Economics Of Precision Medicine: Will It Lower Drug Costs?

While some have asserted tailoring treatments and cures to individuals will make therapies significantly more expensive, Francis Collins, director of the National Institutes of Health (NIH), said he thinks there's a "fair chance" precision medicine approaches will actually lead to a drop in research and development costs, thereby lowering the amounts patients pay for those products.

"I totally reject the idea that precision medicine means everything is going to be more expensive," Collins told Scrip at a Feb. 25 White House summit, where more than 170 representatives from government, academia, the health care provider community, technology firms, patient groups and the medical product industries gathered to discuss the matter.

He noted one of the biggest reasons drug R&D is so expensive is because the failure rate is "so dismally high."

"Most of the time, you have a great idea, you spend 14 years on it – that's the average – and then it fails," Collins said.

Even when companies have "occasional success," they still have to cover the costs of their failures if they're going to stay in business, he explained.

But by targeting therapies to the correct population through precision medicine strategies, like genome sequencing; methods for characterizing patients, like proteomics, metabolomics and genomics; and the use of mobile health technology and computational tools for analyzing large sets of data, clinical trials could be much smaller – 100 participants rather than thousands – with results known much quicker, which would lead to lower R&D costs, Collins said.

And, he said, the effectiveness of drugs "ought to go up if you are actually focusing on the people who are going to get the most dramatic benefit."

"The whole dynamic, I think, then changes in terms of the whole cost equation," Collins said.

"Over the long term, we can save a lot of money, rather than make this more expensive, if every drug we prescribe actually works," President Barack Obama said during a panel discussion at the White House summit, where he unveiled several new actions aimed at speeding his Precision Medicine Initiative (PMI), which he launched early last year.

"If the doctor with his kidney patient knows that this is not going to work, and that's not going to work, he's not going to be wasting a huge amount of time, effort, surgery, et cetera, on a path that's less likely to succeed. He's going to be saving money and focusing entirely on those pathways that we know are going to work," Obama said.

Collins praised the president for having "a very sophisticated perspective" on how precision medicine may reduce R&D costs and eventually health care spending. "It was wonderful to listen to him and see just how much he's got his head around all this."

"It's amazing how the president gets all of this," Robert Califf, the newly anointedFDA commissioner, told Scrip during an interview at the White House.

Collins said he believed the way in which drugs are priced is not reflective of the costs to develop the products.

Rather, Collins said, drug prices are based on "how much will the market bear."

But, he said, "The market is beginning to say 'We're not sure we can bear some of these really high costs.'"

While the pricing versus drug R&D is working its way out, "I think the actual research and development costs for developing these drugs are going to go down" through the adoption of precision medicine approaches, Collins said.

"And that should help these companies and help the public," he said.

Collins acknowledged that even though the biopharmaceutical industry and other sectors, including technology firms, stand to be big benefactors of Obama's PMI and its planned one-million person longitudinal cohort study, with taxpayers footing the bill, "the public benefit is what we're after."

"If those companies, by the access to this kind of a resource – a foundation of information – can move faster and develop products that are going to help people stay healthy or treat disease, that's a good outcome," Collins said.

"If a million people donate their data, imagine how much more quickly and how much better clinical trials could be," Califf said, adding that ensuring the FDA fulfills its obligations under the PMI is one of his highest priorities.

He said that priority falls in line with his other two key goals – building the FDA's workforce and developing a better evidence-generation system, which he said will be necessary in taking on the complex challenges of the PMI.

Barriers To PMI's Success

Califf said one of the greatest barriers that could stand in the way of the PMI's success is if researchers continue to hoard their data.

John Holdren, director of the White House Office of Science and Technology Policy, told Scrip he viewed the lack of interoperability among the different datasets and various types of electronic health records as one of the biggest roadblocks for the PMI's progress.

"We've got to overcome that so that these data can be made interoperable, exchangeable and searchable in an efficient way," he said in an interview at the White House.

Ensuring the security and the privacy of patients' data so that it's not misused in any way is crucial to the PMI's success, Holdren said.

"Obviously, we want to make sure that we are setting this up in a way that people want to volunteer and then once they've volunteered, want to stay involved over the long run," Collins said. "So we don't want to make mistakes in this early step."

He said that's the main reason the NIH is funding the direct volunteer pilot studies program, in which Vanderbilt University is collaborating with Verily, formerly Google Life Sciences, to explore the optimal approaches and systems for engaging, enrolling and retaining participants in the PMI's cohort study.

Volunteers in the pilot will help the research team establish and test innovative methods and technologies for enabling robust participant engagement, as well as user-friendly data collection, Collins explained in announcing the new program at the White House PMI summit.

He said a lot of the questions are going to be about the role of electronic health records in the PMI cohort study and how accessible and usable they'll really be because of the yet-to-be-resolved interoperability issues.

Nonetheless, Collins said the Obama administration is "totally dedicated" to the idea that the PMI cohort's dataset should be available to "anybody with a good idea who is going to protect the privacy and security."

Bipartisan Support

Holdren said he didn't foresee there being any problems with the PMI being stopped or stymied when a new president takes office next year.

"I don't think there's any issue out there that has the bipartisan support that this one does," he declared. "Basically, everybody on both sides of the aisle understands the importance of health, of better therapies, of using genomic information and other individual information to be able to better tailor both prevention and therapy to the characteristics to the individual. There's nobody who disagrees with this."

Holdren noted that Obama's fiscal year 2016 PMI funding request of $200m was wholeheartedly supported by Congress.

"I think we'll see it again in the 2017 budget, where the president has proposed $309m for this," he said. "This is just not a partisan issue. I think the next president, whoever it is, will want to continue this."