The development of drugs aimed at new molecular targets exemplifies the power of translational research — “bench to bedside” translation of biomolecular science into clinical practice — to offer both significant clinical outcomes and the opportunity for commercial benefit. Classic examples are the monoclonal antibody trastuzumab for HER-2 receptor-positive breast cancer and the “designer” small-molecule inhibitor imatinib for BCR/ABL-positive chronic myeloid leukaemia.1,2 However, in Australia, there are structural constraints on funding for translational clinical research that prevent us participating fully in its clinical and financial benefits.

To understand these constraints, we need to examine the roles of the various regulatory and funding bodies in Australia — the Pharmaceutical Benefits Scheme (PBS), Medical Services Advisory Committee (MSAC), Medicare, and the National Health and Medical Research Council (NHMRC). We also need to consider their different attitudes to “primary” and “second-generation” clinical trials.

Pharmaceutical companies devise clinical trial strategies to register their drugs as rapidly as possible. These “primary” trials are conducted by large groups and provide high statistical power;3 the resulting data form the basis for drug marketing and reimbursement in Australia by the PBS. In contrast, “second-generation” trials apply new pathological and radiological technologies to refine treatment schedules and identify patient subgroups in whom new drugs have optimal clinical and cost-effectiveness. Second-generation trials have the potential both to improve clinical outcomes and to reduce costs.

In Europe, second-generation studies refining dosage and patient subgroups are emerging through government-funded cooperative trial groups. Such studies require integrated funding of imaging, molecular analysis and pharmaceutics. This is currently not possible in Australia, reflecting “silo”-like structural barriers that prevent the PBS, MSAC and Medicare commissioning research. These regulatory bodies are unable to look beyond primary marketing data submitted by industry. They are unable to commission evaluation of the integration of diagnostic and therapeutic modalities. The optimal indications, schedules and duration of use of expensive pharmaceuticals cannot be effectively investigated in Australia — our superb collaborative clinical trial organisations are structurally limited to first-generation industry-funded studies, unless they can obtain funding through competitive grant systems that are neither pragmatically nor economically orientated.

Two examples of second-generation trials that Australian groups have not accessed, reflecting the inability of the regulatory silos to fund such activity, are:

• Trastuzumab in HER-2 receptor-positive early breast cancer.4 Based on initial trials, current therapy is a 1-year course of the monoclonal antibody trastuzumab, at a cost to the PBS of about $50 000 per course. Separate European groups are currently investigating 3-month and 6-month versus 12-month courses with potential for dramatic cost savings and reduction in toxicity.

• Oxaliplatin in stage II colorectal cancer.5 Current therapy includes a 6-month course of this expensive and toxic drug at an overall cost of about $20 000. European groups are comparing 3-month versus 6-month courses, which could increase cost effectiveness and reduce toxicity. An application by an Australian group to the NHMRC to fund participation in this cost-neutral study was not ranked highly enough based on “lack of innovation” (Professor J Zalcberg, Peter MacCallum Cancer Institute, Melbourne, VIC, personal communication).

A solution to the disconnection between regulation and funding could be to develop relationships between the PBS, MSAC, Medicare and others to address funding of the translation of new diagnostic and therapeutic technologies into practice. The treatment of cancer is an ideal model for this, given its interdependence on imaging, molecular pathology and targeted therapeutics.6

The stakes are high. In the 2005–06 financial year, the PBS cost7 Australia more than $6 billion, and its cost is increasing rapidly. The current Health Technology Assessment review to examine Therapeutic Goods Administration and MSAC procedures may solve some of these problems; it has noted the need to coordinate Pharmaceutical Benefits Advisory Committee and MSAC recommendations.8

One solution could be the creation of an “Emerging Technology Assessment Group”, representing the PBS, MSAC, Medicare, NHMRC and the cooperative clinical trials groups, supported by health economics input. This group could recognise emerging issues and commission appropriate second-generation trials. These would almost certainly be associated with international groups using the European model. These trials would be cost-neutral, reflecting reduced drug usage in the experimental arms. There may even be a place for a “health dollar offset trading scheme” (analogous to carbon emissions trading schemes) between the PBS, MSAC and Medicare.

The second-generation trials would represent a new form of postmarketing surveillance, with the emphasis moving from assessing toxicity to optimising clinical and cost outcomes through the application of technology to translate into rational therapeutics. We should not adopt the simplistic solution of using NHMRC funding for these trials, as this would exacerbate the cost-transfer silo problem. The scheme should also recognise the need for Australian Health Care Agreements to appropriately support clinical research and infrastructure funding in teaching hospitals.