Comparative Health Assessment Deficits and

FDA Regulatory Inefficiencies in Companion Diagnostics

by

Krishna Teja Yanamandra

A Paper Completed in Partial Fulfillmentof the Requirements for the Degree

Master of Science

Graduate Supervisor:Dr. Carl Yamashiro

Arizona State UniversityAugust 2015

INTRODUCTION

Personalized medicine as we know it

now is in its infancy relative to the hundreds

of years that traditional medical practices

have been carried out. Figure 1 illustrates just

how new this approach is in the medical

realm. Treatment thus far has been

identification of a general disease or

condition followed by medicating the

patient group with whatever has been

found effective but not necessarily

effective for all patients with the disease or

condition. For decades, we have accepted risks from lethal side effects to a spectrum of results

when it comes to patient outcomes from very effective to not at all. Companion Diagnostics is

powerful as it now permits treatment of subgroups of patient with a certain illness with a

stratified approach that has proven to improve response rates versus traditional medicine.

Assuredly, what was once solely a method of identifying rare genetic diseases has since proven

to have a myriad of applications, from the characterization of tumors to the detection of

infectious agents [1][2][3].

The application of this approach towards stratification of patient populations via a

multitude of technologies is, then, useful in the evolution of treatment from the state that it is in

now. With targeted drugs being released monthly, the assay can not only test for the presence of

disease, but can direct medical professionals to better therapy options. Companion diagnostics

Figure 1- Contrast with Traditional Medicine. The figure shows the breakdown of the general diseased sub-group population into groups “A” and “B” based on response to a companion diagnostic. “A” is the positive response group and is likely to respond to targeted therapeutic treatment using the stratified approach. “B” is the negative response group and is unlikely to respond to targeted therapeutic treatment using the stratified approach. Source: Sarah K. Byron et al. Clin Cancer Res 2014;20:1469-1476

rely on this concept to co-develop a targeted drug and a diagnostic assay to identify suitable

subjects simultaneously [4].

As interest in personalized medicine in recent years has grown, so has the scientific clout

such that there is no denying that this is the future of treatment for many patients. This is

exemplified in the increase of the number of prominent personalized medicine drugs available

from 2006 to 2011, when the number of available examples ballooned from thirteen to seventy-

two. [5] PricewaterhouseCoopers has predicted personalized medicine will see an eleven percent

increase in the market year to year, with an estimate of $452 billion as the 2015 market value.

Figure 2 seeks to exemplify that the

market for personalized medicine has been

trending positively with regard to specialty

drug approvals from 2005 to 2014, with a

similar trend expected for 2015. In fact,

according to PwC’s Health Research Institute,

the specialty drug Viekira Pak, which is used

in the treatment of Hepatitis C, is estimated to

have three billion dollars in sales in 2016, a

number similar to the estimated revenue from the sale of the generic drug Lipitor for Pfizer. [6]

That is to say, the popular medication for high cholesterol with a target population of around 40

million adults, across the United States alone, is being matched in sales by a drug that has a

target population of about 2.4 million individuals. However, this estimation of sales becomes

more understandable as consideration is given to the fact that Viekira Pak is a curative treatment

in around 95% of users and thus, can command a greater price. The history of specialty Hepatitis

Figure 2- Number of specialty drug approvals year to year with orange representing approved traditional drugs and red representing specialty drug approvals. Source: PwC Health Research Institute

C drugs started with Boceprevir and Telaprevir, the first of the direct-acting antivirals that were

used clinically in the treatment of Hepatitis C; they illustrate the starting point in the steady

advancement in Hepatitis C treatment effectiveness in recent years. [7]

However, this example also illustrates the biggest pitfalls of personalized medicine with

regard to companion diagnostics. As the market for these treatments expands, the ready

acceptance of these drugs is becoming more and more reliant on dramatic results, such that

developers of specialty drugs receive proper attention. At the same time, regulation of the

necessary co-developed diagnostics by the Food and Drug Administration (FDA) is leagues

ahead of regulation of laboratory developed tests, with regard to evidence development of

efficacy. Even the July 2014 Consumer Health Information Report, released by the FDA,

claimed that because each companion diagnostic test is created as a companion to and is paired

with a specific drug, “the development of both products requires close collaboration between

experts in both FDA’s device center, which evaluates the test to determine whether it may be

cleared or approved, and FDA’s drug center, which evaluates the drug to determine whether it

may be approved.” Using the Genentech drug MPDL3280A, an engineered, anti-programmed

death ligand 1 (anti PD-L1) antibody as a case study, I will seek to show that not only does this

standard put unnecessary weight on solely the drug development party, but that there is currently

no way around the standard for companies.

To further understand efficiencies in the field of drug development, as well as its

financial and regulatory future in healthcare around the world, I will also seek to reflect upon the

types of models used by payers in various countries. One factor that dramatically differentiates

the US from other countries is the amount of money that can be injected into healthcare at any

one time. The United States has by far the highest per capita healthcare spending at $8362

current international dollars, as adjusted using the purchasing power parity. For this reason, there

has been a desire, but no real need, to change the underlying healthcare system to accommodate

for clinical or cost effectiveness. Using the UK and France as examples of different models that

could be used by payers as a clear standard from which reimbursement decisions can be better

made in the future, I will also illustrate that a more efficient regulatory system is not the reality

of the distant future, but rather that of a more proximal one.

MATERIAL AND METHODS

The project had two objectives. The first was to consolidate the regulatory environment

surrounding Laboratory Developed Tests (LDT) and the normal FDA 510(k) or PMN process by

which drug developers must obtain approval for the use of their diagnostic tests. This

information was for the most part completed using of the ASU library database from which

much of the information and articles of necessary information were excavated for use.

Furthermore, the case study of the Genentech and PD-L1 drug was conducted through interview

of Roche Tissue’s Market Access Leader Jim Armstrong, as well as Genentech publications. The

secondary objective was to review the requirements and considerations of the United Kingdom

and France’s healthcare oversight committees in order to identify key requirements. This was

done via ASU’s library database as well as the website for the French Health Assessment Board,

Haute Autorité de Santé (HAS).

RESULTS

Table 1. Population Coverage

Country Health Insurance Coverage Population Covered

United States[8]

Private Coverage 200 millionPublic Coverage 70-80 millionMedicare 44 million(Uninsured) 45 million

United Kingdom[9]

Private Coverage 500 thousandNationalized Healthcare 49.5 million

France [10] Mandatory Health Insurance (HI) System 63.9 million

Table 2. Technology Assessment Bodies / Decision Makers

Country Technology Assessment Bodies / Decision Makers

United States [8]MedicareMedicaidPrivate Payer

United Kingdom[9]

National Institute for Health and Care Excellence (NICE)National Coordinating Centre for Health Technology Assessment (NCCHTA)

France[10]Comité des Médicaments et des Dispositifs Médicaux Stériles (COMEDIMS), a subcommittee of the Hospital Medical Committee, Commission Médicale d’Etablissement (CME)

Technology Assessment Process in the United States

In the United States, private payers and Medicaid payers are the primary decision makers

regarding coverage for diagnostic tests. The decision is reached through an analysis of the

“expected volume of use, cost-impact to the organization, and concerns over data and/or clinical

utility of products.” Payers produce individual HTA reports to provide information regarding the

costs, effectiveness, and current/expected impacts of various healthcare tests and treatments.

Payers may also seek out expertise and HTA reports from third-party technology assessment

organizations, e.g., Hayes, ECRI, and BCBSTEC.

Source:

National Institutes of Health: National Information Center on Health Services Research and Health Care Technology

ECRI Institute website

Evaluation of Genomic Applications in Practice and Prevention website

Technology Assessment Process in the United Kingdom

In the United Kingdom, the National Coordinating Centre for Health Technology

Assessment (NCCHTA) is in charge of producing HTA reports to provide information to those

whom provide, receive, and plan care through the Nationalized Healthcare System (NHS). The

HTA report provides details regarding the costs, effectiveness, and current/expected impacts of

various healthcare tests and treatments [9].

The National Institute for Health and Care Excellence (NICE) is in charge of selecting

interventions for review based on a set of published guidelines:

1. “Is the technology likely to result in a significant health benefit, taken across the NHS as

a whole, if given to all patients for whom it is indicated?” [9]

2. “Is the technology likely to result in a significant impact on other health related

government policies (e.g. reduction in health inequalities)?” [9]

3. “Is the technology likely to have a significant impact on NHS resources (financial or

other) if given to all patients for whom it is indicated?” [9]

4. “Is the Institute likely to be able to add value by issuing national guidance? For instance,

in the absence of such guidance is there likely to be significant controversy over the

interpretation or significance of the available evidence on clinical and cost

effectiveness?” [9]

Technology Assessment Process in France

In France, a product’s medical benefit is determined by the use of five criteria: “efficacy

and safety; position of the medicine in the therapeutic strategy and the existence or absence or

therapeutic alternatives; severity of the disease; type of treatment: preventative, curative, or

symptomatic; and public health impact.” Based on these five criteria, one of five medical benefit

levels is assigned to the product by the Commission d’Evaluation des Médicaments (CEM):

insufficient to justify a reimbursement, weak, moderate, important, or major, in increasing

degrees of perceived benefit.

There are several different governmental bodies that oversee the technological

assessment process in France, each with a different responsibility in the overall process. The

Agence Française de Securité Sanitaire des Produits de Santé (AFSSAPS) oversees inspection of

industrial sites, controls laboratories and scientific evaluation, and controls advertising. The

Haute Autorité de Santé (HAS) oversees assessment of medical procedures, medications, and

medical devices, publishes guidelines, certifies doctors, and determines accreditation of

healthcare organizations. The Commission Nationale d’Evaluation des Dispositifs Médicaux et

des Technologies de Santé (CNEDiMTS) further assesses medical procedures that were

previously assessed by HAS [10].

DISCUSSION

The FDA has released guidelines on the regulation of the Biomedical Diagnostics test

that are made independently by LDTs [11][12][13]. However, the current regulatory system has

caused many to scratch their heads; the regulatory environment for companion diagnostics is

quite clear: in order for a targeted therapy drug to be approved, it must have an effective

diagnostic tool with which you can determine if a patient falls within certain, genetic or

otherwise, specifications for the use of the drug [12][14]. That concept is not hard to grasp and it is

quite logical to enforce the need to provide a companion diagnostic with the drug. This same

stringent scrutiny is not, however, afforded to LDTs. The current problem with LDTs is that

there is never any direct link to them and any kind of regulatory agencies. Laboratories that are

overseen by CLIA either are or are not allowed to perform certain tests, based on the complexity

of the test and the CLIA requirements the lab meets to prove their capability of doing high

complexity testing. If the laboratory passes the requirements laid out by CLIA, they can produce

any LDT with no oversight as to the efficacy of the test.

Jim Armstrong, the Market Access Leader at Ventana, first voiced these concerns

relaying that “there is no way to incentivize labs contracting to hospitals to use one assay over

another” (personal communication, June 26, 2015). For companies to even be able to market

their diagnostics, then, they need to make the antigen available to laboratories to train technicians

on the use of the assay and how to read it. Due to the fact that the product is held in the trials

phase, all diagnostics manufacturers have resorted to giving the raw components of the

diagnostic to labs for them to make their own tests. These raw materials, called Analyte Specific

Reagent (ASRs) are purchased by the lab and can be used for in-house LDTs. Any laboratory

that is capable of high complexity testing is then capable of running ASR based tests, and thus

can work around any restriction as to the regulation of LDTs. This is, in most cases,

economically prudent because it allowed labs to be ready to run a particular diagnostic for the

targeted therapeutic upon release of the drug thus eliminating the post release training period.

There is an increased prevalence of personalized medicine products available in the

market. In the case of oncology, this has many a time lead to not only competing drugs but

competing diagnostic assays that often use the same biomarker. Effectively, this means that

multiple diagnostic assays can, with different degrees of efficacy that will not be tested and

which are not necessarily developed hand-in-hand with the drug they are to be used with, can be

administered interchangeably and used to diagnose a non-small cell cancer variant that the

Genentech drug is effective in treating in lung and bladder instances of this cancer variant.

In the case of the Genentech drug MPDL3280A for example, the companion anti-

programmed death ligand 1 (anti PD-L1) diagnostic being co-developed and tested is going to be

competing with anti-PDL1 assays of two other companion diagnostic producers; Dako is making

the test for Merck and Bristol Myers Squibb. Whilst the Genentech drug and diagnostic is being

held for approval as both Roche products go through phase three trials, there is already no

guarantee that companies will go through the approval process the FDA requires and come out of

it being able to profit from their diagnostic products, each of which were a cost incurred in

research and development. This means that when MPDL3280A is approved for use, laboratories

will have three routes by which they can test for patients being positive for the PD-L1 antigen:

The Ventana assay, the Dako assays, and the LDTs that have been in the works since Ventana

Medical Systems released ASRs to labs that will be running the assay in the future.

Essentially, FDA oversight is thorough and ensures the production of a high quality

product. However, contrastingly, oversight of LDTs by CMS’ CLIA program at no point

addresses the clinical validity of any test. Testing for the analytical validity and putting it under

the trials, inspection, and scrutiny of the FDA whilst not ensuring that only the tests that have

been shown to have analytical validity be used to test for efficacy in the hospital is like asking

Pfizer to put in the research and development costs involved with Lipitor and then allowing

independent third parties to produce the same product with no proof of efficacy at a price

undercutting the pricing strategy that would be necessary to earn back the R&D dollars. The first

step to fixing the inefficiency of the current system, then, is to either have the FDA extend its

regulatory authority to include LDTs or expand the activities of CMS’ CLIA to include clinical

validity of individual test produced by laboratories in cases where the diagnostic is considered

high complexity. By including LDT review in a premarket capacity, the validity of these tests

can span beyond the doors of the laboratory in which they were developed.

Furthermore, it is important to consider that the US healthcare system is very much

decentralized and serves its citizens via three primary payor bodies. The first is private coverage,

which is by far the largest percentage of privately insured citizens among all three comparable

health care systems. As Table 1 shows, only about 1% of the UK population is privately covered

with 99% having nationalized healthcare. In France, the mandatory health insurance system

ensures that every member of the country of 63.9 million is covered by the government. The

other two insurers in the US are Public Coverage and Medicare with about 14.11 million

uninsured as of 2009, a number that has shrunk to 12.9% since the passing of the Affordable

Care Act.

The National Institute for Health and Care Excellence (NICE) and the National

Coordinating Centre for Health Technology Assessment (NCCHTA) in Britain and Comité des

Médicaments et des Dispositifs Médicaux Stériles (COMEDIMS), a subcommittee of the

Hospital Medical committee in France are the main technology assessment bodies that are the

decision makers. This presents us yet again with a rather large leap when it comes to the reality

of the gap in the assessment bodies. The whole of the decision making process is centralized to

these national bodies and some regional assessment boards while in the US, private payers,

whose actions are far more reliant on stakeholders in the long run make technology assessments.

Our assessment process is different than that of the UK and France because whereas

central bodies, often bound by EU regulations that allow for citizens of one country to get

benefits in another work in assessment committees with clear cut requirements from all

pharmaceutical producers, US payers can choose to outsource even their assessments to third

parties that will do all of their analysis for them. This process stems from the fact that unlike the

UK and France, any drug that has proven valid in the eyes of the FDA can and will be

reimbursed, even if begrudgingly. Here we can take a lesson from France, a country in which

drug approval is completely separate from reimbursement, which is done one a gradient

according to the medical benefit level. In this way, a company cannot simply rebrand a product

at the end of a patent (i.e. Lipitor) and sell what is essentially generic atorvastatin as an

expensive branded product because the new drug would not demonstrate a significant advantage.

The trend toward the idea of significant benefit exists even in the UK’s NICE model for

assessment and reimbursement. Drugs are given value if they are the yes tick mark to questions

regarding bridging the gap in inequality. The final change we can make in our assessment system

move away from risk-benefit analysis towards cost-effectiveness metrics as these will better

allow payers to assess what drug is the best value for the expenditure [13][15][16]. This doesn’t mean

that just because a drug is expensive, it shouldn’t be reimbursed. However, it does help bridge

the gap between cost and end of life procedures by bringing into questions of the opportunity

cost of treating an older individual already living beyond their life expectancy with drugs that are

more expensive and could reduce their quality of life in their last months; it will also allow for

many other qualitative measures like the drug’s anticipated effect [16]. That is you would expect

to pay more for a curative product than a pill you have to take for the rest of your life with regard

to monthly payments [13].

Ideally, the FDA has done a respectable job of being strict with its conditions. It is now

time to be fair with those conditions such that dramatic medical advances are no stunted by lack

of proper reimbursement and assurances that biologics developed alongside new drug receive a

fair chance to prove their value. By changing our approach to how we reimburse promising

technology and promoting a health assessment environment that allows for stand out drugs and

diagnostics to do just that, we will, if nothing else, make the medical environment simpler and

more efficient for all its stakeholders.

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