How much does it cost to launch a pharma diagnostic test?
October 12th, 2017
As precision medicine continues to promise a new future for healthcare, pharma companies need to put the teams and budgets in place to launch and commercialize their latest targeted therapies. As these therapies will likely need a companion diagnostic to identify the patients most suited to the treatment, there should also be plans in place to develop and launch the diagnostic at the same time. However, the cost of bringing a pharma diagnostic test to market is one aspect that is not usually discussed, nor well understood.
It could explain why Diaceutics’ Expert Insight Mystery Solved! What is the Cost to Develop and Launch a Diagnostic? is our most popular downloaded resource of the last six months. Everyone preparing for diagnostic commercialization wants to know the answer to that question. Perhaps the reason for the general uncertainty is that planning to launch a diagnostic has been more of an afterthought in the past. More recently, with the rising numbers of targeted therapies being approved for use, companies are proactively integrating the diagnostic into the product launch itself. An additional driver may also be that regulatory authorities around the world encourage the approval of jointly submitted treatments with companion diagnostics.
The calculations in the Expert Insight were developed after Peter Keeling, CEO at Diaceutics, told a meeting of pharma and diagnostic industry executives that the average cost of developing and commercializing a diagnostic properly in the US is $50m to $75m. The gasp of surprise was one he’d heard before, so he went on to ask experts in the field to conduct their own investigations. The article goes on to reveal their comments and the results in full.
Of course, there are many variables to consider that can alter the required investment. The test might be a relatively inexpensive, follow-on diagnostic product or it could require a novel technology for a new biomarker that needs to have clinical utility established, which takes time and a significant investment. However, even with a better understanding of launch costs and with more evidence available over time, it is not uncommon for a diagnostic to be underfunded on its journey to commercialization. The main reason Diaceutics is so committed to supporting pharma to more effectively integrate diagnostics into treatment pathways is because patients deserve to be treated with the right test as early as possible, to determine the right therapy. Additionally, it makes financial common sense for the pharma companies.
We presented a white paper at the Financial Times US Healthcare and Life Sciences Summit in May 2017 showing the number of lost treatment opportunities. This analysis revealed that over 150,000 cancer patients may not be receiving the targeted therapies which could provide the most significant clinical benefit. The paper went on to show that $200bn in therapy revenue is already dependent upon the diagnostic ecosystem and an estimated $3m per day is being spent on the commercialization of diagnostics across the industry. These are not insignificant figures and it’s important to place them alongside other Diaceutics research suggesting that for every single dollar invested in better testing, the pharmaceutical industry can expect a return of $30 to $60 back in additional product revenue.
Talking about investments required in healthcare will continue to cause gasps of surprise, and there is no set cost for launching a diagnostic test. When the returns are counted not only in dollars but in the increased numbers of patients tested and ultimately treated with potentially life-saving therapy, surely the industry should give diagnostic commercialization the financial commitment it deserves?
To read Mystery Solved! What is the Cost to Develop and Launch a Diagnostic? click here.