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FDA Ponders Economics of PGx. Will New Regs Drive or Slow Innovation?


What kind of an economic impact might the US Food and Drug Administration’s pharmacogenomics initiative have on innovation?

With the agency’s draft guidance in industry’s hands, drug makers and tool vendors have a basic, albeit crude, sense of how US regulators may want to receive genotyping and gene-expression data for regulatory ends [see 11/6/03 SNPtech Reporter].

The draft is actually one of two pillars supporting the use of these tools in drug discovery and development, and that may keep drug makers, regulators, and investors interested in pharmacogenomics technologies. The second pillar, which is not discussed in the draft guide, is economic: the hope that these tools will reduce the costs of discovering and developing drugs.

But this macropharmacoeconomic principle is just that: macro. What is unknown — though no less important — is the direct and indirect effects that FDA regulation might have on the cost of performing pharmacogenomics research. Indeed, neither regulators nor industry currently has a framework for accurately predicting costs that would be influenced by regulations.

As one industry insider put it: “The fundamental issue of cost is mission critical for pharmacogenomics. [But] the FDA doesn’t [care] about costs. That’s not their game.”

Research currently underway at the University of California, San Francisco, may change that. Kathryn Phillips, associate professor of health economics and health services research at UCSF, has begun working with the FDA with the aim of helping the agency view pharmacogenomics regulation through the prism of cost-benefit analyses.

“There are very few people in the country who are doing this, which is why I saw a big need,” she told SNPtech Reporter this week. “The FDA does have some economists, but none of them happen to be specialists in the area of pharmacogenomics” research.

Needle, Meet Haystack

Her work is cut out for her. Virtually all studies of economics and pharmacogenomics are targeted to industry: How much capital might technology X save when used in Phase II trials? Is it cost effective to recruit more or fewer patients for studies of one genetic biomarker versus another? And Phillips’ collaboration with the FDA grew from a study she conducted two years ago that looked at whether and how PGx can reduce adverse drug reactions — a costly problem.

Economic research geared toward regulators, on the other hand, is harder to come by, and the articles that do exist are usually scattered among various publications. For this reason and others, most regulators seldom, if ever, include economic criteria in their regulatory decision making. “A lot of people have written about [the economics of pharmacogenomics regulation], but they’re all over the map,” said Phillips. “We’re trying to summarize and synthesize ‘Where are we with this?’ and ‘What are people saying?’”

The subject gets murky farther down the pipeline. Physicians and other health-care providers, not to mention the schools that produce them, have few pharmacogenomics tools with which to work, and payors are by and large in the dark about new — and potentially cost-saving — discoveries [see 3/14/03 and 5/9/03 SNPtech Reporter].

“People have only been focusing on the basic science [of pharmacogenomics] — for example, ‘What mutations do we know about?’” said Phillips. “But we’re just now looking at it from a policy point of view. [We’re asking:] ‘How are we going to consider these new tests, new drugs, [and] who is going to pay for them, [or] which ones should be encouraged, what’s the role of the government, how do we consider all the different players — patients, providers, insurers, industry, government?’

“A lot of people say, ‘Pharmacogenomics is the best thing,’ but we really don’t know that yet,” she said. “So we’re trying to find out, ‘What do we know about the cost and benefits, and what do we need to know in the future?’”

Phillips, who has been working with the FDA for the past few months on the year-long project, said she is currently “reviewing what the FDA is doing [within the pharmacogenomics framework], and what people are saying about regulation in this area.” She said the study will look at this question “from the perspective of economics.” She plans to write a paper that will review “what people are saying about the potential risks, costs, and benefits of pharmacogenomics,” Phillips said.

Any regulation has costs and benefits, and the FDA “wants to consider the cost-benefit [ratio] of their regulation,” Phillips said. In fact, one ally Phillips has is Mark McClellan, the FDA commissioner, who happens to have a PhD in economics. In a keynote speech to participants of a pharmacogenomics meeting in Washington, DC, last week, McClellan said that “pharmacogenomics holds a fundamental potential for funding medicine at better costs.” He added: The FDA “needs to speed up the use of pharmacogenomics in drug development for patients and for industry ... for safety and for cost-cutting. FDA wants to help. We want to drive this development.”

Told of Phillips’ research, and hearing McClellan’s comments, Kim Slocum, director of strategic planning and business development at AstraZeneca, said: “Surprise, surprise. You have a physician-economist running the FDA.

“Everything I see from Dr. McClellan suggests he takes his MD and PhD [in economics] equally seriously,” he said. “You can see the economist coming out here. He’s trying to figure out not just what’s effective, but what’s efficient. And I have to give him credit for that.”

Phillips said that another objective her research would be to pursue would be the likely costs and benefits of the FDA’s pharmacogenomics draft guide. For example, she said, since one of the main focal points of last week’s pharmacogenomics symposium was on the definition of biomarkers — or, more accurately, the fact that there are not hard and fast definitions — Phillips said she would try to look at the various definitions of biomarkers from a cost-benefit perspective. “You can define [biomarkers] more strictly, or you can define [them] more loosely,” she said.

Phillips said she will likely include in her research certain experiences she has had working with academia and industry, and has considered creating a center within UCSF that “would bring together basic, clinical, and social science researchers to address pharmacogenomics.”

“I think the biggest challenge is that this is occurring within the context of increasing expenditures on health care and on pharmaceuticals, and so there is an ongoing and increasing concern about the cost of pharmaceuticals, and how much of the health-care budget goes to pharmaceuticals,” she said. “I think at that point, any new innovation — such as pharmacogenomics — has to be able to prove that it adds to the benefits by improving health care, while not increasing the cost unduly for the comparison of what you get for what you’re paying for.”

She said she has helped companies like Sequenom, Israel-based Glycominds, and DNA Sciences, and has for this project been working with Janet Woodcock, director of the FDA’s Center for Drug Evaluation and Research; Larry Lesko, director of the agency’s Office of Clinical Pharmacology and Biopharmaceutics; David Feigel, director of the Center for Devices and Radiological Health; and others. Phillips said the next step in her FDA research is to get a sense from payors of what their priorities and views may be.

“Because there are so few pharmacogenomics-based tests and drugs on the market today, it’s not an issue that has really been raised yet in the insurance community,” she explained.

Phillips stressed, however, that an approved guidance on the use of pharmacogenomics data in drug discovery and development in the absence of an economic model will not grind the industry to a halt.

“Economic models are simply input into [the] decision making [process], and certainly they’re not going to make the decision,” she said.

— KL


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