Abstract
Pity the poor companion diagnostic (CDx). It’s up against a lot. In most cases, pharmaceutical companies don’t want one, since it cuts down the potential market for their planned drug. Payers have often lumped FDA-approved diagnostic into the same bucket as lab-developed tests (LDTs), which provide paltry reimbursement, making it virtually impossible to recoup the millions spent developing the test and running it through clinical trials. Larger reference labs, with more than a regional footprint, are often reluctant to add CDxes to their testing menus due to the investment needed and anticipated low volumes. Finally, lacking an effective method to police their use, it is often all too easy for labs to use their own LDT to test for the biomarker in question, further limiting the CDx’s market.
“Diagnostics is a tough business, but it is an important business,” said Jonathan Arnold, head of next-generation diagnostics marketing with Qiagen. “We touch three-quarters of all healthcare decisions that are made around a patient, and we shouldn’t lose sight of that.”
It is that direct, one-to-one relationship of a CDx to the patient and the selection of the right drug based on their particular molecular makeup—a bona fide method of delivering precision medicine—that keeps diagnostics companies in the game, despite the challenges.
Or, as Jonathan Lancaster, M.D., of Myriad Genetics puts it: “As a chief medical officer, I say it is the right thing to do for patients, and if it is a family member, loved one, or friend battling cancer, I want to ensure they are getting the very best drug and also the very best quality of test.”
But, what is right for the patient may not translate to what is right for the business, and developers of CDxes must continue to find ways to answer the question of what it takes to be viable in this line of business. Lancasters said it’s a valid question that should beg all molecular diagnostics companies to pause, not just Myriad. His advice? “Unless there is clear line of sight for a viable business, then no molecular diagnostic company is going to get into—or stay in the space.”
Myriad Genetics’ BRACAnalysis CDx was almost immediately undercut after FDA approval in 2014 by NCCN guidelines that also included CLIA validated LDTs as appropriate for the prescribing of Lynparza for ovarian cancer.
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Fortunately, as healthcare undergoes its transition to a value-based model, and as more doctors learn about the benefits of using an FDA-approved test, there is reason for optimism among diagnostic developers.
Priming Payers
Aside from the money provided by a diagnostic company’s pharma partner in a drug-companion diagnostic co-development project, the most important stakeholders for a CDx developer are the healthcare payers, both public and private.
One problem CDxes often face is being lumped in with other tests, often LDTs, under the same CPT code. The result is a test developer being reimbursed at a significantly lower rate that doesn’t recognize the accuracy, specificity and reproducibility of their FDA-approved test.
This was the case recently for MolecularMD, the developer of the MRDx BCR-ABL companion diagnostic for chronic myeloid leukemia (CML) patients in the chronic phase being treated with Tasigna from Novartis. The test measures molecular response to treatment in patients to identify those who can stop taking the drug and receive ongoing monitoring of treatment-free remission (TFR).
The initial reimbursement decision from the Centers for Medicare & Medicaid Services (CMS) for MRDx was significantly less than half of what the company was hoping for. A contributing factor was there are two other BCR-ABL tests avaialable that are broadly used at large reference labs for the diagnosis and management of patients with both chronic and acute myeloid leukemia.
According to Fritz Eibel, chief marketing officer for MolecularMD, after more than a month of intense consultation, the company convinced CMS officials that MRDx was able to test the molecular response of patients at a deeper level and was purpose-built to test for TFR, unlike the other tests available. As a result, the test is now reimbursed at $505, two-and-a-half times the initial rate proposed by CMS.
“We think private payers will key off this decision and it will help us with reimbursements from them,” said Eibel. “But MRDx is labor intensive, so it is also helpful that laboratories running the test can now, at the very least, break even.”
Steve Anderson, chief scientific officer at Covance, a subsidiary of diagnostics testing company LabCorp, added that having a premium reimbursement decision in hand can help a diagnostic company and its pharma partner gain market access through labs with a broad footprint.
“If you are using a companion diagnostic to identify a patient that has an increased likelihood of benefitting from a therapy, that is tremendous value. But there wasn’t, historically, an appreciation for that kind of value,” Anderson said. “That is changing, and it is changing in a very positive way. We are seeing [payers] understanding both the complexity of the testing and the value provided. We are moving in the right direction on the reimbursement front.”
Hannah Mamuszka, founder and CEO, Alva10
While the data from the clinical trial ultimately carried the day for MRDx in securing their reimbursement from CMS, there is also a movement for diagnostics developers and their co-development partners to share preliminary data with payers about CDxes as soon as practical in the clinical trial.
“The payers are really the diagnostic company’s customers, so they need to figure out what their customers want and what they want to see for data in terms of clinical utility and clinical validity,” said Hannah Mamuszka, founder and CEO of Cambridge, MA-based diagnostics consulting firm Alva10.
As Mamuszka sees it, the earlier payers are engaged with the co-development partners, the better. This allows the diagnostic company to understand what data and evidence from the clinical trial the insurance company will need to make a positive reimbursement decision. Too often the diagnostic company exerts so much of its focus developing the test itself that it may let this early legwork slide.
“Usually diagnostics companies approach payers when they have completed their clinical validation and when they have already launched onto the market,” added Mamuszka. “If you think about it, there is no other business where you would build your product without asking your customer if it is what they wanted, start selling it to them, bill them and get them to pay at the same time.”
Eibel sees the practicality of this approach but is a bit skeptical about how workable it is in the co-development process. “It can be hard to get your co-development partner to share their data, since it is proprietary and they need to protect it for the specific indication.”
Competing with LDTs
While getting an appropriate reimbursement for a companion diagnostic can be mission one in a commercialization strategy, it’s all moot if pathology labs provide a knock-off LDT, or non-approved test that identifies the same biomarker.
“It is a huge problem that is one of the biggest issues we face with our partner Novartis,” Eibel said.
Part of the problem stems from the confidence and trust doctors often place in their testing lab of choice. “You have clinicians that have always used a certain reference lab and the lab says that we test for CML and our test [is as accurate as their test.] The doctors put trust in their pathologists and their pathologist’s LDT,” Eibel added.
The problem for diagnostic companies is multifaceted and complex. Despite efforts to better regulate LDTs in the past, the FDA is not in a position to be an enforcement agency when an LTD is used instead of the approved CDx. Many drug companies with a therapeutic requiring a CDx, are not interested in protecting the market of a test costing a few hundred dollars as long as their drug is prescribed. And payers—at least to date—have not shown a strong interest in preauthorization of prescribing the drug only if the CDx is used.
After more than a month of intense negotiating, MolecularMD was able to secure a significantly higher reimbursement from CMS for its BCR-ABL MRDx companion diagnostic.
For some test developers, the answer to mitigate some of the market erosion from LDTs lies in physician education and in making sure the National Comprehensive Cancer Network (NCCN) guidelines reflect the need to use the CDx only for the specific subset of patients.
Unfortunately, it didn’t work out that way when Myriad’s BRACAnalysis CDx was approved with AstraZeneca’s Lynparza for certain ovarian cancer indications. “Within a month of the FDA approval, the NCCN guidelines were updated to indicate the approval of the drug, elaporib (Lynparza) and the companion diagnostic. But in the guidance, [NCCN] said it should be used for patients who have undergone testing with an FDA-approved companion diagnostic or a CLIA approved test,” Lancaster said. “So instantly all of that time and effort and investment to get an FDA-approved test went out the window because NCCN was saying you can use any old CLIA test.”
From Anderson’s perspective, some of the difficulty for a test like BRACAnslysis CDx, originally approved in late 2014, arose from the new paradigm of having a specific test for a specific set of cancer patients.
“If you go back and look at the first couple of examples of a companion diagnostic, that was new territory for pathologists and oncologists,” Anderson noted. “This is starting to become more routine for both the pathologists and oncologists, so that awareness has increased.”
But there is still work to be done. Anderson believes that while awareness is high among academic medical centers and comprehensive cancer centers, oncologists in the community setting are still getting up to speed.
Jonathan Lancaster, M.D., chief medical officer, Myriad Genetics
Ron Rogers, spokesperson for Myriad, highlights this need. “If you look at ovarian cancer as an example, essentially every single woman with ovarian cancer would meet guidelines for use of a companion diangostic for the potential use of PARP inhibitors,” he said. “We know that a majority of ovarian cancer patients haven’t been tested. So why is that? I think it is that we need to do a better job of raising awareness.”