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Discussing the (as yet) untested business case behind PHC.
Basel, 03 August 2009
Contributed by Sophie Kornowski-Bonnet, General Manager Roche Paris
Roche defines PHC as using drugs and diagnostics to identify those patients most likely to benefit from a medicine. It means tailoring treatment based on our knowledge and understanding of molecular biology, the disease, the mechanisms of actions of our drugs, the biological differences between patients and their particular disease characteristics.
By investing early in molecular biology, we’ve built expertise that puts us in a strong position to champion PHC. We’re using new technologies in drug research to select molecules in the body that could make good drug targets. We’re also designing clinical trials in a more differentiated manner, opening up more opportunities to "fit" treatments to specific patients. Spurred by new business strategies implemented through Pharma 2015, the depth and breadth of our pharmaceutical and diagnostics capabilities puts us in the vanguard of PHC, providing a sustainable competitive advantage.
Changing expectations
As support for PHC products grows across the healthcare community, expectations are changing. Patients, physicians and payers are demanding safer, more effective treatments, while investors are looking for companies with more robust and sustainable business models. Restricted health budgets and higher regulatory hurdles make the market landscape even tougher. Drivers include:
Pressure to boost benefit-risk as well as benefit-cost ratio of treatments
Strong economic incentive to improve efficient use of healthcare resources
Demand for medicines that significantly and positively impact public health
Targeting therapy through PHC means treating only those patients with a high chance of responding to the drug. This increases payers’ confidence that the financial investment in treatment will result in positive clinical outcomes. It also avoids exposing patients to potential adverse events from medicines which probably will have no or little benefit. By more quickly identifying the right treatment instead of wasting resources on the wrong therapies, PHC uses resources more efficiently.
Companion diagnostic tests assess whether a patient will respond favorably to a specific medical treatment. Biomarker research and development of potential companion diagnostics is a standard part of the development process for every single drug in our pipeline.
Tangible value
Sophie Kornowski, Roche General Manager in France, discussed PHC’s tangible economic value at the Roche Forum Buonas meeting in October 2008. Because clinically differentiated medicines create value for other healthcare stakeholders, they are more likely to be accepted and reimbursed, thus creating value for the companies that supply them.
Sophie described the situation in France, where the primary variable in deciding which therapies are reimbursed is the quality of the medicine. France uses a rating system called the ASMR (Amelioration du Service Medical Rendu), meaning the "evaluation of therapeutic benefit." This is expressed as a number between 1 (top/best rating) and 5 (worst rating). So if your product or therapy is rated as 1 it offers a higher value than a product or therapy rated with 5. Consequently the better the rating, the better price you can command and the faster you gain market access.
This medical outcome rating surfaces clearly through the reimbursement price of a product and its sales. For instance, Herceptin in metastatic breast cancer has about a 79 percent market share penetration in France, while Tarceva in Non-Small Cell Lung Cancer (NSCLC) has a market share of 20-25 percent. One reason is that we can optimize Herceptin treatment by using diagnostics to identify the most suitable target populations. Currently, Tarceva does not have a differentiating test.
What if Tarceva had a test?
Although Tarceva is effective in some patients, Figure 1 shows plateauing sales. The blue line shows actual sales since Tarceva’s launch. Sales decreased because of shorter treatment duration (in the majority, non-responder patients) and no deeper market penetration.
The green line models Tarceva sales with a test allowing patient stratification. The model assumes a 60 percent narrower patient population, targeted to those most likely to respond to Tarceva therapy.
Despite a smaller population, the modelled sales turnover is much higher for PHC Tarceva treatment. Longer treatment duration, coupled with high response in the targeted population, leads to a higher ASMR rating and higher initial price for the drug. This price doesn’t erode over time, because of the perceived high value of the drug by pricing authorities.
What if we had patient stratification for Tarceva in NSCLC?
Figure 1: Tarceva - modelled with a stratifying test
Reverse example
Let’s look at a reverse example. Without the stratifying test for Herceptin, we would be offering treatment to every breast cancer patient as an option. Although the patient population would significantly increase, sales would slump because treatment duration in the majority of patients would be comparatively short. The ASMR rating would be lower, resulting in a lower initial price. Market penetration would also shrink because physicians could not perceive the value of using it in a broad population.
Without an accompanying predictive test, Herceptin would actually have less real market value, as shown in Figure 2.
What if we didn't have patient stratification for Herceptin in mBC?
Figure 2: Herceptin modelled without its predictive test
Uncertainty remains
Despite potential advantages, uncertainty still surrounds PHC’s overall commercial potential. With smaller target patient populations, will pharmaceutical companies still be able to cover the cost of developing therapies?
At Roche, we focus on delivering innovative, clinically differentiated medicines - capturing value by delivering value. With Herceptin, we have already demonstrated that it is possible to be commercially successful with targeted therapies. Plus, PHC does not always lead to smaller patient populations. Drugs in third line treatments could end up as first-line therapies with the right biomarkers and diagnostic tests to support earlier use.
In a competitive environment, market penetration rather than total market size may be the limiting factor in commercial success. Drugs with companion diagnostics may provide a competitive advantage, as they allow physicians to take a more rational approach to treatment decisions.
In summary
Rather than searching for the "one size fits all" blockbuster, a core part of Roche’s Pharma strategy is developing clinically differentiated medicines for targeted patient populations. By enabling PHC, we will gain a better understanding of why some patients respond to therapies while others do not. Scientifically, we have always known there is a great deal of variation among patients, but now we are systematically using new technologies like bio-informatics and imaging to explore and understand that variation.
There are four key components to bringing new value to the practice of medicine:
Understanding disease heterogeneity
Discovering biomarkers and developing relevant diagnostic tools
Stratifying patients with diagnostic tests
Building evidence for a better benefit-risk and benefit-cost ratio
Integrating diagnostics into our drug development process is essential to our success. We achieve innovation by allowing independence among the group members while creating mechanisms for interchange, cross-talk and collaboration, wherever it makes business and scientific sense.
With Pharma and Diagnostics working together across the entire value chain, Roche is uniquely positioned to deliver the robust and sustainable value of PHC to patients, physicians and payers - making it a key business driver for the mid- and long term. |
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