Reduction of R&D Costs
Personalised medicine may provide more value for money—not only because of improved drug effectiveness and reduced toxicity, but it may also decrease the average research and development costs for new medicines.
In fact, clinical trials are the most expensive part of R&D (nearly 50% of the investment). The costs of clinical trials seem to have risen by one third between 2005 and 2007 due to increasing regulatory and other requirements.7 Biomarkers may enhance the efficacy of clinical trials of new drugs by investing more heavily in early research to identify key biomarkers, and in targeting relevant sub-groups of patients. Smaller (and maybe even shorter) clinical trials are likely to reduce development costs.8
This sounds promising, but since personalised medicine is in its early stages, efficiency gains may occur only in the long run.9 Furthermore, companion diagnostics are likely to increase the additional costs and the complexity of the risky process of drug discovery and development. In oncology, where personalised medicine is currently progressing most rapidly, the late stage failure rate of new compounds has historically been higher than in any other area.
A well-known argument against personalised medicines is, that they will lead to smaller groups of eligible patients and therefore lead to higher unit prices in order to deliver competitive return on investment. Additional value, therefore, “needs to be captured in terms of premium pricing, faster adoption or longer effective patent life for a portfolio of targeted drugs, to offset the reduction in potential revenues from market stratification”.10 However, personalised medicines do not only diminish groups of eligible patients, they enlarge them as well (see chapter 2).
The following problems still have to be solved:
- The costs of diagnostics are not easy to describe
- The evaluation of cost-effectiveness is difficult
- The regulatory pathway is fragmented