It's Blind Leading the Blind on Companion Diagnostics

A new report from the Tufts Center for Study of Drug Development (CSDD), confirms that companion diagnostics are an important factor for pharma companies to consider when seeking reimbursement of their drugs. But companies still have a ways to go in allaying the concerns of investors, regulators and payors alike, and fixing this will require bolder collaborative efforts between drug developers and manufacturers and the companies that specialize in companion diagnostics.

Companion diagnostics are an application of personalized medicine that tests patients to identify a population likely respond to a drug.  The CSDD R&D Management Report points out that companion diagnostics continue to score points with developers because when co-developed with a drug, they increase the drug’s chances of approval. In certain cases, such as with ChemGenEx Pharmaceuticals, the FDA actually rejected approval of one of its drugs in 2011 for a specific type of leukemia, because it was not paired with a diagnostic.

But getting the diagnostic paired through the end of the approval phase is difficult. An increasing concern from drug companies is having to subsidize the entire burden of funding the development of a companion test.  Pharma is well aware of the need to convince other companies and venture capitalists to invest in companion diagnostics, as the businesses that develop them typically report low profit margins.

Timing is also key. The Tufts report emphasizes that collaborations between drug companies and companion diagnostics developers need to take into account the basic discrepancies in their business models. This is true not only within the context of effectively co-developing these products, but in maintaining harmony and pace between both entities to ensure the drug and diagnostics components are ready at the same time for review and approval  before the regulatory bodies.

All of this does little to ease the anxiety of health insurers and thereby the uncertainty regarding reimbursement for such medicines. The Tufts CSDD survey points to a growing number of partnerships and consortia between drug companies and academia as one way for the industry to move forward in general, and this can be of importance specifically when considering companion diagnostics’ growing role in establishing the efficacy of medicines.

Regulatory bodies will undoubtedly continue to evolve in their stance on the issue, with the FDA blazing a trail that denotes a level of trust that will ultimately guide other markets in actions to promote co-development and approval of companion diagnostics of their own.  The uncertainty identified by Tufts is unlikely to ease for some time.