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The Price of Personalization

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It may also be that targeted therapies need not be tested in traditional trials that include large numbers of patients. “That is inconsistent with the very idea of targeted therapies,” says Christof Koelsch, executive vice president of Diaceutics, a global firm supporting the drug industry in commercializing personalized medicines. Koelsch and others note that most targeted therapies usually have much higher response rates in their targeted population than a comparable conventional drug would have, which means that targeted therapies can be shown to have statistically significant benefits in a relatively small number of patients. “With targeted therapies, you don’t need 10,000 patients for a clinical trial—you need 100, as long as they have the mutation of interest,” says MGH’s Haber.

Will the FDA accept smaller clinical trials for targeted therapies? In a statement to Proto, the FDA’s Center for Drug Evaluation and Research said that all approved medications must meet high standards to prove efficacy and safety, yet the agency “exercises flexibility and scientific judgment in applying those standards, and the FDA has a long and well-documented history of applying this flexibility to the development of new products for small patient populations.”

Schulman says it would also help if drug companies spent less to market their products. The pharmaceutical industry spent $27 billion on promotion in 2012, according to the Pew Charitable Trusts. With more and more targeted therapies, large and expensive advertising campaigns make less sense, and Schulman suggests that drugmakers might market personalized medicines more efficiently through social media and direct interaction with patient advocacy groups.

The federal government could also help keep costs down by offering grants to small biotechnology firms to help fund development of new drugs, in return for a promise from drugmakers that they’ll cap prices. Schulman and colleagues estimated in a 2012 Health Affairs article that the price of a drug that was funded solely through private equity at a cost of $329,000 per year could still be profitable for investors when priced at $35,000 a year if it was developed with 90% of funding coming from public grants. The government, in turn, would save money by no longer paying for expensive drugs through Medicare. “Clearly it would be cheaper to use public resources for clinical trials than to pay current personalized medicine drug prices for large numbers of people,” says Schulman.

Whether drugmakers would indeed pass savings along to consumers is an open question. Regardless, Termeer doesn’t believe that the high prices currently charged for these products will persist. “Markets don’t work that way,” says Termeer. The business of making personalized medicines may be expensive today, he argues, but as pharmaceutical companies fill their portfolios with targeted drugs, the development process will become more efficient while the need for a huge return on investment for each product will diminish. “In the future,” says Termeer, “with the economies that will become available, as with any industry, we’ll bring the price down.”

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The Trouble with Targeting Treatments

Researchers are working to develop diagnostic tests to determine who is eligible for targeted therapies, but red tape and limited expertise stand in the way.

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1. Me Medicine vs. We Medicine: Reclaiming Biotechnology for the Common Good, by Donna Dickenson (Columbia University Press, 2013). A medical ethicist argues that the promise of personalized health care has been overstated and that focusing on the individual distracts from the importance of proven public health interventions, such as vaccination programs.

2. “Towards a Balanced Value Business Model for Personalized Medicine: An Outlook,” by Christof Koelsch et al., Pharmacogenomics, January 2013. To bring down the high cost of personalized medicine, drug developers need to adopt new strategies, such as shorter, smaller clinical trials, Koelsch and colleagues argue, stating that “not all targeted therapies must inevitably cost a fortune.”

3. “Can Genomics Bend the Cost Curve?” by Katrina Armstrong, JAMA, March 14, 2012. Like most medical innovations, targeted therapies and companion diagnostic tests add to health care costs. However, Armstrong argues that personalized medicine has the potential to improve the value of health care by reducing the use of ineffective treatments.

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