“Companion Diagnostics” Enter Lab Marketplace

Expected to be good for diagnostic vendors, but mixed benefits for clin labs and drug firms

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CEO SUMMARY: Although the field of pharmacogenomics is still in its infancy, it has begun to develop sub-specialty areas. “Companion diagnostics” describes the marriage of a therapeutic drug with a specific diagnostic assay that can identify which patients will benefit from a prescription and which will not. “Companion diagnostics” will generally have reasonable reimbursement for labs because of their high clinical utility.

WITH THE FIELD of pharmacogenomics, there is an emerging specialty called “companion diagnostics.” This is the marriage of specific drugs with specific diagnostic tests that determine whether the drug is appropriate for
individual patients.

The first examples of companion diagnostics demonstrate how certain diagnostic vendors gain economic benefit if their assay becomes linked to a specific drug. On the other hand, the economics of companion drugs work against the financial interest of pharmaceutical companies, illustrating the conflicts that pharmacogenomics will bring to healthcare.

A New Phenomenon

“Companion diagnostics got its start a few years ago,” stated Joseph W. Plandowski, President of Lakewood Consulting Group, located in Lake Forest, Illinois. “Following its review of a new drug, for the first time ever, the FDA required that a specific molecular test be performed to assure the drug would only be prescribed for breast cancer patients who would benefit from this new drug.

“The FDA took this ground-breaking action because the clinical trial had revealed that about a third or less of the patients involved in the trial had demonstrated benefit from taking the drug,” explained Plandowski. “There was no benefit to the rest of the clinical trial population. Upon further study, researchers conducting the trial determined that the cause of this variation in patient outcomes was tied to the over-or under-expression of the HER-2neu gene.

“Because a molecular assay could predict, with reasonable accuracy, which patients would benefit from the drug and which would not, the FDA decided to approve the drug subject to the use of the ‘companion diagnostic’ test,” added Plandowski. “There were at least two factors in the FDA’s decision. First, it did not make sense to give a drug to a patient who would not benefit from it. Second, it would save the annual cost of the drug, estimated to be at least $18,000, for patients who would receive little or no benefit.”

The drug in question, Herceptin® , was developed by Genentech. DAKO worked with Genentech to develop the screening test, HercepTest® , which also received FDA approval. At this time, Dako was a small, privately-held Danish company specializing in cytology and histology stains, including a strong line of immunostains. However, once the FDA approved HercepTest, DAKO was positioned as the sole source for an exclusive and high demand test.

Good Times For DAKO

“Business has been good for DAKO since then,” observed Plandowski. “In recent years, DAKO merged with another private company, Cytomation. Cytomation makes a line of flow cytometry equipment. Following that acquisition, Dako took the new name of DakoCytomation.

“The second drug to require a companion diagnostic was Gleevec® , developed by Novartis,” he noted. “The FDA approved Gleevec for treating chronic myeloid leukemia (CML), but that indication did not require a companion diagnostic. However, Novartis did further work with the drug and obtained approval for the treatment of Gastro-Intestinal Stroma Tumors (GIST). The FDA required a companion diagnostic to select patients for this new application. Ventana Medical Systems worked with Novartis to develop the test, known as c-Kit.

FDA Approval Expected

“A third drug, Iressa® , is expected to follow the companion diagnostic route in a secondary application similar to the above scenario,” added Plandowski. “Iressa was initially approved for the treatment of non-small cell cancers. Its secondary application for the treatment of head and neck cancers requires a companion diagnostic. DAKO was rumored to have the inside track on that test, known as Epidermal Growth Factor Receptor (EGFR).

“For clinical laboratories, the evolution of companion diagnostics will have mixed effects,” he noted. “Because these tests have high clinical value, reimbursement is reasonable. However, since distribution of the tests or the test kits can be controlled by the diagnostic vendor, not all laboratories interested in performing the test may be able to buy kits.

“The mixed benefits scenario is also true for pharmaceutical companies. For them, an FDA approval linked to a companion diagnostic is a double-edged sword,” he said. “One side of the blade cuts against them. Drug companies do not want an FDA-dictated companion diagnostic for their drugs. It limits the potential size of the market for that drug. Pharmaceutical companies prefer the traditional way—‘one drug for all, whether it works on all or not.’

Blade Cuts Both Ways

“However, the other side of the blade cuts in their favor. Drug companies do want a diagnostic test they can use to sort patients for their clinical trials. Having only patients who respond favorably to their drug would make for spectacular clinical trial results with much smaller trial populations. It would also result in quicker FDA approvals and far less expense,” stated Plandowski.

THE DARK REPORT observes that the early examples of companion diagnostics validate predictions that molecular diagnostics will have higher clinical utility. In the case of Herceptin and HercepTest, payers quickly recognized the value of this laboratory test because of its ability to determine whether or not a patient will benefit from a drug costing thousands of dollars per treatment cycle.

Whether or not companion diagnostics prove to be profitable assays for individual labs depends on how diagnostic test developers choose to distribute such tests in the laboratory marketplace.

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