Clinical laboratories and anatomic pathology groups should consider this another example of how CMS is taking forward steps to encourage value-based payment arrangements throughout the health system
With the sky-high cost of many prescription drugs and gene therapies, it was only a matter of time before the Centers for Medicare and Medicaid Services (CMS) would seek to link reimbursement for them to patient outcomes.
A recent CMS proposed rule (CMS-2842-P) concerning value-based purchasing (VBP) for prescription drugs covered by Medicaid encourages payers to engage in Medicaid state value-based purchasing (aka, pay-for-performance) arrangements for expensive prescription drugs. This rule may have implications for medical laboratories and anatomic pathology groups if it were extended to cover companion diagnostics linked to expensive therapeutic drugs and gene therapies.
CMS also intents the proposed rule to help drug manufacturers ease roadblocks to contracting with payers—including Medicaid—a CMS fact sheet explained.
Federal officials are looking to reimburse healthcare providers for prescribing drugs that are shown to work best on patients that truly need them, while also incentivizing pharmaceutical manufacturers to created drugs “of high patient value,” stated Laffer Healthcare Intelligence, a Nashville, Tenn. healthcare investment firm, in an email to its intelligence service subscribers.
In a press release announcing the proposed rule, Seema Verma, CMS Administrator, said “We are creating opportunities for drug manufacturers to have skin in the game through payment arrangements that challenge them to put their money where their mouth is.”
Old Regulations Don’t Address Value, Expensive Gene Therapies
According to CMS, for 30 years federal regulations have favored the “volume of drugs” sold over the “quality of drugs.” Simultaneously, during the past three years the US Food and Drug Administration (FDA) has approved four gene therapies with many more “in the development pipeline,” Verma wrote in the journal Health Affairs. “While the lifesaving impact of these often-curative therapies are profound, their costs are unprecedented,” she stated.
CMS’ new rule proposes to define value-based purchasing as “an arrangement or agreement intended to align pricing and/or payments to evidence-based measures and outcomes-based measures,” Verma added.
Companion Diagnostic: Molecular and Genetic Testing
For clinical laboratories, the case CMS makes for therapeutic drugs could be applied to expensive molecular diagnostics and genetic testing. CMS may base reimbursement on how accurately and how fast a lab test can enable a diagnosis. Also, payment could be linked to a lab’s report and guidance to the ordering provider in selecting a therapy that makes a difference in the patient’s outcome.
“This is exactly the concept of the companion diagnostic,” said Robert Michel, editor-in-chief of Dark Daily and its sister publication, The Dark Report. “Take, for example, a $5,000 genetic cancer test that that stages a $500,000 cancer prescription drug. Patients who will not benefit from the drug will not get it. And the $5,000 lab test may keep, say, 10 people from getting a drug that wouldn’t work for them. Thus, the $50,000 in lab tests could save $5 million in prescription drug costs,” he explained.
For its part, Novartis, the Basel, Switzerland-based creator of Zolgensma, said the proposed CMS changes are “an important first step,” and helpful to the company’s “access strategy” in the US, BioPharma Dive reported.
Healthcare experts envision that deals struck under the new proposed CMS rule will focus on gene therapies and expensive drugs, MedPage Today reported.
CMS’ proposal also includes standards aimed at fighting opioid prescription fraud and misuse in Medicaid drug programs, noted Fierce Healthcare.
Transparent Drug Prices
Medical laboratory leaders may want to monitor the progress of this proposed rule. In addition to value-based payment, the rule advances price transparency by clearing the way to sharing prices of therapeutic drugs and how they improve patient care, while also lowering costs.
Meanwhile, a refresh of lab information technology to enable authorization of genetic and molecular tests by payer also may prove worthwhile.
However, the distinction between how the two different types of diagnostic tests are intended to be used still confuses many physicians and healthcare professionals
Companion diagnostics are well-known to medical laboratorians. However, the new-breed of complementary diagnostics might not be as familiar. As the pharmaceutical pipeline increasingly becomes filled with test-dependent new drug therapies, medical laboratories and anatomic pathology groups may need to sharpen their understanding of companion and complementary diagnostics to broaden their laboratory test portfolios and keep pace with the growing demand for these new diagnostics.
The FDA defines a companion diagnostic as a “medical device, often an in vitro device, which provides information that is essential for the safe and effective use of a corresponding drug or biological product. The test helps a healthcare professional determine whether a particular therapeutic product’s benefits to patients will outweigh any potential serious side effects or risks.”
Because a companion diagnostic device is “essential for the safe and effective use” of the drug to which it has been assigned, it is identified on the drug’s product label.
The anti-HER2 drug Herceptin, for example, is a commonly prescribed breast-cancer therapy drug that in its various forms comes with one of 11 companion diagnostic devices. As a requirement of Herceptin’s Food and Drug Administration (FDA) approval, the agency requires pathologists to use a companion diagnostic test to confirm a patient’s over expression of HER2 (human epidermal growth factor receptor2) protein before prescribing Herceptin. The other HER2-directed therapies have their own assigned companion diagnostic.
Complementary Diagnostics Is a Growing Opportunity for Clinical Labs
Now, nearly two decades after companion diagnostics first made headlines, pathologists are encountering a new concept—complementary diagnostics. Unlike companion diagnostics, complementary diagnostics aid the therapeutic decision process, but are not required when prescribing the corresponding drug.
In an interview with Dark Daily, Debra Harrsch, President and Chief Executive Officer of Philadelphia-based Brandwidth Solutions, noted that the addition of complementary diagnostics adds a layer of complexity to the diagnostics landscape for pathologists and other healthcare professionals.
“The diagnostics landscape is not only expanding in size and scope, it is also becoming increasingly complex as growth in biomarker– and genomic-based test strategies fuels progress in personalized medicine,” she stated.
Peggy Robinson (left), US Vice President of ANGLE plc, and, Debra Harrsch (right), President and CEO of Brandwidth Solutions in Philadelphia, spoke with Dark Daily on the differences and values of companion versus complementary diagnostics. “The role that companion diagnostics can have in driving personalized medicine is already leaving its mark with drugs such as Herceptin. The impact of complementary diagnostics and how the two types of tests come to share the stage awaits to be seen,” they noted. (Photo copyright: Dark Daily.)
Peggy Robinson, US Vice President of ANGLE plc, a global liquid biopsy diagnostic company, explained that the lack of a regulatory link to a specific testing technology is the critical distinction between a complementary and a companion diagnostic.
“A companion diagnostic is one of the gateways for you to receive a drug,” Robinson stated in the Dark Daily interview. “A complementary diagnostic can aid your physician in helping to determine what level of therapy would be appropriate for you, but it is not required.”
Pairing Clinical Laboratory Tests with Complementary Diagnostics
At that time, Christopher Fikry, MD, then Vice President, Oncology, of Quest Diagnostics (NYSE:DGX), praised the FDA’s introduction of the first complementary diagnostic. He noted in a statement that it would “give physicians greater understanding of treatment expectations with Opdivo and helpful information to communicate to patients.”
Clinical Laboratories Can Add Value to Their Patients’ Healthcare
The challenge for clinical laboratories and pathology groups will be keeping pace with a rapidly expanding catalog of available diagnostic tests. While the number of drugs (two) with FDA-approved complementary diagnostic tests remains small, Peter Keeling, CEO of Diaceutics, a global advisory group for the laboratory, diagnostic, and pharmaceutical industries, predicts that number will be rising.
In a 2016 webinar on companion versus complementary diagnostics, Keeling pointed out that 50% to 90% of products in development through 2020 at the top 10 pharmaceutical companies are test dependent. This highlights the importance of targeted therapies designed to advance the goals of personalized medicine.
Clinical Labs Can Build Out Test Menus with Complementary Diagnostics
“Laboratorians need to understand what type of technologies they are using to employ these diagnostics,” Robinson told Dark Daily. “As laboratory managers build out their test portfolios, they should be looking at the technology and asking, ‘Can I integrate that into my laboratory?’ so that when a new test comes out, they can offer it.”
Meanwhile, healthcare professionals have more work to do to understand the differences between companion versus complementary test labeling. In his webinar, Kelly noted that in a poll of 30 Opdivo/Keytruda prescribers, Diaceutics found:
40% of prescribers surveyed did not understand the differences between the PD-L1 test labels for Keytruda (Pembrolizumab), which requires a companion diagnostic, and Opdivo, which has an associated complementary diagnostic;
60% were unclear about the role of complementary testing; and
50% said their therapy decisions would be impacted if a laboratory used for PD-L1 testing offered only one test.
Harrsch told Dark Daily that “time will tell” whether complementary diagnostics can match the impact of companion diagnostics in improving healthcare outcomes.
Future of Complementary Diagnostics Still Uncertain
“The role companion diagnostics can have in driving personalized medicine is already leaving its mark with drugs such as Herceptin,” she said. “The impact of complementary diagnostics, and how the two types of tests come to share the stage, awaits to be seen.”
As the market for companion and complementary diagnostics expands beyond targeted therapies for oncology, clinical laboratories and pathology groups can position themselves to “add value” to their patients’ journey through the entire healthcare continuum. Robinson believes one key for pathologists going forward will be maintaining a “close working relationship” with client physicians in order to plan for future test offerings.
Drugs based on knockout genes are expected to trigger the need for companion diagnostic tests that will be performed by pathologists and medical laboratory scientists
Pharmaceutical companies and other research programs are developing a new opportunity to use information from human genome sequencing to create a new class of therapeutic drugs. These drugs target “knockout genes” and those same genes are expected to be used as diagnostic biomarkers for clinical laboratory testing as a new field of companion diagnostics emerges.
In simplest terms, large-scale DNA sequencing of the human genome is enabling researchers to identify individuals with “knockout” genes and then develop therapeutic drugs based on that knowledge.
The first commercial success story from this partnership of geneticists and the pharmaceutical industry is expected to be a new class of drugs that lowers cholesterol. These drugs may reach pharmacy shelves this year, reported an October 24 Nature article. (more…)
Myriad Genetics, best known to pathologists and clinical laboratory managers for its portfolio of predictive genetic cancer tests, believes its purchase of Rules-Based Medicine will give it a faster entre into companion diagnostics. RBM is a life sciences company that has well-established relationships with key therapeutic drug companies.