PriceWaterhouseCoopers has issued another report on personalized medicine. It defines personalized medicine as products and services that couple genomic and proteomic advances with trends in wellness and consumerism to create tailored approaches to prevention and care. (PWC Report) (registration required) PWC anticipates that many consumer-focused companies, such as food or cosmetic makers, will enter the space and be formidable competitors because of their skills in interfacing directly with consumers. PWC, however, appears to underweight the regulatory barriers that will arise in regard to foods or cosmetics or other products and services that make claims to improve or maintain health. The FDA has already begun to crack down on food companies in this regard. We will see if these companies have the appetite to spend tens or hundreds of millions of dollars on trials to prove the efficacy and safety of products they claim affect health.
PWC sees the core market for personalized medicine growing from $24 billion in 2009 to $42 billion in 2015. This core market consists largely of diagnostics and targeted medicines. The larger universe of what it defines as personalized medicine includes nutrition, spas and complementary medicine, as well as personalized medicine tools, and is projected to grow from $225 billion in 2009 to $344 billion in 2015. The report notes that all participants in the traditional health market, as well as the new players, will need to rethink business models and address both opportunities and challenges.
For pharmaceutical manufacturers, as has been apparent for several years, personalized medicine is one factor moving them away from a blockbuster model to drugs with smaller markets but likely greater efficacy and therefore potentially higher prices, which preserve total revenue. Physicians need an enormous amount of education and resources to adopt to a new model of treating patients which is based on new types of diagnostic tests. Diagnostic companies have perhaps the clearest opportunity to expand revenues and profits. Payers may see the potential value of personalized medicine’s core services, but are very concerned about the cost implications. Regulators are attempting to understand how best to ensure appropriate development and use of diagnostics and therapeutics, particularly when the products and services are marketed directly to consumers.
The fundamental issue, at least in the United States, in our opinion will be the conflict between the potentially better outcomes but much greater cost of personalized medicine and the need to control overall health spending in the United States. There is very little evidence to suggest that on the whole, widespread adoption of personalized medicine will reduce costs. The diagnostic tests cost more, the therapeutics cost much more and it is unclear that even if the health outcomes are better there is a reduction in total spending per person. Policymakers do not seem to have come to grips with this problem at all, as witnessed by the fact that it has received little attention in the current reform debate.