IVD Market Access and Reimbursement Issues in 2016 - Diaceutics

IVD Market Access and Reimbursement Issues in 2016

July 26th, 2016

Eirini Vavatsikou

Eirini Vavatsikou, Consultant with Diaceutics, provides an informative overview of the current system of IVD and LDT submission to the FDA and suggests how the problems that arise from diagnostic access and reimbursement could be eased.

Market access

The process for obtaining approval for in vitro diagnostics (IVD) in the US consists of a 510(k) or pre-market approval (PMA) submission. The assessment takes risk, test accuracy and frequency of false positive metrics into account. In most cases, provided that the use of an IVD companion diagnostic device is essential for the safe and effective use of a proposed therapeutic product, the IVD and therapeutic product will be approved or cleared concurrently by the FDA for the use indicated in the therapeutic product label. If a therapeutic product is approved independently of its IVD companion diagnostic device, then it is assumed that the IVD will be cleared through an appropriate IVD device submission at a later date, and the therapy product label will be revised to include the new test.  There is no time constraint for this process but it typically happens in the six months following IVD approval.

After the 510(k) documentation is submitted, reviews are completed within 90 days in a process that can involve plenty of consultation between the developer and the FDA. The results of the review, along with all clinical data, post-market follow-up data and the approval status, are made public on the website.

The time between the initiation of negotiations between the FDA and the diagnostic or pharma company wishing to commercialize an IVD kit until the final 510(k) documentation submission can last up to five years. During that time, clarity about IVD applications is important and helpful. However, there is an immense lack of transparency from the FDA and the White House here, instilling insecurity in the diagnostic industry. Five years is a significant investment and the need to change this timeframe is pressing.

In addition, it is possible for an in vitro diagnostic test to gain approval through being defined as a laboratory developed test (LDT). LDTs are mainly regulated by the 1988 Clinical Laboratory Improvement Amendments (CLIA), which sets standards and regulations for any clinical laboratory offering non-clinical trial human testing, for the purpose of diagnosis, prevention or treatment of a disease (FDA, 2009).

LDTs present challenges for CDx

For companion diagnostics, LDTs present a particular challenge. Many of the companion diagnostic tests currently offered, or in development, are different to LDTs used previously. For instance, during the development of Zelboraf, it was eventually revealed that LDTs were utilised to pre-screen patients for the BRAF mutation. This resulted in significant bias being introduced and caused the trials to be halted, until physicians were using the companion diagnostic that became the Roche Cobas BRAF-V600E test1. Accreditation is therefore needed to firstly ensure results of similar tests from different labs are comparable and also to harmonize the practices between different labs.

Physicians are tweaking the treatment by adjusting the dosing in order to optimally treat their patients. Labs are also tweaking the protocols for the kits they use, perhaps because the lab is not using the same buffers as the one that developed the original kit, or perhaps because they use different imaging equipment, for instance. This raises concerns from the FDA around the validity of such ‘tweaked’ kits. What is important here is that patients are uniformly tested in order to receive an appropriate therapy, and whether a test takes the form of an IVD or an LDT, it is critical it provides a correct result. There is definitely room for improvement in this area.

Reimbursement in a time of panel testing

In the US, reimbursement for medical expenses incurred by older adults is provided by the Centers for Medicare & Medicaid Services (CMS) under the Medicare program. For other patients, reimbursement depends on their health insurance policies. Generally, non-FDA-approved diagnostic tests are more difficult to reimburse than FDA-approved tests. Reimbursement for new diagnostic tests is inconsistent.

The pricing of tests is determined by CMS and CLIA using the latest Current Procedural Terminology (CPT) codes, under which similar techniques are pooled together and priced with the same cost. This generates issues, as a new IHC test, for example, may go under a very old CPT code that offers a very small reimbursement much lower than the actual cost.

A payer expects that any assay provided for a clinical service has been validated. If the issue of validation is brought up to a payer panel, the IVD kit in question will face a bumpy reimbursement course. A payer will not pay for a kit that is of questionable accuracy, regardless of whether it is FDA-approved or an LDT. A payer will think, “Is there a medically necessary reason why a physician needs to have a test to guide a treatment decision? We the payers need to think about clinical utility and the FDA cannot play a role here as they are not payers”. For example, in a panel test with 400 answers but only three of them are actionable, the payer will only want to pay for three, regardless of the significance of the contextual biomarkers. The FDA is looking at this differently and will deem contextual biomarkers as actionable regardless of whether patients can pay for them. This is why it needs to understand what the Rx/Dx label will look like to add value for the payer.

Recommendations for the future

Stakeholders are coming together and talking about a new FDA regulatory pathway, and legislation that would create a much faster approval process is being discussed. There is a small chance legislation could move forward this year, according to Diaceutics’ sources, although caution is needed as discussions around this matter occur in an oscillatory manner in electoral years like 2016.

In summary, a number of actions need to be taken to improve the situation for diagnostic access and reimbursement. It is clear that legislation is needed to address the crisis that stems from the five-year timeframe and whether or not the IVD results being obtained are accurate. Also, there should be no need to specify when physicians request a test that it is FDA-approved. On the contrary, analytical accuracy of tests in labs around the country regulation for labs is needed.

The US Congress should oversee the implementation of diagnostic testing reimbursement provision contained in the Protecting Access to Medicare Act of 2014 and take action when needed. The current situation is far from unified and streamlined. CMS in turn, should a) ensure that reimbursement covers at a minimum the cost of testing, b) eliminate the wide regional variations in reimbursement for diagnostics and c) simplify, expedite and increase the transparency of the process of assigning new CPT codes.



1 Titus K (2012). Two for the road with companion diagnostics. Available from:



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