Transcript
DAVID THOMAS: There are nine FDA-approved tumour-agnostic therapies now that appear to work on the basis of the biomarker, regardless of cancer type. And the objective response rates in the data that the FDA used, ranged from about 29 percent all the way through to 75 percent. So, we're talking about highly significant advances in cancer treatment.
MIC CAVAZZINI: That’s Professor David Thomas, founder of the cancer genome centre, Omico. And I’m Mic Cavazzini. Welcome to Pomegranate Health. As we heard in the last episode, rationally-designed therapies have transformed medical oncology in just a few decades. Some of these work on almost any cancer with the right molecular signature, whether that be HER2 overexpression, a BRAF mutation, high tumour mutation burden, or RET and NTRK fusions. Such tumour-agnostic medications could be godsend for those with rare cancers which have classically been overlooked by drug developers.
DAVID THOMAS: Yeah so, the objective response rates for the best of these therapies is quite remarkable and it appears to work in almost every cancer type in which it's been tested. I'll just put that into perspective so that your audience understands. I'm a sarcoma specialist. So, for patients with metastatic soft tissue sarcoma, our frontline therapy, standard of care, is doxorubicin. And doxorubicin, as a single agent, has an objective response rate of between 18 and 23 percent. So, we're talking about drugs that are, two to three to four fold more effective than our best chaemotherapy for those diseases—if we find the target.
MIC CAVAZZINI: The other cohort of patients who will greatly benefit from tumour-agnostic therapies will be those with advanced cancers of unknown origin. Along with rare cancers, these are responsible for 10,000 deaths every year in Australia, or about a fifth of the total toll from cancer.
I went back to the Uni of New South Wales to meet Professor Thomas a second time and learn about the challenges of rolling out these pan-cancer therapies in Australia. We’ll hear about the idiosyncrasies in our drug regulation and funding later in the interview. But I started by asking Professor Thomas about the patient journey following cancer genome profiling, and the financial viability of this screening program.
DAVID THOMAS: Omico’s current program called PrOSPeCT is enrolling patients with advanced, incurable cancers. That program has now reached more than 15,000 patients who have undergone genomic profiling. Our experience to date is that more than 70 percent of patients will have a biomarker which suggests, logically, a companion therapy, and in about half of that number, about 37 and a half percent of the cohort, to be precise, the matched therapy has strong prospective, phase II or better, clinical trial evidence of benefit.
And our own data on watching what happens to those patients who manage to receive a tier one to three matched therapy, is that at approximately double survival compared to those who receive some form of matched unmatched therapy in the same group. However, in our experience, only about a quarter of the patients who had that target went on to receive the matched therapy, and it's that group where we could see the survival gains. About 1700 patients have gone on to receive the recommended therapy and it’s that group where we could see the survival gains.
MIC CAVAZZINI: And some fraction, will have received a FDA approved therapy, and some fraction will have gone on to trials?
DAVID THOMAS: The vast majority of patients receive treatment primarily through clinical trials. Very few receive the treatments through the Pharmaceutical Benefits Scheme. Some people are paying for treatments out of pocket or receiving it via compassion access programs. We think the area where we can make a big difference is to try and increase the number of these biomarker-dependent clinical trials.
The reasons why only one in four of those patients who could potentially have benefited from receiving a matched therapy then actually went on to receive the matched therapy is complicated. But the primary drivers are the patient is already on an existing therapy that is proving effective; the patient has become too sick to receive any further therapy; or the absence of clinical trials or other mechanisms of access to the recommended matched therapy.
And as a consequence of the second two explanations we have instituted some pretty big changes in the way that we're offering screening to cancer patients. In the first phase of our program, we were reserving genomic screening for patients once they had exhausted lines of conventional therapy. Now we're offering screening much earlier in the cancer journey. We just didn't want patients to be going to their graves without being able to use the information that we were generating from the genomic profiling. And we reasoned that if we went earlier in the cancer journey, when they needed that information, they would still be well enough to benefit from it.
MIC CAVAZZINI: Yeah, that figure of doubling survival. So, I think average survival was extended to 21 months as compared to 14 months. Where, where is the comparator coming from? Presumably, it's not RCTs, but is that just standard of care?
DAVID THOMAS: Yeah, that's a great question. So, this is a single arm study. We don't randomize patients to receiving either what is, in some cases known to be a pretty effective therapy or not. I don't even think that would be ethical anymore for some of these treatments. So, the control arm in this study are patients who are taking part in the trial, who have the relevant tumour biomarker, but who don't receive the matched therapy. And the trick is that we are only including in the control arm those who are well enough to receive some form of non-matched therapy. If you just chose patients who didn't receive the matched therapy, then in some cases you'd be artificially inflating the difference, because patients in that arm might be too sick to receive any further treatment, and so they will naturally tend to cause a worse survival in the control arm. But what we've chosen as patients who went on to receive some form of systemic therapy, it just wasn't matched, and I think that is the best that we can do in a non-randomized approach.
MIC CAVAZZINI: Are these data in the manuscript I was told was in preparation?
DAVID THOMAS: That's right. So that data is currently before a high impact journal for consideration. We'll be able to share that with the community, but I've been talking about that data in general and public spaces for the past 18 months or so.
MIC CAVAZZINI: And I've heard you present the numbers as— a sort of integrated assessment of these numbers, where X percent of screen patients find a matched therapy with Y percent response rate and Z percent survival where you said that these drugs are six times more effective than previous standard of care, is that right?
DAVID THOMAS: Yes. So about five or six years ago now, there was a publication from the US from one of the early pioneers in this process, a woman called Razelle Kurzrock, who is a thought leader in this space along with people like Vivek Subbaiah. And they had done an analysis of the response rates on Phase I trials [see also]. The meta-analysis included some 360-plus phase 1 trials, so not a small sample, and it compared the outcomes for patients who took part in unmatched or non biomarker-dependent trials compared to biomarker dependent trials. And what they were able to show is that the objective response rate in patients who received non biomarker dependent trials was around 5%—one in 20 patients would get that tumour shrinking by at least half. Whereas those who received a matched therapy on a phase one trial had a response rate in excess of 30%. Now the point is that in phase 1 you don't know enough about the drug. You're literally trying to establish a safe and effective dose, a maximum tolerated dose, and a recommended phase 2 dose. So, this is literally a test about the model of rational drug development. If you treat everybody the same, what's the chance that patients will respond? Well, it's one in 20. If you try to identify the right patient with the molecular profile will match the drug, then all of a sudden, that jumps sixfold to 30 percent.
MIC CAVAZZINI: Again, so of the 15,000 screen patients, a third of those were eligible for trials of more novel agents. So, these might be safety studies, first in human. What do you tell those patients about?
DAVID THOMAS: So, 70 percent is the number of times we find a target that leads us to suggest a treatment may be sensible. In about half that number, 37 and a half percent, there is phase 2 or better data for benefit. For the other 33 percent yes, we're using often drugs earlier in the cancer journey, where that data doesn't exist, and that might be predominantly early phase 2 or phase 1 studies.
Okay, so how do we explain that to a patient? When a patient gets referred onto our program, we'd just give them the figures. We would say that, conservatively, one in three patients would be expected to have a drug target that might give them more time, might provide them with pain control or symptom improvement over a period of time.
We would tend to be conservative when we make those recommendations, because one of the issues in this population, as you can easily imagine, there's an extraordinary hunger for hope. But at the same time, we do want them to understand that we're not talking about something that is vanishingly rare. We're talking about something that is now—you know, one in three is not a bad hit rate for any sort of screening test.
And, I guess, there's a second consent process which happens when you have a target. And we have to be able to say this treatment has fairly strong evidence that it might benefit you. This is softer evidence, we don't know that this is going to be a benefit, but science tells us that this is a logical thing to target in your tumour.
And the point of the distinction is that sometimes these trials are a long way away. It might mean that people have to leave their home. It may be that the trials don't exist, and there will be discussion about whether it's reasonable to pay for the drug. And I think it's important that the clinician who's looking after the patient is able to give them a clear idea about what the likely benefit is, so that they can make the wisest decision for them. Certainly, from my point of view, I would hate the idea of patients traveling hundreds of kilometres for a Phase I trial. I think it's reasonable to go to another hospital in the same town, if they wanted to take part, but I wouldn't want them to be selling their homes or made making major life decisions which might take them away from their homes precisely at a time when being part of a community is very important for good medicine, good clinical care.
MIC CAVAZZINI: Yeah, the clinician has a lot more considerations than just these numbers.
DAVID THOMAS: Absolutely, that's right.
MIC CAVAZZINI: You’ve also addressed in some of your presentations the business case of the CaSP program, the Cancer Screening Program. What does it cost to screen 15,000 patients and does the hit rate make up for that.
MIC CAVAZZINI: Professor Thomas presented a compelling analysis at another part of our discussion, and I’ve merged the responses here so it flows more cohesively. It came as we were discussing RET gene fusions which, as we heard in the last episode, are detected at a rate of only 0.1 percent in the cohort screened through PRoSPeCT. Selpercatinib is a targeted therapy against RET fusions that has an objective response rate of 44 percent but the cost of finding candidate patients would be prohibitive if that’s all you were looking for. NTRK fusions are a little more common, but the two treatments directed against these have an incredible response rate of 75 percent. We’ll talk about the cost of drugs themselves later, but for now let’s focus on the numbers needed to make screening worthwhile. For listeners outside Australia, our public funder, Medicare, is split between the Medical Benefits Schedule which pays for services and the Pharmaceutical Benefits Scheme or PBS.
DAVID THOMAS: So, the cost of the molecular profiling is roughly $2,300 per patient. That's the money that we provide to the NATA-accredited pathology labs that perform the testing and we've now supported seven laboratories to achieve NATA accreditation.
So, it's interesting. RET fusions and NTRK fusions are very rare, and the consequence of that is that you have to screen a lot of people to find a patient that will benefit. So, imagine you have to screen a thousand people to find somebody with a RET fusion or an NTRK fusion, and it's $2,300 per test. That means you're paying $2.3 million to find each patient, and the drug works brilliantly on that patient. Let's say it increases their survival by three years, which would be regarded as a very impressive outcome, then you are paying roughly $800,000 for each year, year of life gained, even removing the cost of the drug. So, the cost of screening becomes rate-limiting for what is conventionally regarded as good value for money in our society, where the target is rare.
Where a target is common, the cost of screening is less important than the total budgetary impact of the drug. Now that suggests, logically, a solution. Because once you get to the point where there are nine pan tumour therapies, each with their own target, and all you are doing is doing the same test for all nine all of a sudden, instead of screening 1000 patients for one person to benefit, you're screening 15 patients to get one person that benefits. There's a kind of threshold where the cost of the test now is a significant part of the equation, and that is the Rubicon that we need to cross in Health Technology Assessment.
So, the overall program is $185 million to screen what will be 23,000 patients under CASP, something of that sort. But only a fraction of that, about 60 million, is spent on the genomic profiling and the rest of it is spent on the collecting information, organizing the back-office function, finding out what happens at the end, doing the trial matching, going out and making sure that everybody who has a trial that we think is important knows that Australia is a great place to bring that trial.
And ultimately, all of these programs are time-limited, and yet the model of care we want to leave has to be there in perpetuity. It shouldn't depend upon us being successful with another grant, we should be able to generate evidence that allows the best of what we're doing currently to be mainstreamed and accessible to all patients. And that piece of work, the health system and ecosystem-shaping part of what we're doing, is particularly important now. Because the science is out, we already know the numbers that we're talking about, they're only going to get more significant, it's only going to be a larger fraction of patients that will benefit. The science is pretty clear, but the model of integrating what we are learning into routine health care, that is the cutting edge of the challenge worldwide in my view. It's about mainstreaming so that it's available on the MBS and linked to the PBS.
And when you talk about the cost of genomic screening, sure, it's only $2,300 but some of these treatments now retail, you know, for $100,000 $200,000 a year, and that's enough to bankrupt people. In the US, I think, 60% of bankruptcies are associated with healthcare costs—that gives you an idea about what happens when you have an uncontrolled system, and all systems need to use the resources wisely. The trick is we have to solve some technical problems in health technology assessment which the system hasn't faced before.
MIC CAVAZZINI: Let’s lay out in more detail the problem that Professor Thomas is describing—the fact that even when people test positive for a molecular target, there is limited availability of pharmaceutical options in this country.
From the get-go, drug sponsors typically make submissions to the Therapeutic Goods Administration only after they’ve already been to the bigger American and European markets. Australia is responsible for a mere two percent of global drug sales, and I’ve been told that sponsors are also put off by the demanding standards set by the TGA, such as asking that trials be replicated in a local setting.
The Australian Registry of Therapeutic Goods does list all nine of the targeted drugs we’ve talked about in these podcasts, but in most examples this is only for a specified cancer histotype. Just three of the drugs have been approved with a tumour-agnostic indication as they have been in the USA.
For example, the product information for pembrolizumab recognises the drug’s effectiveness against almost any cancer type that has a high tumour mutational burden, but public funding is restricted to patients with advanced melanoma. Similarly, entrectinib is indicated for any solid tumors that are NTRK positive, but it’s listed on the PBS only for advanced non-small cell lung cancer, and even there the required biomarker is an entirely different one.
By my analysis, its competitor larotrectinib is currently the only drug that’s funded in a tissue-agnostic way in Australia, and even then it’s only for children that there are no exclusions. Further, the cancer must be metastatic, or locally advanced and unresectable without serious disfigurement. For all these drugs, the PBS listing comes with a number of restrictions such as special authority to prescribe, other treatments must have been tried and failed and that scripts can be written for only a few weeks supply subject to a clinical or radiological response.
As David Thomas puts it, the caution shown by the TGA and the Pharmaceutical Benefits Advisory Committee in recognising pan-cancer indications is a hang up from the anatomical and histological understanding of cancer we talked about in the last episode that emerged in the late 19th Century.
Even for specific indications, there is, on average, a delay of 18 months between registration and funding on the PBS. And that’s for common cancers where there are enough patients to run statistically meaningful trials. Rare cancers are defined as having an incidence rate below 6 cases per 100 000, and therefore it’s hard to conduct such trials even if there were commercial interest in doing so.
This is incredibly frustrating for patients, their families and clinicians, particularly when the PBS continues to pay for traditional chaemotherapies developed without rational design which have much lower response rates. Of course, the PBAC has an unenviable task when weighing up the eye-watering costs of next generation oncotherapies against an incomplete evidence base.
Australia’s representatives in these business negotiations drive a hard bargain but do, eventually, get results. Larotrectinib is sold by Bayer and Eli Lilly under the brand name Vitraktvi. It’s current price in the USA is over 33 thousand US dollars for thirty days supply, or the equivalent of 53 thousand Australian. In 2022 it was listed on the PBS for a fifth that price, though patients would be no more than $32 out of pocket each month. I asked Professor Thomas where he thought the greater barrier to access was in the long pathway of drug regulation and funding.
DAVID THOMAS: Ultimately, I think it's reimbursement that's the issue. In fact, there's been quite a number of innovations with the TGA process, which is designed to establish safety and efficacy. It's not designed to evaluate value for money. So, there is a process called Project Orbis, where the TGA is working with other agencies in other countries to have mutual acceptance of assessments being performed by other agencies. That means, instead of having each agency do the same thing separately, you can get a sort of an expedited review by saying, the Canadians have approved this, and this is their analysis, and we're going to just take that aboard, review it, and then just to approve it better than doing it ourselves.
The reimbursement process is much more complicated, because in the reimbursement process, there are multiple factors which are taken into account, only one of which is to do with efficacy and safety, and the rest are to do with value for money and the total budgetary impact. And that's perfectly legitimate to say that we've got a limited amount of money, we've got so many demands on the public purse, we need to show in a transparent way that this expenditure is justifiable, if only because we may have to take the money away from something else.
As opposed to the US model, where it's essentially a privatized healthcare system where patients or their insurance will pay for care. In public healthcare systems, which are using taxpayer dollars, we have to make that additional decision. Now, the consequence of not making a decision when you've got highly effective therapies coming down the pike, if they're TGA-listed, is that people who can pay for it will get those drugs. It's just human nature. So, we have a whole lot of drugs which are emerging from that process, which is typically done by the private sector, where they're built up they’re mature in respect of the science, but the business model is just not compatible with, or is really challenging the whole sustainability of publicly-funded healthcare.
Our current mode of assessing Health Innovations is based around an era when they came along once in a blue moon, rather than every week, and where the costs were just were different and, in fact, you have these tumour-agnostic therapies which cover many different cancer types, which is just not the way that we've done it in the past.
MIC CAVAZZINI: But when you describe the Health Technology Assessment processes as not fit for purpose, what is—I'm still not crystal clear what the ask of it would be. It's not simply that the TGA need more staff so they can get through the pile of applications more quickly. It's that they should be prepared to take a more of a punt on these populations as you’ve defined them, because they will find that the outcomes do meet the cost threshold, once all the numbers are in?
DAVID THOMAS: Yeah, that's essentially it. So, you could divide it into two broad areas of reform. The first is quantity. At last year's, most recent PBAC meeting—Pharmaceutical Benefits Advisory Committee meeting—there was a deferral of 80 percent of the workload because there was an increase in the number of submissions. That's just a function of the advances in science. The model is working. There's more data coming out than ever before. Of course, the regulators are going to get an increased burden of cases for reimbursement in the public health care system, and the system itself is struggling to deal with that exponential growth in the rate of generation of knowledge. So, certainly, there's a quantitative problem.
But that quantitative solution doesn't address the fundamental qualitative limitations of the existing system. And the fundamental problem that I would focus on first is the fact that we go to histotype, to primary site of origin of a cancer, as the framework within which all our assessments occur. And the consequence of that is, if you've got big numbers in that category, you can generate the data. And if you don't, you're just out in the cold.
And think about this as just an ethical matter, a social and ethical matter. Of the 50,000 deaths each year from cancer, 10,000 are due to rare cancers and cancers of unknown primary site which, by definition, fails the histologic classification. Those people have paid lifetimes worth of taxes to see other people being treated. And it's structural. It's actually embedded in the system itself, that that's occurring. It's a systematic inequity which was previously not soluble because we didn't have a molecular framework to classify those cancers but that's now become possible.
And that's the area where I think we need to think about reform. I think if we can get the regulators to utilize that molecular framework in their regulatory considerations, there is an immediate group of patients that would benefit from the stuff that we've already done. It's not about future research. These drugs already exist.
And the other thing to realize, we sometimes get a little bit pious about the sources of uncertainty that we'll accept. So, for example, if you use pembrolizumab and immunotherapy in or nivolumab in melanoma, we see an objective response rate that's in, say, the low 30 percents. That is one in three patients with metastatic melanoma will respond to immunotherapy.
Health technology assessment, for some reason, completely accepts a source of molecular uncertainty. As long as melanoma is being treated, it doesn't matter that there are molecular reasons why 70 percent of people don't respond. We're prepared to accept that a benchmark of 30 percent is good enough to justify public sector investment. Then why shouldn't an objective response rate of 75 percent justify it, just because we've now included many different cancer types? When it comes to rare diseases, the fact that they've got different labels on them causes all sorts of jitteriness in regulators. They're not used to giving tumour-agnostic approvals.
But it's a mindset thing. And it has to be reasonable value for money, because we're using tax dollars, which are finite, and there are many calls on tax dollars. So, I fundamentally accept the idea that we have to demonstrate a reasonable standard of value for money. And that standard, actually, I can tell you the number, it's $70,000 per quality adjusted life year gained. That's the metric that generally is a threshold for good value for money for everything that we've approved in the past 20 years. So, if we maintain that standard going forward, that's fine.
MIC CAVAZZINI: I just want to focus on this $70,000 per QALY figure for a moment. This means that the PBS is prepared to spend 70 grand to return the average patient to a whole year of perfect health, or two years at half health. I won’t go into how quality is given a quantitative estimation, because I don’t really understand it.
But you won’t actually find in print this number that Professor Thomas and many commentators refer to. The PBAC has never published a specific threshold, and observers have extrapolated various estimates only based on past spending habits. $70,000 per QALY would be slightly more generous than the UK’s declared limit of 30,000 pounds. But the National Institute for Health and Care Excellence does stretch to 50,000 pounds per QALY where no alternative therapy exists. I guess this parallels our Life Saving Drugs Program, which I want to discuss in another episode.
As a side note, some academics at the University of Adelaide compared submissions to the two funding bodies for the same drugs and found that costs were consistently higher in the UK. They suggested that having an explicitly declared threshold invited drug sponsors to pitch as close to that as possible.
In a paper published in 2018 for the Journal of Clinical Oncology researchers analysed the costs of screening for and delivering all the precision oncotherapies available at that time. The combined figure came out to $100,000 US dollars per QALY, on average. In recent presentations, Professor Thomas has suggestsed that the figure has halved since then and is approaching a threshold that would be acceptable to a funder like the PBS. Apologies for the tangent, let’s get back to the interview.
DAVID THOMAS: So the question is, how do we generate that number, the dollars per quality adjusted life year gained, whilst adjusting the methodology to start including tumour agnostic drugs by crossing histological boundaries? It shouldn't matter what the terms are that you input, as long as the outcome is, this is how much, how many more years of life we've added to the community for this amount of money.
I said, one in five cancer deaths is due to a rare cancer or a cancer unknown primary site. So, in effect, we would also, if we were to be creative in that way, not only improve the total burden of cancer in our community, do so more equitably, but we'd take a group with unmet need and bring them into the fold for the first time. And in terms of five-year survivals, that could be an area where you gain a disproportionate bang for your research buck.
Now, there may need to be a little bit of uncertainty and a bit of faith in all of this because this is a relatively new area. But we're talking about unmet need here, and it's actually enshrined in the processes of the regulatory bodies, the Medical Services Advisory Committee and the Pharmaceutical Benefits Advisory Committee, that where unmet need exists, that the committee has discretion to be able to accommodate that uncertainty, increasing uncertainty. So, I think there is already a framework for thinking about this it just requires a use case to be able to show that it occurs, then you start to have a system that is now caught up with the advances in science in those areas of medicine.
MIC CAVAZZINI: I liked how it was expressed in a paper you co-authored for Nature Medicine in 2022 with 14 other leaders in the field from around the world where it was stated, “This challenge… should not result in lower standards for drug approval, but rather in innovative clinical-trial designs that generate the necessary evidence efficiently. These approaches include enrichment trials, basket trials, umbrella, and adaptive trials,” real world evidence. Without going into those in more detail—you know, sometimes I've been sceptical when people are selling, “Oh let's just approve this for n=1 trial. Let's give it to this patient”, because the infrastructure isn't there. But I think what you've just already described with PrOSPeCT, is you're following up all of these patients. You're gathering these data in a rigorous way, they're not just compassionate use type scenarios.
DAVID THOMAS: Absolutely, I would never advocate for bypassing an evidence framework to justify public sector investment. But I am certainly also advocating at the same time that we can't just say, “computer says no,” in the face of advances in knowledge, that just makes us obsolete as a healthcare system.
MIC CAVAZZINI: There’s a paper published in the Internal Medicine Journal which might bring this into relief. In 2012, researchers from Monash Uni and the Peter Mac Cancer Centre audited cancer treatment protocols approved for clinical use—for all cancers not just rare cancers. There were 448 different protocols comprised from various combinations of 82 drugs. 42 percent of those protocols were not PBS funded because they were being used off-label. But the authors say that the majority were derived from evidence-based treatment guidelines. Is that to say that it’s not just maverick clinicians who are progressing too fast for the regulators, it’s published guidelines, is that your experience?
DAVID THOMAS: Think of it like a pyramid. And at the apex of the pyramid you have drugs which are approved by the government to be reimbursed for public access as a standard of care. And below that apex, there will be a group of drugs which are clearly effective and safe, but where the cost considerations might constrain access. And some of those might be passing through that layer, ultimately to become part of the PBS and MBS. And then below that is the area of research where we don't know whether they're safe or effective—or maybe I should say, safe enough and effective enough, in the particular cancer in which they're being deployed. And then at the bottom, you have the feeder layer of coming out of basic research about targets and new molecules that will hit those targets, what I would regard as phase one.
The question is, what is the shape of that pyramid? Is it like a ziggurat with a flat top and a lot of drugs available? Well, the answer to that is that for non-small cell lung cancer, at least in this country today, I think there are three targeted therapies that are reimbursed on the PBS, whereas there are 11 with FDA guidelines for use. And the FDA guidelines can be treated as providing some reasonable evidence for safety and efficacy, but they're not…
MIC CAVAZZINI: They don't consider the cost.
DAVID THOMAS: Yes. And the real issue is that the model by which drugs are developed today is an outsourced model. So, the public sector will generate the intellectual property through supporting medical research. Those ideas, when they mature, lead to a potential drug target. If the drug target looks really promising with cell culture, in vitro, sort of studies, it looks very promising then, typically there'll be some licensing event of that intellectual property to a company which will then undertake medicinal chemistry to find a lead compound for drug development, and that lead compound gets matured to become the drug that we first put into man in clinical trials and so on.
So, the problem with that model is that the sector that does the drug development and the clinical trials proves that the drugs work is a private sector. So, the money for that comes from shareholders, typically, or private sector in other ways. And then it's based on a profit model, so that once they mature—it’s a very expensive process, there's lots of very high failure rates, so completely understandable—then you have to go back to the public sector in single payer healthcare systems to say you now have to pay for the drug development.
And that model is so siloed that my observation is there are a remarkable number of opportunities for doing it more efficiently, thereby decreasing the total cost for all parties concerned. For example, if rather than having 7% of cancer patients taking part in clinical trials, in Australia, we regarded clinical trials as a standard of care—so we aim for, say, 50% of patients on clinical trials, immediately you would have patients who are benefiting from access to the drugs, but they would come for free—not at $100,000 per year, but for free in return for the data that's generated to assist and ultimately help the companies with taking a drug to market.
That sort of efficiency of engagement in which both the public and private sectors work together could ultimately get to the answers more quickly, therefore decrease the costs of drug development, immediately benefit the patients and decrease the cost of the PBS of delivering those therapies. And because you're doing more clinical trials, which is in effect, an area of the economy, the life sciences economy, you're actually creating jobs at the same time and injecting resources into the healthcare system, which results in taxes being raised to be able to support the budgets for doing the screening.
And one of the things that Omico is trying to do is to raise awareness amongst the global pharmaceutical community of the fact that Australia is now moving into the molecular era of cancer diagnosis and predictive testing. And we reason that if global pharmaceutical industry knows that they don't have to pay in a bespoke way for screening for each of their trials, but that this infrastructure exists, it should make the clinical trials proceed more quickly. It should mean that they'll be able to do trials more efficiently and get to the answers that they want faster. And if we can persuade the pharmaceutical industry that coming to Australia is a good a good thing then the corollary of that is that patients will have more options and will increase the number of patients who actually get to experience some of the drugs that can double survival.
MIC CAVAZZINI: Have I heard you correctly saying that 10 of the 52 trials that you've referred patients to would not have come to Australia, were it not for this infrastructure?
DAVID THOMAS: Well, I can update you there. So currently, we have been informed by pharmaceutical company partners that 13 of the trials—and we're now more than 60 trials that we've supported under the CAS protocol—13 of those trials would not have come into the country if it were not for a molecular infrastructure for screening patients. It would be impractical. It would cost too much to set up that infrastructure. Each company would have to set up its own screening infrastructure. It just wouldn't be worth it. You may as well go and do your trials in the US, where the privatised model of healthcare means that a lot of patients are already receiving genomic screening. In Australia, the service we provide to cancer patients is providing them with access to molecular profiling without cost, but in return for generating information. That's what research is about. And if we could invent an ecosystem of that kind, wouldn't Australia be a fantastic place to come to develop the 800 plus molecules that are currently being invented to try and change cancer patients’ future.
MIC CAVAZZINI: And what is one of the biggest industries worldwide. Why wouldn't that be one of the first things that we should be investing in and boosting?
DAVID THOMAS: That's exactly right. I cannot overstate the size of the life sciences economy. Globally, it's worth trillions. 15 of the top 50 companies in the world are pharmaceutical companies. And if we if we do think that that part of the economy is important, it's directly linked to healthcare, now. We've treated Health as an expenditure portfolio in our government, just like welfare and education and housing. A sum of money is given, and that money is seen as money that is spent on a sort of per citizen basis, if you like.
But Health is not just an expenditure portfolio. And if you look at COVID, probably the one major reason that we had this galvanic, highly effective response to COVID was when it started to impinge on our economies. There may well have been really remarkable progress from the application of science to COVID 19 if it had just been a health problem. But it was the fact that it was tanking economies and isolating countries from each other that ultimately justified the investment of was a large amount of money in Australia—I think the government committed $130 billion within the first six weeks through Jobkeeper towards solving the problem of COVID-19. The solution to COVID-19 was generated as fast as it was because of an integrated view of the entire national ecosystem, both the economy as well as Health.
MIC CAVAZZINI: Yeah, if you're considering the costs to the workforce, impact impaired productivity, and then the increasing cost of cancer care worldwide. In the case of COVID, you were able to turn around a vaccine in 12 months from and get it into people's arms.
DAVID THOMAS: Incredible. That’s one message I’d really like to come across, that there's a lot of public debate about science and what it means in society today. You've only got to look at the US and the discussions about the CDC at the time of COVID 19. We haven't done the sort of job we should do about public communication of the benefits of science, and I think it's actually a good time for this podcast.
MIC CAVAZZINI: When your media team reached out to me as part of a bigger publicity campaign, what did you hope from this podcast? Is it to get more oncologists referring into the program?
DAVID THOMAS: Yeah so, oncologists are a critical part of the ecosystem that we're discussing. We've had referrals from more than 900 clinicians around the country, so that's a significant fraction of the medical oncology community. But it's important that we don't leave people with the impression that they should be reserving this only for the exceptional patient, but rather, it should be progressively and logically integrated into a model of care.
And I think it's actually a very exciting time, because previously, we would have wanted to solve these problems, but had no idea where to begin. Now we've got the beginning underway, we just need to transfer the tsunami of emerging, highly effective therapies somehow into a social context where they can be accessed as routine care, where they meet that threshold.
There's one element, which is the long-term sustainability of the way in which we develop drugs. And the second is adapting our health technology assessment so that it is fit for the 21st century of molecular oncology, rather than the old era of histotype-driven oncology. And you know, like all those adaptations in very highly respected, entrenched structures that are really fundamental to our ethics as a society—equity and fairness and transparency—changing those things is something that makes people feel very uncomfortable because they don't know what the consequences will be of those changes.
It’s very hard—they're not scientific systems, the health system. They are political and social and human systems, but they're not necessarily amenable to a scientific strategy, and that's what I think is required now. I think it’s going to require an experiment on the health system itself, one that can be conducted without throwing the baby out the bath water permanently, and resulting in runaway, uncontrolled expenditure. One needs to think about the NDIS as an example of such a thing that's happened quite recently.
On the other hand, we need to move forward, because every family in this country is affected by cancer. Every family will, within a very short time will be aware of these drugs coming on. They will demand it as a social right. And so there will be political pressure to come up with a solution. Our job as clinicians and scientists and researchers is to come up with solutions that balance the public interest with the individual interest in our society. It's a fundamental sort of tension, of course, and it's not a new one, but this is a very live problem for the governments now.
MIC CAVAZZINI: For the second time, I reached the end of my hour with Professor Thomas without having gotten through my many many questions. So, I’ll just leave you with some personal thoughts about the economics of funding new therapies and point you in the direction of some supporting literature. The links are all embedded in the transcript you can find at our website.
Like any public funder, the PBS need to be thrifty. Particularly given that healthcare spending as a proportion of Australia’s GDP is expected to grow from four to six percent over the next forty years. As described in Treasury’s most recent intergenerational report, 40 percent of that increase relates to an ageing population. In fact, by 2050, the ratio of working Australians to those over 65 will fall to 2.7, just half of what it was at the turn of the millennium.
But most of the increase in health spending comes down to the price tag on new drugs and other technologies, and this is certainly true in oncology. The direct cost of cancer care to the Australian health system has risen by 66% over the last decade to about 10 billion dollars a year The global spend on cancer is forecast to double by the end of the decade.
Again, there’s no doubt that age and lifestyle and environmental factors are driving an increasing burden of disease worldwide. Most baffling has been the rising incidence of early onset cancers in both high and low income countries [see SMH, BBC, Time]
But the more dramatic and more soluble issue is the ballooning price tag on next generation cancer therapies. In the United States, the median price of new therapies is around $12-13 thousand US dollars month, but there are individual drugs, like larotrectinib which I mentioned earlier, that cost two or three times as much.
Pharmaceutical companies say that they need to set such high prices because running trials is a costly and risky exercise. They often refer to a 2016 report published by analysts at Tufts University where it was estimated that it took $2.7 billion US dollars to bring a new cancer drug to market. This also accounts for the sunk costs into 19 failed candidates for every one that succeeds in getting all the way through to regulatory approval.
But critics of the study say that the authors cherry-picked the most expensive drugs, they put on Big Pharma’s balance sheet costs that were subsidised by public sources, and inflated the dividends owed to capital investors. More sceptical analyses have put the median cost of development at around 650 million US dollars or even as low as 90 million across all cancer drugs. And the success rate from cancer drugs research might actually be closer to one in four or five.
This risk to reward ratio is discussed in an excellent review written for the Atlantic magazine by US oncologist Zeke Emmanuel. He points out that while the top 25 pharmaceutical companies reported a “healthy average operating margin of 22 percent” in 2017 they spent less on research and development than many companies working on much smaller margins. I touched on this back in podcast episodes 64 and 65. Despite the claim that IP protections like 20 year patents are essential for stimulating innovation, there’s evidence that the biggest drug companies spend more on marketing and buying back their own shares.
Another indicator that market prices are in no way tied to research costs is this jaw-dropping finding. That the profits generated from the 20 best-selling drugs alone were more than enough to cover the R&D costs of all drug companies around the world.
Don’t believe me? In 2023 pembrolizumab, known on the shelves as Keytruda, was worth $25 billion US dollars in sales. Even if it did cost two and a half billion to develop, that leaves with quite a lot of change left over, and demand for pembrolizumab will keep increasing as it gets approved for more diverse cancers and at earlier stages of disease. Ironically, back in 2010, the manufacturer Merck had pulled the plug on the research program and it was only after the success of another immune checkpoint inhibitor from a rival company that they took a second look.
Dr Emmanuel cites a former CEO of Pfizer, who in his tell all book wrote “How do we decide what to charge? It’s basically the same as pricing a car…. It is the anticipated income stream, rather than repayment of sunk costs, that is the primary determinant of price.”
This disconnect between the R&D costs and what pharma companies charge suggests that making clinical trials easier for them to conduct won’t necessarily have an impact on prices, despite the other advantages described by Professor Thomas.
Clearly, regulation plays a critical part. In a detailed analysis published in JAMA in 2018, it was shown that common drugs for cholesterol, diabetes, asthma and arthritis were two to three times more expensive in the USA than they were in other rich countries. In Germany and the United Kingdom, for example, there are laws requiring that new drugs be priced on their efficacy relative to existing ones. I was made aware of the UK’s Voluntary Pricing and Access Scheme by Professor Robert Tindle, an immunologist who has written a book based on his own experience of trying to access immune checkpoint inhibitors for his daughter who was dying of a rare cancer.
The VPAS Scheme is an upfront agreement for 12 billion pounds worth of medications sold into the NHS. In return for these guaranteed purchases, drug companies agree to cap the price. As Professor Tindle explained to me the VPAS also makes allowances for drugs like the ones we’ve heard about in these podcasts, that don’t have a fully mature evidence base from trials. In a sort of “pay-for-performance” model, the drug company reimburses some of the costs where pre-agreed patient outcomes are not met. In this way, patients aren’t bankrupting themselves for hopes and prayers, and more data can be collected in a real-world setting. Hopefully, the ecosystem that Omico is contributing to will enable more creative funding models in Australia, and get precision oncotherapies to those who are most likely to benefit.
Thankyou to once again to Professor David Thomas for his time and patience. I’m grateful also to Professor Tindle for his insights, and the reviewers on the podcast editorial group who took a listen to early drafts of this story. They’re listed by name at the website racp.edu.au/podcast. This episode of Pomegranate Health was recorded on the lands of the Bidjigal and Gadigal clans of the Yura nation. I’m Mic Cavazzini. Thanks you for sticking with me right to the end.