Figure 3

View larger version

Health plans are reluctant to reimburse biomarker tests without evidence of clinical utility, because these may prove ineffective in improving patient outcomes, and therefore, are financially wasteful at a time when it has become critical to control increasing healthcare costs. Indeed, 62% of payers in our survey indicated that, for oncology diagnostic tests to gain wider acceptance, the tests must be accompanied by a demonstration of cost-effectiveness (Figure 3).

1 Early in Genomic Health’s development of the Oncotype DX breast cancer assay, the company studied the potential cost-savings of its test on the healthcare system and found that even with pricing the test at roughly $3500, the resulting average cost-savings to the system was approximately $2000 per patient. The savings are derived from the test’s ability to help steer patients with a high recurrence score to chemotherapy and those with a low recurrence score, who are less likely to benefit, away from chemotherapy.

To raise the credibility and visibility of its analyses, the company published its study in May 2005,4 just over 1 year after the launch. Similarly, Expression Diagnostics (XDx) published a health economics study for AlloMap that projected a savings of about $6500 per patient in 5-year monitoring costs, which more than justified the $2950 price for the diagnostic.

Companion Diagnostics: How Will They Be Reimbursed?

A seemingly easier path to reim-bursement is when the diagnostic is tied to the use of a drug (ie, companion diagnostic) to identify patients who are the best candidates for a particular targeted therapy. For example, in the Iressa Pan-Asia Study (IPASS), after gefitinib (Iressa), an EGFR inhibitor, failed to provide a significant overall survival benefit in a broad population of patients with non–small-cell lung cancer, it was investigated in selected patients with lung cancer (Asian nonsmokers or light smokers with EGFRpositive mutation), and showed a significant benefit in PFS versus chemo therapy. In contrast, in EGFRnegative patients, gefitinib worsened out comes compared with chemotherapy alone (1.5 months vs 5.5 months PFS).6

The FDA announced in late July the publication of a much-anticipated draft guidance on in vitro companion diagnostic devices, indicating that, with a few exceptions, the agency will require approval or clearance of the diagnostic at the same time it approves the therapeutic.7

However, the reimbursement for companion diagnostics is much less clear-cut. In our survey, 44% of payers indicated that they will cover companion diagnostic testing differently from their current approach to standalone diagnostics. Many respondents indicated that the companion diagnostic tests may be coupled with therapy as part of prior authorization (PA) and/or will require PA to determine if a patient is a candidate.

KRASmutation analysis is indicated for patients with colorectal cancer initiating EGFR inhibitor therapy. Payers describe KRAS testing’s path to reimbursement as relatively eventless because of its inclusion in the FDA label for drugs such as panitumumab (Vectibix) and cetuximab (Erbitux).

This is supported by the results from our payer survey, in which a majority of payers indicated that they currently reimburse EGFR (for lung cancer) and BRAF testing (for colorectal cancer) for identifying patients appropriate for erlotinib (Tarceva) and panitumumab/cetuximab therapies, respectively (Figure 4). In addition, 66% and 69% of payers indicated that they currently reimburse the respective diagnostic tests separately from the therapeutic, with only 14% and 7% bundling the EGFR and BRAF test together with the therapy (Figure 4).

Figure 4

View larger version