The murky world of companion diagnostic reimbursement and access around the world is not easy to navigate and for pharma and companion diagnostic partners, these complexities will not go away anytime soon. However, as a starting point, reimbursement for new and expensive companion diagnostics needs to be perceived as part of the personalized medicine package. Margery Rothenberg points us in the right direction.
Companion diagnostic reimbursement is complex for three reasons.
For pharma and companion diagnostic partners these complexities will not go away anytime soon. However, as a starting point, reimbursement for new, expensive companion diagnostics needs to be perceived as part of the personalized medicine package. An ‘expensive’ test up front can save tens of thousands of dollars of unnecessary treatment down the road and can speed delivery of the best available treatment for all patients. This ‘hybrid’ approach couples the value of a diagnostic test and personalized medicine so that they are considered together. Some countries (US, UK, Australia, Germany, France, Canada…) are striving to review Dx and Tx together and are reaching towards streamlined reviews and reimbursement decisions, but far more countries are still struggling to put the cart and the horse together. To complicate matters further, in the US the reimbursement decision will migrate into the hands of provider organizations (e.g., ACOs) upon whom payers will rely for review of expert treatment pathways. Clinical laboratory tests (versus imaging tests) have traditionally been reimbursed by Medicare and other payers in the US but are now being questioned. Outside the US, tests are usually covered by DRG-like payments or hospital budgets.
The big money question is ‘what is the clinical utility of the test?’ The more expensive the test, the bigger the question! It’s one thing if the test stratifies patients in order to identify which patients would most likely respond to a drug, but it’s quite another thing if the test only provides prognostic information or if it reveals a genetic abnormality for which a treatment does not exist. But some payers will pay for a prognostic test that can help a patient and his/her physician understand—and prepare for—what the likely course of the disease may be.
Congratulations to Martina Garau, Adrian Towse, Louis Garrison, Laura Housman and Diego Ossa for their excellent  white paper entitled ‘Can and Should Value Based Pricing Be Applied to Molecular Diagnostics?’ We commend it as important reading. See the link here: http://www.ohe.org/publications/article/value-based-pricing-and-molecular-diagnostics-117.cfm. Their paper contends that current pricing and reimbursement systems for diagnostics are not efficient and provide poor incentives for new diagnostic approaches and that a value-based pricing (VBP) framework for efficient use and pricing of medicines also might be applied to diagnostics.
For those of you just now diving into the murky world of diagnostic reimbursement and access and perhaps commissioning research on reimbursement practices for companion diagnostics, take a moment to consider that in fact you are observing two parallel worlds. The first world is one where chronic underinvestment in diagnostic cost-effectiveness studies has resulted in an imperfect market for diagnostic coverage across the globe. From the US, where a coding system has been tortured to provide sufficient reimbursement to laboratories for high volume multi-component testing procedures, over to Europe, where you have a smorgasbord of coverage of novel diagnostics ranging from full reimbursement (Spain) to little or no reimbursement (Italy), all the way to China where the patient predominantly pays.
The second parallel world (albeit more hidden from view) is the increasing trend for pharmaceutical companies to have to pay for companion diagnostic testing, most obviously at work in the UK and in France, where a number of pharma companies have formed partnerships with INCa, the national cancer association, which has enabled testing for important new targeted therapies. For example, Pfizer formed a partnership with INCa through a scientific collaboration signed in June 2010. INCa’s €3 million program will provide additional support for 28 hospital-based molecular genetics platforms to routinely detect a panel of biomarkers that will determine access to the targeted therapies soon to be available to patients – (http://www.europabio.org/sites/default/files/3_-_access_to_molecular_tests_europabio_pers_med_workshop_090211.pdf).
While this extended access to companion diagnostics is understandable given the infrastructure gaps in diagnostic reimbursement policies, procedures and budgets, it is an interim ‘fix’ in most instances and not sustainable as a model to enable a global personalized medicine marketplace. It is this dilemma which led Garau et al to author their white paper exploring a VBP model which may help us leapfrog over these parallel worlds.
But there is a barrier we need to overcome before we can make this leap and one which requires a collaborative dialogue between pharma, payers and laboratorians. We need to develop models where a targeted therapy and companion diagnostic investment returns and the cost benefit of patient targeting are joined up. This is not easy since, to date, value-based pricing solutions, like that put in place between NICE and J&J for Velcade, tend to be a last resort for pharma-payer negotiations after initial coverage rejections.
Perhaps we can all agree that personalized medicine has the potential to remove wasted cost and poor clinical outcomes and focus payer dollars on the right patients at the right time. It is our view that, in the short term, such VBP models will need to be developed on a personalized medicine therapy-by-personalized medicine therapy basis, unfortunately putting the onus back on pharma’s project and access teams to pioneer new VBP models. More simply put, there is no shortcut to a better VBP model.
So as you commission that diagnostic reimbursement research make sure you structure your RFPs to:
Almost ten years after the mapping of the human genome, the trickle-down effect has delivered scores of genetic and genomic tests that are expensive at this point in time, although costs are decreasing as technology accelerates. The underlying problem with ‘all companion test reimbursement is local’ is that the patchwork of approaches will proliferate, not decrease. While complexity is here to stay, a common starting point is a well articulated, joined-up economic benefit of test and treatment. Back to the data, I’m afraid!