Pricing and Reimbursement of Next Generation Diagnostics in the United States

Published by: Decision Resources

Published: Dec. 13, 2007 - 20 Pages

Table of Contents

Executive Summary

Strategic Considerations

Stakeholder Implications

Introduction

What Are Next-Generation Diagnostics?

Next-Generation Diagnostic Tests Approved Since 2001

Roche/Affymetrix’s AmpliChip CYP450

Third Wave Technologies’ UGT1A1 Molecular Assay

Other Approved Next-Generation Diagnostic Tests in Select Indications

Oncology

Cystic Fibrosis

HIV

Current Pricing and Reimbursement Environment for Diagnostics

Challenges of Health Outcomes Data

Introducing a New IVD Test to the Market

Strategies for Commercialization

Medicare’s Role in Reimbursing Diagnostics

Coding

Coverage

Payment

Reimbursing Diagnostics Through Private Payers

Outlook

Tables

1. Select Approved Next-Generation Diagnostic Tests, 2001-2007

2. Requirements for the Award of Each Category of CPT Codes

Figures

1. Process for Developing Local Medicare Coverage Determinations

2. Process for Developing National Medicare Coverage Determinations

3. Percentage of HMOs That Restrict Use of Select Targeted Cancer Therapies to Patients with Relevant Gene Mutations

4. HMO Pharmacy Directors’ Views on the Importance of Positive Biomarker Test Results As a Condition for the Use of Select Targeted Cancer Therapies

5. HMO Pharmacy Directors’ Views on the Importance of Accompanying, Validated Biomarker Tests As a Condition for Formulary Inclusion of Future Targeted Therapies for Select Cancers

Sidebars

Value of Outcomes Data: the Experience of Genomic Health

Aetna—Spearheading Coverage of Next-Generation Diagnostics

Format for Formulary Submissions—a Model for the Diagnostics Industry?

Abstract

• Next-generation diagnostic tests build upon existing molecular technologies, resulting in either a greatly en hanced version of older technology or in a completely new approach. Which novel diagnostics have received approval, and what improvements do they offer over existing technologies?
• The greatest difficulty in entering the market with a novel diagnostic test is navigating the existing pricing and reimbursement structure of the major payers. How do Medicare and private payers determine coverage for diagnostic tests? Which private payer has the most transparent coverage policies for diagnostics?
• Manufacturers of diagnostic tests must meet rigorous requirements for patient outcomes data and showcase a test's clinical value before payers, particularly Medicare, will approve reimbursement. How has Genomic Health successfully secured coverage for its product Oncotype DX, a test that quantifi es the likelihood of recurrence of breast cancer?
• Similar to the controversy surrounding personalized medicine, which calls into question the notion of market restriction with the use of targeted therapies, there is limited fi nancial incentive to invest in developing a diagnostic test. What strategies can companies employ to increase the uptake of a diagnostic test during commercialization?

• Birth of next-generation diagnostics: overview and description of diagnostic tests that improve upon existing immunoassay and nucleic acid testing (NAT) technologies.
• Next-generation diagnostics approved since 2001: coverage of select diagnostics for indications such as drug metabolism, chemotherapy side effects, oncology, cystic fi brosis, and HIV.
• Current pricing and reimbursement environment for diagnostics: path to market, challenges of collecting health outcomes data, and commercialization strategies.
• Medicare's role in the reimbursement of diagnostics: description of the agency's policies in determining coding, coverage, and payment levels.
• Private payers' role in the reimbursement of diagnostics: overview of private payers' policies.
• Outlook: a look at the future pricing and reimbursement environment for next-generation diagnostics.

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