The R&D Tax Aspects of Precision Medicine
Precision-Medicine
In his recent State of the Union Address, President Obama
called upon the United States to lead a new era of medicine,
“one that delivers the right treatment at the right time”. To
this end, he launched the Precision Medicine Initiative,
designed to “bring us closer to curing diseases like cancer
and diabetes, and to give all of us access to the personalized
information we need to keep ourselves and our families
healthier”.
This article will discuss the underlying principles behind
precision medicine, its potential, and the role it has to play
in the future of healthcare. It will further present an
overview of the recently launched initiative as well as the
federal tax credit opportunity available for companies
investing in precision medicine innovation.
The Research &
Development Tax Credit
Enacted in 1981, the
Federal Research and Development (R&D) Tax Credit allows a
credit of up to 13 percent of eligible spending for new and
improved products and processes. Qualified research must meet
the following four criteria:
- New or improved products,
processes, or software
- Technological in nature
- Elimination of uncertainty
- Process of experimentation
Eligible costs include employee wages, cost of supplies, cost
of testing, contract research expenses, and costs associated
with developing a patent. On December 19, 2014, President
Obama signed the bill extending the R&D tax credit for the
2014 tax year.
A New Medical Program
Precision medicine can be defined as an
innovative approach to the prevention and treatment of
diseases that takes into consideration individual differences
in patients’ genes, environments, and lifestyles.
It is the basis for the emergence of a new taxonomy of
diseases that would no longer be defined by physical signs and
symptoms, but rather by their molecular and environmental
causes. The idea behind this approach is to overcome the
notions of the “average patient”, or “one size fits all
medicine” and to acknowledge the complexity and uniqueness of
the mechanisms underlying a patient’s condition.
Precision medicine aims at developing tools to better
understand such mechanisms and ultimately being able to
predict which treatments will be most effective for which
patients.
This line of research would also help us better understand why
diseases progress differently in different people. As a
result, it would no longer make sense to lump together, for
instance, the Type 2 diabetes that causes the loss of a limb
and diabetes that is easily controlled with diet.
| Mass
Medicine |
Precision
Medicine |
| Average patient |
Each patient is
unique |
| One size fits all
medicine |
Targeted treatments |
| Prominence of
physical signs and symptoms |
Attention to
molecular and environmental causes
(molecular diagnosis) |
Initial Successes and
Outstanding Challenges
The potential for precision medicine to
enable the development of new, targeted treatments is major.
Initial successes include cancer treatments that take into
consideration patients’ genetic makeup and the genetic profile
of tumors.
In cases of breast, lung, and colorectal cancers, melanomas,
and leukemia, routine patient care increasingly involves
molecular diagnosis, which has proven to guide physicians in
choosing treatments that enhance chances of survival and
reduce side effects.
Using advanced sequencing technology, doctors can identify
genes that drive a tumor’s growth and prescribe drugs aimed at
such genes.
Even though there have been advances in certain types of
cancer, there is still a long way to go when it comes to
applying precision medicine to other diseases, such as
Alzheimer’s and diabetes.
In the case of diabetes, a condition that reaches more than 8
percent of the American population, there is still no concrete
molecular information available to customize treatments.
According to a 2011 report from a National Academy of Sciences
expert committee, a diabetes diagnosis “gives little insight
into the specific molecular pathophysiology of the disease and
its complications.”
Significant R&D efforts will be necessary to fill this gap
and enable the development of tailored treatments for diabetes
and other deadly conditions.
The Issue of Data
Despite its exciting potential, there are
significant obstacles to the advancement of precision
medicine. The ability to gather and analyze massive volumes of
patient data as well as the privacy concerns involved stand
out among them.
Precision medicine presumes that every disease has its
molecular underpinnings. The massive accumulation of genetic
and clinical data from as many patients as possible is
critical in understanding these unique characteristics as well
as the genetic features that predispose people to certain
conditions and why.
In this context, electronic health records can serve as an
unparalleled source of data. Not only do they provide
longitudinal information that extends throughout a patient’s
life, but they also document real world clinical
manifestations of both common and rare molecular variations.
The U.S. has experience an accelerated transition to
electronic medical records, having already crossed the 60
percent online conversion rate. The medical data
software industry should play a central role in enabling the
use of such valuable data for precision medicine applications.
Major challenges include the integration of heterogeneous
systems and the development of user-friendly tools for
extracting, transforming, and analyzing information.
Besides the technical challenges involved , the transmission,
storage, and analysis of sensitive personal information raise
major regulatory and security concerns.
Extensive precision medicine research will depend critically
upon the exchange of information over the internet and cell
phone networks. Thus, the creation of effective means for
ensuring the administrative and technical safeguarding of
confidential data is vital.
As pointed out in a recent report by the National Institutes
of Health, “cyberthreats are real, pervasive, and will
continue to evolve over the duration of any longitudinal
study, so data and communications security will be an
essential ongoing component of such an activity.”
The Precision Medicine
Initiative
The recently launched Precision Medicine
Initiative aims to pioneer a new model of patient-powered
research that promises to accelerate biomedical discoveries
and provide clinicians with new tools, knowledge, and
therapies to select which treatments will work best for which
patients.
The initiative will work through collaborative public and
private efforts aimed at leveraging advances in genomics;
exploring new methods for managing and analyzing large data
sets while protecting privacy; and developing health
information technology to accelerate biomedical discoveries.
The said efforts will be directed towards four objectives:
I. More and better
treatments for cancer: The National Cancer Institute will
accelerate the design and testing of innovative, personalized
treatments for cancer by expanding genetically based clinical
trials, exploring fundamental aspects of cancer biology, and
establishing a national “cancer knowledge network”.
II. Creation of a
voluntary national research cohort: The National Institutes of
Health will launch a national, patient-powered research cohort
of over one million Americans who will voluntarily contribute
with their health information to enable the emergence of a new
era of data-based, precise medical treatment.
The cohort will be
broadly accessible to qualified researchers and will have the
potential to inspire scientists from multiple disciplines to
join the effort and apply their creative thinking to generate
new insights. In this context, the Office of the National
Coordinator for Health Information Technology will develop
interoperability standards and requirements to address privacy
issues and ensure secure data exchange.
III. Commitment to
protecting privacy: The White House will work together with
the Department of Health and Human Services along with other
federal agencies in order to identify and address legal and
technical issues related to patient privacy in the context of
precision medicine. This will be done with the input from
patient groups, bioethicists, privacy, and civil liberties
advocates, technologists, and other experts.
IV. Regulatory
modernization: In an effort to determine which changes will be
necessary to support the development of precision medicine,
the initiative will promote a review of the current regulatory
environment. For instance, the Food and Drug Administration
will develop a new approach for evaluating Next Generation
Sequencing technologies in order to foster genetic sequencing
innovation while ensuring accuracy and reliability.
President Obama’s 2016 Budget will allocate $215 million to
support the Precision Medicine Initiative, including $130
million for the National Institutes of Health; $70 million for
the National Cancer Institute; $10 million for the Food and
Drug Administration; and $5 million for the Office of the
National Coordinator for Health Information Technology.
University Research
A growing number of American universities
and research institutions are engaged in precision medicine
research. The following paragraphs give an overview of recent
efforts.
Columbia
University: In March 2014, Columbia announced the
creation of a University-wide task force on personalized
medicine. By enabling synergies between specialists at the
Columbia University Medical Center (CUMC) and other faculty
members, the effort hopes to define the medical, legal,
policy, and economic implications anticipated from the
applications of precision medicine.
Scientists at CUMC have pioneered a method that recreates an
individual’s immune system in a mouse, allowing unprecedented,
customized analysis of autoimmune diseases such as type 1
diabetes. The tool may also be useful to analyze a patient’s
response to existing treatments or to develop new therapies.
Future plans for precision medicine research include a
comprehensive biological repository that will store and allow
analysis of 100,000 patient specimens to enable translational
researchers to develop new therapies.
Duke
University: Created in 2010, the Duke Center for
Personalized and Precision Medicine (CPPM) aims to optimize
and deliver personalized medicine strategies for mainstream
healthcare. A combined effort between the Duke University
Health System and the Duke Institute for Genome Sciences &
Policy, the Center develops novel tools, predictive models,
and care paradigms to improve the efficacy, safety,
effectiveness, and economics of medical care.
Ongoing research in the area of personalized medicine includes
the implementation of a family health history tool that
streamlines the collection of an individual’s family health
history and provides clinical decision support to primary care
providers, based on that history.
Another ongoing effort investigates the clinical utility of a
genetic test for type 2 diabetes risk based on four genes in
combination with a standardized risk assessment compared with
a standardized risk assessment alone.
Developing genetically tailored statin therapies for
cholesterol reduction and assessing its impact on medication
adherence is yet another CPPM-funded effort.
University
of California: Researchers from the UC San Diego School
of Medicine and UC San Francisco recently launched the Cancer
Cell Map Initiative (CCMI) with the objective of studying how
the components of a cancer cell interact.
Even though genome-sequencing technology has enabled the
characterization of various mutations found in patients’
tumors, scientists remain mostly in the dark when it comes to
determining how these mutations give rise to cancer or
indicate the most effective treatments to pursue.
In order to better interpret cancer genomic data, the
initiative aims to draw a complete diagram of a cancer cell,
detailing the connections between normal and mutated genes and
proteins. This effort would help understand how mutations
found in each patient, which are almost always different from
each other, can lead to the same kind of cancer.
By understanding how genetic changes subvert normal cellular
functions, the CCMI aims to accelerate the development of
personalized therapies.
At UC Los Angeles, the Institute for Quantitative and
Computation Biosciences is also engaged in advancing precision
medicine. Its objective is to understand how our genes
interact to ensure health or produce disease — and the roles
played by factors such as food, environmental stresses,
infectious agents, and pharmaceuticals.
In order to understand such complex interactions, the
Institute will partner with UCLA mathematicians who will
create mathematical models to help them make sense of the
tsunami of biological data. UCLA is also planning new programs
through which computational scientists will train clinicians
so they can understand how to work with large sets of data and
apply the insights they gain into treating patients.
Cornell University: In partnership
with the New York-Presbyterian Hospital, the Weill Cornell
Medical College has established the Institute for Precision
Medicine.
Physician-scientists at the institute seek to identify the
genetic influencers of a patient's specific illness - such as
cancer, cardiovascular disease, neurodegenerative disease, and
others - and use this information to design more effective
treatments that target those specific contributing factors.
To this end, the institute brings together state-of-the-art
sequencing technology, an expansive biobank of patient
specimens and tissue samples, and dedicated bioinformaticians
who analyze patient data, searching for genetic mutations and
other abnormalities to identify and target with treatment.
Preventive precision medicine is also a key aspect of the
institute’s work. The idea is to identify a patient's risk of
diseases and take necessary steps to aid in its prevention
through medical treatment and lifestyle modification.
The Joint Center for Cancer Precision Medicine: A combined
initiative among the Dana-Farber Cancer Institute, Brigham and
Women’s Hospital, Boston Children’s Hospital, and the Broad
Institute of MIT and Harvard, the Joint Center for Cancer
Precision Medicine is an important example of collaboration in
the field of precision medicine.
It has been established to create new treatment pathways for
patients with advanced cancers and to speed the development of
personalized therapies. Its ultimate objective is to
understand which genetic and other molecular alterations
predict how tumors respond to targeted drugs, why some
patients become resistant to drugs, and what that means about
the treatments that should be tried next.
An important activity at the center is obtaining and
characterizing biopsies of patients’ tumors during their
treatments. Scientists study the DNA, RNA, and protein in the
biopsy samples to understand how cancers respond or become
resistant to drugs. In addition, some of the specimens are
used to generate cancer cell lines in the laboratory, which
enable further research.
Because genome sequencing produces a massive amount of data,
the center has a group of biologists, bioinformaticians, and
software engineers working on new algorithms for processing
and interpreting the information gathered.
The Precision Medicine
Market
Throughout the country, innovative
companies are pioneering the precision medicine market. From
big pharmaceutical businesses to biotechnology startups and
diagnostics firms, their R&D activities aim at developing
technologies that will support the emerging precision medicine
approach.
Based in Seattle, Washington, Adaptive Biotechnologies is at
the forefront of immune-based discoveries and diagnostics. The
clinical stage diagnostics company leverages Next Generation
Sequencing to profile the adaptive immune system at a high
level of detail.
Adaptive’s scientists have invented a patent-pending
technology that combines advances in high-throughput
sequencing with state-of-the-art computer infrastructure to
provide the first in-depth analysis of the T-cell receptor
(TCR) repertoire, a specific and important part of the immune
system.
Where once scientists could only catalog the exact makeup of
approximately 30,000 unique TCRs out of more than 100 million,
Adaptive’s immunoSEQ identifies 10–15 million unique TCRs in
one individual.
When incorporated into clinical trials and other drug
development efforts, the immunoSEQ helps monitor response to
drugs and discover new prognostic and diagnostic biomarkers.
Researchers at Columbia University have recently used
Adaptive’s immune sequencing technology to describe a
mechanism responsible for kidney transplant tolerance.
Headquartered in Cambridge, Massachusetts, Foundation
Medicine, Inc. has also been a pioneer of precision medicine
technologies. The company provides two types of genomic tests
for cancer patients – FoundationOne for solid tumors, and
FoundationOne Heme for hematologic malignancies and sarcomas.
These innovative solutions analyze all genes known to be
relevant in human cancers, and find all classes of alterations
that are driving the growth of a patient’s tumor, helping
physicians to precisely and confidently identify targeted
treatment options.
As of the end of 2013, Foundation Medicine had tested over ten
thousand people. The company runs a molecular information
platform that gathers data for pharmaceutical and clinical
use. It currently collaborates with more than twenty biotech
and pharmaceutical companies to accelerate the development of
new targeted therapies.
Traditional pharmaceutical players are also investing in
precision medicine R&D. Abbott Molecular, a division of
Abbott Laboratories, is a leader in molecular diagnosis and
the analysis of DNA, RNA, and proteins at the molecular level.
With over 350 products available in the areas of infectious
disease, oncology, genetics, and automation, Abbott Molecular
has developed innovative tests and technologies designed to
detect subtle but key changes in human genes and chromosomes
that can aid in the earlier detection or diagnosis of disease,
influence the selection of appropriate therapies, and improve
monitoring of disease recurrence.
When it comes to precision medicine drug development,
AstraZeneca’s efforts stand out. In December 2014, the
pharmaceutical giant filled a New Drug Application for Iressa,
a targeted monotherapy for the first-line treatment of certain
lung cancer patients.
The innovative drug targets patients with advanced or
metastatic non-small cell lung cancer (NSCLC) who test
positive for an epidermal growth factor receptor mutation
(EGFRm). AstraZeneca is working with Dutch provider of sample
and assay technologies, Qiagen, to develop a companion
diagnostic test to guide the use of this targeted therapy.
Iressa has become the first EGFR tyrosine kinase inhibitor to
have a European label allowing the use of circulating tumor
DNA (ctDNA), obtained from blood samples, for the assessment
of EGFR mutation status in those patients where a tumor sample
is not viable.
Conclusion
Precision medicine promises to
revolutionize how we improve health and treat disease. The
recently launched Precision Medicine Initiative creates unique
momentum for the development of innovative, personalized
therapies along with correlated bioinformatics and diagnostics
technologies. Companies investing in precision medicine
R&D should take advantage of the federal and state tax
credits available.
