There are several reasons that diagnostics is a tough way to make money, mostly relating to inertia in the US healthcare system. No matter how compelling the clinical data for a test may be, getting an endorsement from the USPSTF* is a drawn-out process. Without an endorsement from USPSTF, many physician practices won’t use a test.
After an endorsement from USPSTF, a diagnostics company still needs to secure a favorable reimbursement rate from Medicare and private insurers, which is usually another drawn-out process.
EXAS’ Cologuard is a case in point. I first mentioned Cologuard to my personal GP in 2014, but it wasn’t until two years later that this medical practice (which follows the guidelines of Partners Health, the largest healthcare provider in Massachusetts) was willing to write prescriptions for the test. USPSTF initially rebuffed Cologuard by (astonishingly) rating it at par with FOBT, an older and clearly inferior test.
USPSTF eventually came around and issued a favorable rating for Cologuard, but during the interim reimbursement was spotty and many end users simply didn’t pay for the test as promised. Even now, almost ten years after the FDA approved Cologuard, EXAS is still losing money, as noted in #msg-173211076.
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