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By Amit Agarwal

MDD Perspectives Contributing Writer

Editor's note: Amit Agarwal is a partner with Scientia Advisors.

With the growth of personalized medicine, the use of diagnostics to determine whether a specific therapy likely will help a patient is on the rise. Such combinations often are referred to as "companion diagnostics" – a category that includes any diagnostic test that can influence drug prescription.

Distinguishing theranostics
Some companion diagnostics do not define which drug therapy should be used to prevent or treat a particular disease. Examples include genetic tests that measure patients' sensitivity to Coumadin (warfarin, Bristol-Myers Squibb Co.) in order to determine appropriate dosage and the BRCA1 and BRCA2 tests, which measure genetic susceptibility to breast cancer but not the drug regimen that should be prescribed.

Other diagnostics are intimately tied to a specific drug: The FDA requires their use if a drug is to be prescribed. At Scientia, we define these drug-diagnostic combinations as "theranostics." Examples include Her-2 neu testing followed by prescription of Herceptin (trastuzumab, Genentech Inc./Roche AG) for eligible breast cancer patients or BCR/ABL and C-kit protein testing followed by prescription of Gleevec (imatinib, Novartis AG) for treating chronic mylogenous leukemia or gastrointestinal stromal tumors.

Often, all of the above-mentioned drug-diagnostic combinations are categorized as "theranostics." But we believe that it is important to distinguish theranostics from other companion diagnostics – and that, for several reasons, theranostics should be considered a pharmaceutical category of its own.

Theranostics as a pharma category
To begin with, unlike other companion diagnostics, theranostics provide critical information that determines prescription of a specific drug. What is more, for theranostics, pharmaceutical developers must take into account additional variables involving diagnostic testing laboratories and FDA requirements. Finally, theranostics require specialized sales and marketing strategies that encourage the diagnostic testing that enables drug sales.

In our definition of theranostics, the diagnostic portion of the combination must meet multiple criteria – all of which must be included on the FDA-approved label for the drug.

  • At least one of the approved indications for a drug requires a diagnostic test before prescription and applies to at least a portion of potential patients (e.g., women of childbearing age).
  • If the diagnostic test is required as part of the indication, the results of the test must be provided in the indication or contraindication.
  • The label clearly states that diagnostic testing is a requirement by using language such as "must" or "required."
  • The label clearly states that the diagnostic test must be completed before prescription, rather than simultaneously or shortly after beginning a course of therapy.

A market approaching $20 billion
If theranostics were considered a separate category of pharmaceuticals, they would rank as the tenth largest – with 2008 sales of more than $9 billion. As a category, currently marketed theranostics are projected to grow significantly faster than other drug categories such as cardiovascular or oncology drugs – so that by 2014, currently marketed theranostic drugs will grow in sales to more than $20 billion. (This includes only the drug portion of the combination, with diagnostic sales adding to totals.)

In addition, new theranostic drugs will enter the market after completion of clinical trials. Based only on drugs currently in Phase III trials, we estimate that approximately 34 new drugs – for oncology, musculoskeletal, cardiovascular and other categories – will utilize a diagnostic to segment patient populations. If approved, these drugs will likely carry labels requiring diagnostic testing before prescription.

Moreover, based on historical precedent, we believe that the FDA will continue to mandate post-launch label changes that will turn current drugs into theranostics. And, in the future, the use of biomarkers for drug discovery will further drive the trend and add more theranostic drugs to clinical pipeline.

New challenges are arising in theranostics
The projected growth in theranostics presents certain special variables that pharmaceutical developers must consider.

While many theranostics are tied to standard, widely-available clinical chemistry or immunohistory tests, some 20 percent of theranostics currently on the market require clinical testing that needs specialized equipment and expertise. Many such diagnostics are offered as "home brews" by clinical testing laboratories. In these cases, the laboratories must purchase specialized reagents and conduct tests utilizing their own protocols. These "analyte specific reagent" (ASR) tests are granted FDA approval based on different criteria than those used for standard diagnostic kits. What is more, ASR tests sometimes exhibit problems of quality, lack of standardization and reimbursement – leading to physician reluctance to adopt the tests and consequently, the corresponding drug.

Another option is for pharmaceutical or diagnostics developers to seek FDA approval for a test kit while the drug is also in clinical trials. While this takes longer than ASR test approval and has a simpler reimbursement process, test quality and correlation among different diagnostics manufacturers may vary – and specific antigens/antibodies used in developing the test can lead to very different results. Diagnostic developers' incentives are to quickly validate and gain FDA approval for their tests but this may not work to the pharmaceutical developers' advantage. False positives may lead to patient adverse events arising from the prescription of an unnecessary drug; false negatives can mean that patient populations that would benefit from the drug therapy do not receive it.

All of the above bring new marketing challenges.

While it is in the interest of drug developers to have the most accurate tests possible, many diagnostic tests may not have been developed for that purpose. The "gold standard" diagnostic test for a given condition may have reached that status due to lower cost, "good enough" accuracy for clinical diagnosis and widespread availability. While physicians may be aware of the limitations of an existing test, the need to change clinical practice to encourage adoption of newer tests that will drive the sales of a companion pharmaceutical is an additional barrier that theranostic developers must address. Gaining acceptance for higher quality tests may require financial incentives, physician education, clinical laboratory negotiation and payer reimbursement discussions more complex than those required for "simply" gaining drug approval, reimbursement and uptake.

Theranostics and drug sales
Theranostics also present a unique competitive challenge with which traditional drug developers have historically not had to contend. While tests are intimately tied to sales of the drug, the intellectual property underpinning the diagnostic test is not part of the new chemical entity/new molecular entity patent application. This situation is made more complex by the explosion of biomedical research, which is uncovering new biomarkers that can form the basis for new diagnostic tests.

In several instances, new theranostic tests have negatively impacted drug sales. Such tests have been developed by academic researchers, by payers and even by pharmaceutical competitors seeking to limit use of a particular drug to a particular patient sub-segment. The academic researchers were attempting to minimize adverse events, payers sought to identify patient segments that could use cheaper generic drugs, and competitors wanted a market opportunity for their own drugs. As the example of Plavix (clopidogrel, Sanofi-Aventis Group and Bristol-Myers Squibb) demonstrates, even blockbuster drugs are not immune from these competitive dynamics.

For all of these reasons, pharmaceutical and diagnostics companies must develop strategies that take into account the differences between theranostics and other companion diagnostics. Only by treating theranostics as a separate category will companies be able to surmount the special challenges presented by this rapidly growing new field.

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