FDA guidance reinforces importance of companion diagnostics

Reflecting the growing significance of companion diagnostics in development of advanced health care, the FDA has proposed guidance that would tie the regulatory approval of “personalised” medicines to the tests that identify appropriate patients.

The regulator’s long-awaited document makes explicit the importance of the companion assays in the development of personalised therapies, as it states that in general it will not clear the drugs for the market without first approving the diagnostic. It is a development that companies in the diagnostics space welcome, as compensation practices have lagged behind the sophistication of such tests, which makes it difficult for developers to recoup their R&D costs.

Assessing risk

Companion diagnostics identify specific characteristics of a patient's disease and allow clinicians to optimise treatment strategies. The classic example is the test to identify breast cancers that over-express the protein human epidermal growth factor receptor 2 (HER2), present in one in five breast cancers, which can be treated with the monoclonal antibody Herceptin.

The FDA’s proposed guidance would require companion diagnostics, should the use of a therapy depend on it for safe and effective use, to move through a parallel development and regulatory pathway. Exceptions to stray off this concurrent pathway would be made in the case of serious or life-threatening conditions for which no alternative exists and instances in which a new companion diagnostic can be used to identify patients susceptible to a safety issue for an already marketed product.

Until now, in many cases assays have been developed and used in a single laboratory, and the agency has used its discretion on whether to require pre-market approval on the safety and efficacy data that are required of commercial kits. This includes many of the companion tests used to select appropriate patients for such drugs as Rituxan and tamoxifen, although the universe of tests this applies to is much bigger than just companion diagnostics and may soon be subject to similar FDA guidance, said Eric Assaraf, an analyst with MF Global.

A worry is the accuracy of such tests, with false negatives resulting in sub-optimal treatment and false positives resulting in unnecessary and invasive treatments that subject patients to greater risk

Bargaining power

Embedding companion diagnostics into the approval pathway of drugs destined for very specific patients has the potential to strengthen the position of pure-play diagnostics manufacturers. Many have complained of the multiple obstacles to reimbursement, which has scared investors from what should be a promising field (BIO 2011 – Diagnostics want barriers to compensation torn down, June 30, 2011).

With the FDA guidance seeming to explicitly link regulatory approval of a therapy to approval of the companion tests, the diagnostics companies may be in a position to command bigger deals with drug developers – potentially receiving royalties off sales of the drug, says Mathieu Chabert, an analyst with Bryan Garnier.

“There has to be something in this for the diagnostic company as well,” says Mike Annable, a director at British diagnostics specialist Lab21. “There has to be a revenue stream that starts earlier in the process, rather than just when the drug gets to market. "

“There needs to be an earlier return and pharma needs to bear that in mind when they are developing their drugs.”

This will also be crucial in justifying compensation from payers when a test reaches the market, a common complaint of diagnostics manufacturers who often see their tests reimbursed on manufacturing costs without regard for the pharma-like R&D costs attached.

“It’s hard for these test makers to substantiate the high R&D costs if they’re not going through the same rigorous evidence review,” said Eric Assaraf, an analyst with MF Global.

Greater clarity

An additional benefit for diagnostics makers: The proposals discourage the naming of specific manufacturers’ tests on the label of their personalised therapies, which should allow for robust post-market competition.

“This (guidance) keeps the market open and other companies can come in and develop a test for the same purpose," Mr Annable says.

Greater clarity from the agency should go a long way toward improving market conditions for companion diagnostics. Given the growing number of drugs moving through the clinic which intrinsically rely on such tests - Pfizer's crizotinib and Roche's vemurafenib to name two high profile, late-stage examples - such guidance is needed.

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