Q&A with PwC’s Tony Pillari on pharma-diagnostics partnerships

August 3, 2009 – 11:10 am by Gina Monari

Med Ad News Insider corresponded with Tony Pillari, director in PricewaterhouseCooper’s Healthcare Advisory Service, on topics related to their report on pharmaceutical-diagnostics partnerships, which you can read about here.

Med Ad News: Are companion diagnostics partnerships really about pressure from regulators and payers?
Tony Pillari: There definitely is an element of pressure from regulators and payers, but more importantly, there is an enormous opportunity that the industry recognizes and real benefits to marketers and their brands.

Med Ad News: What are the real benefits to developing companion diagnostics?
Tony Pillari: Increasingly, pharmaceutical companies will not move a drug candidate to the clinical development state without also having a clear, related biomarker in development.

Diagnostics are therefore becoming an imperative for the pharmaceutical industry for knowing where to place their best bets. These companies understand the contribution of biomarkers and diagnostics in improving the design and probability of success of clinical trials.

Companion diagnostics could accelerate drug approval process because, with a biomarker, there is an opportunity to create an enriched clinical trial pool of people more likely to respond to a particular drug, thus proving efficacy much more quickly and reducing the time and cost required to complete a trial. 
Diagnostics could represent a potential new and recurring revenue stream for pharmaceutical companies.

Med Ad News: Why is there so much pressure from these organizations?
Tony Pillari: The balance of power in drug development is shifting to payers. With healthcare costs rising, payers are becoming the ultimate arbiters of pricing and value, reimbursement and prescribing decisions. They want definitive proof that a drug or a diagnostic is effective and delivers value for the money. The development of drugs and companion diagnostics has the potential to improve treatment outcomes, enhance patient compliance with prescriptions and eliminate payment for expensive but ineffective therapies.

As a result, we think that pharma companies will start thinking about product pricing earlier in the development phase, commercially de-risking their portfolios in phase II by terminating any drug candidate that looks unlikely to generate commercial demand. The ability to identify specific biomarkers for certain drugs will help to define the market. The FDA is supporting development of companion diagnostics because the data generated by diagnostic tests could help determine whether clinical trials of new drugs are adequate, and offer the potential to create a better prescription path based on predictive biomarkers. This would significantly improve the effectiveness of certain drugs and therapies, while reducing the risk of adverse reactions and thereby improving safety for patients.

Med Ad News: What are some other factors or trends that will increase the number of diagnostics partnerships over the next five years?

Tony Pillari: Although we’ve seen diagnostic partnerships in the past, the sun, moon, and stars have aligned in such a way that we think there will continue to be an increase in alliances. Factors converging are: connectivity and consumerism driving a transformation in healthcare; completion of the human genome project enabling better insight into health and disease; pressure from regulators and payers; changing science driven by advancements in molecular diagnostics. In addition, there is a lot of activity taking place in biomarker discovery and validation, which is being translated into diagnostics.

There are many people developing new tests and kits (e.g., hand-held diagnostic devices). All that activity creates viable and interesting acquisition targets. Finally, consumerism will ultimately create a market for diagnostic test, as was the case with GenomicHealth’s Oncotype DX diagnostic for breast cancer.

Med Ad News: Are any of these deals producing noticeable results for pharmaceutical companies? Has it been worth their investment? Can you talk about Roche?

Tony Pillari: We think that personalized medicine is the future of healthcare, and there is an enormous opportunity ahead for companies engaged in the field, and pharmaceutical companies know this. But the field is in its infancy and it may be too early to tell what the results are from the big deals we’ve seen so far. We cannot comment specifically on Roche, but given the benefits mentioned, these kinds of partnerships are likely to be well worth the investment.

Med Ad News: Personalized medicine is big in oncology but will we see other therapeutic areas receive increased attention in the next five years?

Tony Pillari: Oncology will likely continue to be the biggest area for personalized medicine and diagnostic testing, but we expect to see more players in more therapeutic categories such as neurological disorders, infectious diseases and cardiology. The reality is that if the big pharmaceutical companies begin partnering with diagnostic companies, their peers will most likely follow suit.

Med Ad News: What are the main challenges with marketing companion diagnostics? How are these major players overcoming those challenges?

Tony Pillari: The biggest issues will be clinical validation, pricing, and reimbursement coverage. Although the clinical motivation for developing more tests designed to guide the prescribing of a specific drug is clear, the economics are challenging. The pricing of diagnostic tests does not always reflect the level of development costs associated with the test or its contribution to overall health benefits and this can adversely affect the business case for developing a new diagnostic. Addressing the pricing conundrum will be a crucial factor to ensure that diagnostics play a full part in improving patient health and will be a critical part of a pharmaceutical company’s tool kit in enhancing its product portfolio and pipeline. 
There are a number of initiatives under way to address clinical validation.

For example, the Partnership for Personalized Medicine is attempting to develop and validate new diagnostics by putting them through a process akin to the FDA approval process for drugs. Others are following suit. 
Pricing and reimbursement will depend on first getting the validation part right.

Pharmaceutical companies are beginning to reevaluate their business models and pipeline knowing that new medicines are going to be paid for on the basis of the outcomes they deliver. The focus on outcomes and measurement of outcomes data is beginning to drive their product development, pricing and reimbursement decisions and risk-sharing agreements between industry, healthcare payers, providers, and regulators.