Our new era of precision medicine holds great promise for patients. If therapies can be tailored to their exact needs 鈥� i.e. via genetic or molecular testing 鈥� there will no longer be any need to guess which medications will be effective. You can do away with a blanket approach to therapy, in which all patients with a given disease are given the same drug and their doctors simply hope for the best.
Despite the excitement being generated, in practice, the shift towards precision medicine brings with it a major problem. Specifically, if drugs are designed for particular genetic subtypes, the market for each medicine will be limited. And if the market for a medicine is limited, it will no longer be so easy to keep prices in check.
鈥淲hen you have precision medicine, you have fewer and fewer patients to treat, because the disease is well characterised and you know exactly what works for each patient,鈥� explains Walter Colasante, vice president in the Life Sciences Practice at Charles River Associates (CRA). 鈥淭his is great, because you don鈥檛 have wastage, but at the same time the volume is tiny. If you cannot increase the volume, the only lever you have to increase your turnover is by increasing price.鈥�
Historically, the pharma industry has been driven by the search for blockbuster drugs. If your drug has a huge potential market 鈥� boosted by glowing physician reviews 鈥� then the R&D investment will pay off without needing to charge too much.
鈥淲ith these new therapies, you can鈥檛 do that, so the existing business model doesn鈥檛 work,鈥� says Colasante. 鈥淭he model will need to change in terms of production, distribution, marketing and pricing, and it鈥檚 not clear what we do next.鈥�
Divided opinions: the struggle to set a fair price for innovative medicines
At the recent Bio-Europe Spring conference in Amsterdam, CRA live-polled attendees for their views on this subject. More than 60 experts 鈥� running the gamut from biotech to patient associations 鈥� voted on pricing issues during a CRA-hosted panel session.
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By GlobalDataThe vast majority of respondents (93%) agreed that traditional pricing models can鈥檛 be applied to many new gene/cell therapies, and that the industry will need to develop new models quickly. Beyond that, however, there was little consensus about the best approach to take.
鈥淥ur questions were triggered through discussions with clients and payers, and through reading different publications 鈥� all have different views,鈥� says Colasante. 鈥淲e are in a chaotic situation, as we are far from agreement on the 鈥榬ight鈥� price of innovative medicine.鈥�
The issue, in essence, is how the market can set a fair price for drugs, which addresses both the sustainability of the research industry and the needs of healthcare systems and patients. Too high a price, and healthcare systems will simply be unable to afford a drug, in turn denying patients access to life-saving medicines. Too low a price, however, and the research industry will flounder.
鈥淚n the short term, industry would survive, but over the long term people won鈥檛 invest anymore, and 20 years down the line people will ask why we don鈥檛 have innovative gene therapies,鈥� says Colasante. 鈥淚 would not be happy to be a PhD student who has a great idea to solve a disease, but who knows they will not get funding or will struggle to make it to market.鈥�
Of the survey respondents, 57% agreed that selling drugs at a low price, therefore maximising access to all patients, would put the long-term viability of gene therapy at risk. Just 30% felt that EU health systems could cope with gene/cell therapy pricing, even if funds were reassigned and contracts negotiated.
鈥淚t鈥檚 all about who pays for healthcare and who gets the treatment,鈥� says Colasante. 鈥淰olume medicine is over 鈥� generics and biosimilar are taking these markets 鈥� and everyone expects innovation for cheap, but this is a short-term view. Everything we鈥檙e facing now is because people come up with simple answers to complicated problems.鈥�
Price vs value: pitting patients against Big Pharma
We only need take a medicine like tisagenlecleucel (Kymriah), a curative leukemia drug for young adults, to see why this is such a contentious subject. The first cell-based gene therapy to be approved in the US, the drug is priced at an astonishing $475,000 for a single course of treatment. (It also has a patient population of just 600 people a year, meaning that even if all of them were treated it would be far from a blockbuster drug.)
According a group called the Campaign for Sustainable Rx Pricing: 鈥淲hile science behind Kymriah is revolutionary, the business decision to price it at nearly half a million dollars per treatment is not. Kymriah鈥檚 price tag is聽simply a continuation of the pattern of sky-high launch prices that spins聽further out of control each year.鈥�
It鈥檚 an emotive issue, as pricing a drug like Kymriah essentially asks us to place a price on the value of life.
鈥淭here鈥檚 a belief that there鈥檚 a linear relationship between price and value,鈥� says Colasante. 鈥淲hat we鈥檝e seen with many new drugs is that they鈥檝e been denied access by many countries, and therefore the paradigm has been shifting so that price and value aren鈥檛 connected.鈥�
He adds that, while governments want to save money, they also want to privilege access to medicine. And while they want to invest in R&D, they can鈥檛 always afford to do so. This creates a world marked by winners and losers, in which big pharma is pitted against patients.
鈥淵ou have such a diversity of opinions on the subject, and people think the answer is simple,鈥� he says. 鈥淏ut, when you look back you say, I didn鈥檛 think of that. As a consultant I can see different sides because I deal with health professionals, payers and patients, and while each of them are correct, the system won鈥檛 let us find an answer that works for all of them.鈥�
Potential solutions: pursuing a holistic approach to pricing
With regard what might actually work, 83% of the Bio-Europe attendees felt that engaging third parties (e.g. charities, insurers and financial institutions) could solve the funding issues hampering access. Colasante too recommends something of this kind. He feels that pursuing partnerships with third parties pre-launch could drive a holistic approach to pricing new medicines.
He also thinks that an international fund might be one way forward. This would be similar to the Cancer Drugs Fund initiated by David Cameron, albeit on a bigger scale and better thought through.
鈥淭his would be an international fund where different organisations ranging from charities, to national systems to pharma industries can contribute, giving the fund sufficient money to deal with some of the costs of gene therapy. If you have a few people with good intentions it鈥檚 not impossible,鈥� he says.
Broadly, though, he is concerned about the lack of foresight being shown on these issues. He feels there is a tendency to seek knee-jerk answers to one part of the problem, rather than addressing the system as a whole. This could lead to ill-advised new models being implemented, long before a true analysis of their impacts can be completed.
鈥淎 sustainable approach would require stakeholders to come up with new options beyond the simple fix, dealing with the complexity of this situation,鈥� he says.
