Analysing stratified medicine business models and value systems: innovation-regulation interactions

Abstract

Stratified medicine offers both opportunities and challenges to the conventional business models that drive pharmaceutical R&D. Given the increasingly unsustainable blockbuster model of drug development, due in part to maturing product pipelines, alongside increasing demands from regulators, healthcare providers and patients for higher standards of safety, efficacy and cost-effectiveness of new therapies, stratified medicine promises a range of benefits to pharmaceutical and diagnostic firms as well as healthcare providers and patients. However, the transition from 'blockbusters' to what might now be termed 'niche-busters' will require the adoption of new, innovative business models, the identification of different and perhaps novel types of value along the R&D pathway, and a smarter approach to regulation to facilitate innovation in this area. In this paper we apply the Innogen Centre's interdisciplinary ALSIS methodology, which we have developed for the analysis of life science innovation systems in contexts where the value creation process is lengthy, expensive and highly uncertain, to this emerging field of stratified medicine. In doing so, we consider the complex collaboration, timing, coordination and regulatory interactions that shape business models, value chains and value systems relevant to stratified medicine. More specifically, we explore in some depth two convergence models for co-development of a therapy and diagnostic before market authorisation, highlighting the regulatory requirements and policy initiatives within the broader value system environment that have a key role in determining the probable success and sustainability of these models.

Stratified Medicine: Will it be the Future of Medicine?

“…In this case there is no risk of the diagnostic failing during development, which would be detrimental to the pharmaceutical company as the therapy would have no value in the market without a stratifying agent. 25 Also, phase 2 attrition during clinical trials, which is a big challenge to the pharmaceutical industry, can be minimized by better selection of patients early in the trial. 27 The cost incurred in trials would also be reduced by smaller, better defined clinical trials.…”

“…However, developing diagnostics early in the clinical trial is more risky to the diagnostics company, given that many drugs fail during phase 1 and phase 2 of trial. 25 Hence, not many diagnostic companies are willing to invest in co-development of the diagnostic early in the clinical trial. Also, the diagnostics are undervalued by the payers and reimbursement authorities as the value assessment of diagnostics is more cost based instead of being value based, as is for pharmaceuticals.…”

“…This in turn can reduce the duration and cost involved in the trial. 25 Several case studies show that if stratification is done before clinical trials, the time taken for regulatory approvals is much less, as compared to stratification done during clinical development or post marketing. A classical example of this is development of Zelboraf (vemurafenib: Roche, Basel, Switzerland) which is an inhibitor of oncogenic, V600-mutated BRAF kinase, along with along with the Cobas 4800 (Roche) BRAF V600 mutation test.…”

“…Economic studies indicate that structure of the clinical trials and determining at which stage the convergence of the two business models should happen, are the most defining factors in successful implementation of stratified medicine. 25 that there is great need for holistic assessment of the value of diagnostics and reworking of the pricing and reimbursement policies for diagnostics. The current reimbursement policies do not reward the value creation and innovation involved in the diagnostics, thus dissuading diagnostic manufacturers from investing in stratified medicine.…”

Formalizing an Integrative, Multidisciplinary Cancer Therapy Discovery Workflow

“…And, interdisciplinary development may raise a number of legal issues from sharing of intellectual property rights to dealing with therapeutic risks (7). Nevertheless, the benefits of early interdisciplinary work have been adapted to collaborations across diagnostic and pharmaceutical industries, where drug research and co-development is now aiming at stratified, or personalized, medicine due to the ever-increasing regulatory demands for drug safety and efficacy (8). …”