Personalized medicine’s economics

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Personalized medicine’s economics

Does personalized medicine cut the mustard when it comes to treating cancer? Richard Smith, a former editor of the British Medical Journal, believes that it does not. Using the mustard metaphor, he shows how personalized medicine undermines the pharmaceutical industry’s profits. If the one-size-fits-all approach to prescribing cancer drugs were abandoned, drug companies would be forced to change their business model, most notably by increasing prices radically - or stop producing the drugs altogether.

In pharmacogenetics (or pharmacogenomics), genetic typing is used to determine a patient’s likely response to drugs, and to tailor the pharmaceutical regime accordingly. In oncology, this means adjusting treatment based on the cancer’s sequenced genome, which differs from that of the patient’s normal cells. It might be possible, for example, to identify patients who are genetically programmed to respond more quickly to chemotherapy, and thus to prescribe lower dosages that allow them to avoid the treatment’s worst side effects.

This approach is crucial in oncology, given that cancer varies widely, even in patients with the same diagnosis. After sequencing 50 patients’ breast cancers, one group of researchers found that only 10 percent of the tumors had more than three mutations in common.

Likewise, an analysis of biopsies conducted on four patients with kidney cancer showed that a single tumor can have many different genetic mutations at various locations. Two-thirds of the genetic faults identified were not repeated in the same tumor, let alone in any other tumors that appeared elsewhere in the patients’ bodies. A pharmacogenomic drug that targets one mutation may not work on others.

If a pharmaceutical company treats 100 patients for £100 ($160) each, it makes £10,000. But, if only ten of those patients - 10 percent of tumors - are genetically programmed to benefit from the drug, insurers or national-health systems will want to pay only for those patients, reducing the company’s income by 90 percent. This is where the mustard metaphor comes in.

According to Smith, drug companies are like mustard makers. They make most of their money from patients who do not benefit from the drugs that they provide, just as mustard makers profit primarily from what diners leave on their plates. Stratified or personalized medicine will require drug companies to raise their prices significantly in order to offset losses from the reduction in portions.

In fact, this is already happening. A new personalized drug for cystic fibrosis, Kalydeco, is highly effective, but only in the 4 percent of patients who have a particular genetic mutation. As a result, one year of treatment costs $294,000. Likewise, Xalkori is being made available for $9,600 per month, because the drug’s target population - patients whose lung cancers have a certain mutation - comprises fewer than 10,000 patients.

In the United Kingdom, the National Health Service deemed the personalized cancer drug Herceptin too expensive, until a public outcry forced the NHS to reverse its position.

But, in an age of austerity, will the authorities do so again?

By restricting access to the rich and the well-insured, rising drug costs could exacerbate growing inequality in many countries. As the health-care ethicist Karen Peterson-Iyer has pointed out, “From the standpoint of justice, one of the most disturbing possibilities raised by pharmacogenetics is that it will further entrench the already deep socioeconomic divisions that characterize modern U.S. society.”

But personalized medicine is not the only factor undermining the pharmaceutical industry’s profits. Patents on many best-selling drugs are expiring, deepening the urgency of finding new markets.

Pharmaceutical companies can create new niche markets by persuading customers that they cannot rely on a one-size-fits-all product, and by breaking down existing medications into different “size ranges.” Their best option would be to persuade individual patients to pay out of their own pockets to learn which of the niche pharmaceuticals is their “size.” Now that an entire genome can be sequenced for only $1,000, online direct-to-consumer genetic firms may well extend their reach from gene subsets to whole-genome mapping.

In this case, diagnostic costs would be transferred from the public-health system or insurers to the individual. But that could lead to new problems, particularly if some individuals are excluded from coverage on the basis of the genetic profile for which they have paid.

Moreover, even if pharmaceutical companies raise prices, there will probably be some combinations of pharmacogenetic drugs for which the market is simply too limited. Patients with cancers driven by different genetic pathways would require such diverse drug combinations that producing every drug required for each patient’s ideal regime would not be feasible. Indeed, as medicine becomes more personalized, the range of customers for each drug narrows, weakening pharmaceutical companies’ incentive to produce them.

Personalized medicine appeals to our desire for choice and autonomy. But we should be careful what we wish for. Patients’ enthusiasm for pharmacogenetics would be dampened significantly if it served as a rationale for national health systems and insurers to deny them treatment. And, with governments and companies worldwide cutting costs, that may well be the shape of things to come.

Copyright: Project Syndicate, 2012

*The author is emeritus professor of medical ethics at the University of London.

by Donna Dickenson
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