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When Science Outpaces Payers: Molecular Diagnostics Pose Reimbursement Dilemmas

http://www.onclive.com/publications/oncology-live/2014/august-2014/when-science-outpaces-payers-molecular-diagnostics-pose-reimbursement-dilemmas/1#sthash.WIe0o5QT.dpuf

Many see the industry at a crossroads, with reimbursement issues at the center. The future of molecular diagnostics is both entwined in the broader discussion of paying America’s healthcare tab and constitutes its own separate beast, for reimbursement issues present a steep scientific and regulatory challenge. Most of the experts who spoke with Evidence-Based Oncology predicted an industry shakeout would occur, with some promising small companies joining large ones while others will disappear.

Right now, the divide looks like this: Payers have seen a new cost category explode across their balance sheets, and they are determined to understand what they are funding and whether tests are necessary. Molecular diagnostic companies, meanwhile, say they can’t understand what they call a penny-wise, pound-foolish approach. Why, they say, should insurers pay ever-rising sums for cancer therapies, with prices measured in tens and hundreds of thousands of dollars, but balk at a $3000 test2 that would tell doctors whether the drug is likely to work?

“We overtreat people continuously in this country,” said Macey Johnson, vice president of managed care and reimbursement at bioTheranostics, based in San Diego, California. “It’s overkill to give people all these drugs, with oncology being the poster child.”

As both regulators and testing companies implement a new reimbursement law, many stakeholders see opportunities for change. “It brings the industry into the bright light,” said Mike Barlow, vice president of operations at Palmetto GBA of South Carolina, the Medicare contractor that developed the MolDx program to create billing expertise around an emerging industry. “Too often, the lab industry has been operating as an afterthought.” What’s harder to gauge is how much the recent reimbursement woes are driving the science— either by slowing new discoveries or directing research toward tests for which payment is perceived to be easier. Some say there’s no doubt that venture capitalists who make decisions on whether to invest in molecular diagnostic companies find the current landscape unsettling.