Personalized Medicine is NOT business as usual.

Personalized healthcare is extremely valuable to society - However, the nuances of the pharmaceutical market have radical implications for how the major stakeholders - the patients, doctors, health systems, payers and governments - share in that value.

The problem that innovative pharma companies have is that the listed drug price is typically set when the drug is first approved… and then the haggling with payers and discounting starts. The effect is like a ratchet - the price of a specific drug only goes in one direction and that’s down.

This has profound implications for the pharmaceutical business model and how pharma companies need to think about personalizing their medicines. Two lessons for pharmaceutical companies spring immediately to mind:

Invest early to personalize drugs before you launch - imagine you launch a new drug, and the very next day a biomarker is discovered that identifies that the benefit is concentrated in only 25% of patients. All of a sudden your market potential for your new product is only a quarter of the guidance that your CFO briefed the market. My experience is that researchers are super smart and once they start prescribing the medicine, they will rapidly look to find ways to secure the value of personalization to improve patient care and save money. Although personalized healthcare is valuable - patients, doctors and payers - not pharmaceutical companies - can typically claim additional value once the drug has been launched.

Launch your medicines with the highest value diseases first - Drug prices usually have some sort of pharmacoeconomic logic. It is intuitive that saving years of life is worth more than clearing a blocked nose. However, once a drug is in the market it is practically impossible to control how doctors use your medicine.? So if the pharmaceutical company does an additional clinical trial that shows the drug is even more effective against an even higher value disease, realistically the price cannot be raised to reflect this new high value. The most extreme example of this is when doctors started using the cancer medicine Avastin off label to stop patients with macular degeneration going blind. One vial of the cancer medicine was sufficient to treat 40 eye patients, and hence much cheaper than using Lucentis - a higher priced drug with a similar mechanism but specifically developed for eyes.

This peculiarity of the pharma market has been applicable for years - however it is more relevant than ever as the development of diagnostics to personalize drug care is set to go exponential.

There is a rapid expansion in the number of potential biomarkers to aid personalization - We are witnessing the development of methods to translate new sources of patient information - such as clinical records and radiology reports - into novel clinical biomarkers. This will dramatically increase the number of biomarkers that could be used to individualize patient care by an order of magnitude or more.?

New clinical biomarkers contain significantly more power to personalise care - clinical biomarkers - including patient performance status, ethnicity, and comorbidities - are already known to contain novel information content that is not simply a duplication of the genomics and proteomics. These markers are powerful predictors of response to treatment and hence will significantly increase our ability to identify what makes patients individuals and not populations as we currently think about them.

Since health systems and patients - not pharmaceutical companies - own the medical records of patients, we should expect personalisation to become more intense with the pharmaceuticals industry poorly placed to claim the value they create.

R&D based pharmaceutical companies need to go well beyond selling pills as the only way to monetise their intellectual property. There will be a need to offer a much more tailored patient experience - selling ‘software’ as well as ‘hardware’. In this new world, the Chief Patient Officer function will become the focal point for patient-centric software offerings and become a significant revenue center in its own right by leveraging a talent mix that includes ecommerce, health information management, and diagnostics.

#healthcare #precisionmedicine # personalizedmedicine #diagnostics