't easily updated to reflect changes to the technology or to add new predictive biomarkers. Moreover, FDA-approved test kits are more expensive to implement for smaller, cash-strapped labs that serve community oncologists.
When it comes to precision cancer treatments, for example, Diaceutics' data shows that 75 percent of the testing in the US is provided through lab-developed tests, not FDA-approved test kits. Globally, around 2,600 labs are conducting 60 percent of the testing in the top 20 markets for precision cancer drugs.
The FDA's regulatory policies further restrict pharma companies from promoting off-label, unapproved uses of their drugs, which has also had the effect of discouraging pharma from engaging with lab networks to educate physicians about the needs for testing and improve test access. "Pharma legal departments are wringing their hands over supporting an LDT when the agency has asked for an FDA-approved kit," said Keeling. "What we've always told our pharma clients is that they should be promoting quality testing and raising the standard, whether that testing is performed through an LDT or a kit."
While the regulatory policies in the US have made pharma uncomfortable connecting with the lab community, this reluctance comes at the expense of patients, in Keeling's view. Outside the US, where the regulatory environment is different, pharma companies are engaging with labs. "It's somewhat of an artificial situation in the US and it deserves a broader discussion," Keeling said. "Is patient harm being done by not providing appropriate support to the laboratories with the introduction of new biomarkers? In our view, absolutely."
The FDA, some lab industry stakeholders, and device industry players have been working with US lawmakers for several years now to draft a new regulatory framework through legislation for all diagnostics, LDTs and kits. Keeling and other experts at Diaceutics proposed in an article published last month in the Journal of Molecular Diagnostics that any such legislation should include provisions for ensuring that LDTs that predict response to treatments are concordant with each other and other FDA-approved kits.
Such harmonization would ease the present tensions in the market over LDTs and make it easier for drugmakers to engage with lab networks that already play such a critical role in patient care. "The writing is on the wall. LDTs are here to stay," Keeling said. "What has to change is policy [but] we don't yet see an adequate response from the stakeholders. There needs to be a concerted effort from pharma, FDA, the diagnostic industry, and laboratories to develop this strategy for evolving precision medicine."
The good news is that there are now enough profitable precision medicine drugs on the market, with the likes of Roche's HER2 targeted drug franchise and AstraZeneca's EGFR inhibitor osimertinib (Tagrisso) and PARP inhibitor olaparib (Lynparza), that pharma companies are starting to recognize the value of investing in pre-commercialization test launch planning and physician education. Pharma companies are investing in test education campaigns and supporting testing harmonization and standardization efforts.
But if 40 to 50 drug/test precision medicine products are launched over the next five years, as Diaceutics data suggests, pharma companies need to do a lot more. In its report, Diaceutics makes a number of recommendations, such as appointing a "chief precision officers" within pharma companies' boards to lead test commercialization and adoption efforts, and greater use of big data to better understand the importance of diagnostics in the continuum of a patient's care, beyond the companion diagnostic model that has dominated oncology to date.
Diaceutics also predicts that decision support software, such as Roche Diagnostics' Navify, which physicians can use at the point of care to gain pertinent information about their patients' medical and care history, will also disrupt the diagnostic ecosystem and commercialization strategies. With this in mind, Diaceutics is developing a software-as-a-service platform, called Nexus, said Keeling. According to reports, Diaceutics is investing $3.88 million (£3 million) into the effort.
But there will also be external pressures on the personalized medicine space, forcing industry players to adapt and evolve. For example, in recent years, Keeling has observed that investors and market analysts are becoming more sophisticated in their evaluations of drug companies' assets and factoring in details around biomarker testing for specific drugs. The experience with pembrolizumab (Merck's Keytruda) has shown investors the power of a biomarker strategy to define the patient population most likely to benefit and to differentiate a drug in a competitive market, according to the report.
"Nowhere is this more evident than in the [immuno-oncology] sector where pharma is compelled to explain why drugs with a similar mechanism of action might be accompanied by very different testing strategies or, in some situations, none at all," Keeling wrote in the report. "In response, a number of CEOs across the industry designate testing strategies as a top priority at their investor briefings, explaining that all, or most, of their therapies will be launched alongside better testing."
Lastly, Diaceutics predicts another significant disruptive force from the East. The company has a team on the ground in China, and conversations with Chinese pharma companies suggest not only a willingness to out-invest Western counterparts in precision medicine but also to purchase drug companies in the US and Europe with products and expertise in biomarker-informed treatments. The Chinese government has already committed around $9 billion toward funding precision medicine in the country, and Diaceutics estimates that for every dollar the US government spends in this field, China is putting forth $43.58.
China's entrance into the space could be a significant disruptive force from a pricing standpoint. Precision medicines are typically for rare disease populations, and in cancer, given to advanced patients, which result in smaller market sizes for these drugs. Drugmakers to date have responded by setting high prices for these products. But China's entrance into the precision medicine space will be one focused on achieving volume using cheaper drug and test solutions.
"The Chinese industrial model has … a cultural affinity and comfort with the idea that volume is better than high prices," Keeling said. "I've been around to every pharmaceutical manufacturing facility in the US and they're huge, but they are not as large as those being built by Chinese companies, by an order of magnitude."
According to the report, the entry of China into precision medicine will only put a brighter spotlight on the drawbacks of how drugs and tests are developed and commercialized in the US and Europe. "This will accentuate the observation that precision medicine is already a 'high-priced' paradigm in the West, with many payers and governments balking at initial price points, opening the window for more cost-effective solutions," Keeling wrote in the report.