A discussion between Shailesh Maingi, Mark Osterman, Bill Finger, and Trey Putnam

Shailesh: Welcome everyone, thanks for joining our panel discussion today. We’re talking about specialty pharma and how its changing the traditional pharma model. Joining me today on this panel is Trey Putnam who is the VP and General Manager, Cardinal Health Regulatory Sciences. Also on the panel from Kineticos are Mark Osterman, Senior Vice President, Biopharma and Bill Finger, Managing Director, Diagnostics.

Shailesh: Let’s start this off with Mark – can you define specialty pharma for us?

Mark: Specialty pharma is a relatively new term.  Looking at the way it’s evolved, early on in the development of the pharma model, larger disease states were the entire market whereas smaller diseases were not part of the model.  Now, it’s evolved to include these smaller diseases.  Specialty pharma is associated with life threatening, rare diseases, and the therapies are more costly, more difficult to move through distribution channels, and many also require monitoring.  There are multiple things you can use that are part of the definition of specialty pharma, whereas traditional pharma has a loose definition of small vs. large molecule.  But you have to look at the entire development process.

Shailesh: So, taking what you said, one element is a targeted population, and another element is a serious disease state, there’s a commercial element, as well as manufacturing and processing.

Trey: I agree- there are several definitions of specialty drugs.  Specialty drugs are those therapeutic entities designed to treat complex or rare disease states, and those with a complicated treatment regimen, safety risk, special storage, or shipping requirements – all of that wraps into what a specialty drug is.

Shailesh: So how did this come about?  The traditional pharma model worked for years; the specialty pharma model has only been around for around ten years or so.

Trey: The evolution in pharma development was led by the advent of biologics, and although the segregation of specialty pharma is not strictly small vs. large molecule, the movement of biologics into the mainstream of medical practice really helped drive the arrival of specialty pharma and bring this evolution of being able to treat rare and complex diseases .   And certainly the types of molecules and therapies have much different requirements with respect to safety, reimbursement, as well as support services for patients.

Shailesh:  Great points, Trey – Bill, I think one of the driving elements is also the human genome sequencing project, because we were able to target more of the underlying genetic basis of the disease, and we could further segment the population and develop treatment options there.

Bill:  It started in the late 1990s, with Herceptin, targeting patients who were HER2+ and developing therapies to target these patients.  It was slower in the 2000’s, but now we’re seeing more genetic markers out there, and we’re able to identify patients who will respond to targeted therapies or classes of therapies with personalized medicine and companion diagnostics.  We see, more and more companies are finding targets for their drug, either on- or off-label as the level of diagnostic capability goes up

Shailesh: Understanding the underlying mechanism and the target, and developing the key to that lock, is crucial.

Mark:  I think it’s the evolution of the oncology model that moved broadly across multiple diseases.

Shailesh: Because it’s a different area, the regulatory elements are different than traditional pharma – could you talk about that, Trey?  What is the FDA is requiring and how it’s different than the traditional pharma model?

Trey: I think that although there are general nuances with approval for specialty drugs vs. approval for traditional pharma drugs,  one of the key aspects is, since these are often targeted to treat rare disease states, they most typically fall into special categories, orphan drugs, or rare drug populations.  Certainly there are some regulatory advantages developing therapeutics in these areas.  If it’s an orphan product, and it’s accepted by the FDA under the Orphan Drug Act, which targets a population of less than 200,000 patients, there are certain financial, as well as other advantages that can come to it. Other advantages include certain expedited approval pathways associated with these drugs for unmet or underserved medical needs, such as Fast Track Designation and Priority Review, which allows sponsors greater access to the FDA, as well as can reduce the development or review time at the FDA for approval.  The ability to access these regulatory pathways and accelerated regulatory pathways is one of the big differences.

Shailesh: You bring up some interesting points, Trey.  There has been a lot of activity in the rare disease side in Duchenne Muscular Dystrophy (DMD), with BioMarin and PTC Therapeutics and Sarepta.  The level of engagement the FDA has shown with DMD is phenomenal; I’ve never seen anything like it before!

Trey:  I would agree, and as we get into these disease states, patient advocacy groups play a larger role.  Pharma companies engage them to help design trials and the advocacy groups appeal to the FDA on behalf of the patient population.  I think there’s a level of engagement, given the high level of unmet need in these diseases states, that’s unprecedented and only exists in the rare and complex disease states which resides within specialty pharma.

Shailesh:  Yes, and one point is that they’ve raised a lot of money, but they’ve also found patients willing to go into clinical trials, which is a defining issue.

Mark:  Yes, they often have a well-organized clinical trial organization, so when companies have therapeutics for their patient population, they have access to these patients through the patient advocacy group.

Shailesh:  Without these advocacy groups, we might not have specialty pharma.

Trey:  Yes, they are an important cog, helping to define the specialty arena.  I highly endorse the comment that they helped drive product development in their arena because recruitment of patients is one of the rate limiting factors in getting a product to market, and getting the requisite data to fulfill the NDA requirements. Because of these patient advocacy group trial support services, specialty pharma developers can more easily access qualified patients for trials, expediting the overall product development timeline. As previously mentioned they also provide very generous financial support for product development.

Shailesh:  Thanks, Trey.  Moving on, Mark, a key element of defining specialty pharma is reimbursement and market access:  how has that changed?

Mark: That has changed by the sheer size of these markets, which are well defined and small, as opposed to traditional pharma markets, which are not applicable to specialty pharma.  It requires a new model and new pricing to get an ROI; because the patient populations are smaller, there needs to be a benefit or reward associated with all the risk that specialty pharma companies are taking.

Trey:  I agree 100%, and because of the smaller patient population, the cost of these drugs is going to be significantly higher than in traditional pharma.  That leads to discussion about how to show the healthcare economic benefit for this particular therapeutic, as well as outcomes of research showing improvement of the therapeutic disease.  Demonstrating these outcomes is much more important in these high-cost therapies.  Also, when there is increased risk with the treatment, making sure that patients stay on therapies throughout the duration of the therapy is incredibly important to make sure the outcomes are met.  Therefore, patient assistance programs and wraparound services working to ensure that the patients get the maximum value for the high cost therapeutic is very important.

Shailesh:  Those are very important points, thank you. Bill, can you talk about the companion diagnostics and precision medicine part of this?

Bill:  Absolutely.  Both Trey and Mark mentioned that as we go into specialty pharma, the patient population shrinks and there is a higher cost with a lower patient volume, so people are trying to get the right patients on the right treatments.  It started with academia and pharma companies developing these in-house.  But in the last ten years, we’ve seen more outsourcing, asking diagnostic companies to help develop these tests to pin down the right patient population and make sure that they’re enrolling and prescribing the right drugs.  The problem is the payers and the pharma companies haven’t really come together- who’s going to pay for all of this?  It takes a lot of money to develop the clinical trials.  There are some success stories, but as we move forward, we’ll see more and more partnering; even the patient advocacy groups are getting involved in these discussions.  They want to make sure the right patients get into the right trials, so we’re seeing an increase in communication between these groups.

Shailesh:  Thanks, Bill.  Finally, let’s talk about what we believe are the trends and the future of specialty pharma.  Trey?

Trey:  I’d say, in the near-term, there will be increased scrutiny on specialty drugs, as well as increased scrutiny on the manufacturers of these specialty products as more of them enter the market and it becomes a bit more of a crowded market space.  Because of that, there will be more pressure on manufacturers to demonstrate the economic value of their product and ensure the clinical outcomes related value of the product.  Increased competition will require these manufacturers to adopt more sophisticated marketing and commercialization techniques due to a more crowded market than has traditionally been seen in specialty pharma.

Mark:  I agree, and I also think that there will be an evolution in large patient populations.  There will be sub-segmentation due to the ability to tease out the genetic factors like in asthma or high cholesterol.  You’ll find sub-segments within these populations so that you can target the true genetic cause of these diseases.

*Disclaimer: The views expressed during the panel are the opinions of the panelists and do not reflect the views of the organization for which they work.*

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