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Genomic Diagnostic Tests Face Persistent Pricing And Reimbursement Challenges

Twenty years ago, the mapping of the human genome promised new opportunities for genomic or genetic tests to predict, prevent and even treat disease, tailored to specific patient sub-populations. For example, tests for breast cancer, such as Oncotype Dx, can analyze disease risk, and guide screening and treatment modalities for patients.

Presently, there are thousands of genetic and genomic tests on the market for more than 10,000 conditions. In addition, hundreds of drugs include genetic markers in their labels to direct prescribing of treatments, and at least one-third of drugs in the pipeline include genetic markers.*

Yet, the perennial question is, will these diagnostic tests be paid for, and at what price? The American Clinical Laboratory Association and the Personalized Medicine Coalition, among other groups, have argued that administratively set payment rates for many laboratory tests are not based on market prices. Furthermore, reimbursement has been far from certain for the majority of tests, whether approved formally by the Food and Drug Administration (FDA) or regulated under the Clinical Laboratory Improvement Amendments (CLIA).

Historically, payers have focused on medically necessity and non-experimental testing as criteria for coverage, which means that they assume a patient is being tested for a marker or multiple ones, and the retrieved information is actionable for that patient and delivers improved health outcomes; in other words, has clinical utility.

And, what’s preventing comprehensive reimbursement of genomic tests? Well, according to payers, topping the list of factors are limitations in evidence of tests’ clinical utility. But, payers perceive other challenges, too, including a blurring of research versus clinical, real-world use of diagnostic tests, as well as population-wide screening versus targeted testing.

In order for payers to establish clinical utility and ensure appropriate real-world use of diagnostics, they must have systematic ways of evaluating tests. Currently, for genomic tests there are impediments to doing so. Coding for tests, for example, remains problematic. Test procedures are billed according to a standardized system of Current Procedural Terminology (CPT) codes developed by the American Medical Association. But, only several hundred permanent CPT codes exist for approximately 75,000 genomic tests. This implies that there is no straightforward way to bill for many tests, or for payers to even identify which tests were performed, making it difficult to gather data to prove clinical utility.

Examples of high-profile tests that encounter coverage barriers

Even when seemingly rigorous data exist, problems with reimbursement persist. To illustrate, Myriad’s GeneSight Psychotropic has faced an uphill struggle to get reimbursed. GeneSight Psychotropic is a pharmacogenomic test that analyzes clinically important genetic variations in a person’s DNA. Results can inform a prescribing physician how a person may respond to certain medications commonly prescribed to treat psychiatric conditions.

Data from the Genomics Used to Improve Depression Decisions (GUIDED) study, published in the Journal of Psychiatric Research, constituted an integral part of an evidence package that Myriad used to request expansion of Medicare coverage of GeneSight. Myriad presented findings in a number of major conferences. The GUIDED study showed that patients receiving GeneSight-guided treatment had significant short-term improvement in remission and response rates. Myriad was hoping that the study’s data would alter the reimbursement prospects for the test. However, study findings did not appreciably improve GeneSight’s reimbursement.

And, here was the issue. The study failed to meet its primary endpoint – symptom improvement at eight weeks – as it was not statistically significant for patients in the pharmacogenetic testing arm compared to the treatment-as-usual arm.

Moreover, the American Psychiatric Association’s research council evaluated the evidence underlying several pharmacogenetic tests for personalizing treatment of depression, including GeneSight, and found the data lacking. “There are insufficient data to support the widespread use of combinatorial pharmacogenetic testing in clinical practice, although there are clinical situations in which the technology may be informative, particularly in predicting side effects,” the authors wrote in the American Journal of Psychiatry.

Another example highlights the challenges facing companion diagnostics manufacturers in the oncology space. In March of 2018, CMS finalized its National Coverage Determination (NCD) for next-generation sequencing tests for patients with advanced cancer. The NCD included coverage for companion diagnostics, with FDA approval of such tests being sufficient.

On the face of it this seemed like a positive development. However, the NCD had a considerable number of detractors. Specifically, they criticized the unnecessarily narrow scope which excluded coverage for early-stage cancer patients.

Following this pushback from diagnostics manufacturers and patient advocates, the NCD was subsequently reopened by CMS. In turn, CMS responded with a decision memorandum in January 2020 which stated that next-generation sequencing tests would be covered, but only for people with breast or ovarian cancer to determine if they have hereditary cancer-associated mutations.

The memorandum went on to say that the sequencing test – a multigene panel – must have FDA approval. Notably, in the past decade, there’s been a move from single-gene testing to gene panels to whole-genome sequencing. And so, most of the current spending on genetic testing is on multigene panel tests and prenatal and hereditary cancer risk testing.

But, there are very few NGS tests for hereditary mutations that have been authorized by the FDA. Only quite recently, in August of 2020, did the FDA approve the first liquid biopsy companion diagnostic that also uses NGS to identify patients with specific types of mutations of the epidermal growth factor receptor gene in a particular form of metastatic non-small cell lung cancer.

Many NGS tests are currently being sold as laboratory-developed tests, which are generally not cleared by the FDA.

In the end, Medicare Administrative Contractors and Medicare Advantage plans may use their discretion in so-called local coverage determinations when determining whether to cover NGS tests for hereditary mutations that have not been FDA-approved. Similarly, Medicare Advantage plans will make their own determinations. Of course, what this entails is that we’re back at square one, with no real national guidance.

Genomic testing will continue to grow in importance. However, pricing and reimbursement challenges persist and hold back uptake. While precision medicine has the capacity to revolutionize clinical practice, payers need to be on board with coverage of diagnostic tests in order to make this a reality.

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