Convergence Support Deck

THE BUSINESS MODEL FOR
INTEGRATED THINKING IN PM
Peter Keeling,
CEO
Diaceutics
a discussion on our business
case readiness through the lens
of my four favourite movies
First…..internal integration
Observations from 9 years and 60 Rx/Dx/Lx
programs….
Rx= Therapy asset
Dx= Diagnostic asset
Lx= Laboratory service
Jessup: You want answers? Lt Kafee: I want the truth! –
Jessup: You can't handle the truth!
first the good news…..
Observations from 9 years and 60 Rx/Dx programs
clear R&D shift towards a PM model
(Phase 3 Pipelines of top 12 Pharmaco’s)
2010
2014
Total = 213
Total = 208
54%
72%
46%
28%
PM
non-PM
PM
non-PM
Number of biomarker-associated drugs or drugs that could benefit from PM
strategy in the pipeline increased by over half, from 99 in 2010 to 149 in 2014Q2
and constitutes over 70% of the phase 3 pipeline.
Source Diaceutics Top 12 Pharma PM Readiness Report 2015 .
& an improvement in organizational and
commercial readiness between Pharma cos.
2010
2014
Observations from 9 years and 60 Rx/Dx programs
Diaceutics Top 12 Pharma PM Readiness Report 2015 .
st
1
Illustrated by a really competitive PM market
which will expose win/lose PM strategies
PD-L1 Four Competitor investments in clinical trials
across the multiple indications
# of
studies
Competitive
rivalry
Observations from 9 years and 60 Rx/Dx programs
Source: Diaceutics PDL1 Competitive Benchmarking Report
however
Observations from 9 years and 60 Rx/Dx programs
The perfect storm… starting with a lack of
understanding from the top of Rx and Dx
industries …of the financial architecture
underpinning PM
Observations from 9 years and 60 Rx/Dx programs
plus a reinforcing commercial mind-set which
has positioned PM as “small business”
niche market =
price high
How should we build
our business systems?
broad market =
optimize access
Observations from 9 years and 60 Rx/Dx programs
Source:
National Trends In Spending On And Use Of Oral Oncologics, First Quarter 2006 Through Third Quarter 2011
Rena M. Conti1,*, Adam J. Fein2 and Sumita S. Bhatta3; Health Aff October 2014 vol. 33 no. 10 1721-1727;
despite data to the contrary
Class contribu on to cost increase in Cancer therapies 2006-11
PM Global Oncology Therapy Sales –$Billion
100%
$8
80%
$7
US$ Billion
120%
60%
$6
40%
$5
20%
0%
$4
Targeted therapies
Hormonal therapies
An metabolites
Alkyla ng agents
-20%
$3
-40%
$2
$1
$0
2010
2013
Observations from 9 years and 60 Rx/Dx programs
Source Diaceutics Top 12 Pharma PM Readiness Report 2015 .
resulting in a minimization of corporate
investment towards building the necessary
commercial excellence above immediate
asset/brand needs
“we learn on projects”
Observations from 9 years and 60 Rx/Dx programs
which translates for Dxcos to …..no
meaningful shift away from the traditional
diagnostic business model of getting
someone else to build the market for their
tests, DESPITE the implied value in testing
Observations from 9 years and 60 Rx/Dx programs
and a hesitation by Pharma to lead the
transformation of personalized medicine
“We are only one stakeholder here and have to be led
by the science”
Observations from 9 years and 60 Rx/Dx programs
Only 7 new RX with Cdx launched
But 53 Existing Rx
labels retrofitted
with safety
biomarkers by FDA
Zelboraf with cobas 4800 BRAF V600 Mutation Test (both Roche, 2011)
Xalkori with ALK BreakAway Test (Pfizer and Abbott, 2011)
Perjeta and Kadcyla with HERCEPTEST (Roche and Dako, 2012)
Gilotrif with therascreen EGFR RGQ PCR Kit (BMS and QIAGEN, 2013)
16
Mekinist and Tafinlar with THxID BRAF Kit (GSK and bioMerioux, 2013)
But since 2010….!
the fabric of our
world is changing
Source Diaceutics Top 12 Pharma PM Readiness Report 2015 .
So should we rethink
the business model
underpinning PM?
Observations from 9 years and 60 Rx/Dx programs
We need to start by defining what is the
economic promise of PM !
Prevention Failures
7%
0%
Fraud
10%
Unnecessary
Services
27%
Inflated Prices
14%
Excess
25%
Inefficient Care
Delivery
17%
US healthcare system alone
wastes $750bn annually
Up to $385bn
of waste can
potentially be
addressed by
PM,
freeing up
funds for
redistribution
and better care
standards
Source: http://www.iom.edu/~/media/Files/Report%20Files/2012/Best-Care/Best%20Care%20at%20Lower%20Cost_Recs.pdf
…and focusing on an interventional shift across
the treatment pathways
Time to Earliest
Intervention
Time to Latest
Intervention
Optimal
Maximum Clinical Impact Of
PM 2.0
Rx 2nd
Line
PM 2.0
Outcome
Improvement
Maximum Clinical Impact Of
Current Model
Rx 2nd
Line
Current
Rx 1st Line
PM 2.0
Current Treatment Path
Poor
Rx 1st Line
Current
MDx
Intervention
Early
Disease
Stages
What
integrated
targeted Rx
and Dx and Lx
solutions
provide
clinical and
regulatory
confidence to
manage
patients
earlier in the
disease state?
Resource
Use
Late
Source: Adapted from TS Deisboeck, A New Value-capture Strategy for MDx, with permission
To prove this to ourselves we created an
interventional disease model for three diseases ,
Melanoma, Sepsis and Diabetes
•
Created a direct cost disease model based on US . Several authoritative sources have been used in
this model. Including
•
Epidemiology data 2010-2025
•
•
•
- Mattson Jack –
US Melanoma Direct Disease Costs –
•
Unv San Diego Doru Traian Alexandrescu MD direct costs analysis “Melanoma costs: A
dynamic model comparing estimated overall costs of various clinical stages “2009
Dermatology Online Journal 15 (11): 1
http://dermatologys10.cdlib.org/1511/originals/melanoma_costs/alexandrescu.html#6
•
Model is based on 2008 Mid Atlantic Medicare costs
•
Model includes detailed costs for diagnosis and surveillance (routine follow-up). Accounts
for false positive (FP) results of imaging tests
•
Model accounts for collateral costs such as loss of days of work and income however
these have not been included to illustrate direct costs
•
Model provides detailed breakdown of costs by resource input by stage
Undiagnosed Rates -. Diagnostic Accuracy in Malignant Melanoma
•
Primary reference . Alfred W. Kopf, MD; Medwin Mintzis, MD; Robert S. Bart, MD Arch
Dermatol. 1975;111(10):1291-1292 doi:10.1001/archderm.1975.01630220055001.
•
Diaceutics benchmarks and analysis have been used extensively in designing the direct cost model.
•
In addition to the base case ( current situation) two alternative scenarios are presented
Diaceutics PM 2.0 Disease Model ©
The
Melanoma
Model Small
Print
Melanoma US Current
Patient - Cost
Distributions
Current Patient Distribution By Stages;Melanoma US
160000
140000
# of Patients
120000
100000
80000
60000
40000
20000
0
Diaceutics PM 2.0 Disease Model ©
..we assumed
2 integrated
PM scenarios
Scenario 1
Marginal Shift
 25% of undiagnosed are identified due to
better patient self screening tools and
awareness programs
 Investment in development and diffusion of
improved diagnostics identify 29%, of stage 1
patients at stage 0,(versus base of 23%)
improving overall outcome
 Targeted 1st line treatments and investment in
development and diffusion of improved
staging tests (post first line surgery) reduce
2nd line surgery by 25% for stage II and above
 3% revenue distribution from Pharma to Dx
and Laboratory companies is made to
incentivise funding whilst keeping overall
disease management costs the same
 Per patient management cost-all stages
remains the same
Diaceutics PM 2.0 Disease Model ©
Scenario 2Transformational Shift
 70% of undiagnosed are identified due to better
patient self screening tools and awareness
programs
 Investment in development and diffusion of
improved diagnostics identify 46%, of patients
at stage 0, (versus base of 23%) improving
overall outcome
 Targeted 1st line treatments and investment in
development and diffusion of improved staging
tests (post first line surgery) reduce 2nd line
surgery by 72% for stage III and above
 3% revenue distribution from Pharma to Dx
and Laboratory companies is made to incentise
funding whilst keeping overall disease
management costs the same
 Per patient management cost-for stages 0 and 1
increase by 10%
 Surveillance costs reduced by 20% via access to
improved patient self monitoring technology
..resulting in shift
of interventions
across disease
stages
Diaceutics PM 2.0 Disease Model ©
% Distribution of Interventions
..and assumed clinical impact
More Patients Diagnosed
25%
More Patients Rx 1st Line
40%
75%
81%
Base Case ( Current situation )
Marginal
22%
72%
21%
71%
Transformative
24
Diaceutics PM 2.0 Disease Model ©
Lower % of 2nd L Surgery
Lower Number of Deaths
..with significant shift in cost burden
$1.1bn
Increased costs of
chemotherapy
$1.3bn
$.25bn
Decreased cost of
2nd line surgery
Increased costs of Dx
and Lx
$..5bn
Base Case
Cost
Burden
Decreased cost of
surveillance
$..5bn
Other ( mixed)
Revised
Cost
Burden
$12.6bn
$11.5bn
Cost shift resulting from transformative scenario
Diaceutics PM 2.0 Disease Model ©
Down
UP
..and commensurate industry incentive
Diaceutics PM 2.0 Disease Model ©
Dx
Revenue
Up By
158%
Lx
Revenue
Up By
127%
PCP
Revenue
Up By
70%
Surveillance
Revenue
Down By
21%
Rx
Revenue
Up By
15%
Hospital
Revenue
Down By
26%
Payer
Revenue
Up By
9%
Observations from 9 years and 60 Rx/Dx programs
Doyle Lonnegan: “I put it all on Lucky Dan; half a million dollars to win.”
Kid Twist: “To win? I said place! ‘Place hit on Lucky D’ That horse is gonna
run second!”
Doyle Lonnegan: “There’s been a mistake! Gimme my money back!”
The Sting: The delivery of the PM promise
no longer lies in technology but in a new
industrial model of delivery
and frankly that’s a tough sell
Observations from 9 years and 60 Rx/Dx programs
Because there is an absence of creative
stewardship towards disease based integration
“ … to minimize health care cost increases,
genomic approaches must replace existing
inefficient technologies and reduce the use of
downstream resources.
An understanding of the systems and market
conditions that affect adoption of genomic
technologies is needed to develop economic
incentives and devise care pathways that
encourage appropriate use. …”
Observations from 9 years and 60 Rx/Dx programs
Source: Realizing the Opportunities of Genomics in Health Care. Ginsburg GS, JAMA, April 10, 2013—Vol 309, No. 14, 1463-1464
Joe Fox: It wasn't...
personal.
Kathleen Kelly: What
is that supposed to
mean? I am so sick of
that. All that means is
that it wasn't personal
to you. But it was
personal to me. It's
*personal* to a lot of
people. And what's so
wrong with being
personal, anyway?
Joe Fox: Uh, nothing.
Kathleen Kelly:
Whatever else
anything is, it ought to
begin by being
personal.
thankyou for listening