the business of precision medicine

8/9/2019 The Business of Precision Medicine

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The Business of Precision

MedicineStephen T. Parente, Ph.D., M.P.H., M.S.

Minnesota Insurance Industry Chair of Health FinanceGoverning Chair, Health Care Cost Institute

Director, Medical Industry eadership Institute !ssociate Dean, M"! Progra#sCarlson School of Manage#ent

Depart#ent of [email protected]

May 20, 2015; The Mayo Clinic, Rochester, MN


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What is a Precision Medicine?

• “A medical model that proposes the customization ofhealthcare—with medical decisions, practices, and/or products being tailored to the individual patient. In

this model, diagnostic testing is often employed forselecting appropriate and optimal therapies based onthe context of a patient’s genetic content or othermolecular or cellular analysis. Tools employed in PMcan include molecular diagnostics, imaging, andanalytics/software.” (source: Timmerman, Luke (4 February 2013)."What’s in a Name? A Lot, When It Comes to ‘Precision Medicine’". Xconomy.


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Where does Health Economics Play?

Journal of Economic Perspectives Study:

•Setting: price and health benefits of 58 anti-cancer drugsapproved between 1995 and 2013

•Conclusion: gains in survival time associated with recently

approved anti-cancer drugs are typically measured in months,not years.”

•BUT: the cost of each month of life gained through the newtreatments is way up.

– The inflation-adjusted price for new anti-cancer drugs rose 10% a year overthose 18 years, according to the study.

– In 1995, patients and insurers paid $54,100 (in 2013 dollars) for a year of extralife.

– By 2005, that had gone up to $139,100 a year, and by 2013 it was $207,000.


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Summary: From Bench Science toReimbursement Schedule

1. NIH/Industry support basic science research

2. Basic science yields an innovative material or missing link fortherapeutic or diagnostic value

3. New product development within a firm.

4. Prototype developed

5. Prototype used for clinical trials6. If prototype proceeds to human trials, cost-effectiveness analysis

commissioned.

7. Successful human trials leading to FDA approval combined withpositive cost-effectiveness analysis are used to solicit reimbursementfrom public and private insurers.

8. Technology added to reimbursement schedule after medical technologyreview by internal insurer auditors. Medicare reimbursement often asignal of positive reimbursement decision.


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Is Technological Change Worth It?

• Ho$ #uch $ould you %e $illing topay everyday fro# this day for$ardfor a %etter than &'( chance you$ill live )ve #ore years than $ithoutsuch an the invest#ent*


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The Drive TowardsCost!""ectiveness

• Increasingly, health care systems are insisting on

manufacturers presenting a cost-effectiveness case for

a product to justify unit pricing and affordability

within health care systems• Evidentiary and analytical standards are demanding

and few pharmaceutical and biotechnology

companies have staff skilled in meeting these

standards


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Cost-Effectiveness Analysis ‘Standards’

• National Institute for Clinical Excellence (UK): Guide to the Methods of Technology Appraisal (2004) (www.NICE.org.uk )

• Pharmaceutical Benefits Advisory Committee (PBAC):Guidelines for the Pharmaceutical Industry on Preparation of

Submissions to the Pharmaceutical Benefits AdvisoryCommittee (2002)• WellPoint Pharmacy Management, Health Technology

Assessment Guidelines, Drug Submission Guidelines for NewProducts, New Indications and New Formulations (2004)(www.Wellpointrx.com)

• WellPoint Pharmacy Management, Health TechnologyAssessment Guidelines: Drug Submission Guidelines for Re-Evaluation of Products, Indications and Formulations (2004)(www.Wellpointrx.com)

http://www.nice.org.uk/http://www.nice.org.uk/


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The Precision Medicine Market:

Where Health Economics Gets Real

• The principal role of the health economist in thepharmaceutical industry is to develop and recommenda sustainable global unit pricing strategy

• A sustainable pricing strategy is one that is consistentwith achieving and maintaining reimbursement in keyglobal markets and market segments at a unit pricethat is consistent with an acceptable market share and

rate of return on research and developmentexpenditures


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Health Economist’s and their ‘Jamborees’


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To #easure $alue %ou &eed to 're(are a )lobal *ealth Technology +Dossier,

• To underscore the role of the health economist andthe importance of health economics activities in thelife cycle of a drug

• To emphasize the importance of meeting healthtechnology assessment evidentiary and analyticalstandards

• To detail the role of a dossier in supporting a globalreimbursement strategy

• To consider the contents and scope of a globaltechnology dossier


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The &eed "or Consistency andTrans(arency

• The commitment to a health technology dossier at pre-Phase I inproduct development and the support for that dossier over the lifecycle of a drug ensures: – Validation of assumptions driving business opportunity

decisions to support product development

– Validation of the epidemiology and market opportunities in adisease state

– A coherent and consistent assessment of comparative clinicalperformance

– Core models to support cost-effectiveness and system impactclaims

– A framework for assessing the impact of a changingcompetitive environment

– A basis for preparing for disease area and therapeutic classreviews


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Dossier Structure

• Target Disease Classification• Epidemiology• Treatment patterns, resource utilization and costs

• Product description• Comparator product/procedure description(s)• Clinical summaries and meta-analyses• Modeled cost-effectiveness case

• Modeled system impact case• Product claims, monitoring and verification


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Dossier Sco(e

• Dossier must identify and report on all key marketsand market segments for content description andanalysis:

– US (managed care, VA, Medicaid, Medicare) – European Union (UK, France, Italy, Germany Spain)

– Canada

– Australia

– Japan – Developing countries (Mexico, Brazil, India, China)


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*ow -((les to -((les Com(arisonso" 'roducts are #ade

• All product claims must be presented in terms thatmake them empirically evaluable

• Claims which are not empirically evaluable would berejected

• Manufacturers must present (and get agreement) as towhich claims are evaluable to support both cost-effectiveness and system impact impacts, which mustbe detailed in the dossier

• Manufacturers must agree to the process by whichclaims are monitored and validated, which must bedetailed in the dossier


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And the Target Always Moves

• Over the balance of the product life cycle the dossier must beupdated to reflect not only the results of product claimsmonitoring and validation but also changes in the competitiveenvironment for the manufacturer’s product

• The dossier should support ongoing disease area andtherapeutic class reviews – Update of clinical summaries and meta-analyses

– Review of comparator choice

– Re-evaluation of modeled cost-effectiveness and system impact case

for the product – Revisions to empirically evaluable product impact claims


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&IC! . '# Canary to WatchThe National Institute for Health andClinical Excellence (NICE) is the

independent organisation in the UK

responsible for providing national

guidance to the NHS and the wider

public health community on the

promotion of good health and the

prevention and treatment of ill health.

Has had a public health role since 2005.


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&IC! /egacy

• The Cochrane and Campbell Collaborations.

• Health economics and the Quality Adjusted Life Year

(QALY)

• The NHS Centre for Reviews and Dissemination(University of York).

• The Cochrane controlled trials register.

• Fast electronic search engines accessing large data bases.

• Systematic Review and metaanalysis

• NICE


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The (illars o" &IC!,s wor0

• Comprehensive evidence base

• Expert input

• Patient and carer involvement

• Independent advisory committees

• Genuine consultation

• Regular review

• Open and transparent process.


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Methodological principles governing

all NICE’s work

• Base recommendations on the best

available evidence.

• To determine cost effectiveness

using the QALY.• To be clear about scientific and

other values

• To allow contestability.

• To be seen to be and to be

independent of government, thepharmaceutical industry and other

vested interests.


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The hierarchy o" evidence


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-ssessing Cost !""ectiveness

Probability

of rejection

Cost per QALY (£K)

x XX

XX

1 ! " # $

1


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&IC! 1uality Standards

• NICE quality standards are a set of specific, concise

statements and associated measures. They set out

aspirational, but achievable, markers of high-quality,

cost-effective patient care, covering the treatment andprevention of different diseases and conditions.


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3D is Required

• Derived from the best available evidence such as

NICE guidance and other evidence sources accredited

by NHS Evidence, they are developed independently

by NICE, in collaboration with NHS and social careprofessionals, their partners and service users, and

address three dimensions of quality: clinical

effectiveness, patient safety and patient experience.

http://www.evidence.nhs.uk/default.aspxhttp://www.evidence.nhs.uk/default.aspx


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&IC! 2uality standards enable:

• Health and social care professionals to make

decisions about care based on the latest evidence and

best practice.

• Patients and carers to understand what service theyshould expect from their health and social care

provider.

• Service providers to quickly and easily examine the

clinical performance of their organisation and assessthe standards of care they provide

• Commissioners to be confident about purchasing.


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Challenge o" 'recision #edicine:Custom &eeds a Clear 'ath


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And Clear Results: The health gradient

Health state

Social status

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The health gradient

Health state

Social status

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The health gradient

Health state

Social status

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Summary

• There large market opportunities from precision medicine.• But with opportunity, there is risk…..• The increasingly prescriptive requirements that manufacturers

meet ‘gold standard’ evidentiary and analytical criteria in

formulary submissions and product re-evaluations haveprofound implications for the process of product developmentand assessments of comparative treatment effects.

• Manufacturers must recognize that all claims are potentiallydiscoverable and that a consistent global approach to clinical

assessment will minimize adverse assessments of false ormisleading claims.• As future consumers, none of us would want anything less.

the business of precision medicine

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