A Revolution in R&D

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Side-effect-based pharmacogenetics for common side effects
can save a candidate drug that would otherwise fail.
This form of pharmacogenetics does not streamline
trials; in fact, it imposes a moderate increase in costs,
since more patients have to be recruited initially for
the vetting process. It requires a smaller upside to
break even than efficacy-based pharmacogenetics,
however, since its powers of exclusion apply only to
the second type of patient (those who would ordinarily
try the drug and then discontinue it). They do
not apply to the first group (those who would take a
full course of the drug), since placebo responders
do not suffer from side effects.
Side-effect-based pharmacogenetics for very rare side effects
is the type that would be applied for a drug already
on the market. Once the number of adverse events
(instances of severe side effects) reaches a critical
mass, the drug’s reputation suffers, and its continued
marketability is jeopardized. (In severe cases,
regulatory agencies require the drug to be removed
from the market.) To salvage it would involve implementing
screening tests for all potential patients—
a kind of postmarket surveillance. This type of
pharmacogenetics would increase costs fairly
steeply, yet it could still make economic sense if the
drug were saved.
The economics hinge on a paradox: the fewer the
adverse events, the harder it might be to save the
drug. To identify the culprit genetic marker for use
in the screening test, you need a certain minimum
number of patients who have experienced the side
effect. That could be as low as 20 (assuming you
achieved a 100 percent association with a single
SNP marker), and that would carry the modest
price tag of $100,000 (assuming the expected genotyping
cost of one cent per SNP). But the required
number could be 2,000 (assuming you achieved
only a 10 percent association), and the likelihood is
that such a number of side-effect sufferers would
simply never emerge.
It’s a crime that a very small percentage of patients
can sometimes eliminate an otherwise highly beneficial
drug from the market. Pharmacogenetics benefits
everyone here.
—Research executive,
leading pharmaceutical company
Finally, market-expansion pharmacogenetics for the
most part has highly favorable economics. Since its
effect is to expand rather than contract the market,
all it needs to ensure is that the expansion be large
enough to cover the cost of the required trial.
The prospects hinge to some extent on the incidence
of the genetic variant. Consider two drugs,
one producing side effects in poor CYP2D19
metabolizers (including 20 percent of Asians) and
the other in poor CYP2D6 metabolizers (including
7 percent of Caucasians); and suppose that dosage
adjustments could resolve the side effects. It might
turn out that the former case warrants the investment
and the latter does not, given the difference
in their potential market expansions.
All in all, these limitations reduce the expected savings
that pharmacogenetics would bestow on an
average drug to about $75 million. But of course
there is no such thing as a true “average” drug. In
some cases, pharmacogenetics could yield potential
savings as high as $335 million and potentially capture
additional upside through price premiums or
an increase in market share. In other cases, it might
save nothing, or even destroy value in the market.
The key to success is to be selective.
Implementing Pharmacogenetics
Although the savings attainable through pharmacogenetics
appear less dramatic than those attainable
through disease genetics, they are in the right circumstances
quite substantial. And the total value
added would be enormous if the hoped-for market
advantages were realized.