Targeted drugs are more efficient, but do they save money?

Government belt-tightening hasn't been easy on pharma's pricing power, but it will be a boon for targeted drugs. Or so figures one of Roche's top diagnostics executives. On the heels of its targeted melanoma drug's FDA approval--and as Pfizer ($PFE) celebrates the OK for its targeted lung cancer treatment--Roche is expecting similar meds, and the tests required to target them, to gain importance for cash-strapped payers.

"No country is going to be able to afford to increase the percentage of GDP spent on healthcare," Roche Diagnostics COO Daniel O'Day told Bloomberg. "What they're all looking for now is how we can take this certain pie we have for healthcare and better leverage it for society."

And that leverage can be provided by smarter spending on drugs. With diagnostic-and-drug combinations, governments can be more efficient in their spending, O'Day said. Diagnostics will be "solutions for how the countries divide the pies more efficiently," he said.

But targeted cancer drugs are expensive. Yes, they aren't designed to be used in patients who aren't likely to respond. But even if they're restricted to the smaller groups that can benefit, the cost is still quite substantial. Roche's new Zelboraf treatment is priced at $56,400 for 6 months of treatment. It's designed for use in melanoma patients with a BRAF gene mutation and advanced disease. Of the roughly 9,500 patients each year diagnosed with advanced melanoma, about half have the mutation. With those numbers, at least one analyst expects the drug to hit peak sales of $1.5 billion. And that $1.5 billion has to come from somewhere.

- see the Bloomberg story

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