Financial Drivers | Diaceutics

Financial Drivers


This case study looks at how a number of diagnostic drivers can impact on a targeted therapy's return on investment. It shows that it is important to have a robust and well-defined diagnostic strategy with an understanding of where diagnostic drivers impact revenue therapy flows. It also looks at how to optimize the different drivers in order to build and analyse the business case. It will help you understand:
  •  That there are a number of diagnostic drivers that can impact on therapy return on investment
  • That a personalized medicine strategy has the potential to enhance as well as destroy value, compared with a traditional non-targeted, or 'one size fits all' Rx strategy
  • How propensity to prescribe (P2P) can be influenced by issues around testing
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1: Case Summary

This case will help you understand:

That there are a number of diagnostic drivers that can impact on therapy return on investment.

That a personalized medicine strategy has the potential to enhance as well as destroy value, compared with a traditional non-targeted, or 'one size fits all' Rx strategy.

How propensity to prescribe (P2P) can be influenced by issues around testing.
Key messages:

To determine where personalized medicine drivers will impact, it is important to focus on elements in the financial cascade, or interacting calculations, normally associated with determining the business case. These are typically a combination of epidemiology and target market parameters.

Changes in P2P reflect the impact of the introduction of a new diagnostic test on prescribing decisions. It is wrong to assume a 1:1 conversion of positive test results into targeted drug prescriptions.
Key actions:

Understand the key adoption drivers.

Understand P2P in regards to your therapy.

Investigate the diagnostic impact on a therapy along the market-to-profit cascade.

2: Personalized Medicine Drivers' Impact on Typical Rx Revenue Curves

Areas of ImpactEssential Question
Rx Pricing and Access Impact To what extent will the drug's price reimbursement, formulary status and lifetime value be dependent on, or at least influenced by, the diagnostic, and why?
Rx Adoption Impact To what extent will the diagnostic speed or delay the drug's uptake in the target prescriber community, and why?
So What?

There are a number of diagnostic drivers that can impact on Rx return on investment (ROI).

A personalized medicine strategy has the potential to enhance as well as destroy value, compared with a traditional non-targeted, or 'one size fits all' Rx strategy that follows a standard Rx lifecycle revenue curve.

Commentary

Diaceutics has examined over 210 peer-reviewed and published case studies illustrating a direct and indirect diagnostic impact on therapeutic costs and revenue. This data has been analysed using an iterative case-based reasoning methodology to identify patterns and drivers.

The data suggest there is a reservoir of potential revenue which may be greater than that achieved with a non-personalized medicine strategy. This will, however, always be specific to the therapy area and product. In addition, a lack of coordinated or optimally resourced companion diagnostic strategy can result in undermining the business case and destroying value.

It is essential to understand where the diagnostic drivers impact the therapy revenue flows, and how to optimize the different drivers, in order to build and analyse the business case.

3: Rx Pricing and Access Impact

Areas of Impact
Rx Pricing and Access Impact


Drivers
 

4: Rx Adoption Impact

Areas of Impact
Rx Adoption Impact


Drivers




5: Representation of Typical Rx Model Cascade

So What?

To determine where personalized medicine drivers will impact, it is important to focus on the elements in the financial cascade, or interacting calculations, normally associated with determining the business case. These are typically a combination of epidemiology and target market parameters.

6: Adoption Impact: Explained

DriverDriver Explained
Dx Concept
What kind(s) of Dx is needed?
Screening Tests will introduce more patients into the treatment pool
Diagnostic Tests will confirm diagnosis in more patients
Response/Prognostic Tests will identify patients who will respond better to treatment
Adherence/Monitoring Tests will improve patient adherence or closing levels
Dx Adoption
Can our Dx address the needs of all relevant stakeholders?
Dx Adoption can be influenced primarily by:
  • Making the optimal choice of technology
  • Optimizing the timing of the test launch
  • Sufficient sales and marketing investments
Propensity to Prescribe
Can we link Dx results closely to use of our Rx?
Perceived Test Complexity
Prescribing levels can increase by managing physicians' perception about ease-of-access to the Dx, interpretation of the Dx result and the level of reimbursement.
Rx Substitution
Prescribing levels can increase by managing the degree to which a therapy can be substituted in test positive patients.

7: Rx Pricing and Access Impact: Explained

DriverDriver Explained
Price premium
Can the Dx help achieve access and pricing advantages for the Rx?
The use of biomarkers may help remove patients who may not respond to a therapy or suffer adverse events, thus increasing the probability of achieving higher quality of gains (Qualy) and rewarding payers with higher pricing points
Extended lifecycle
Can the Dx help maintain value over the lifecycle of the Rx?
The test may provide an opportunity to access new patentable indications or slow down typical Rx erosion

8: Adoption Impact: the Rx Cascade



1: Dx Concept
What kind(s) of Dx is needed?

2: Dx Adoption
Can our Dx address the needs of all relevant stakeholders?

3: Propensity to prescribe
Can we link Dx results closely to use of our Rx?

So What?

Changes in propensity to prescribe reflect the impact of the introduction of a new diagnostic test on prescribing decisions. It is wrong to assume a 1:1 conversion of positive test results into targeted drug prescriptions.

Commentary

Propensity to prescribe (P2P) is defined as the likelihood of a physician prescribing a particular drug or drug category to a patient who has received a particular test result. P2P can be measured as the number of individual prescriptions per number of positive test results received. It is influenced by:

  1. The clinical predictive value of a test regarding a therapy's suitability for a particular patient, meaning: How closely are test result and therapy response connected, clinically? A diagnostic test may be highly (technically) sensitive for a particular biomarker but this biomarker may only be loosely correlated with therapy response, thereby reducing a physician's willingness to solely or primarily base his Rx decision on this test.
  2. The technical performance of the test. Various measures of technical accuracy (e.g., technical sensitivity and specificity, detection thresholds, positive and negative predictive value) will affect a physician's confidence in the results of a test and, indirectly, his prescribing behaviours.

9: Pricing and Extended Lifecycle



1: Price premium
Can the Dx help achieve access and pricing advantages for the Rx?

2: Extended lifecycle
Can the Dx help maintain value over the lifecycle of the Rx?

So What?

Consider the diagnostic's impact on the therapy along the Rx market-to-profit cascade.

Commentary

Rx adherence varies significantly between therapy areas and individual diseases and is driven by various factors such as acute versus chronic, severity of the disease, specific Rx choices, treatment duration, etc. Changes in patient adherence can have a considerable impact on the total revenue for a particular therapy over time.

Diagnostic testing in the form of therapy monitoring has been proven to have a positive impact on patient adherence to drug regimens.

Patients will be reassured by the effectiveness of their treatment if objective measurements of its physiological effect are taken, using either a predictive marker prior to starting a therapy or by regular drug response monitoring throughout the course of treatment.

10: Key Messages

Key messages:

To determine where personalized medicine drivers will impact, it is important to focus on elements in the financial cascade, or interacting calculations, normally associated with determining the business case. These are typically a combination of epidemiology and target market parameters.

Changes in P2P reflect the impact of the introduction of a new diagnostic test on prescribing decisions. It is wrong to assume a 1:1 conversion of positive test results into targeted drug prescriptions.
Key actions:

Understand the key adoption drivers.

Understand P2P in regards to your therapy.

Investigate the diagnostic impact on a therapy along the Rx market-to-profit cascade.

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