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DBL%20Hendrix%20small.png College chemistry, 1983

Derek Lowe The 2002 Model

Dbl%20new%20portrait%20B%26W.png After 10 years of blogging. . .

Derek Lowe, an Arkansan by birth, got his BA from Hendrix College and his PhD in organic chemistry from Duke before spending time in Germany on a Humboldt Fellowship on his post-doc. He's worked for several major pharmaceutical companies since 1989 on drug discovery projects against schizophrenia, Alzheimer's, diabetes, osteoporosis and other diseases. To contact Derek email him directly: Twitter: Dereklowe

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December 7, 2004

Check, Please

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Posted by Derek

Here's a post from back in the spring which goes into why I think that the cancer drug market is in the process of changing. As we figure out which patients will respond to which drug - which will happen, albeit slowly - the standard industry assumptions about market size will have to be rethought.

For now, we in the business can continue to assume that everyone will be given most everything for most everything. That's why Gleevec sells at the level it does - it's really an orphan drug which has benefited from the let's-give-it-a-shot mentalily more than anyone thought possible. The thing is, most of the people who've received the drug (and the other new agents) for totally different kinds of cancer than they're known to treat have wasted their time and hopes, and their insurance companies have wasted their money. It's true that this kind of clinical practice can lead to new treatments (there are always some surprises), but it leads to a lot of lost effort, too.

But as we move into the world where we know more about what we're doing, that's going to change (see that post linked above for details.) Cancer is going to slowly turn into a constellation of hundreds (thousands?) of orphan diseases, each of which will have its own particular preferred therapy. We won't need new drugs for all of them - many of these will be particular combinations of known agents - but we'll need a lot more than we have now. And the market size for each of them might be at least an order of magnitude smaller than we'd like.

That, naturally enough, will mean that the prices of these drugs will go up, because they're probably not going to be any cheaper to develop. So we'll have a lot of drugs, each of which can do great things for a small set of patients, and each of which will cost a heap. Doctors will have no problems with this, and patients will adapt to this world without many complaints. We'll adapt to it in the drug industry. But think about how this is going to look to an insurance company or HMO. . .

All of their cancer-patient customers will be taking highly expensive medications - different ones, true, but the bottom line will be the same. And they'll all have to stay on them for a long time, since we still don't know how to make cancer reliably go away very well - we can just keep it in check. How's that sound over on the insurance side of the street, guys? Guys?

(For those who are interested, I wrote a few other posts on the issue of cancer therapies (and their prices) back in the summer - try here and here if you haven't seen them.)

Comments (6) + TrackBacks (0) | Category: Cancer | Drug Prices


1. SRC on December 7, 2004 10:53 PM writes...

You've made an important point here, Derek, one to which there's no obvious answer, but that needs pointing out.

I've explained this problem previously to non cognoscenti by likening it to a situation where each model of car ran only on gasoline deriving from a particular well, and refined at a particular refinery. It's obvious to laymen that that would cost a fortune by destroying the economies of scale.

One solution is apparent: cut back on basic research (e.g., NIH) budgets, and allow attrition of those of us of a certain age (gulp), thereby smoothing out the demographic bulge and avoiding an economic calamity.

For intensely selfish reasons, I hope we find another solution. Perhaps lowering the regulatory bar, and letting those affected assume more risk, would be a workable solution.

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2. Clark on December 8, 2004 6:56 AM writes...

In regards to your assertion that genomics/proteomics is going to make medicine much more expensive because the R&D will get no cheaper, but the target patient population will get much smaller. I disagree:

I'll admit that the cost of the Phase I and even the Phase II's is not likely to come down much, but the cost of the Phase III's is likely to come down substantially. As the percent of patients showing a response rate climbs, the total number of patients in which it needs to be tested comes down substantially. In going from a 10% response rate to a 70% response rate you need only perhaps 1/10th of the patient population. That makes for an enormously cheaper trial. There are some tricky bits to doing this effectively - e.g. the FDA is looking at protocols where the duration of response is measured only in those patients showing some kind of initial reaction marker - that are not yet worked out. But there is no question whatsoever that the cost of trials will come down substantially with targetted therapies. Will it come down as fast as the patient population? That is a question to which the answer is murky.


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3. jh on December 8, 2004 7:49 AM writes...

Personalized medicine ... oh my. Doctors will indeed have "problems with this" ... plenty of business failures have occurred in personalized medicine (PM), and many are yet to come. Don't misunderstand me ... I hope and pray for PM. Those who have attempted to build a business around PM quickly realize that guessing is established, quick, free, and reimbursable. No CPT code exists to pay any doc any $ for any PM. Hence, they don't attempt to learn about it and they fear what they don't understand. A detailer selling "just give it to everyone, doc" will always win against the alternate "test everyone, wait for the results, puzzle over the fuzzy results, dig into the clinical literature, then give them this pill." Your vision is correct, but it's 50 years ahead of its time.

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4. ctr on December 8, 2004 8:34 AM writes...

Derek, although I think you have an important point, I think there will be a strengtened focus towards those targeted therapies that are most likely to work in synergy with the already established drugs w/o overlapping toxicities and therefore the number of drugs in cocktails will be bigger. Of course that doesn´t overcome the problem for highly targeted drugs such as Gleevec, but if you look at e.g. some of the oncolytic viruses, some of the angiogenesis inhibitors and perhaps best illustrated of them all, - the new vascular targeting agents, it seems there are many new drugs and techs coming that aim to be just another piece in the cocktail puzzle but where that piece adds important benefits w/o added toxicities. This trend clearly speaks for room for more drugs.

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5. Ward on December 9, 2004 9:33 AM writes...

I would think the insurance model will have to shift more risk back on to the patient while also trying to push more pharmacogenomics, testing and prevention.

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6. Scott S. on December 10, 2004 1:28 PM writes...

I tend to disagree somewhat. I think that there are likely a limited number of intervention points in the development of many cancers. Cancer is a disease of either uncontrolled proliferation or defective apoptosis. Signaling agents control the first, and survival agents control the second.

It may be that there are scores of these agents, or perhaps even hundreds, but there is a finite number of them.

It may also be that the identification of crucial members in signaling pathways will allow the rapid development of interventionary molecules.

There may be multiple intervention points (angiogenesis, wide applicability of signaling agents), too, which may provide for unanticipated commonality of therapeutic benefits. And there may very well be overlapping targets between cancers, witness GIST as well as CML for Gleevec.

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