Don’t Forget CDx Developers

It is now a well-established principle that not every patient responds to a therapy in the same way. To that end, the pharma industry is evolving from a ‘one-drug-treats-all’ model to one based on better-directed, personalized medicine. By pre-screening individuals with one or more analytical tools, we can more easily ensure that they are treated with the drug most likely to produce a favorable clinical outcome. In essence, personalized medicine is all about matching the right patient with the right therapy. The prescreening tools – usually biomarker tests performed in a clinical laboratory – are designed as an accompaniment to the safe and effective use of the drug, and are thus termed companion diagnostics (CDx).

While experienced in drug development, most pharma companies do not have the expertise required to develop a biomarker assay and commercialize it as a CDx. Instead, drug developers look towards external partnerships with diagnostic manufacturers. For a diagnostic industry that has experienced low single-digit growth over the past decade, you’d think that a pipeline of CDx assays would be considered a revenue driver and would be widely embraced, right? Wrong. Though smaller diagnostic companies benefit from funded R&D that allows them to commercialize (low volume) tests in which they would not otherwise invest, a number of factors have led many diagnostic companies to question the sustainability of the current model. In many cases, investment in the CDx program only takes place once it is certain (or at least highly likely) that the compound will progress through the clinic, which leaves the CDx developer with very tight timelines to meet first-patient screening targets. Even then, there is still a real possibility that the compound will fail or that the biomarker will not be clinically useful as a CDx, and its use discontinued. Such waste is extremely onerous for the CDx developer.

Even if the drug and accompanying CDx receive regulatory clearance, adoption is often slow – and the disparity in the revenue generated by the drug and the accompanying CDx is striking. I have particularly observed this inequity in assays that accompany drugs designed for use in a limited population, where the volume of testing and resulting revenue is low. In addition, low volumes push testing towards a centralized (specialty reference lab) solution that may not be able to generate the results in the timeframe required for optimal patient management.

To overcome these issues, the industry needs to consider an alternative business model that more appropriately considers risk sharing and more equitably rewards a successful launch of the CDx in support of a high-revenue targeted therapy. At Hanson Wade’s recent World CDx Congress, I saw a number of diagnostic manufacturers proposing a profit-sharing model whereby they would receive a percentage of the sales of the drug. While I doubt that the biopharmaceutical industry would universally embrace this approach, I do feel that a new model should be developed that better rewards the diagnostic manufacturer for achieving development and commercialization milestones, with more balance across upfront revenue versus revenue from ongoing sales.

Additionally, I would encourage all parties to provide open access to non-proprietary CDx assays to avoid several companies addressing the same target with different CDx assays, all independently manufactured. In addition to the confusion that this would cause the prescribing physician, it would fragment the potential market size and limit adoption of a number of drugs because it is unlikely that clinical laboratories would offer several different assays for the same analyte…

The future of drug development is singularly focused on tailored therapeutics centered on a strong companion diagnostic strategy. A forward-thinking partnership between the drug developer and their companion diagnostic development partner will strengthen commercial return and help deliver on the promise of personalized medicine.