August 13, 2003 | The gap between scientific possibility and economic reality is a familiar story in the history of innovation, and we are seeing it now in the pharmaceutical industry. On one side, new genetic knowledge is laying the groundwork for personalized medicine — highly effective drugs developed for small patient populations defined by genetic profiles.
But drug company executives, facing soaring costs and other hurdles, have pinned their growth strategies on new blockbuster drugs (meaning annual sales of $1 billion or more). Such drugs, increasingly rare, must be usable by large patient populations and be effective against widespread illnesses that require long-term medication, such as cancers or chronic degenerative diseases.
What targeted drugs would lose in market size, they would make up for in effectiveness. While blockbusters work adequately for most patients, genetically targeted drugs would work very well for virtually all the members of smaller niche populations. Personalized drug treatment would improve patient care, of course, but it would require a major adjustment for drug companies wedded to the blockbuster model. Furthermore, would, or could, consumers or insurers pay extra for a more effective product?
So why not just apply new technology to produce drugs to fit the customer, as Dell does with made-to-order computers? In theory, this is not as wild an idea as it may sound. The convergence of genomic data and computing power should make drug discovery faster and less expensive, with fewer false starts. The ability to identify those genetic features that determine a patient's propensity to certain diseases and individual responses to potential drugs should streamline the list of drug candidates before any testing, human or animal, needs to be done.
Pharmacogenomics Can Help
The greatest impact of such data sifting would be in the early stages of drug development. It would probably not be as directly effective against a faster-growing problem: the costs of clinical trials later in the development process. In 2001, the Tufts Center for the Study of Drug Development reported that clinical trials costs climbed 11.8 percent per year (adjusted for inflation) from 1987 to 2000 — more than a fourfold increase. The length of clinical trials also continues to rise. This year, Tufts reported the average clinical phase time for new biopharmaceuticals rose 137 percent — from 31 months (between 1982 and 1989) to 74 months (between 2000 and 2002).
Unless a way is found to leverage technology and make trials more focused, the exorbitant cost of getting a drug to market will continue to drive big drug companies toward blockbusters. These firms will align their resources toward the big payoffs and away from personalized drugs. Smaller firms might continue to thrive by offering small-market drugs that the big pharmaceutical firms no longer want in their portfolios. But most of them will have trouble finding the capital to develop true breakthrough drugs from genomic data.
Solving this dilemma isn't simply a matter of reforming the FDA approval process or pushing the right technological buttons. Both are crucial, but neither one is a magic bullet. The FDA approval process is bound to be rigorous as long as the public cares (as it must) about drug safety. And there is only so much that can be learned about safety before a drug is tried on humans.
However, genomics technology has the potential to save money in the pretrial stages by focusing candidate compound selection. By identifying which subjects would be most likely to experience beneficial results and avoid adverse reactions, genomics can help reduce large, broad-population testing, which is currently one of the biggest drains on pharmaceutical R&D budgets.
On the regulatory side, the greatest need is for better coordination and sharing of knowledge between drug companies and the FDA. This is especially true at the early stages, when the drug firms are identifying the most promising compounds and starting to design clinical trials. FDA Commissioner Mark McClellan wants to give drug developers earlier feedback on candidates and clinical trial design and also clarify the FDA's standards and expectations for approval. (See "Remaking the FDA in McClellan's Image," page 48.)
The agency is starting to develop standards and techniques for pharmacogenomics, which should greatly improve the process of developing drugs for rare conditions and small populations. But pharmacogenomics needs FDA approval guidelines to get off the ground commercially. By following through on these initiatives, the FDA can help this new science reach its full potential, which will benefit not only the drug industry but, of course, the public as well.
Right now, there's a crying need in the drug industry for such innovation in development. How fast will the necessary changes occur? That depends on the sense of urgency in the industry. However, the big pharmaceutical firms are investing in relevant genomics technology, and the FDA would not go to the trouble of developing new standards if it did not believe pharmacogenomics is here to stay.
Pharmacogenomics and blockbusters are not mutually exclusive. The new science may be producing blockbusters of its own in a few years. But personalized medicine will also be an essential part of the future product mix, because patients and physicians will demand it. If the big pharmaceutical companies decide to embrace it wholeheartedly, then we might see remarkably fast progress. We may continue to see inertia and indecision, too, but probably not for very long. The potential of pharmacogenomics is just too great to stay bottled up.
John Rhodes (firstname.lastname@example.org) is the managing partner for Deloitte & Touche's Life Sciences Practice.