Mind to Market

Friday, July 20, 2007

Thalidomide Pharmion

At the same time Johnson & Johnson is developing new pricing strategies for their multiple myeloma drug, Velcade, new drugs showing efficacy against MM are coming to market. Pharmion, a local Boulder pharmaceutical, is moving toward FDA approval with Thalidomide, a compound that has been around for many years but whose therapeutic properties in the treatment of cancer have only recently been proven.

Given the relatively low efficacy of oncological drugs, Patrick Mahaffy, President and CEO of Pharmion, questioned the ability of J&J to make their pay-for-performance model profitable. If Velcade were simply prescribed to all MM patients across the board, Mahaffy asserted, charging $49,000 per successful treatment would not be enough to cover the costs of those treatments that were not beneficial. The only way it could work would be to screen for those patients most likely to benefit.

Welcome to personalized medicine! There does seem to be this idea within the biomedical community that prescreening patients is somehow invalid. Screening for relatively healthy patients that would have a high success rate regardless of treatment does tend to make the drug look more efficacious. But the ability to take other phenotypic characteristics into account in the screening process is of value, especially in pay-for-performance pricing contracts. Patients that are on the margin for benefit will be in the greatest risk here; the drug companies won't want them treated if their chance of benefiting from the drug is low.

The answer, according to Mahaffy, is to charge less for the drug treatment and abandon the pay-for-performance model. We'll be interested to see how Thalidomide Pharmion competes against Velcade in the UK market once its approved.

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