CLEVELAND – The genomics field holds the key to providing critical insight and eliminating some of the most debilitating diseases. However, diagnostic companies in the space face significant hurdles to innovation via issues with reimbursement and costs to conduct clinical trials.
At the Cleveland Clinic 2017 Medical Innovations Summit, panelists in a presentation titled "Hype, hope, and the bottom line: Reimbursement strategies for genomic innovation," gave insight on some of the issues which negatively impacted many companies in the genomics testing market.
The subject of reimbursement reared its head earlier this month when patient advocacy groups cited concerns with an Anthem Blue Cross authorization policy for genetic tests. The groups noted the policy, which went into effect in July, is causing coverage denials. The patient advocacy groups have said this issue has caused some patients to not undergo testing.
Part of the disconnect comes from the fact that many payers don't understand how the massive amounts of data that come from these tests can lead to strong outcomes.
"We're drowning in a sea of data without knowledge," Steve Miller senior vice president & CMO, Express Scripts, said during the panel. "We have to turn that data into knowledge."
Genomic testing firms
Myriad Genetics Inc. has been one of the more successful companies in the genomic testing market. The Salt Lake City-based company said that in fiscal year 2018 it is estimating that it will record total revenues of $750 million to $770 million and adjusted earnings per share of $1 to $1.05. But being profitable wasn't always something the company could claim.
"When you think about laboratory developed tests, there really is only one company that has made money in this space in 25 years," said Chip Parkinson, executive vice president of reimbursement strategies for Myriad. "It took Myriad 17 years to get profitable out of that 25."
The reason so many companies struggle in the space is because the cost of the tests haven't been clearly defined.
"Everyone in the pharmaceutical industry knows it takes a billion dollars to make a drug, and they have been very good with that message," said Alan Wright, CMO of Roche Diagnostics Corp.
Wright said there is a lot of uncertainty around just how much it costs to develop a test, which is problematic for the industry.
To give some perspective, Wright said it cost Roche almost $100 million to bring out its HPV test for cervical cancer. The Basel, Switzerland-based company received FDA approval for the HPV diagnostic in 2011 for screening patients age 21 and older with abnormal cervical cytology results and for use adjunctively with normal cervical cytology in women ages 30 and over to assess the presence or absence of high-risk HPV genotypes.
In 2014, the test was given additional approval by the FDA to be used as a first-line primary screening test for cervical cancer in women 25 and older. (See BioWorld MedTech, April 25, 2014.)
"What's happening to the genomics world and laboratory world is the research, discovery and building of the evidence has been uncoupled from the actual delivery of the result," Wright said. "We're getting in this situation where we're trying to bring these back together and come up with some solutions."
Strategy going forward
Joe Cunningham, managing director, Santé Ventures, posed the question about how genomic testing start ups could overcome roadblocks in getting venture capital funding.
"The problem from a venture capital standpoint is that if you have to do an economic outcomes study to show the value of your product, that makes it economically not viable to do that," said Cunningham, who also served as moderator for the panel. "What should we do about that?"
Parkinson was quick to reply that the question of funding could be answered by looking at how payers made coverage decisions for these genomic tests in the U.S. He offered the Centers for Medicare and Medicaid Services approach as an example.
"Medicare actually has it figured out," Parkinson said. "They've been able to expand the definition of clinical utility beyond just requiring [data] from a randomized controlled trial, which takes a long time in spaces that we don't nearly have the size and market potential a Humira would have."
He noted that some of Myriad's markets were about a quarter of the sales of Humira (adalimumab, Abbott Laboratories), an immunosuppressive drug that treats rheumatoid arthritis, ankylosing spondylitis and psoriatic arthritis.
"Medicare has thought about different ways of evaluating evidence," Parkinson said. "Medicare carriers have been able to say they've been able to take a longitudinal observational study and follow that test in a population for a period of time for prespecified endpoints and that's good enough to form clinical utility."
Wright said a lot of coverage determination comes down to evidence and cost of evidence. He pointed out that in addition to CMS, the FDA is providing a clearer path for clinical trial oversight.
"FDA is acknowledging that unlike the pharmaceutical industry where the U.S. gets the first innovations, diagnostics lag behind the rest of the world because of the regulatory environment," Wright said.
He added, "There are two ways to approach this reimbursement problem. You can increase the payment side or the revenue side. The other thing is you can decrease the cost of development."