This post is related to what I do so I will very vague, and freely admit that I have a conflict of interest.
Depending on how the FDA deicide’s to deal with the new kinds of companion diagnostics this could be a golden age for drug companies. Why, because companion diagnostics could allow them to revive some of the drugs that failed in later phases.The biggest reason drugs fail in late stage as I understand it is a lack of efficacy. Well the drug got to the later phases because it worked in a subset of people, but failed because it didn't work in everyone. With some of the new technologies that have become available, the drug companies can go back to the samples they collected and figure out what was “different” about the people the drug worked on from those it didn't work on (using genomic, transcriptomic, proteomic, and/or any other method you can think of). For example if they find a genetic variation in people the drug didn't work on, then they design a low cost genetic test, that is run before the doctor decides what to write the Rx for.
There is a long history of companion diagnostics, it is just the current generation are well understood tests, for things like liver function. This brings up the second major reason drugs fail in late stage trials: very adverse reactions in a small percent of the population. In this case you do the same thing as before and figure out what was different between the two groups. Then have a test to make sure you never give the drug to people who it could be harmed by the drug. Imagine how well Merck could do if they could find a marker that predicted adverse reaction to Vioxx. They could put the drug or some kind of Cox2 inhibitor back on the market with a companion test. Then they could test all the people in class (action lawsuit) and potentially exclude some of the negative "events" as not drug related.
These sorts of tests are the beginning of personalized medicine. This has its ups and downs for everyone. For the drug companies they can rescue drugs that fail in later stage trials, but they won’t be able to make as much money on the drug once its releases since not everyone with a condition can take the drug. However, it still can work out for them, since if they have a drug that fails when they have $500 million invested in it, before they would have had to simply write down the lose. Now they can spend $10 million more figure out what’s going on and if need be create a companion diagnostic, and bring the drug to market. They might not make tons of money, but it seems making money slowly is preferable to losing money.
Now the customers will benefit since as the drug company’s revive their legacy of semi-failed drugs, personalized medicine gets a big boast. Now the down-side is that the drug companies won’t be able to sell as much of any one drug as they are use to, so the prices will be higher.
However, once companion diagnostics are considered as part of the drug development process the cost of drug development could go down, as it becomes easier to get a drug to market. The drug companies can use the information obtained from model systems and early clinical trails with prospective testing to segment the population. This can smooth out the road and make the longer more expensive later phase trials go more smoothly, since more of the variables are controlled.
In the near term I envision a new type of Pharma company, opportunists. These companies buy, for pennies on the dollar, the later stage failures from other companies, then try and figure out what happened and if they can get around the issue, and bring the drug to market. I could even see Teva getting into this market.
As I said, this could be the beginning of a golden age.
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