Companion diagnostics are expected to occupy an increasingly greater volume of investor interest in the coming years, which makes sense given that a recent report projects the market will reach $8.7 billion by 2019. Much of the growth is attributed to encouragement by regulatory bodies such as FDA and the EMA.

Developers may worry that the FDA and the Centers for Medicare & Medicaid Services (CMS) will struggle to keep pace with the volume of applications for regulatory review and coverage, but Tadd Lazarus, the chief medical officer at Qiagen NV, of Valencia, Calif., indicated that the complexity of these filings will slow things down sufficiently to allow government to keep pace with industry.

The report, published by MarketsandMarkets, said that the market for CDx will grow from $3.1 billion this year to $8.7 billion in five years thanks to a compound adjusted growth rate of nearly 23 percent over that span. Much of the growth is attributed to "encouragement by regulatory bodies such as FDA" and the EMA, largely driven by the companion diagnostics push. Lazarus, whose responsibilities at Qiagen include medical and scientific as well as reimbursement and public policy, practiced HIV primary care at the former St. Vincent's Hospital, in New York, and he remarked that the role of Medicare administrative contractor Palmetto GBA, of Columbia, S.C., is likely to remain important for Medicare coverage of diagnostics.

"I think Elaine Jeter [medical director at Palmetto] has been incredibly contemplative," about the current state of affairs in diagnostics as well as how they might evolve, Lazarus said. "In many ways, what she's done for CDx was the prequel for the FDA draft [lab-developed test] guidance. The two mirror each other."

Lazarus said, "Palmetto GBA has been a trusted source and partner, and has helped CMS to become forward looking" in the agency's approach to CDx. "They'll still be a trusted partner, but they will help CMS go into the new age," he continued, adding that over time, CMS will "have its own degree of independence and foster their own forward-looking thought process."

As to interagency coordination, Lazarus said, "we have helped to foster – we hope – a better dialogue between FDA and CMS" on CDx, but he pointed out that labs have an incentive to use approved tests rather than home-brewed tests.

"I think labs, whenever they can, are eager to use approved tests" for a number of reasons, Lazarus said, "not the least being that the onus for quality is on the manufacturer, but there's also the matter of trust" for clinicians prescribing the test or tests.

CMS "either didn't know or it wasn't communicated to them that approved CDx diagnostics are mandated in the package insert of approved therapeutic drugs, and we had to remind them that when they offer reimbursement" based solely on the cost of the drug, "it doesn't allow anyone to either purchase or run those tests," and hence CMS is "not participating or recognizing the ecosystem they're an important member of."

However, Lazarus did not indicate any concern about a backlog of applications for CDx at either agency despite the enormous up-tick in investment. "I don't think so because it's a huge endeavor of us to do each and every submission," he said, adding that the requisite work for PMA filings is "a rate-limiting step."

"I do note that CMS is at the beginning of a sea change and has said you can start talking to them about the test when you do a formal submission" to FDA, Lazarus continued. He said he has heard the term "parallel review" used in different ways, but observed, "it's a great idea for one reason. If you're a manufacturer who is very focused on making certain the genomic targets are fully clinically vetted, then there is a high degree of [assurance] of the clinical value of the test" before FDA reviews the trial protocol.

Lazarus added, "it is important that anything that has a better and faster reimbursement outcome is a good thing because these are powerful drugs" that offer life-saving and quality-of-life effects, and anything that hastens their appropriate use "is a good thing."

Private payers have, in the past, almost uniformly waited to hear from CMS on coverage decisions, but Lazarus confirmed that some of them "like to take the lead and are pretty eager to make those reviews on their own. Others continue to have the older" model of waiting for CMS to come to a decision, he said.