Q&A: Finding Common Ground in CDx Partnerships

April 12, 2017
Q&A: Finding Common Ground in CDx Partnerships
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In today’s drug development landscape, where targeted therapies are increasingly common, partnerships between pharmaceutical and diagnostics companies for the development of a companion diagnostic are on the rise. Clinical OMICs Editor in Chief Chris Anderson recently spoke with David Parker, Ph.D., senior vice president, diagnostics solutions, at Precision for Medicine about some of the issues inherent in these CDx development relationships.

Clinical OMICs: Pharma and diagnostics companies have different views of the market and different needs. When it comes to working on the development of a CDx, what are some misconceptions that each has of the other’s business?

David Parker, Ph.D., Senior VP Diagnostics Solutions, Precision for Medicine: They have very different business models and different goals. That is really central to the whole partnership issue between pharmaceutical developers and diagnostics companies. In a nutshell, the pharma company wants a companion diagnostic that will not impose a barrier to access to the drug, and ideally it would promote access to the drug.

So, practically speaking that means the pharma company wants a test that is cheap. They want a test that is broadly available, that anybody can get access to. They don’t want reimbursement of the test to be an issue, because they certainly don’t want patients to pay out of pocket or have laboratories refuse to offer it. The idea in their mind is that the test, the companion diagnostic, is a means to the end and the end is access to the drug.

The diagnostics company has an entirely different view of the world. To them, it’s a product. In a sense, they don't care how well the drug does as long as it has enough success to drive use of the test. To them, it is a product in their diagnostics test portfolio.

They are using it to generate revenues and profits, which means the lowest-cost test is not necessarily what they want. They may have distribution channels that aren’t necessarily aligned with what the pharma company wants to see. They may have a particular platform that they would like to see the test integrated on that may or may not be the easiest way to do that test.

This is a source of some misalignment. Each partner knows that the other has different business goals, but when they really start working on their development programs, and their timing, and their regulatory submissions, and even their market access strategies, then these differing goals come into focus and have a real impact on the ability of the biopharma partner and the diagnostics partner to work successfully together.

CO: Is there a pervasive view within pharma companies that the diagnostic companies are second fiddle in a CDx partnership?

Dr. Parker: Certainly, for the pharma company, it is all about the drug. But I do think the value equation between the diagnostic testing and the pharmaceutical product is way out of whack. There is immense clinical and societal health economic value provided by diagnostic testing that is far underrepresented in the amount of healthcare spending that is actually devoted to diagnostics. That is the reality in terms of the amount that a health insurer will pay for a diagnostic test or a drug. They will pay ten- or a hundredfold the value of the diagnostic test as they will for the drug. So, at the high-level economic view of this, the diagnostic is the second fiddle.

CO: What are some of the pitfalls of a pharmaceutical company having a drug candidate and thinking they may not need a CDx partner?

Dr. Parker: The vast majority of biopharmaceutical companies do not have an in-house diagnostics product division, and have no idea how to take a diagnostics product to market. I’ve had direct experience with that.

A couple of years ago, we were working with a Top 20 pharma company that was actively engaged in developing some biomarker signatures to indicate response for one of its drugs. They engaged a number of our units to help them in this endeavor and it became crystal clear early on that the regulatory people the pharma company could bring to the table were obviously experts in FDA regulation of biopharmaceuticals. But they were frankly almost novices in their understanding of the process by which the FDA would regulate and allow it to market a diagnostic test.

The company had a very good market-access team and their managed markets capabilities were excellent. Their drug marketing was top notch; but my team and I had to do diagnostics reimbursement 101 for their team, just to let them know this is how tests are paid for, and this is how market access for diagnostics goes. Just another example of a how a very sophisticated drug-marketing team is all the way back to square one for a diagnostic test.

CO: What are the hallmarks of a well thought-out CDx partnership?

Dr. Parker: The first is early engagement between the two partners. The drug company—if they are developing a targeted therapy—already has a biomarker in mind. It could be a particular gene that is expressed; it could be a biomarker signature that looks at several genomic variations all together. Whatever it is, the pharma company is well served engaging with a diagnostic partner that is optimally positioned to turn that biomarker into a suitable companion diagnostic test that meets their needs.

As the pharma company, you want to think about how that biomarker might be manifested as a diagnostic test and who is the right partner to turn this biomarker into a diagnostics test. That should start very early, because there might be other options for measuring that biomarker.

The second hallmark is that you really want to select a diagnostic partner that has experience taking tests to market. It is not always the partner with the sexiest technology that has the most experience commercializing tests. You also want to look at the breadth of that diagnostic partner’s distribution channels. The goal of the drug company is wide access to the test. If it’s a global launch and you’ve chosen a partner that doesn't have any European or Far East operations, then you are going to have a difficult time getting access to the tests in those markets and, as a result, getting access to the drug.

CO: What is one thing pharmaceutical and diagnostics companies can do to make sure they work well together in a CDx development relationship?

Dr. Parker: The main thing I would emphasize is that each partner serves its own interests by remembering what the interests of the other partner are. That sounds like “Partnership 101,” but I think in a lot of partnerships, the two partners often lose sight of that as the work progresses. If they keep this in mind, they will better understand what is motivating the other partner.

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