The worlds of drugs and diagnostics are parallel universes: in general they have different development timelines, product lifecycles, return on investment, customers, and regulations.
Drugs are valued and reimbursed as products, typically of high value. Diagnostics are valued and paid for as services, typically at a much lower value. Relatively few if any models exist for valuing a drug diagnostic combination. This issue will be discussed in the next chapter.
Drugs are protected by patents, but in the companion diagnostic arena, biomarkers are considered to be within the public domain and there is less emphasis on intellectual property. It is even debated whether biomarkers should be patented at all, because biomarkers are not invented but already exist in cells.
Moreover, drugs and diagnostics are regulated differently. It takes many years and a large amount of data from expensive clinical trials to get a drug approved. Under current rules, however in the current IVD Directive there is little mention of clinical evidence.
However, the EU IVD Directive, which regulates in-vitro diagnostics, is under revision. The current IVD classification does not take scientific and technological evolution into account which is expected to be changed towards a new risk-based approach.
A revised IVD Directive (which may even become a Regulation) will improve safety and efficacy, but will also raise difficulties. It is likely to state that an IVD assay must have the performance characteristics required for fulfilling a clinical purpose. Moreover, requirements may be added on how to demonstrate clinical validity, possibly proportionately with the risk level of the test.
The intention to increase safety will inevitably lead to higher costs and greater efforts for manufacturers. It will take IVD manufacturers years and unusually high investments to take an IVD past the regulators. Undoubtedly, Phase III trials would benefit from well validated biomarker tests. But it is almost impossible to comply with regulations that require a clinically validated diagnostic test, simply because clinical evidence will only be provided by a clinical trial itself, and this is unlikely to be required for many IVDs.
Another point is that more regulation can severely impact innovation. The larger investments that are needed might limit the ability of (especially small) innovative companies to discover and develop biomarkers.