commercializing diagnostics


Why Drugs Are Priced So High and Diagnostics So Low

Pharma companies face escalated flack over high drug prices. Meanwhile the diagnostics industry toils away at comparative pennies to the dollar.

Today's guest, the irreverent and hilarious blogging radiologist, Saurabh Jha (@roguerad), offers an alternative view to the industry's knee jerk reaction to the drug pricing conversation. Saurabh's experience as a radiologist grappling with a medical culture of over diagnosis is on full display along with his typical biting sarcasm. (As background for the interview, we recommend his brilliantly titled blog, The War on Death). To those working to commercialize molecular diagnostics, Saurabh offers some bits of wisdom.

“I do think diagnostics should be more expensive, but I think they should be more expensive because they have some kind of expertise giving meaning to them. I’m very reluctant to simply giving people numbers. Numbers without context, by and large, is very dangerous,” he says.

The Future of Diagnostics Reimbursement with Bruce Quinn

We toss the term "precision medicine" around with ease today, and yet payers continue to refuse to pay for diagnostic tests.

These are tests that might indicate which treatment will work for a specific patient, thereby saving perhaps hundreds of thousands of dollars, not to mention protecting the patient from unnecessary harm. These are tests which prevent invasive procedures such as unnecessary biopsies.

A few weeks ago, we featured the CEO of a leading diagnostics company who has been desperately fighting a recent proposal by CMS to reduce reimbursement of his company’s leading test by a whopping 70 percent. If the cut goes through, the company would probably go belly up.

How does this happen in 2015?  Why, in the golden age of molecular testing, do diagnostics continue to be so devalued?  As a society, why are we undercutting our own investment in biomedical research by not paying for the resulting tests?

These questions led us to today’s guest, Bruce Quinn, a diagnostics reimbursement consultant. Bruce worked five years on the payers’ side and now spends his time helping labs and diagnostics companies get their tests paid for.

Starting with the story mentioned above, Bruce says that the latest CMS proposal to cut rates reflects an old way of calculating reimbursement that goes back to the ‘70s. These old methods such as “crosswalk" and "gap fill” do not work with the sophisticated and costly diagnostics tests coming on the market today. Bruce is hopeful that a new market-based pricing method—similar to that used for drug pricing—which will be implemented as part of the recent PAMA (Protecting Access to Medicare Act) legislation will improve reimbursement rates for the more complex tests. He also warns that it could reduce rates for more simple tests, such as the PSA (prostate specific antigen) test.

Attempting explanation as to why diagnostics are so undervalued, Bruce says that payers have been burned over the years. Many companies and labs say that they are not understood by the payers,  but the payers DO understand them, he says.  The payers just don’t believe them. So what can these companies do? And who will pay for the expensive studies and trials needed to convince the payers?

“The book still remains to be written on how to develop these diagnostics tests with the optimal efficiency and the optimal chance of success,” Bruce says.   “I think people need to recognize we’re still learning how to do it, and we don’t have the answers in hand.  It’s still kind of a white space."

After CMS Announcement, Peter Maag and CareDx Fight for Life

By listening to him, you wouldn’t know that Peter Maag, the CEO of CareDx, was fighting to keep his company from the brink. We booked Peter for the show after news came out that CMS was once again threatening to lower reimbursement rates of established diagnostic tests.

Peter sounds remarkably positive in the face of the recent announcement by the Center for Medicare and Medicaid Services (CMS) that, come January, they would be cutting the reimbursement rate for CareDx's Allomap test by 70%. Because the test is used mostly by Medicare patients, this cut could threaten the company's very existence.

Why is this happening? Ten years ago, yes . . . but why is CMS still jerking diagnostics companies around when these products offer the very promise that President Obama talked about when he announced the Precision Medicine Initiative?

CareDx and the other companies, such as well known Genomic Health and Veractye, have thirty days to reply. Peter has some strong voices backing him up and is optimistic about getting the disastrous change negated.

He’s also very happy about a new test CareDx is working on using cell free DNA from not only heart transplant recipients but also for the transplant organs as well.

If diagnostics companies could focus more on their new products and less on continually fighting for a dime over a nickel with CMS, the future of precision medicine would be much brighter.

FDA Will Take Time to Digest Comments on LDT Guidance, Says Liz Mansfield

We’re very pleased to have Liz Mansfield of the FDA on the program to finish up our current Special Report on LDTs Series. Liz is part of the team at the FDA working on the new guidance for the regulation of LDTs, and she was at the recent meeting the FDA held to receive community feedback.

Today we get into some of the details of that feedback. Did Liz and the FDA hear any new issues that they had not already considered? What about the BRAF testing that was mentioned in the meeting? Is there a risk that patients will lose access to some important tests?

In a recent interview in this series, Amy Miller of the Personalized Medicine Coalition urged the FDA to push out their timeline for guidance. In this very open and candid interview, Liz responds that there is no set date for final guidance. “We will take the time it requires to go through them [community comments], analyze them, and decide what we need to do in response and finalize the guidance,” she says. "There is no rush to do that."

Podcast sponsored by: This Month in Biotech - Coming January 30th!

Future of Personalized Medicine at Stake, says Amy Miller of PMC about LDT Regulation

Amy Miller is the Executive Vice President for the Personalized Medicine Coalition (PMC) and joins us in our Special Report on LDTs Series. Though the PMC does not have a position on whether the FDA should regulate LDTs, Amy says that the stakes could not be higher.

“We see the future of personalized medicine is at stake. We urge the FDA to get this right the first time so that personalized medicine can continue to improve the quality of care that patients currently have access to,” she says at the outset of today’s interview.

Amy and her organization represent stakeholders from every side of the current debate on LDT regulation. They hear from industry, payers, providers, and labs. Amy is asking the FDA to step back, take time to respond to the recent community feedback conference, and publish supplementals that will provide more clarity to the guidance, such as how risk will be determined. Amy and the PMC would also like to see the FDA “harmonize” their language with that of CLIA, the current system in place for lab regulation.

“I absolutely think the timeline has to be pushed out,” she says. “The community needs another crack at that framework."

An Exciting Time for Mass Spec: Paul Beresford, Biodesix

Guest:

Paul Beresford, VP of Bus Dev, Biodesix Bio and Contact Info

Listen (4:47) VeriStrat - a test for non-small cell lung cancer

Listen (4:39) What do you anticipate on the regulatory front?

Listen (6:01) Evolution of the Dx model away from cost plus

Listen (3:39) New legislation

Mass spectrometry has been a valuable research platform for many years. But clinical uptake of the technology has proved illusive. Until now.

In today’s program, Paul Beresford says that his company, Biodesix, out of Boulder, Colorado has been able to improve mass spec to a clinical, commercially viable level. The company already has a proteomics based test on the market, VeriStrat, a predictive and prognostic for non-small cell lung cancer. And this is just the beginning. Announcing a new round of funding this week, the company intends to use the platform for other cancers and tests.

Working for eight years at Ventana Medical Systems before his current stint at Biodesix, Paul offers a seasoned perspective on the challenges facing all diagnostics companies. Asked about how we as an industry can raise the value of diagnostics, Paul says that the “value-based play for diagnostics is actually getting better” and sees help on the horizon from Congress.

“Legislation is moving forward so that these [high value diagnostic] tests will essentially be priced through a market assessment versus Medicare just picking a price,” he says.

The Sad State of Biospecimen Science with David Rimm, Yale

Guest:

David Rimm, Professor of Pathology, Yale University School of Medicine Bio and Contact Info

Listen (4:16) An unsexy science

Listen (5:36) A lack of certifications

Listen (6:20) Most pathologists not aware of the problem

Listen (2:48) Pathologists not reimbursed for providing research samples

Listen (7:44) Still no Tissue Quality Index

The next stop in our journey to better understand the impact of poor biospecimens on biomedical research takes us to Yale where we talk with pathology professor, David Rimm, about the new science of biospecimens.

In past interviews we’ve established the importance of better standards in the collection, handling and storage of biospecimens. David has developed some rare and unique training at Yale for the students of pathology, but still, he says that biospecimen science has not really taken off.

“Most scientists and pathologists are not aware of this problem,” says David, referring to the issue of sample degradation.

How is it the case that billions of dollars are spent studying samples that were not collected with any standards? Why are there no certifications for pathologists in this regard?

One thing that would help immensely and has been long hoped for is an assay that would tell whether a sample is still good, what David calls a Tissue Quality Index. Perhaps a researcher or pathologist does’t know where a sample came from or how long it’s been in storage. This Tissue Quality Index would be a scoring system for determining whether the sample could still be used for an application. David got a grant to develop the score, but didn’t quite get there with the one grant. He applied for another grant, but it was turned down. Regrettably, he says, it’s just not an important topic for traditional funders.

The holy grail of biospecimen science, a Tissue Quality Index, remains still to be grasped.

Podcast brought to you by: Quintiles - bringing people and knowledge together for a healthier world.

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Faces of Leadership in Diagnostics: Surbhi Sarna

Guest:

Surbhi Sarna, Founder, CEO, nVision Medical

Bio and Contact Info

Listen (4:43) Filling a void in female health innovation

Listen (4:31) Addressing the leading cause of infertility

Listen (7:41) Creating the pap smear for ovarian cancer

Listen (5:22) An early start

Facing health difficulties at a young age, Surbhi Sarna determined early in life that she wanted to change the status quo for female healthcare.

“I’m generally not very good at accepting things the way they are,” Surbhi says in today’s interview.

Several years ago, she tapped into that impatience to create nVsion Medical. Backed now by venture capital, the company is running clinical trials for a new imaging device to address the leading cause of infertility—fallopian tube blockage. The company is also working on tests to diagnosis ovarian cancer early.

“Our long term goal is to create the pap smear for ovarian cancer,” she says after painting the bleak outlook those with the disease face today.

Surbhi has been listed as one of Forbes Magazine’s 30 under 30 in Science and Healthcare. Today she tells her story.

Podcast brought to you by: Slone Partners - Premier talent. Delivered.

The Silicon Valley Fantasy Trip: Sci-fi Author Kim Stanley Robinson Talks Life Science

Guest:

Kim Stanley Robinson, Sci-Fi Author Bio and Contact Info

Listen (3:30) Creating plot when science wants to be boring

Listen (3:22) Genetics and the distant past

Listen (5:09) The mental voyage

Listen (6:35) Why don't we value diagnostics?

Listen (4:58) Medicine has always been utopian

Listen (4:28) The Silicon Valley Fantasy Trip

Listen (9:12) The open question of aging

Since first interviewing sci-fi author, Kim Stanley Robinson, I find myself wondering what he might think about this or that topic that comes up on Mendelspod. So we invited him back to weigh in on themes that continually resurface here on the program.

For example, what are his thoughts on why we value therapeutics so much higher than diagnostics? And what level of regulation is appropriate? Should there be government imposed controls on drug pricing?

Stan is never short of a well reasoned answer. In today’s interview he takes on what he calls the Silicon Valley Fantasy Trip and the naivety of futurists—who he reminds us are also sci-fi writers—such as Peter Diamandis.

“Two or three billion people on this planet go to bed hungry every night and don’t have basic healthcare, don’t have toilets,” he says. "So the researchers on the edge of biotech are like the games the French aristocracy were playing right before the revolution, and they got their heads chopped off. Here’s what you have to say to them, ‘Get real. Just because you’re a trillionaire doesn’t mean the world is in good shape.'”

We start the interview with a chat about two of Stan’s recent works, Shaman and Galileo’s Dream.

Podcast brought to you by: Chempetitive Group - "We love science. We love marketing. We love the idea of combining the two to make great things happen for your marketing communications."



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