Companion Diagnostic Strategy: Who Bears Those Costs?

Posted by Alexis Kuchins on Sep 28, 2015 4:25:04 PM
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The 2015 World CDx conference in Boston, Massachusetts brought together thought leaders from pharma, diagnostics, and companion diagnostic companies (CDx). This dynamic group of individuals engaged in a dialogue on areas such as next generation sequencing and companion diagnostics, precision medicine, and the regulatory landscape. In conversation with participants and presenters there was a consistent theme of seeking to understand companion diagnostic strategy and who will bear those costs.

Lack of blockbuster agents and payer constraints have resulted in pharmaceutical companies adopting approaches to drug development which involve the use of biomarkers to stratify patient populations. The ability to target subsets of patients for testing and treatments through the companion diagnostic partnership provides greater safety and efficacy, faster regulatory approval and the potential for value-based reimbursement.

Recent news suggest a large number of pharmaceutical companies are embracing companion diagnostic strategies at an earlier stage in their drug development programs as compared to a few years ago. This is especially evident in oncology where co-development of a targeted therapy and its companion diagnostic test is becoming more prevalent and necessary.

Despite an uptick in adoption, questions still remain on who will finance drug development. Some pharmaceutical companies are hesitant to invest in the development of a diagnostic until they are confident that it will be required for drug approval. From the diagnostic companies’ investment viewpoint, the need for royalty payments through sales-based milestones or other compensation methods are essential to defray the risks of the drug not being approved or of mediocre sales. Payer reimbursement of companion diagnostics is limited and highly variable.

A companion diagnostic strategy is going to be central to both drug development and patient management. As new biological therapies enter the market, they will be evaluated on cost and clinical benefit. The ability to spend a fraction of the cost to determine whether a patient should receive a therapy valued at tens of thousands of dollars annually is very attractive. The consensus from health economics experts suggests government and regulatory agencies should view the diagnostic and drug as a unified partnership. Only then will we see a diagnostic market adoption uptake and availability.

Topics: Competitive Intelligence, Brand Insights, Innovation, Manufacturing/Industrial, Market Analysis, Medical Devices, Pharma, Scenario Analysis, Healthcare, Life Sciences

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